Newsletter - Volume 55, August 2010
Copyright Office Grants DMCA Jailbreaking Exemption
In a blow to Apple Inc. and other smartphone manufacturers, on July 26, 2010,
the Copyright Office granted an exemption from the DMCA's prohibition against
circumvention of digital-rights-management technologies which permits
smartphone owners to jailbreak their phones to install unapproved applications
or switch carriers.
The Digital Millennium Copyright Act (DMCA), per Section 1201, prohibits anyone
from circumventing technological measures designed to control access to a
copyrighted work. The exemption in question, specifically, allows for
circumvention of "computer programs that enable wireless telephone handsets to
execute software applications, where circumvention is accomplished for the sole
purpose of enabling interoperability of such applications, when they have been
lawfully obtained."
This affects smartphone providers' ability to control the software downloaded
onto the phones. For example, on the iPhone, Apple controls what software can
be downloaded on the devices by allowing installation of only those programs
pre-approved by Apple and/or downloaded via the "App Store." Apple's argument
is that it is necessary to maintain a "high-quality" user experience and weed
out malware. If users wish to download other programs, they must jailbreak
their phones. Doing so requires the user to modify the software which comes
with the phone, which in turn requires utilizing a portion of the copyrighted
computer program installed on the phone.
The decision came after the Electronic Frontier Foundation (EFF), a non-profit
organization which advocates free speech, privacy and other consumer rights,
submitted a request for the exemption. The EFF argued that circumvention of
Apple's technology for the purpose of switching carriers or downloading
alternative programs, when done by the owner of the phone, does not constitute
copyright infringement in the first place, or in the alternative, constitutes
fair use. It further argued that the primary purpose of locks on cell phones is
to bind customers to existing networks, rather than to protect copyrights.
Apple argued that allowing jailbreaking would constitute infringement of its
copyright, and would ruin its ability to provide a safe controlled environment
for its users, free from malware, and possibly destroy a "chain of trust" the
company has developed with its customers.
The Copyright Office found that when done for the purpose of enabling
interoperability with other legally obtained programs, the act of jailbreaking
constitutes fair use. While it does require utilization of Apple's copyrighted
code without authorization, the Copyright Office reasoned that the portion of
Apple's copyrighted computer program code required to be used was too small to
be significant. Specifically, the modifications necessary for jailbreaking an
iPhone were found to affect fewer than 50 bytes of an 8-million-byte program,
or only a 160,000th of the work. Further the Copyright Office found that any
adverse effects that may stem from jailbreaking an iPhone, such as harm to
Apple's reputation or installation of malware, for example, are not in the
nature of the type of harm that copyright law is designed to protect against.
What it means
The decision means that Apple and other smartphone providers can no longer
enforce the DMCA against any customer who circumvents their download
restrictions. In reality, however, Apple has never utilized the DMCA to do so
in the first place, nor has it threatened to do so. In any case, the decision
eliminates, at least for now, any possibility of Apple ever getting an
injunction against such acts based on the DMCA.
Apple can still seek to protect its iPhone from jailbreaking via other means. It
can still enforce the terms-of-service contracts users must sign upon
purchasing the phones. Should a user wish to violate the terms of service by
jailbreaking his or her phone, doing so would void any warranty and constitute
a breach of contract the company could enforce in court. Apple could also
protect against jailbreaking by implementing new technical measures to disable
the use of an unauthorized application, or by conditioning updates to firmware
on proof that the product has not been tampered with.
It is important to note that the exemption is valid only for actual smartphone
owners. Third parties and commercial entities are still prohibited from
offering "circumvention services" even if designed for the purpose of assisting
users with jailbreaking their phones to switch carriers. Further, the decision
is not likely to lead to every user jailbreaking his or her phone. To do so,
one has to be fairly technologically savvy. If done incorrectly, an attempt to
jailbreak a smartphone can lead to an unusable phone. Once that happens, the
warranty has been voided, so taking the phone to Apple's Service center is no
longer an option.
Other exemptions
The exemption is one of several granted during the rulemaking, which has been
considered by many to be groundbreaking, as the Copyright Office has proceeded
quite cautiously in granting exemptions since passage of the DMCA in 1998. All
of the exemptions, including the jailbreaking exemption, are situations in
which the Copyright Office has concluded that without the exemption, users
would likely be adversely affected in their ability to make non-infringing uses
due to the prohibition on circumvention of access controls.
Five other classes of works have been excluded from the prohibition on
circumvention:
1. Motion pictures on DVDs where the circumvention is solely for the
purpose of incorporating short portions of movies for comment or criticism, for
non-commercial or educational purposes, or in documentary filmmaking.
2. Computer firmware or software enabling connections with wireless
telecommunications networks, where the circumvention is initiated by the owner
of the copy of the program solely to connect to a wireless network which has
authorized the user to connect.
3. Video games on personal computers where the circumvention is solely for the
purpose of investigating or correcting security flaws.
4. Computer programs protected by dongles which prevent access due to
malfunction and which are obsolete.
5. Literary works distributed in e-book format where all versions of the work
contain access controls preventing the enabling of read-aloud functions. If
there is any commercial alternative for purchase which allows screen-reading or
text-to-speech functionality, then the circumvention is still prohibited.
