Source: http://www.techlawjournal.com/alert/2007/03/06.asp
Timestamp: 2019-04-22 18:51:24+00:00

Document:
TLJ Daily E-Mail Alert No. 1,547, March 6, 2007.
March 6, 2007, Alert No. 1,547.
3/6. Thomas Rubin, Microsoft's Associate General Counsel for Copyright, Trademark and Trade Secrets, gave a speech titled "Searching for Principles: Online Services and Intellectual Property" in which he stated that Google systematically violates copyright.
He focused primarily on Google's book search program. In contrast, he said that Microsoft's competing book search program respects copyright.
He spoke in New York City to the American Association of Publishers (AAP), some of the leading members of which have sued Google in federal court in New York alleging copyright infringement.
Bill Gates is scheduled to give a speech in Washington DC on Wednesday night, March 7, 2007.
Litigation Background. On October 19, 2005, five book publishing companies filed a complaint [35 pages in PDF] in U.S. District Court (SDNY) against Google alleging that its Google Print for Libraries (GPL) program infringes copyrights. The plaintiffs are McGraw Hill, Pearson Education, Penguin, Simon & Schuster, and John Wiley & Sons. All are members of the AAP. See, story titled "Major Book Publishers Sue Google for Digitizing Copyrighted Books" in TLJ Daily E-Mail Alert No. 1,237, October 20, 2005.
See also, story titled "Google, Publishers and Authors Debate Google's Print for Libraries Program" in TLJ Daily E-Mail Alert No. 1,239, October 25, 2005; story titled "Author's Guild Sues Google for Copyright Infringement" in TLJ Daily E-Mail Alert No. 1,218, September 21, 2005; story titled "University Publishers Accuse Google of Systematic Infringement of Copyright on a Massive Scale" in TLJ Daily E-Mail Alert No. 1,142, May 25, 2005; and story titled "District Court Rules in Perfect 10 v. Google" in TLJ Daily E-Mail Alert No. 1,319, February 28, 2006.
Introductory Comments. Rubin began by saying that "authors and publishers often find it difficult just to cover their costs, let alone make a profit, in this new online world. At the same time, companies that create no content of their own, and make money solely on the backs of other people's content, are raking in billions through advertising revenue and IPOs." He did not mention Google until much later in his speech.
He asked several rhetorical questions: "What path will we as a society choose in making the world’s books and publications available online? Will we choose a path that nourishes creativity and innovation over the long term and that preserves incentives for authors to offer their best works online? Or will we choose a path that encourages companies simply to ``take´´ the works of others, without any regard for copyright or the impact of their actions on authors and publishers too?"
He said that "expanding access to online content must be done in a way that respects intellectual property rights".
He also advocated three principles. First, he said that "new services that expand online access to content should be encouraged". Second, he said that "those new services must respect the legitimate interests of copyright holders; put conversely, we must forcefully reject any business model that is based on the systematic infringement of copyrights". Third, he said that "we must all work together to find consumer-friendly and cost-effective solutions to our shared goal of expanding online access to copyrighted and public-domain works".
Microsoft's Book Programs. Rubin then discussed Microsoft's online book search programs, titled "Live Search Books" (LSB) and "Live Search Academic" (LSA). He focused on the LSB program.
He said that this program "involves scanning only books that are out of copyright or otherwise in the public domain. In connection with the program, we are currently scanning out-of-copyright books at partner libraries such as The British Library, the University of California Libraries, Cornell University Library, the University of Toronto Library, and The New York Public Library."
He added that the LSB program gets material through its "Publisher program, under which we receive books still under copyright from publishers with their express permission, either in digital form directly from the publisher, or scanned from hard copy. Participating publishers have access to an online site -- or dashboard -- that enables them to manage their publications on Live Search Books. They can choose the amount of text that a reader may preview, create click-to-buy links next to their books, edit metadata, and so on."
