April 2011
From the editors of Wolters Kluwer Law & Business, this update describes important developments from CCH and Aspen Publishers intellectual property and computer law publications.
If you have any comments or suggestions concerning the information provided or the format used, we'd like to hear from you. Please send your comments to john.arden@wolterskluwer.com.
COPYRIGHTS
Wildflower Garden Lacked “Authorship” and “Fixation”
An artist’s live wildflower garden display in a city park did not qualify for moral-rights protection under the Visual Artists Rights Act (VARA), the U.S. Court of Appeals in Chicago has ruled. Judgment in favor of a city park district on the artist’s claim that the city violated his “right of integrity” by reducing the size of his garden, reconfiguring the shape, and changing the planting materials was affirmed.
The VARA gives an artist “rights of attribution”—the right to be recognized as the author of his work and to prevent attribution of his name to works he did not create—and “rights of integrity”—the right to prevent the modification, mutilation, or distortion of his work. However, to qualify for protection as a “work of visual art” under the VARA, a work must first satisfy the basic copyright standards. Under Section 102(a) of the Copyright Act, copyright subsists in “original works of authorship fixed in any tangible medium of expression.”
A living garden is neither “authored” nor “fixed” in the senses required for copyright. The wildflower garden was planted and cultivated, not authored. Works owing their form to the forces of nature cannot be copyrighted. Moreover, the garden’s constituent elements were alive and inherently changeable, not fixed. Most of what one sees and experiences in a garden—colors, shapes, textures, and scents of plants—originate in nature, not in the mind of the gardener (Kelley v. Chicago Park District, 7thCir, CCH Copyright Law Decisions ¶30,043; IntelliConnect User Link).
AP Settles with Retailer over Use of Famous Obama Image
The Associated Press (AP) has agreed to settle copyright infringement claims against a clothing retailer that used a copyrighted image of Barack Obama without authorization during the 2008 presidential campaign. The image, designed by street artist Shepard Fairey, was based on a copyrighted AP photograph. Fairey, who was also a plaintiff in the suit, licensed the image to the retailer for use on T-shirts and other merchandise, although he had not licensed the photograph from the AP. The litigation involving Fairey was resolved in January.
The AP alleged that the retailer’s unauthorized use of the copyrighted photo to create the image generated millions of dollars revenue for the company. Pursuant to the settlement, the AP and the retailer will collaborate to create and sell apparel using Fairey’s graphics. The retailer also agreed not to use another AP-owned image without the AP’s consent. Financial terms to the agreement were not disclosed.
Reaching the settlement marked the final resolution of the disputes over the AP’s rights in the Barack Obama photograph. The AP said that the settlement would benefit its Emergency Relief Fund, which helps AP staff and families worldwide cope with catastrophes and natural disasters.
Company Did Not Acquire Rights in “Betty Boop” Character
A company that managed the intellectual property rights to characters developed by deceased animators Max and Dave Fleischer (“Fleischer Studios”) failed to prove that it owned a valid copyright in the “Betty Boop” cartoon character, the U.S. Court of Appeals in San Francisco has ruled. Dismissal of Fleischer Studios’ copyright infringement claim against an agency that licensed the Betty Boop character was affirmed.
It was undisputed that the original owner of the Betty Boop copyright sold all rights to the Betty Boop character and animated cartoon films to Paramont Pictures in 1941. Fleischer Studios argued that Paramont Pictures later transferred all of its rights in the Betty Boop character and cartoon films to an entertainment company, which in turn transferred them to a motion picture company in 1958. The motion picture company’s successor company purportedly sold its rights in the Betty Boop character to Fleischer Studios in 1997. At issue was whether Paramont effectively transferred its ownership rights in the Betty Boop character to the entertainment company.
The court held that Paramont sold its rights in the Betty Boop films to the entertainment company, but explicitly retained its rights in the Betty Boop character under a 1955 purchase agreement between the parties. The doctrine of indivisibility was not applicable in this instance because the Betty Boop character copyright was separate from, even if also a component part, of the copyrighted films, the court determined (Fleischer Studios, Inc. v. A.V.E.L.A., Inc., 9thCir, CCH Copyright law Decisions ¶30,044; IntelliConnect User Link).
