Silicon Valley Media Law Blog

The UK All Party Parliamentary Internet Group has published a report today that makes various recommendations about the usage of DRM in the UK. Here's a summary of their recommendations.

Interesting quote:

"We did not hear any evidence to suggest that mandatory DRM is currently on the agenda in the UK or US. . . . Although we think it unlikely that, having considered all the pros and cons, that any government would be in favour, for the record, we recommend that the government do NOT legislate to make DRM systems mandatory." [emphasis in original]

Clearly the evidence was taken in without consideration of the US broadcast flag or the Macrovision mandate in the Copyright Act, or the recently introduced PERFORM Act that would also mandate DRM.

The report is also good reading for US types as it provides a window into how the copyright system in the UK interacts with the DRM regime. It would be good to know more about how much influence this report will have in the UK legislative process.

Cory Doctorow is on the advisory board of the UK Open Rights Group, which submitted these comments. See the post on Boing Boing.

This follow an Australian report issued in March that was also critical of DRM.

Here's a prior post with my slides from a PLI presentation on DRM legal issues.

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The Patent & Trademark Office is holding meetings with the open source community in order to ensure that patent examiners have access to all available prior art in connection with assessing patent claims for novelty, see announcement. The open source community is thus taking pragmatic steps in its war on software patents.

The next meeting is on February 16 in Washington D.C. It is open to the public, but space is limited -- see details here.

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The Business Software Alliance has announced its legislative priorities for 2006, in a policy agenda posted here. Highlights include:

Copyright

"Stopping piracy without stifling innovation -- Content companies are proposing legislation to mandate that specific technology solutions be incorporated into product design to deter piracy. Such requirements would constrain the functionality of software and hardware and burden technology companies with obligations to design to prevent the misuse of content. BSA has strong reservations about such rules, although we strongly support the goal of finding ways to limit piracy."

Spyware

"BSA supports efforts to address data breach notification and spyware -- These efforts must appropriately focus on punishing bad actors, not 'bad' technology."

"BSA supports a limitation on remedies against developers of anti-spyware tools -- Developers of anti-spyware software are threatened with lawsuits for defamation and interference with their business by spyware companies. These threats are disrupting the development of tools that empower consumers to stop unwanted software from being installed on their computers."

Cybercrime

"The Senate should ratify the Council of Europe Convention on Cybercrime -- The Treaty requires countries to adopt a core set of criminal laws against hacking,consumer-facilitated fraud, and other illicit online activities. It would require no new laws in the United States."

The Treaty was signed in 2001 by numerous countries but ratification has been more limited, see chart.

The BSA also supports patent reform, governmental R&D spending on information technology, and free trade, and it opposes government-imposed technology mandates.

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The Free Software Foundation is battling the proliferation of Digital Rights Management (DRM) schemes in a number of ways -- it calls them "Digital Restrictions Management" -- most notably with prohibitions on DRM in the new draft GPL v3 license.

Section 3 of the draft creates a DMCA hacking exemption where GPL'd code is involved:

"No covered work constitutes part of an effective technological protection measure: that is to say, distribution of a covered work as part of a system to generate or access certain data constitutes general permission at least for development, distribution and use, under this License, of other software capable of accessing the same data."

As the comments to the draft license explain:

"The second paragraph of section 3 declares that no GPL'd program is part of an effective technological protection measure, regardless of what the program does. Ill-advised legislation in the United States and other countries has prohibited circumvention of such technological measures. If a covered work is distributed as part of a system for generating or accessing certain data, the effect of this paragraph is to prevent someone from claiming that some other GPL'd program that accesses the same data is an illegal circumvention."

"Someday, we hope, copyright law's traditional respect for individual user rights will be restored, and user-disabling DRM will no longer be permitted. In the meantime, we have designed GPLv3 to forbid such perversion of free software."

The FSF is also promoting a consumer pledge not to buy copy-protected CDs, but ultimately that's old technology and the real action is in electronic delivery of digital content.

Richard Stallman has written an open letter to the Boston Public Library criticizing its use of a Microsoft DRM solution in connection with audio books. On one hand, this about maintaining access to public materials through free software platforms that do not support DRM. On the other hand, it is about the larger debate, see prior post, about how publishers are restricting use of books through licensing means. According to Stallman's letter,

"There is another, deeper issue at stake here. The tendency of digitalization is to convert public libraries into retail stores for vendors of digital works. The choice to distribute information in a secret format--information designed to evaporate and become unreadable--is the antithesis of the spirit of the public library. Libraries which participate in this have lost their hearts."