He said that Microsoft's LSB program both uses "technology to dramatically expand access to works" and "respects copyright".
He said that this is the "right path" and that its adheres to the three principles that he articulated at the beginning of his speech.
Google's Copying of Books. He then compared and contrasted Microsoft's LSB program with Google's book program.
He said that "Google persuaded several libraries to give it unfettered access to their collections, both copyrighted and public domain works. It also entered into agreements with several publishers to acquire rights to certain of their copyrighted books. Despite such deals, in late 2004 Google basically turned its back on its partners. Concocting a novel ``fair use´´ theory, Google bestowed upon itself the unilateral right to make entire copies of copyrighted books not covered by these publisher agreements without first obtaining the copyright holder’s permission."
Rubin (at right), said that "Google's chosen path would no doubt allow it to make more books searchable online more quickly and more cheaply than others, and in the short term this will benefit Google and its users. But the question is, at what long-term cost? In my view, Google has chosen the wrong path for the longer term, because it systematically violates copyright and deprives authors and publishers of an important avenue for monetizing their works. In doing so, it undermines critical incentives to create."
He added that "Google has also undertaken this path without any attempt to reach an agreement with affected publishers and authors before engaging in copying."
"Google defends its actions primarily by arguing that its unauthorized copying and future monetization of your books are protected as fair use", said Rubin. But, "there are serious questions about the merits of Google's fair use defense".
He also criticized Google's opt out approach to copying protected works. He said that "Google takes the position that everything may be freely copied unless the copyright owner notifies Google and tells it to stop. Microsoft and most other companies, by contrast, take the position that they should get the copyright owner’s consent before they copy. The Copyright Act, in our view, supports this approach. It’s hard to see any justification for exempting Google from its requirements."
Finally, he argued that this opt out approach cannot work, because over time others will also provide book search. He asked, "Should copyright owners be obligated to track down everyone engaging in unauthorized copying in order to preserve their exclusive rights in their works? ... This approach would be absolutely unworkable in practice, which is probably why Congress in enacting the Copyright Act placed the burden on those who want to copy to get the express consent of the copyright owner, rather than the other way around."
Google's Other Bad Practices. Rubin extended his criticism of Google beyond its book copying. He said that "Google's track record of protecting copyrights in other parts of its business is weak at best." He discussed YouTube and use of keywords that refer to pirated software.
He said that the Google's YouTube "follows a similar cavalier approach to copyright".
He elaborated that "television companies, movie studios and record labels have all complained that the site knowingly tolerates piracy. In the face of YouTube’s refusal to take any effective action, copyright owners have now been forced to resort to litigation. And Google has yet to come up with a plan to restrain the massive infringements on YouTube".
Rubin also said that "Google employees have actively encouraged advertisers to build advertising programs around key words referring to pirated software, including pirated Microsoft software. And we weren't the only victims -- Google also encouraged the use of keywords and advertising text referring to illegal copies of music and movies."
He said that "These actions bolstered websites dedicated to piracy and reportedly netted Google around $800,000 in advertising revenues from just four such pirate sites. These are not the actions of a company that has the interests of copyright owners as one of its priorities".
Microsoft on Orphan Works. While Rubin spoke of the importance of respecting intellectual property, nourishing creativity, and preserving incentives for authors to offer their works online, he also advocated enactment of legislation usually referred to as the "orphan works bill".
He said that "we need to address the orphan works issue". He continued that "Online providers should make diligent efforts to locate copyright owners, but when they cannot locate the owner, there must be a process or a safety net by which they can move forward without risk of liability beyond payment of a reasonable royalty if the copyright holder later makes herself known."
This bill, which was considered in the 109th Congress, would retroactively diminish the protection under copyright law for certain copyright holders, particularly photographers, illustrators, and other creators of visual works. Both House and Senate committees held hearings. The House Judiciary Committee's (HJC) Subcommittee on Courts, the Internet, and Intellectual Property (SCIIP) approved its on May 24, 2006.
