GettyImages-179131621-600pxOne of the most significant legal concerns for Internet service providers is the risk of exposure to liability for the copyright infringements of their users. The concern is not unreasonable. Because Internet service providers can be held secondarily liable for the infringements of their users, and because this liability can come with statutory damages attached, the service provider’s potential economic exposure can be significant, especially for Internet service providers engaged in the transmission or hosting of user-generated content.

Moreover, the principle of joint and several liability may further increase this potential economic exposure for Internet service providers.

Under Section 504(c) of the Copyright Act, which permits a range of statutory damages for each infringed work, the principle of joint and several liability can make a defendant liable for multiple statutory damage awards for infringing a single work. The Ninth Circuit’s decision in Columbia Pictures Television v. Krypton Broadcasting of Birmingham, Inc. two decades ago illustrates the operation of this principle.

The defendants in Columbia Pictures were three television stations that had directly infringed upon plaintiff’s copyrights independently of each other. Consequently, the company that owned the three stations was secondarily liable for their infringement. Relying in part on legislative history, the court held that the plaintiff was entitled to separately calculated statutory awards against each of the three stations as they were separate infringers, and that, with respect to these awards, each of the three stations was jointly and severally liable with their common owner.
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CheerUniformsDecisionImageOn March 22, 2017, the Supreme Court held in Star Athletica, LLC v. Varsity Brands that design elements of cheerleading uniforms may be protected under the Copyright Act. The 6-2 decision, written by Justice Thomas, clarified the scope of protection afforded to clothing designs and, more broadly, designs on useful articles.

Varsity Brands, Inc.—the country’s largest cheerleading supplier—owns more than 200 copyright registrations for two-dimensional designs consisting of combinations of chevrons, stripes, and other colorful shapes for its cheerleading uniforms. At issue in this case were the five pictured designs.

Varsity Brands sued Star Athletica, LLC, an upstart competitor, for copyright infringement. The District Court for the Western District of Tennessee granted Star Athletica’s motion for summary judgment, holding that the designs could not be conceptually or physically separated from the uniforms, and they were therefore ineligible for copyright protection. The Copyright Act makes “pictorial, graphic, or sculptural features” of the “design of a useful article” eligible for copyright protection as artistic works only if those features “can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.” The Sixth Circuit reversed, concluding that the graphics were “separately identifiable” and “capable of existing independently” of the uniforms.

In affirming, the Supreme Court laid out a two-part test for when a feature incorporated into the design of a useful article is eligible for copyright protection: When the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article; and (2) would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated. “To be clear, the only feature of the cheerleading uniform eligible for a copyright in this case is the two-dimensional work of art,” the Court explained. “Respondents have no right to prohibit any person from manufacturing a cheerleading uniform of identical shape, cut, and dimensions to the ones on which the decorations in this case appear.”
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ContentGraphic_SmallWe’re in the midst of a seismic shift in how companies interact with user-generated content (UGC).

For years, companies were happy simply to host UGC on their websites, blogs and social media pages and reap the resulting boost to their traffic numbers. And U.S. law—in the form of Section 512(c) of the Digital Millennium Copyright

The UK wants to use the blockchain to track the spending of welfare recipients.

Some believe that a recent Ninth Circuit holding could turn sharing passwords into a federal crime under the Computer Fraud and Abuse Act.

And another Ninth Circuit opinion sided with Facebook in a closely-watched case interpreting the same federal law, this

04_21_Apr_SociallyAware_v6_Page_01The latest issue of our Socially Aware newsletter is now available here.

In this issue of Socially Aware, our Burton Award winning guide to the law and business of social media. In this edition, we discuss what a company can do to help protect the likes, followers, views, tweets and shares that constitute

Internet of things synchronized by smart phone isometric poster vector illustration

In an article published here in January we addressed some of the more significant Internet of Things (IoT) -specific standards and initiatives and emphasized the importance of interoperability as central to the growth and success of the products and services that leverage the IoT.  In this follow-up piece, we provide a detailed update regarding one of the leading efforts around standardization, the Open Connectivity Forum (OCF). We also cover three additional industry standards that have particular potential when used in IoT: Bluetooth Low Energy, Wi-Fi (including 5G) and Blockchain.