The FSF's anti-DRM initiative raises the question as to whether the free software movement can effectively combat the use of DRM in connection with digital content, or whether it risks marginalizing itself by incorporating these "values" into the GPL. The GPL v3 draft also prohibits usage of free software in a manner that illegally violates personal privacy, which by definition is already prohibited by law:

"Regardless of any other provision of this License, no permission is given to distribute covered works that illegally invade users' privacy, nor for modes of distribution that deny users that run covered works the full exercise of the legal rights granted by this License."

By inserting these values into GPL v3 draft, the GPL has gone a step beyond ensuring the use of free software -- as it has done with mandatory source access and patent prohibitions. Now it makes a value-judgment as to how free software can be used. Clearly these are important values to the FSF community. Query however whether this will undermine in any way the goal of advancing the broad use of free software. How much social engineering is possible through a software license? That's what we'll find out, and why Stallman is the MacArthur Fellow.

In addition, these restrictions could be inconsistent with the Open Source Initiative's definition of open source software, but clearly that's the tail wagging the dog, as the FSF charts its own course, with Stallman being the founder of the free software movement. See fyi the OSI's definition:

"No Discrimination Against Fields of Endeavor
The license must not restrict anyone from making use of the program in a specific field of endeavor. For example, it may not restrict the program from being used in a business, or from being used for genetic research."

"Rationale: The major intention of this clause is to prohibit license traps that prevent open source from being used commercially. We want commercial users to join our community, not feel excluded from it."

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The Federal Circuit has denied a petition for rehearing in the StorageTek v. Custom Hardware case, which is summarized here. In its ruling denying the petition, the Court elaborated further on its reasoning in the case, Download file.

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The Copyright Office has issued a Notice of Inquiry seeking comments on particular classes of works that should be exempt from the DMCA's Section 1201 anti-circumvention provisions.

Under Section 1201(B) of the DMCA:

"The prohibition contained in subparagraph (A) shall not apply to persons who are users of a copyrighted work which is in a particular class of works, if such persons are, or are likely to be in the succeeding 3-year period, adversely affected by virtue of such prohibition in their ability to make noninfringing uses of that particular class of works under this title, as determined under subparagraph (C) [rulemaking]."

Two previous rounds of rulemaking under Section 1201(C) have resulted in exemptions for the following rather obscure types of works:

"(1) Compilations consisting of lists of Internet locations blocked by commercially marketed filtering software applications that are intended to prevent access to domains, websites or portions of websites, but not including lists of Internet locations blocked by software applications that operate exclusively to protect against damage to a computer or computer network or lists of Internet locations blocked by software applications that operate exclusively to prevent receipt of email.

(2) Computer programs protected by dongles that prevent access due to malfunction or damage and which are obsolete.

(3) Computer programs and video games distributed in formats that have become obsolete and which require the original media or hardware as a condition of access. A format shall be considered obsolete if the machine or system necessary to render perceptible a work stored in that format is no longer manufactured or is no longer reasonably available in the commercial marketplace.

(4) Literary works distributed in ebook format when all existing ebook editions of the work (including digital text editions made available by authorized entities) contain access controls that prevent the enabling of the ebook's read-aloud function and that prevent the enabling of screen readers to render the text into a specialized format."

The Copyright Office previously rejected proposals to include exemptions for fair use, archiving, public domain works, open source software, foreign DVDs, and the like. See past public comments.

The problem is that the rulemaking, as mandated by Section 1201(C), focuses on identifying specific types of works, rather than specific lawful uses of copyrighted works. As a result, the DMCA exemptions have had limited relevance. It seems unlikely that this round of exemptions will be any different, but we'll have to see how commentators proceed based on the rationales articulated by the Copyright Office in the previous round.

Of related interest is a recent ruling of the Federal Circuit states that the DMCA cannot be used to create property rights beyond those in the Copyright Act. See prior post on StorageTek v. Custom Hardware. In that case, an act of circumvention was held not to violate the DMCA because it was done in connection with repairing and maintaining computer software, which is covered by an exemption to copyright infringement. Whether this rationale would extend to fair use or other noninfringing uses remains to be seen.