TRADEMARKS
“Betty Boop” Is Aesthetically Functional, Not Protectable
A company that managed the intellectual property rights to characters developed by deceased animators Max and Dave Fleischer (“Fleischer Studios”) could not pursue a trademark infringement action against an agency that licensed merchandise featuring the character “Betty Boop,” in which Fleischer Studios claimed to hold trademark rights, the U.S. Court of Appeals in San Francisco has held. The licensing agency was not using Betty Boop as a trademark, but rather as a functional product, in the court’s view.
The Betty Boop character was a prominent feature of the merchandise the agency licensed so as to be visible to others when worn. The agency never designated the merchandise as “official” or otherwise indicated sponsorship by Fleischer Studios. Fleischer Studios presented no evidence of customers being misled about the origin, sponsorship, or endorsement of the agency’s goods. The name Betty Boop and the character’s appearance were functional aesthetic components of the product, not trademarks, the court concluded.
In addition, the U.S. Supreme Court, in Dastar Corp. v. Twentieth Century Fox Film Corp. (CCH Trademark Law Guide ¶60,065; IntelliConnect User Link), held that when a formerly copyrighted work has entered the public domain, a party may not assert a trademark infringement action if that action is essentially a substitute for a copyright infringement action. If Fleischer Studios were allowed to assert exclusive trademark rights over Betty Boop, the character would never enter the public domain, the court said (Fleischer Studios, Inc. v. A.V.E.L.A., Inc., 9th Cir., CCH Trademark Law Guide ¶61,766; IntelliConnect User Link).
Analysis of Keyword Ad Trademark Dispute “Too Rigid”
A district court applied an analysis that was “too rigid” in determining that a seller of job scheduling and management software was entitled to a preliminary injunction barring a competitor from purchasing the seller’s trademark as an Internet search engine advertising keyword used to trigger the display of sponsored links to the competitor’s website, the U.S. Court of Appeals in San Francisco has held.
According to the appellate court, the district court erred by focusing too rigidly on three of the Sleekcraft likelihood of confusion factors known as the “Internet troika”—the similarity of the marks, the relatedness of the goods and services, and the simultaneous use by the parties of the Internet as a marketing channel. A more flexible analysis was required, keeping in mind that the factors listed in Sleekcraft were non-exhaustive. In addition, to establish initial interest confusion, the seller was required to demonstrate likely confusion, not mere diversion, the court said. The most relevant factors to the analysis of the likelihood of confusion in this case were (1) the strength of the seller’s mark, (2) the evidence of actual confusion, (3) the type of goods and degree of care likely to be exercised by the purchaser, and (4) the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page.
Although the parties’ products were virtually identical, the district court erred by focusing on this factor in isolation, the appellate court said. The factor had to be considered in conjunction with the labeling and appearance of the advertisements and the degree of care exercised by consumers. Contrary to the district court’s finding, consumers using the Internet to search for products are often sophisticated about the sponsorship of websites, the appellate court said. The district court's order granting the preliminary injunction was reversed, the injunction was vacated, and the case was remanded for further proceedings (Network Automation, Inc., 9th Cir., CCH Trademark law Guide ¶61,765; IntelliConnect User Link).
POSTPOST Marks for Social Media Software Could Confuse
An advertising agency that used the mark POSTPOST in connection with a "social media search and curation application" was entitled to a preliminary injunction barring a software company from using the mark in connection with its “real-time personal social newspaper” application, the federal district court in Boston has ruled. The advertising agency showed that it was likely to prevail on the merits of its trademark infringement claims.
The agency's application allowed users to conduct keyword searches of content stored on Twitter, Flickr, and RSS feeds and then to create a subset of those results to post to the users' profile pages for display. The agency asserted that it planned to expand the application to Facebook within a few months. The software company's application compiled links, pictures, and videos posted on Facebook and presented them to users in a format resembling a newspaper.