See, HR 5349, the "Orphan Works Act of 2006". Another version of it was made a part of HR 6052, the "Copyright Modernization Act of 2006". However, neither bill became law. An orphan works bill has yet to be introduced in the 110th Congress.
For more information on the orphan works bill, see , "House CIIP Subcommittee Holds Hearing on Orphan Works" in TLJ Daily E-Mail Alert No. 1,326, March 9, 2006, "Rep. Smith Introduces Orphan Works Act of 2006" in TLJ Daily E-Mail Alert No. 1,377, May 24, 2006, and "House CIIP Subcommittee Approves Orphan Works Act of 2006" in TLJ Daily E-Mail Alert No. 1,378, May 25, 2006.
The introduction of legislation followed the Copyright Office's (CO) release of its report [133 pages in PDF] titled "Report on Orphan Works". See, story titled "Copyright Office Recommends Orphan Works Legislation" in TLJ Daily E-Mail Alert No. 1,302, February 2, 2006. The primary author of the report, Jule Sigall, subsequently went to work for Microsoft. See, story titled "Jule Sigall Joins Microsoft" in TLJ Daily E-Mail Alert No. 1,510, December 27, 2006.
3/5. The Supreme Court issued its opinion [16 pages in PDF] in Sinochem International v. Malaysia International Shipping, a case involving the common law doctrine of forum non conveniens and personal jurisdiction. It concerns proceedings in the U.S. and the People's Republic of China (PRC) in an admiralty dispute between a state owned Chinese company and a Malaysian shipping company.
Sinochem is a PRC state owned importer. It contracted with Triorient Trading to import steel coils from the U.S. Triorient subchartered a vessel owned by Malaysia International Shipping, a Malaysian company, to transport the coils to China.
Sinochem filed a petition, and then a complaint, against Malaysia International in the Guangzhou Admiralty Court in China alleging, among other things, that backdating of a bill of lading resulted in unwarranted payment for the coils. The Chinese court ordered the arrest of a vessel.
Malaysia International then filed a complaint in U.S. District Court (EDPenn) alleging that Sinochem's petition to the Chinese court negligently misrepresented the vessel's fitness and suitability to load its cargo.
The District Court concluded that it had subject matter jurisdiction under the federal admiralty statute, but lacked personal jurisdiction over Sinochem. However, it conjectured that discovery might disclose facts that would give the court personal jurisdiction. Nevertheless, it dismissed, without discovery, under the doctrine of forum non conveniens.
Malaysia International appealed. The U.S. Court of Appeals (3rdCir), in a divided opinion [53 pages in PDF], held that the "District Court could not dismiss the case under the forum non conveniens doctrine unless and until it determined definitively that it had both subject-matter jurisdiction over the cause and personal jurisdiction over the defendant." This opinion is also reported at 436 F. 3d 349.
The Supreme Court granted certiorari. There were also conflicting opinions from different circuits regarding whether a forum non conveniens motion can be decided prior to matters of jurisdiction.
This case is Sinochem International v. Malaysia International Shipping, Sup. Ct. No. 06-102, a petition for writ of certiorari to the U.S. Court of Appeals (3rdCir).