Conclusion
Although the groundbreaking exemption has been granted, Apple still has a right
to request the ruling be overturned by filing a lawsuit. It is not likely,
however, as Apple has to date made no effort to enforce the DMCA against its
users to prohibit jailbreaking of iPhones. Further, such a lawsuit would likely
take years, during which a Court may, or may not, issue an injunction blocking
application of the exemption. In any case, the Copyright Office's recent
exemption may not last, as it is required to re-argue any exemptions every
three years.
Progress in India towards Implementation of the Madrid Protocol
India's Trademark (Amendment) Bill of 2009 would enact the provisions of the
Madrid Protocol in India, enabling both the extension of protection for a
trademark to India through the International Bureau, or a basic registration in
India to be extended to any of the other member countries of the Protocol. In
December 2009 the bill was passed in the lower house of the Parliament of
India, and recently, on August 10, 2010, the bill was passed by India's upper
house of Parliament.
Although the bill has been passed, the regulations have yet to be implemented,
and there is no effective date. The Indian Trademarks Registry will need to
undergo changes to ensure that it can comply with the requirements for
accepting and processing extensions of protection to India under the Madrid
Protocol.
Corporate-Veil Defense Does Not Protect Corporate Officers from Indirect-Patent-Infringement Claims
The ability to seek shelter behind a "corporate veil" is ordinarily an
invaluable defense protecting corporate officers from personal liability
extending from tortuous conduct occurring in regular course of their
employment. The legal fiction is that the "corporate veil" can only be pierced
when the corporation is merely the alter ego of its officers and in the realm
of patent law protects corporate officers from patent-infringement plaintiffs
asserting liability for direct infringement against them. The Federal Circuit
Court of Appeals has, however, reminded us in a recent decision that corporate
officers can be liable for indirect infringement, namely, inducement of others
to infringe and contributory infringement, even when the corporate veil has not
been successfully pierced. Wordtech Systems, Inc. v. Integrated Network
Solutions, Inc. stands as reminder of the metes and bounds of the
corporate veil for purposes of corporate officer insurance policies and
indemnifications as well as preparing patent-infringement complaints.
Under U.S. patent law, a patent claim can be infringed either directly or
indirectly. Section 271(a) of the Patent Act addresses direct infringement,
i.e. where the accused has allegedly taken actions to infringe the asserted
patent claims. Sections 271(b) and 271(c) of the Patent Act cover circumstances
of indirect infringement, i.e. inducement to infringe and contributory
infringement, respectively. Inducement requires that alleged infringer
knowingly induced infringement by another and possessed the specific intent to
encourage another's infringement. Contributory infringement requires that a
party sells a component designed for use in a patented invention, where that
component is not a staple article of commerce suitable for substantial
non-infringing purposes. The key difference between claims of direct- and
indirect infringement is the subjective intent or knowledge of the alleged
infringer. Direct infringement can occur without any subjective intent or
knowledge on the part of the alleged infringer. In contrast, indirect
infringement requires intent or knowledge of the situation.
While the Federal Circuit's decision in Wordtech concerning the
indirect-infringement claims ultimately hinged on flawed jury instructions at
the trial-court level, the Court provided interesting commentary on the
applicability of the corporate veil to indirect-infringement claims. In
discussing the individual employee defendants' post-trial motions the Court
held that the plaintiff had provided substantial evidence to pierce the
corporate veil. In denying these motions as they applied to the
indirect-infringement claims, the Court noted that "corporate officers who
actively assist with their corporation's infringement may be personally liable
for inducing infringement regardless of whether circumstances are such that a
court should disregard the corporate entity and pierce the corporate veil." The
same reasoning was applied to the contributory-infringement claims where the
Court stated that "a corporation does not shield officers from liability for
personally participating in contributory infringement."
The Wordtech case did not necessarily present new issues for the Court
to opine on, but certainly stands as a reminder on the limitations of the
corporate-veil defense.
Google Extends Use of Trademarks as Keywords in its AdWords Policy to Most of Europe
Starting September 14, 2010, Google will be allowing advertisers to use
trademarks belonging to others as keywords to trigger their own ads throughout
the European Union. Google's change in policy is following favorable decisions
relating to its AdWords policy by the European Court of Justice earlier this
year.
Trademark owners are not without recourse from Google, which will still allow
trademark holders to file a complaint under its updated European policy. Upon
receipt of a complaint, Google will conduct a limited investigation. If Google
determines that the keyword in combination with particular ad text is confusing
users as to the origin of the advertised goods and services, Google will remove
the ad. However, Google's criterion for determining confusion is not detailed.
Under new policy, Google's Sponsored Links section will allow a variety of ads
to be triggered by third-party trademarks purchased as keywords, including ones
for websites that: 1) use a trademarked term in a descriptive or generic way;
2) contain ads for competing products or services; 3) include ads for
informational sites about a product or service corresponding to the trademark;
4) show ads for resale of the trademarked goods or services; and 5) reveal ads
for the sale of components, replacement parts, or compatible products
corresponding to a trademark.
