Software Makers Win Big in Supreme Court Copyright Fight

The Supreme Court is refusing to review a federal appellate panel’s decision that software makers may use shrink-wrap and click-wrap licenses to forbid the transfer or resale of their wares.

Without comment, the justices on Monday let stand a 9th U.S. Circuit Court of Appeals ruling that is another erosion of the so-called “first-sale” doctrine, which the Supreme Court began to chip away at last year.

The first-sale doctrine generally is an affirmative defense to copyright infringement. It usually allows legitimate owners of copyrighted works to resell those copies.

That 3-0 circuit court decision means copyright owners may prohibit the resale of their wares by inserting clauses in their sales agreements. Autodesk had done that with a version of its popular AutoCAD software. The San Rafael, Calif. company sued to enforce those terms in its sales agreement and prevailed.

The Motion Picture Association of America and Software & Information Industry Association, whose members include Google, Adobe, McAfee, Oracle and dozens of others, urged the appellate court to rule as it did.

The American Library Association and eBay argued against that outcome. The library association said it feared that the software industry’s licensing practices could be adopted by other copyright owners, including book publishers, record labels and movie studios.

That assertion was not lost on the appeals court. It ruled Congress is free to modify copyright law “if it deems these or other policy considerations … require a different approach.”

The 9th Circuit’s ruling last year was believed to be among the first appellate decisions directly addressing whether a user agreement could forbid resales of software. The appellate courts have previously backed companies that have imposed terms on how software may be used.

The 9th Circuit had reversed a lower court judge who ruled the first-sale doctrine applied whenever the consumer is entitled to keep the copy of the work, thus allowing consumers to resell their purchased software at will.

The case concerned Autodesk’s AutoCAD Release 14, which was for sale on eBay. Autodesk, invoking the Digital Millennium Copyright Act, demanded eBay remove the item from the site, and it promptly did in 2007.

Timothy Vernor, the seller, had purchased at least four copies of the software from a company that was required to dispose of the software under an Autodesk user agreement. Vernor re-posted the sale on eBay and his eBay account was terminated after Autodesk complained. Litigation ensued and the Supreme Court rejected his challenge Monday.

Autodesk imposed a significant number of restrictions on its software: The company required that the software could not be transferred or leased without Autodesk’s written consent, and the software could not be transferred outside the Western Hemisphere.

The first-sale doctrine of 1909, in its current form, says the “owner of a particular copy” of a copyrighted work may sell or dispose of his copy without the copyright owner’s authorization.

Last year, the Supreme Court ruled Costco could be liable for copyright infringement for selling foreign-made watches without the manufacturer’s authorization.

Omega, of Switzerland, sued Costco for copyright infringement because Costco was obtaining the watches from unauthorized European dealers that sold them far cheaper than U.S.-based Omega distributors.

Omega copyrighted the watch design in the United States by imprinting the company’s emblem on the underside of the timepiece. The justices upheld a lower court decision saying the first-sale doctrine did not apply to goods produced overseas.

Hat Tip: techdirt

Photo: deltaMike/Flickr

Supreme Court Docket: Surveillance, Profanity and Thought Patents

The Supreme Court’s 2011-2012 term begins Oct. 3 with arguments on the docket concerning everything from television profanity to warrantless GPS surveillance.

Cases we are tracking also surround whether Congress may place public-domain works into copyright and whether “thought” can be patented.

The justices hear about six dozen cases annually, and four dozen have been chosen so far. A number of crucial cases from the appellate courts are vying to be added.

The Justice Department, for instance, is asking the nine justices to review the constitutionality of a law making it a crime to lie about being a decorated military veteran. And artists want the high court to decide whether they should get “performance” royalties when a consumer purchases a digital download from iTunes. Those two petitions are pending.

Here is a summary of important cases that have been granted a hearing by the Supreme Court:

An abandoned FBI vehicle-tracking device/

United States v. Jones
Oral Argument Nov. 8

At the Obama administration’s urging, the Supreme Court will decide whether the government, without a court warrant, may affix GPS devices on suspects’ vehicles to track their every move. The Justice Department told the court that “a person has no reasonable expectation of privacy in his movements from one place to another.” The administration is demanding that the justices undo a lower court decision that reversed the conviction and life sentence of a cocaine dealer whose vehicle was tracked via GPS for a month without a court warrant.

The issue is arguably one of the biggest Fourth Amendment cases in a decade — one weighing the collision of privacy, technology and the Constitution.

In 2001, the justices said thermal-imaging devices used to detect marijuana-growing operations inside a house amounted to a search requiring a court warrant.

The justices accepted the government’s petition to clear conflicting lower-court rulings on when warrants are required for GPS tracking. The administration, in its petition to the justices, said the U.S. Court of Appeals for the District of Columbia Circuit was “wrong” in August when it reversed the drug dealer’s conviction, which was based on warrants to search and find drugs in the locations where defendant Antoine Jones had traveled.