3/5. The Supreme Court issued an order in Leegin Creative Leather Products v. PSKS, an antitrust case regarding minimum resale price maintenance by manufacturers and intermediate distributors. The case could impact the way some consumer electronics products are marketed. The Supreme Court granted certiorari on December 7, 2006. See, story titled "Supreme Court Grants Certiorari in Antitrust Cases" in TLJ Daily E-Mail Alert No. 1,501, December 8, 2006. The just released order states that "The motion of the Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument is granted. The motion of New York State, et al. for leave to participate in oral argument as amici curiae and for divided argument is granted." See, Order List [10 pages in PDF] at page 3. The Supreme Court's docket states that the question presented is "This Court has held that antitrust ``per se rules are appropriate only for conduct that ... would always or almost always tend to restrict competition.´´ Modern economic analysis establishes that vertical minimum resale price maintenance does not meet this condition because the practice often has substantial competition enhancing effects. The question presented is whether vertical minimum resale price maintenance agreements should be deemed per se illegal under Section 1 of the Sherman Act, or whether they should instead be evaluated under the rule of reason." The CTIA -- Wireless Association submitted an amicus brief [31 pages in PDF] urging the Supreme Court to grant certiorari, and reverse the Court of Appeals. This case is Leegin Creative Leather Products, Inc. v. PSKS, Inc., Sup. Ct. No. 06-480, a petition for writ of certiorari to the U.S. Court of Appeals for the 5th Circuit, App. Ct. No. 04-41243. The Court of Appeals heard an appeal from the U.S. District Court (EDTex).
3/5. The Supreme Court issued an order in Credit Suisse First Boston v. Billing, an antitrust immunity case. The Supreme Court granted certiorari on December 7, 2006. See, story titled "Supreme Court Grants Certiorari in Antitrust Cases" in TLJ Daily E-Mail Alert No. 1,501, December 8, 2006. The just released order states that "The motion of the Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument is granted. The motion of respondent Milton Pfeiffer for divided argument is denied. The Chief Justice took no part in the consideration or decision of these motions." See, Order List [10 pages in PDF] at pages 2-3. The Supreme Court's docket states that the question presented is "Whether, in a private damages action under the antitrust laws challenging conduct that occurs in a highly regulated securities offering, the standard for implying antitrust immunity is the potential for conflict with the securities laws or, as the Second Circuit held, a specific expression of congressional intent to immunize such conduct and a showing that the SEC has power to compel the specific practices at issue." This case is Credit Suisse First Boston Ltd., et al. v. Glen Billing, et al., Sup. Ct. No. 05-1157, a petition for writ of certiorari to the U.S. Court of Appeals for the 2nd Circuit, App. Ct. Nos. 03-9284 and 03-9288.
3/6. The Progress and Freedom Foundation (PFF) released a paper [22 pages in PDF] titled "The American System: A Schumpeterian History of Standardization". The author is Andrew Russell. This is a sequel to Russell's paper, also published by the PFF, in September of 2005, and also titled "The American System: A Schumpeterian History of Standardization".
3/5. The U.S. Patent and Trademark Office (USPTO) released a report [PDF] titled "Filesharing Programs and ``Technological Features to Induce Users to Share´´". Jon Dudas, head of the USPTO, stated in a release that "Computer programs that can cause unintended filesharing contribute to copyright infringement, and they threaten the security of personal, corporate, and governmental data".
3/5. The Department of Commerce's (DOC) National Telecommunications and Information Administration's (NTIA) Public Telecommunications Facilities Program (PTFP) released a notice the announces, describes, and sets the application deadline for FY 2007 PTFP grants. The deadline is 5:00 PM on Friday, April 6, 2007. The PTFP added that it will publish a notice in the Federal Register on March 7, 2007.
3/5. Securities and Exchange Commission (SEC) Commissioner Paul Atkins gave a speech in Washington DC. He addressed, as he often does, the "flawed implementation" of Section 404 of the Sarbanes Oxley Act. He said that "The more that companies spend on things like internal controls, the less they can invest in developing and marketing products, hiring and retaining talent, and embracing new technologies. Some companies have avoided new acquisitions, delayed or cancelled upgrading their computer systems, or not added a new product line lest they set off a new flurry of internal control documentation. This does not mean that internal controls and other organizational costs are not important. They are, but there must be a balance."
The House will meet at 10:30 AM for morning hour, and at 12:00 NOON for legislative business. The House will consider several non-technology related items under suspension of the rules. See, Rep. Hoyer's weekly calendar [PDF].