This change in policy relates solely to the use of trademarked terms as
keywords, and does not affect the current policy dealing with references to
trademarks in ad text, which Google will continue to block in most of Europe.
On September 14, 2010, Google will also sync its trademark policy for the United
Kingdom, Ireland and Canada with the trademark policy it has implemented in the
United States last year. Trademark references in ad text will be allowed for
ads which use the term in a descriptive or generic way, and not in reference to
the trademark owner or the goods or services corresponding to the trademark
term. Nominative use of the trademark in ads by resellers, complimentary
product sellers and information sites will also be allowed.
In determining whether the trademark is being used in a nominative manner, a
reseller's website must sell (or clearly facilitate the sale of) the goods or
services corresponding to the trademarked term, while the landing page of the
ad must clearly demonstrate that a user is able to purchase the goods or
services corresponding to a trademark from the advertiser. Similarly,
advertisers of component or replacement parts must clearly demonstrate on their
landing page that the components, parts, or compatible products corresponding
to the trademarked term are available for purchase from the advertiser. Lastly,
information sites must be able to provide non-competitive and informative
details about the goods or services corresponding to the trademark, while not
selling or facilitating the sale of the goods or services of a competitor of
the trademark owner.
Based on the earlier ECJ decisions, along with Google's revised policies
relating to trademarks, the burden is on brand owners to vigilantly monitor and
protect their marks on the internet. Although Google's AdWords program has
avoided infringement liability by favorable decisions in Europe, a trademark
owner still has the opportunity to proceed with direct-infringement claims
against the individual advertisers for improper use of the owner's trademarks.
Madden NFL Sacked in Backfield?
Every summer, during the off season and before the college- and pro seasons even
start, Electronic Arts, Inc. ("EA") provides the football fan and gamer with a
shot in the arm with its highly anticipated annual release of the newest
version of the "Madden NFL" video game. EA continuously refines and improves
the game and new releases build upon the game with new technologies, new
capabilities and more reality. The Madden NFL game accounts for approximately
$400 million in annual revenue to EA and is one of its leading products.
Recently, EA released the latest version of the game, Madden NFL 11. The game
allows the user to control the action on both offense and defense and pick any
of the thirty NFL teams as his or her own. It essentially allows the gamer to
be a virtual head coach, and allows for controlling movements of all players on
the team. The players in the game are virtual clones of actual NFL players,
from height and weight, to jersey number, position and even, in some instances,
personality.
True to the reality of the game, each new edition of Madden NFL reflects the
roster changes on the actual NFL teams. In order to be so realistic and allow
gamers to "be" their favorite NFL players, EA has an agreement with the NFL
Players Association, the union for active and retired NFL players, which allows
EA to recreate the image and likeness of current players.
Prior editions of Madden NFL allowed the user to pick among not only current NFL
teams and rosters, but among an extensive list of historic teams and All-Star
type teams. Could the 1967 Packers beat the 1972 Dolphins? Could the 1985 Bears
stop Peyton Manning and the 2009 Colts? On Madden NFL you could match the teams
up and see. Since EA's Madden NFL product relies on accurate portrayal, these
historic teams were made up of historic players—or were they? Player profiles
on historic teams listed players that had similar physical characteristics, age
and skills as the real players from those real teams but were nameless and had
different jersey numbers than their real-world counterparts.
Tony Davis, a retired running back who played in the NFL for six years during
the 1970s and 1980s, filed suit in California against EA in July 2010, claiming
that EA misappropriated his likeness by using a player with similar attributes
as he had, in a similar position, on the teams he played for in these
"historic" teams. Mr. Davis sued not only on his behalf, but also on behalf of
over 6,000 other retired NFL players who, like Mr. Davis, allegedly appear on
Madden NFL historic teams true in all respects to their selves but for minor
changes in such things as jersey numbers.
The suit is based on rights of publicity. All persons have a right to control
use and re-creation of their likeness. A third party cannot simply take a
person's likeness—whether it be a photograph, a film, a voiceover or even a
digitization in a video game—and use it for its own benefit without the
authorization of that person. Though the players on historic teams in the
Madden NFL game are nameless and have different jersey numbers than their
real-life counterparts, a recreation even in this way might implicate the right
of publicity and a requirement for authorization to use likeness.
Interestingly, the just released Madden NFL 11 does not have historic teams. In
2008, a group of retired NFL players brought suit against the NFL Players
Association claiming a right to compensation for licensing deals entered into
by the NFLPA that included rights to likenesses of retired players. Among the
licenses at issue was a license from the NFLPA to EA. A jury awarded the
retired players $28 million. Though this was strictly a contract matter between
retired players and their Players Association, EA apparently thought enough of
it to stop including historic teams in Madden NFL. Now, the players are
claiming compensation for violations of their right of publicity directly from
EA.
How this matter plays out may ultimately provide greater direction regarding the
scope of publicity rights and possible liability in situations where a persona
is not immediately recognized because it has been altered or changed. This suit
may have implications to situations where an altered persona is the basis for a
marketing campaign and, as such, should be an interesting case to watch.
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Newsletter Volume 72, January 2012