The agency had priority in the mark. It began using the POSTPOST mark no later than August 2010, whereas the software company began using the mark no earlier than December 2010. The likelihood of confusion factors also favored the agency, the court said. The parties' respective marks and products were highly similar and both parties publicized their products via websites and Twitter feeds. The agency presented evidence of several instances of actual confusion in posts on Twitter and other websites.
The agency was likely to sustain irreparable harm in the absence of injunctive relief, in the form of injury to its reputation and goodwill, the court said. The public interest would be served by issuing an injunction to prevent consumer confusion (Boathouse Group, Inc. v. Tigerlogic Corp., DMass, CCH Trademark Law Guide ¶50,138; IntelliConnect User Link).
COMPUTER AND INTERNET LAW
Court Rejects Google Book Settlement
The federal district court in New York City has rejected the Amended Settlement Agreement proposed by Google, Inc. and groups representing publishers and authors regarding Google’s creation of a digital library because the terms were not “fair, adequate, and reasonable.” The settlement proposed to resolve claims that Google violated copyright laws in 2004 by scanning books, creating an electronic database, and displaying copyrighted “snippets” without the permission of copyright holders.
The most troubling aspect of the Agreement was the opt-out provisions, in the court’s view. Rightholders with interests in out-of-print or unclaimed “orphan” works who did not wish to participate in the project would be required to “opt-out” rather than “opt-in.” Absent class members who failed to opt out would be deemed to have released their rights, even as to future infringing conduct. The establishment of a mechanism for exploiting unclaimed “orphan” works was a matter more suited for Congress, according to the court.
The Agreement also was problematic was because it would implement a forward-looking business arrangement beyond the scope of the lawsuit, the court said. The dispute originally dealt with Google’s use of an indexing and searching tool and its display of “snippets,” not the sale of complete copyrighted works. The Agreement, on the other hand, would release Google from liability for future acts and grant Google rights over the digital commercialization of millions of books in exchange for future financial arrangements.
As noted by Google competitors, the Agreement also raised antitrust concerns. The Agreement would give Google a de facto monopoly over unclaimed works and could further entrench Google’s power in the online search market. Third parties (except nonprofit entities) would not be allowed to “index and search” or display snippets from scanned books without Google’s permission (The Authors Guild v. Google, Inc., SDNY, CCH Guide to Computer Law ¶50,145; IntelliConnect User Link).
Internet TV Service Ordered to Stop Streaming Programs
Internet TV service ivi, Inc. must cease streaming copyrighted television programs without the broadcasters’ consent, according to a preliminary injunction issued by the federal district court in New York City. ivi captured the broadcast signals of 55 stations in Los Angeles, Seattle, Chicago, and New York and retransmitted them in real time through the Internet to subscribers for a fee of around five or six dollars per month.
Section 111 of the Copyright Act permits “cable systems” to retransmit television content by paying a compulsory license fee of about $100 annually, provided the cable system is in compliance with the Federal Communications Commission’s record-keeping and royalty requirements. The broadcasters argued that Internet-based services like ivi were not “cable systems” entitled to the Section 111 performance rights exemption. ivi argued not only that it qualified as a “cable system” under the Copyright Act but also that it was exempt from FCC regulations because it was an Internet service, not a cable service.
ivi failed to show that it was a “cable system” under Section 111—it did not own any transmission “facilities,” and technically did not “make” the secondary transmissions distributed to subscribers. Moreover, “no technology has been allowed to take advantage of Section 111 to retransmit copyrighted programming to a national audience while not complying with the rules and regulations of the FCC and without consent of the copyright holder,” the court observed. In addition, the Copyright Office repeatedly has rejected the notion that Internet retransmission services qualify for Section 111 licensing, and has issued several public statements that only FCC-regulated entities may be construed as cable systems (WPIX, Inc. v. ivi, Inc., SDNY, CCH Guide to Computer Law ¶50,134; IntelliConnect User Link).
Statutory Damages for File-Sharing Service Narrowed
A peer-to-peer file sharing network operator that was secondarily liable for its users’ direct infringement would not be required to pay music recording companies multiple statutory damages awards per work infringed, the federal district court in New York City has decided.