The Senate will meet at 10:00 for morning business. It will then resume consideration of S 4, the "Improving America's Security by Implementing Unfinished Recommendations of the 9/11 Commission Act of 2007", a bill that pertains to the 9/11 Commission's recommendations, and unrelated matters.
9:00 AM - 5:00 PM. Day one of a two day meeting to the National Institute of Standards and Technology's (NIST) Visiting Committee on Advanced Technology (VCAT). See, notice in the Federal Register, February 13, 2007, Vol. 72, No. 29, at Pages 6716-6717.
POSTPONED. 10:00 AM. The Senate Judiciary Committee's (SJC) Subcommittee on Terrorism, Technology and Homeland Security will hold a hearing titled "Identity Theft: Innovative Solutions for an Evolving Problem". Sen. Dianne Feinstein (D-CA) will preside. Press contact: Tracy Schmaler (Leahy) at Tracy_Schmaler at judiciary dot senate dot gov or 202-224-2154. Location: Room 226, Dirksen Building.
10:00 AM. The House Appropriations Committee's Subcommittee on Commerce, Justice, Science will hold a hearing on the Department of Commerce. Location: Room H-309, Capitol Building.
10:00 AM - 5:30 PM. The Securities and Exchange Commission (SEC) will host an event titled "International Financial Reporting Standards ``Roadmap´´ Roundtable". See, SEC release. Location: SEC Headquarters, Room LL-002 (Auditorium), 100 F St., NE.
11:00 AM - 12:30 PM. The Heritage Foundation will host a panel discussion titled "Brussels -- Rival or Partner? The Future of US-EU Relations". The speakers will be European Parliament Members Chris Heaton-Harris, Roger Helmer, and Syed Kamall. See, notice. Location: Heritage, 214 Massachusetts Ave., NE.
2:00 PM. The House Appropriations Committee's Subcommittee on Commerce, Justice, Science will hold a hearing on the Department of Commerce. Location: Room 2359, Rayburn Building.
Deadline to submit initial comments to the Federal Communications Commission (FCC) regarding its Second Further Notice of Proposed Rulemaking pertaining to aviation radio. The FCC adopted this item on October 4, 2006, and released it on October 10, 2006. This item is FCC 06-148 in WT Docket No. 01-289. See, notice in the Federal Register, December 6, 2006, Vol. 71, No. 234, at Pages 70710-70715.
The House and Senate will meet in joint session at 10:45 AM to hear Abdullah II bin Al Hussein, King of Jordan. See, Rep. Hoyer's weekly calendar [PDF].
2:00 PM. The Senate Judiciary Committee's (SJC) Subcommittee on Antitrust, Competition Policy and Consumer Rights will hold a hearing titled "Oversight of the Enforcement of the Antitrust Laws". The witnesses will be Thomas Barnett (Assistant Attorney General in charge of the Antitrust Division) and Deborah Majoras (Chairman of the FTC). Sen. Herb Kohl (D-WI) will preside. See, notice. Press contact: Tracy Schmaler (Leahy) at Tracy_Schmaler at judiciary dot senate dot gov or 202-224-2154. Location: Room 226, Dirksen Building.
9:30 AM -12:00 NOON. The Federal Trade Commission (FTC) and Department of Justice's (DOJ) Antitrust Division will hold another in their series of joint hearings regarding single firm conduct. This hearing will focus on different methods of evaluating monopoly power in single-firm conduct cases, including issues relating to market definition, the Cellophane fallacy, the use of direct evidence, single-firm markets, and technology markets. The speakers will be Andrew Chin (University of North Carolina School of Law), Robert Lande (University of Baltimore School of Law), Richard Schmalensee (MIT's Sloan School of Management), Alan Silberman (Sonnenschein Nath & Rosenthal), and Michael Williams (ERS Group). See, notice. Location: FTC Conference Center, 601 New Jersey Ave., NW.

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