“Fragmentation is the Enemy”

On February 19, 2016, the Open Connectivity Forum (OCF), a new standards effort for the IoT, was announced. Led by Intel, Qualcomm, ARRIS, CableLabs, Cisco, Electrolux, GE Digital,  Microsoft and Samsung, the OCF reportedly seeks to merge the current efforts towards standards development in the IoT, uniting the former Open Interconnect Consortium with companies at all levels, and is “dedicated to providing this key interoperability element of an IoT solution.” The initiative hopes to circumvent the expenditure of time and resources in building consensus between multiple standards approaches, accelerating innovation and assisting developers create solutions that map to one open IoT interoperability specification.  Emphasizing this point, Qualcomm recently published on its website that “fragmentation is the enemy of IoT.” The OCF sponsors the IoTivity open source project (covered in Part 1 of this Alert) which includes a reference implementation of the OCF specification licensed under the open source Apache 2.0 license.

OCF Intellectual Property Policy

The Intellectual Property Policy adopted by the OCF shows a high level of attention to detail, thoroughness and nuance. Those considering joining would be well-advised to get some help in understanding how these terms will apply to their specific intellectual property portfolio, products, components and services. We have chosen to take a deeper dive into the intellectual property policy for this standard because the details of the policy reveal a number of areas of focus of the founding members.

While the policy imposes obligations on members as well as their affiliates to grant licenses under copyrights and patents, the scope and cost of those licenses will depend on a number of specifics that will vary depending on the precise contours of the final specifications. Members are required to represent that they are authorized to bind their affiliates to the terms of the policy, including parent and sister companies.

1. Patent Claims Captured. The patent claims captured by the policy are limited in a number of ways:

  • The only claims captured are those that would be necessarily infringed by implementing the mandatory portions of the specifications within the bounds of a tightly defined scope that ties specifically to enabling the compliant portions of products to interoperate, interconnect or communicate.
  • Necessary infringement is defined as there being no “commercially reasonable” non-infringing alternative for this enablement. The policy requires that any transfer of these necessary patent claims to unaffiliated third parties must be subject to the terms and conditions of the policy, and transfer or assignment agreements must explicitly address the fact that the transfer or assignment is subject to existing licenses and obligations imposed by standards bodies such as OCF. Those who practice in the merger and acquisition arena will want to take note of the potential issues for both sellers and acquirers in light of these requirements.

2. Patent License Scope. The license scope is also limited in similarly nuanced ways. The license under the above patent claims extends to only those portions of products and services that implement the protocols, functions, APIs and their adaptation layers, input parameters, data structures, services and firmware descriptors that fall within the mandatory portions of the final specification (including mandatory portions of optional components of the specification). Moreover, the policy goes to great lengths to ensure that, unless the final specification is explicit and describes in detail these items where the description’s sole purpose is to enable interoperability, interconnection or communication, no license will apply. This would seem to place a heavy burden on the developers of the specification taking  this into account in developing the details of the specifications.

3. Opt-Out is not true Opt-Out. Another interesting aspect of the policy is that while the policy allows for members to exclude specified patent claims from the royalty-free license, this opt-out mechanism is constrained. Most importantly, members cannot opt out entirely. The policy imposes a requirement to license those excluded patent claims on reasonable and necessary non-discriminatory terms—again, this applies even if patent claims are excluded in accordance with the opt-out framework. The opt-out mechanism also only can be exercised 4 times in any 60 month period.

4. Copyright and Software. While we have focused on patents here due to the policy’s emphasis on the patent rights granted, the policy also imposes obligations to license copyrights.  The policy only addresses rights under copyright to contributions made by members to the specification itself.  The policy also includes a brief statement permitting members to contribute OCF open source that OCF deems acceptable and non-confidential as well as modifications and additions to such open source software to open source projects.  It is not clear what will be considered “acceptable” and what software will be made non-confidential.  The policy also appears to be limited to the following acknowledgment: members may license their software source code that implements the specification under open source licenses and may make contributions of such source code to open source projects.  No limitations on which open source projects are permitted appear.  This seems odd given that this could result in OCF open source software ending up being contributed to projects that impose license terms that conflict with one another.  It seems that OCF may have decided to defer these issues to the future once it has determined what is “acceptable” and what software OCF itself will make available.