Section 504(c)(1) of the Copyright Act provides that a copyright owner “may elect: an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum not less than $750 or more than $30,000 as the Court considers just.” In determining the amount of statutory damage awards, a fact-finder may consider multiple factors, including, “the expenses saved, and profits earned, by the infringer,” and “the revenue lost by the copyright holder.”
The most reasonable interpretation of Section 504(c) was that only a single statutory damage award per work should be awarded against a secondarily liable defendant, particularly in the context of mass infringement associated with peer-to-peer file sharing networks, in the court’s view. The recording companies had identified approximately 11,000 sound recordings allegedly infringed through the file-sharing system. Allowing recovery of multiple awards per work based on the numbers of direct infringers would be untenable and absurd, resulting in a potential award of over a billion dollars in statutory damages alone. Therefore, the recording companies were entitled to a single statutory damage award per work infringed, regardless of how many individual users directly infringed that particular work (Arista Records LLC v. Lime Group LLC, SDNY, CCH Guide to Computer Law ¶50,142; IntelliConnect User Link).
Hot Topics
Justice Department Approves Google’s Purchase of ITA, With Conditions
The Department of Justice announced on April 8 that it would approve Google’s proposed $700 million acquisition of travel search provider ITA Software, Inc., provided that Google met certain conditions designed to alleviate competition concerns.
Massachusetts-based ITA Software is a leading producer of airfare pricing and shopping systems in the United States. ITA’s QPX software is used by travel companies like Bing Travel, Travelocity, Kayak, and Orbitz, as well as multiple airlines, to search for air travel fares, schedules, and ticket availability.
Google’s original proposed purchase of ITA “would have substantially lessened competition among providers of comparative flight-search websites in the United States,” according to Joseph Wayland, Deputy Assistant Attorney General of the Department of Justice’s Antitrust Division. “The proposed settlement assures that airfare comparison and booking websites will be able to compete effectively, providing benefits to consumers.”
In an April 8 post on the company’s official blog, Google Senior Vice President Jeff Huber stated: “We’re excited that the U.S. Department of Justice today approved our acquisition."
While the proposed settlement agreement has alleviated many concerns about Google’s purchase of ITA, consumers, businesses, and lawmakers continue to be troubled by Google’s dominant position in the search market.
Senator Herbert Kohl (D-Wis.), Chairman of the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights, said in a statement that his subcommittee intends to continue to investigate “broader questions about the fairness of Google's search engine, and whether it preferences its own products and services to the detriment of competitors.” Ranking member Sen. Mike Lee (R-Utah) also issued a statement calling for continued scrutiny of Google as the search engine “extends its reach into a variety of vertical search markets and online services.”
Google Settles FTC Privacy Charges Over Social Networking Service
Google, Inc. has agreed to settle Federal Trade Commission charges that it violated Gmail users’ privacy and acted deceptively when it introduced its social networking service Google Buzz last year. Google Buzz allows Gmail users to share status updates, comments, photos, and videos. This is the first time the FTC has required a company to implement a comprehensive privacy program, the agency said in a news release.
In its complaint against Google, the FTC delineated several deceptive or misleading practices it considered to be violations of Section 5(a) of the FTC Act. The FTC alleged that Google’s Gmail Privacy Policy falsely represented that (1) Google would use Gmail users’ messages, contacts, and other account data only for providing Gmail services, and (2) Google would ask for users’ consent before using their personal information for a purpose other than for which is was collected.
Under the proposed agreement and consent order, Google would be required, among other things, to (1) Comply with its stated information sharing practices; (2) Refrain from misrepresenting the privacy and confidentiality of “covered information;” (3) Establish and maintain a comprehensive privacy program designed to protect the privacy and confidentiality of covered information; (4) Assess privacy risks of existing products and when developing new products and services; (5) Establish privacy controls and procedures; and (6) Permit an independent privacy audit every other year for 20 years.
Further information about In the matter of Google, Inc. File No. 102 3136, is available here on the FTC’s website.