Federal Court Rules Scanning of Library Holdings Falls Within ‘Fair Use’ Exception

| July 2, 2014

In a closely watched case, the Federal Court of Appeals for the Second Circuit has ruled that the scanning of book contents by libraries for archival and research purposes constitutes a ‘Fair Use’ of those copyrighted materials.

Ruling in Authors Guild, Inc. v. HathiTrust, No. 12-4547, 2014 U.S. App. Lexis 10803 (2d Cir. Jun. 10, 2014), the justices paved the way for a similar finding in litigation now pending against Google Corp. for funding and managing a similar operation on a wider scale.

The defendants in the case represent a consortium of libraries engaged in a joint project. As of June 2014, there were 80 universities, colleges and other non-profit organizations participating in HathiTrust, and over 10 million works — of various ages, languages and subject matters — available in the digital Library.

One of the primary reasons the court ruled as it did was that it found that the fact that the project makes the text of the works electronically searchable is a “transformative” undertaking. There are special provisions in copyright law protecting uses that add a valuable purpose to the underlying work.

It also noted that search results obtained from the Library’s digital copies would not include any portion of the copyrighted works. Results include only the name of the work, the page number(s) on which a search term appears, and the number of times a search term appears on each page. Interestingly, this differs in the Google case, which is pending in the same court, because Google’s results return snippets of content surrounding the found terms.

 

After Raging Bull Ruling, Statute of Limitations is Meaningless in Copyright

| July 2, 2014

In a bizarre ruling that effectively eliminates the very notion of a Statute of Limitations on Copyright infringement suits, the U.S. Supreme Court has ruled that “Under the [Copyright] Act, each infringing act equates to a new wrong, thus triggering a new limitations period.”

That logic stretch enabled the Court to find in favor of a plaintiff who filed a suit 18 years after the first alleged infringement of a copyright. This despite the fact that the Copyright Act contains a clear and unequivocal three-year Statute of Limitations.

The case involved the famous MGM film “Raging Bull” directed by Martin Scorsese and starring Robert De Niro. The 1980 film was adapted from a 1963 screenplay by Frank Petrella, whose daughter Paula inherited the copyright when the screenwriter died in 1981. She renewed the copyright when it was due in 1991 and notified MGM. The film company continued to sell and distribute the film without permission from that point.

In 2009, Paula filed a copyright infringement suit against MGM. The first court to hear the case properly dismissed it because of the legal doctrine known as “laches” which says that a lawsuit must be filed in a timely manner. The Ninth Circuit upheld the dismissal on appeal.

But then the case landed at the Supreme Court. It ruled, first, that laches couldn’t be applied because it was only usable in cases where no statute of limitations had been enacted. In this case, Congress had enacted a three-year statute. So far, so good.

Then the Justices  drew the shocking conclusion that as long as any infringement occurs within the three-year period defined in the Act, the plaintiff cannot be barred by the passage of time from filing a claim. This is because the Court ruled that each act of infringement — in this case, each showing of the film, or each sale of a DVD or other format video — gives rise to a new action. As a result, Paula, even after waiting 18 years to file her suit, is entitled to her day in court as long as she files within three years of any infringing act.

Hopefully — and presumably — Congress will act at some point to amend the Act to make it clearer that the litigation statute of limitations is intended to prevent just this sort of lawsuit from arising.

Meanwhile, Paula can now resume her suit which will in all likelihood be quietly settled by MGM, whose lawyers are probably still stunned.

Supreme Court Makes it Tougher to Defend Method Patents

| June 27, 2014

In a unanimous decision earlier this month the U.S. Supreme Court ruled that in order for an infringement suit defending a method patent to succeed, every step in the method must be infringed by the same party or parties under its direct control.

The case, Limelight Networks, Inc. v. Akamai Technologies, Inc., involved a situation in which Akamai claimed that Limelight had violated a process patent. A process patent typically sets out two or more steps to be carried out to accomplish some purpose. If anyone reproduces all of those steps in its own process or does so by collaborating with others over whom it exerts “control or direction,” then they can be found to infringe the patent.

In this specific case, Limelight Networks apparently reproduced all but one of the steps in the Akamai patent. Its customers, who were not within Limelight’s control, then carried out the remaining step, known as “tagging.” Akamai filed suit for constructive infringement.

The Court ruled that, “where there is no direct infringement, there can be no inducement of infringement.”

As a result of the ruling, those who seek a process patent protection will have to be much more careful to describe processes where there are no separately executable steps that don’t depend on the flow of the process. Any such step can be left to others to carry out so long as the alleged infringing party doesn’t control that step, and the process patent will be negated.

 

If You’re Using Automatically Renewing Subscriptions, You Need to Follow These Cases

| June 18, 2014

Companies that use automatically renewing subscription plans are coming under increasing scrutiny as a growing number of class action lawsuits is filed by consumers who claim they did not explicitly authorize the renewals.

These cases are, for the moment at least, popping up primarily in California and Oregon which have particularly stringent laws governing such agreements. In California, e.g., a consumer who can demonstrate that a service provider failed to comply with the state’s precise regulations can claim any services received under an unauthorized renewal were “unconditional gifts” for which the consumer has no financial obligation.

Illinois, Florida, Connecticut, Hawaii, Georgia and North Carolina all have laws restricting, to one degree or another, automatically renewing subscription contracts.

Last year, a Pasadena resident sued the online music subscription service Spotify, claiming she did not consent to auto-renewal of her service. That case, Bleak v. Spotify USA Inc., N.D. Cal. Case No. 4:13-cv-05653, was forced to arbitration by Spotify’s terms of service. Video subscription service Hulu (Kruger v. Hulu, L.L.C., L.A. Super. Ct. Case No. BC540053) and cloud storage company Dropbox (Goldman v. Dropbox Inc., N.D. Cal. Case No. 14-cv-01453 CRB) have also been subject to suits.

For more information on this topic, click here.

 

Right to Auto-Dial a Cell Does Not Survive Transfer of the Number

| June 18, 2014

If your business uses auto-dialing of cell phones as a way of communicating with customers, you may find yourself facing an unexpected new burden after a ruling by the Eleventh Circuit Court.

That court, in the case of  Breslow v. Wells Fargo Bank, N.A., determined that when the plaintiff transferred ownership of the phone and its number to another party (in this case her daughter), the right of the bank to contact her for debt-collection purposes lost its validity.

The Telephone Consumer Protection Act (TCPA) prohibits the use of automated dialing systems to call cell phones without the consent of the “called party.” In this case, the defendant argued that the “called party” in this case should be seen as meaning the “intended recipient.” The lower court disagreed and the Eleventh Circuit concurred.

While acknowledging the business obstacles posed by its ruling, the Court said these were issues for Congress to address as it considers amending the 23-year old law.