5. Rights on Termination. Termination also raises issues for terminating as well as continuing members. Once members join, they may not terminate the licenses they have previously granted to other members prior to termination with respect to versions of the final specification that existed while they were members or contributions to draft specifications that they made which become part of subsequent versions of the specification after their termination. Continuing members are also required to provide more or less reciprocal grants.
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03_21_Signs_Today’s companies compete not only for dollars but also for likes, followers, views, tweets, comments and shares. “Social currency,” as some researchers call it, is becoming increasingly important and companies are investing heavily in building their social media fan bases. In some cases, this commitment of time, money and resources has resulted in staggering success. Coca-Cola, for example, has amassed over 96 million likes on its Facebook page and LEGO’s YouTube videos have been played over 2 billion times.

With such impressive statistics, there is no question that a company’s social media presence and the associated pages and profiles can be highly valuable business assets, providing an important means for disseminating content and connecting with customers. But how much control does a company really have over these social media assets? What recourse would be available if a social media platform decided to delete a company’s page or migrate its fans to another page?

The answer may be not very much. Over the past few years, courts have repeatedly found in favor of social media platforms in a number of cases challenging the platforms’ ability to delete or suspend accounts and to remove or relocate user content.

Legal Show-Downs on Social Media Take-Downs

In a recent California case, Lewis v. YouTube, LLC, the plaintiff Jan Lewis’s account was removed by YouTube due to allegations that she artificially inflated view counts in violation of YouTube’s Terms of Service. YouTube eventually restored Lewis’s account and videos but not the view counts or comments that her videos had generated prior to the account’s suspension.

Lewis sued YouTube for breach of contract, alleging that YouTube had deprived her of her reasonable expectations under the Terms of Service that her channel would be maintained and would continue to reflect the same number of views and comments. She sought damages as well as specific performance to compel YouTube to restore her account to its original condition.

The court first held that Lewis could not show damages due to the fact that the YouTube Terms of Service contained a limitation of liability provision that disclaimed liability for any omissions relating to content. The court also held that Lewis was not entitled to specific performance because there was nothing in the Terms of Service that required YouTube to maintain particular content or to display view counts or comments. Accordingly, the court affirmed dismissal of Lewis’s complaint.

In a similar case, Darnaa LLC v. Google, Inc., Darnaa, a singer, posted a music video on YouTube. Again, due to allegations of view count inflation, YouTube removed and relocated the video to a different URL, disclosing on the original page that the video had been removed for violating its Terms of Service. Darnaa sued for breach of the covenant of good faith and fair dealing, interference with prospective economic advantage and defamation. In an email submitted with the complaint, Darnaa’s agent explained that she had launched several large campaigns (each costing $250,000 to $300,000) to promote the video and that the original link was already embedded in thousands of websites and blogs. Darnaa sought damages as well as an injunction to prevent YouTube from removing the video or changing its URL.

The court dismissed all of Darnaa’s claims because YouTube’s Terms of Service require lawsuits to be filed within one year and Darnaa had filed her case too late. In its discussion, however, the court made several interesting points. In considering whether YouTube’s Terms of Service were unconscionable, the court held that, although the terms are by nature a “contract of adhesion,” the level of procedural unconscionability was slight, since the plaintiff could have publicized her videos on a different website. Further, in ruling that the terms were not substantively unconscionable, the court pointed out that “[b]ecause YouTube offers its hosting services free of charge, it is reasonable for YouTube to retain broad discretion over [its] services.”

Although the court ultimately dismissed Darnaa’s claims based on the failure to timely file the suit, the decision was not a complete victory for YouTube. The court granted leave to amend to give Darnaa the opportunity to plead facts showing that she was entitled to equitable tolling of the contractual limitations period. Therefore, the court went on to consider whether Darnaa’s allegations were sufficient to state a claim. Among other things, the court held that YouTube’s Terms of Service were ambiguous regarding the platform’s rights to remove and relocate user videos in its sole discretion. Thus, the court further held that if Darnaa were able to amend the complaint to avoid the consequences of the failure to timely file, then the complaint would be sufficient to state a claim for breach of the contractual covenant of good faith and fair dealing.