The government told the justices that GPS devices have become a common tool in crime fighting. An officer shooting a dart can affix them to moving vehicles, and recently, a student in California found a tracking device attached to the underside of his car, which the FBI later demanded back.

Three other circuit courts of appeal have already said the authorities do not need a warrant for GPS vehicle tracking.

Igor Stravinsky/Wikimedia Commons

Golan v. Holder
Oral Argument Oct. 5

The top court has agreed to rule on a petition by a group of orchestra conductors, educators, performers, publishers and film archivists about whether Congress may take works out of the public domain and grant them copyright status. A federal appeals panel, reversing a lower court, ruled against the group, which has relied on artistic works in the public domain for their livelihoods. The 10th U.S. Circuit Court of Appeals set aside arguments that their First Amendment rights were breached because they could no longer exploit those works without paying royalties.

For a variety of reasons, the works at issue, which are foreign and were produced decades ago, became part of the public domain in the United States but were still copyrighted overseas. In 1994, Congress adopted legislation to move the works back into copyright, so U.S. policy would comport with an international copyright treaty known as the Berne Convention.

Some of the works at issue include:
*H.G. Wells’ Things to Come
*Fritz Lang’s Metropolis
*The musical compositions of Igor Fydorovich Stravinsky

The government argued in the long-running case that Congress adopted what was known as “Section 514″ for its “indisputable compliance” with the convention and to remedy “historic inequities of foreign authors who lost or never obtained copyrights in the United States.”

“In other words, the United States needed to impose the same burden on American reliance parties that it sought to impose on foreign reliance parties. Thus, the benefit that the government sought to provide to American authors is congruent with the burden that Section 514 imposes on reliance parties. The burdens on speech are therefore directly focused to the harms that the government sought to alleviate,” the appeals court wrote.

Eric Schwartz, an intellectual property attorney with Mitchell Silberberg & Knupp in Washington, D.C., said the case boils down to whether Congress has the power under the Copyright Act to do what it did, and whether it was consistent with the First Amendment rights of the plaintiffs.

“I think the answer is ‘yes’ to both questions,” said Schwartz, former acting general counsel for the U.S. Copyright Office, who helped draft the congressional legislation.

Anthony Falzone, executive director of the Fair Use Project at Stanford University and a plaintiff’s lawyer in the case, urged the justices to take the case.

“The point of copyright protection is to encourage people to create things that will ultimately belong to the public. While the scope and duration of copyright protection has changed over time, one aspect of the copyright system has remained consistent: once a work is placed in the public domain, it belongs to the public, and remains the property of the public — free for anyone to use for any purpose,” he wrote.

Photo: Leo Reynolds/Flickr

Federal Communications Commission v. Fox Television Stations
Oral argument not scheduled

The justices have agreed to hear the government’s appeal of a lower court ruling invalidating the Federal Communication Commission’s broadcast decency rules. The 2nd U.S. Circuit Court of Appeals ruled last year that the regulations were “unconstitutionally vague” and produced a “chilling effect” on First Amendment speech.

The facts concern FCC rulings that “fleeting expletives” uttered during the 2002 and 2003 Billboard Music Awards were indecent. First Cher then Nicole Richie cursed during the shows aired on Fox. In the other dispute, the FCC said ABC violated decency standards when the network aired a brief nude shot of Charlotte Ross’ buttocks in NYPD Blue.

The FCC’s decency regulations are not enforced between 10 p.m. and 6 a.m., and only affect broadcast networks, not cable or internet programming.

The broadcasters claim the rules, which the government announced in 2004 would be strictly enforced, are so broad and vague that it’s unclear what is allowed, a position the government said was ridiculous. The appeals court in the Fox issue ruled that the FCC’s policy was unconstitutionally vague because “broadcasters are left to guess whether an expletive will be deemed ‘integral’ to a program or whether the FCC will consider a particular broadcast a ‘bona fide news interview.’”

In the ABC case, in which the FCC fined its affiliates $27,500 each, the appeals court said there was no “significant distinction” between the ABC and Fox cases, despite the ABC case dealing with scripted nudity. That’s because the appellate court said the FCC rules were “impermissibly vague.”

The government on appeal argues that “the court of appeals never asked what should have been the dispositive question: Whether Fox and ABC had fair notice that the expletives and nudity in the broadcasts under review could violate the commission’s indecency standards.”

Dennis Wharton, a vice president for the National Association of Broadcasters, said the government should not regulate broadcasters’ content.

“Responsible programming decisions by network and local station executives, coupled with program-blocking technologies like the V-chip and proper guidance of children by parents and caregivers, are far preferable to government regulation of program content,” Wharton said in a statement.

Photo: RambergMediaImages/Flickr

Mayo Collaborative Services v. Prometheus Laboratories
Oral argument Dec. 7

A highly nuanced and technical dispute between Mayo and Prometheus begs the question of whether “thought” is patentable. The issue surrounds a Prometheus patent concerning, in part, doctors’ subjective observations on how patients react to synthetic drug dosages to treat auto-immune diseases.