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InternetofthingsThe financial impact of the Internet of Things on the global economy will be significantly affected by interoperability. A 2015 McKinsey Global Institute report indicated that, “[on] average, interoperability is necessary to create 40 percent of the potential value that can be generated by the IoT in various settings […] Interoperability is required to unlock more than $4 trillion per year in potential economic impact for IoT use in 2025, out of a total impact of $11.1 trillion across the nine settings that McKinsey analyzed.”

However, at present, there is a lack of consensus between standards organizations and industry stakeholders as to even the most basic technical standards and protocols that apply to how devices communicate. Characterized as a “standards war” between technology groups, companies have competing incentives. While all vendors share an interest in aligned standards that promote IoT development and interoperability, individually some companies seek the perceived competitive and economic advantages of building proprietary systems based on proprietary standards and protocols (or so-called “walled-gardens”).

The lack of a uniform standard that applies across devices and networks means that we lack any universally adopted set of semantics. As a result, without clear definition, opportunities for misunderstandings abound. We start then with the definition of two key concepts: the definition of the Internet of Things or “IoT,” and the definition of interoperability as applied to the Internet of Things.

Internet of Things

The term “Internet of Things” is arguably a misnomer in today’s rapidly changing technical environment. The term has two components, both of which are somewhat misleading: “Internet” and “things.”

The reference to the Internet is misleading because the Internet is not the only networking protocol over which devices communicate. While the Internet is a powerful enabler of the broad adoption of connected devices, the networks and communications protocols that support our connected world are far more diverse and continue to proliferate.

The term “things,” while not limiting in and of itself, is vague at best. In this article, when we refer to “things,” we intend to encompass all of the types of objects that have the ability to connect and communicate, whether those objects be sensors, computers or everyday things. The ability to connect with other objects and communicate data makes the object “smart.”


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0114_SA_ImageIn this election season, we hear a lot of complaints about laws stifling business innovation. And there is no doubt that some laws have this effect.

But what about laws that spur innovation, that result in the creation of revolutionary new business models?

Section 512(c) of the Digital Millennium Copyright Act (the DMCA) is one

Word Cloud with Influence related tags

In an age of explosive growth for social media and declining TV viewership numbers, companies are partnering with so-called “influencers” to help the companies grow their brands. Popular users of Instagram, Vine, YouTube and other social media sites have gained celebrity status, generating millions of views, impressions and “likes” with every upload.

Capitalizing on the shift from traditional media to online platforms, advertisers have begun to engage influencers in marketing campaigns. In a May 2015 study, 84% of marketers said they expect to launch at least one influencer marketing campaign in the next 12 months. Of those who had already done so, 81% said influencer engagement was effective. In a separate study, 22% of marketers rated influencer marketing as the fastest-growing online customer-acquisition method.

So what is an influencer, anyway? By its broadest definition, an influencer is any person who has influence over the ideas and behaviors of others. When it comes to social media, an influencer could be someone with millions of followers or a user with just a few loyal subscribers. One thing that all influencers seem to have in common is that their audiences trust them. As such, influencers can be powerful advocates, lending credibility, increasing engagement and ultimately driving consumer actions.

Influencer marketing can be an effective tool, but it’s important to do right. As recent Federal Trade Commission (FTC) and Food and Drug Administration (FDA) investigations demonstrate, online advertising is an area of relatively active enforcement, and influencer marketing presents a number of potential legal issues. The following tips can help companies lead successful influencer marketing campaigns while lessening the risk of liability.

Disclosure Is Key

In September, the FTC settled a case with Machinima, a company that paid popular video bloggers to promote Microsoft’s Xbox One system through YouTube. Despite the hefty sums paid out to the gamers (one of whom pocketed $30,000), Machinima did not require them to make any disclosures. The FTC alleged that the failure to disclose the relationship between Machinima and the gamers was deceptive, in violation of Section 5 of the FTC Act. In its Endorsement Guides, the FTC has taken the position that a failure to disclose unexpected material connections between companies and the individuals who endorse them is deceptive.

This case raises two important questions: (1) when is a disclosure required and (2) what constitutes adequate disclosure?
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