Prometheus holds patents to methods that assist doctors in figuring out — through observation and testing — the effective dosage of synthetic drugs to administer. The method includes performing drug tests with a Prometheus-patented kit.

Prometheus sued Mayo, arguing its use of the kits was patent infringement. The U.S. Federal Circuit Court of Appeals sided with Prometheus, saying the patents were valid because they outlined methods of altering a patient’s body chemistry with specific drugs.

Mayo claims that the patents, ultimately, are an observation of naturally occurring phenomenon — the body’s reaction to dosing levels.

Mayo told the Supreme Court that the patents at issue should be nullified. “The Prometheus patents claim a monopoly over consideration of a naturally occurring correlation between metabolites of a drug and the toxicity or efficacy of that drug,” the clinic said.

Steven Shapiro, the legal director for the American Civil Liberties Union, said Mayo should prevail.

“What they’re claiming a patent on is how you think about whether or not a drug is working. You can’t patent thought,” he said.

The government weighed in, too, arguing “provisions of the Patent Act permit the nuanced, fact-intensive distinction necessary to separate patentable from un-patentable inventions.”

Continue reading “Supreme Court Docket: Surveillance, Profanity and Thought Patents”

Parents Sue Expert Witness Who Made Fake Child-Porn of Their Kids

Dean Boland

An Ohio lawyer who serves as an expert witness in child pornography cases might be on the hook for hundreds of thousands of dollars in civil damages for Photoshopping courtroom exhibits of children having sex.

Attorney Dean Boland purchased innocent pictures of four juvenile girls from a Canadian stock-image website, and then digitally modified them to make it appear as if the children were engaged in sexual conduct. Boland was an expert witness for the defense in half-a-dozen child porn cases, and he made the mock-ups to punctuate his argument that child pornography laws are unconstitutionally overbroad because they could be applied to faked photos.

In 2007, the tactic made Boland the defendant of a deferred federal child-porn prosecution in Ohio even though his exhibits helped clear at least one client of child-porn-related allegations. Now, a federal appeals court decision (.pdf) is reinstating a civil lawsuit by the parents of two of the girls, potentially putting Boland on the hook for a minimum $300,000 plus legal costs.

Boland, a former state prosecutor, had argued he was immune from such a lawsuit because, among other reasons, he’d created the images for use in court. That argument had already failed in his own criminal case, and was no more successful with the Cincinnati-based 6th U.S. Circuit Court of Appeals.

“[N]o constitutional principle … allows a criminal defendant to defend one criminal charge by urging his lawyer or witness to commit another,” wrote the three-judge panel, in an unanimous ruling Wednesday. “Otherwise, an individual on trial for a murder-by-stabbing charge could try to prove that the knife was not long enough to kill someone by using it to stab someone else in the middle of the trial.”

Boland said in a telephone interview Thursday, “I was hired as an expert witness. This was not like, let’s start a website of this crap.”

Wednesday’s ruling reverses a lower court’s dismissal of the civil lawsuit (.pdf) that the parents lodged against Boland in 2007. Under the 1986 Child Abuse Victims’ Rights Act, each victim is entitled to a minimum $150,000 in damages if Borland loses at trial.

“This is a complete scam,” Boland said.

Boland said the avalanche of legal trouble started when he was an expert witness in a local Ohio child-porn prosecution in 2004, in which his testimony and morphed images helped convince a judge to drop the pornography-related charges in a rape case.

He had used the morphed pictures as exhibits in a nuanced legal defense.

Given that the law prohibited “knowingly” accessing child pornography, Boland argued, it violated the First Amendment on “vagueness and over-breadth grounds” because a defendant could not know whether what he was viewing was an actual or virtual image of a child having sex.

The parents learned of the photo morphing from the FBI, according to the girls’ attorney. They’re suing over Boland transforming a picture of a 5-year-old girl eating a doghnut into one of her having oral sex. Another photo was of a 6-year-old girl’s face placed on the body of an adult woman having sex with two men. Boland purchased the pictures from iStockPhoto, according to court records.

The appeals court noted that Boland could have attempted to make his legal defense without creating or possessing child pornography.

“Boland could have illustrated the difficulty of discerning real from virtual images by combining two innocent pictures into another innocent picture,” the court wrote. It added that once Boland modified the images of the minors, “he crossed the line between possessing lawful images and violating the statute.”

Still, the appeals court said Boland could try to convince the judge presiding over the girls’ civil lawsuit that the children are not entitled to damages. That’s because the law requires them to have suffered “personal injury.” In this case, the children don’t know about the pictures, so they haven’t suffered any psychological harm, he said.

The parents are “insisting I owe them hundreds of thousands of dollars for harm these children don’t even know is going on,” Boland said.

But the parents’ attorney, Jonathan Rosenbaum, said the harm was real enough. The pictures, he said in a telephone interview Thursday, were distributed in disc format to an untold number of “defense lawyers and different clerks of courts.”

“Their faces have been abused and misappropriated in the most disgusting manner,” Rosenbaum said. “How would you like this to happen to your children?”

Photo: Courtesy of Dean Boland

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