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The FCC issued an order repealing the requirement that telephone companies provide open access to their wireline (DSL) broadband Internet networks. This follows the Supreme Court's ruling in the BrandX case that cable companies are not required to provide such access to competing ISPs such as Earthlink.

At the same time, the FCC adopted a policy statement favoring network neutrality:

"to ensure that broadband networks are widely deployed, open, affordable, and accessible to all consumers, the Commission adopts the following principles:

To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to:

(i) access the lawful Internet content of their choice.
(ii) run applications and use services of their choice, subject to the needs of law enforcement.
(iii) connect their choice of legal devices that do not harm the network; and
(iv) competition among network providers, application and service providers, and content providers."

As Congress looks to telecom reform for the Internet era, we will have to see whether these principles are realized, or whether the cable and phone companies will control what consumers receive as Internet offerings and redefine the Internet from a common carriage, open platform to a cable framework with the facilities owner as content gatekeeper.

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A recent case in the 9th Circuit reinforces limitations on the copyright misuse doctrine. In Altera v. Clear Logic,Download file, Clear Logic claimed that Altera's software license agreements contained terms that constituted copyright misuse, but the Court held that this could only be raised in the context of an infringement claim.

Altera and Clear Logic compete in the semiconductor industry. Altera manufactures programmable logic devices (PLDs), and licenses its software to customers to assist them in developing their chips. Clear Logic, on the other hand, sells Application Specific Integrated Circuits (ASICs). PLDs can be programmed and reprogrammed to refine the chip, whereas ASICS are generally cheaper but cannot be programmed. Therefore, customers will often start with PLDs and then switch to ASICs once they have refined their chip design.

Clear Logic asked its customer send them the output of their PLD programming efforts derived from use of the Altera software. This output was a bitstream file that could be used to produce ASICs that were compatible with Altera chips. Because of the competitive threat this posed, Altera sued Clear Logic for violating its mask work rights under the Semiconductor Chip Protection Act of 1985, as well as for inducing its customer to breach their software license agreements and for tortious interference with those contracts.

Copyright Misuse Defense Rejected

The Altera license agreement restricted use of the software to "programming logic devices manufactured by Altera and sold by Altera". Clear Logic challenged this restriction as copyright misuse, on the basis that Altera's license agreements operated an as illegal tying arrangement to control competition in an area outside the copyright, i.e., Altera's chip hardware.

The district court held, and the 9th Circuit affirmed, that the copyright misuse defense could not lie because there was no allegation of copyright infringement. The Court reviewed its prior copyright misuse rulings in Practice Management v. American Medical Association (9th Cir. 1998) and A&M v. Napster (9th Cir. 2001), and Sony Computer Entertainment v. Connectix Corp. (9th Cir. 2000), in which the doctrine was specifically described as a defense to copyright infringement.

"Because the remedy for copyright misuse is equitable, it makes little sense to allow Clear Logic to proceed on an independent claim for copyright misuse when there has been no allegation of copyright infringement."

"We cannot now void the license agreements under the pretext of refusing to enforce a copyright that has not been asserted. Copyright misuse is not a defense to the state law claims asserted by Altera."

This ruling suggests that so long as a copyright holder seeks state law redress to enforce its contracts rather than alleging copyright infringement, the terms of its contract could be immune from a misuse challenge. For useful background see article on patent misuse by Robin Feldman, which among other things surveys cases involving breach of contract and infringement claims.

However in the 9th Circuit's ruling in the Practice Management case, a publisher and distributor of medical books sought declaratory relief against the AMA. It successfully argued that the AMA misused its copyright by entering into an agreement with a government agency that required use of a copyrighted medical code taxonomy to the exclusion of any other code. Thus it appears that declaratory relief could be a path to assert copyright misuse even in the absence of a pending infringement claim.

Copyright Preemption Defense Rejected

The Court also followed existing precedent that Altera's state law claims based on its license contracts were not preempted by the Copyright Act, citing Summit Machine Tool v. Victor CNC Systems, (9th Cir. 1993), Bowers v. Baystate, (Fed. Cir. 2003), National Car Rental v. Computer Associates, (8th Cir. 1993), and ProCD v. Zeidenberg (7th Cir. 1996). The Court found Altera's contract similar to that in ProCD, in which a shrinkwrap license put restrictions on use of information obtained through the license.

"Likewise, Altera's customers use software to create a bitstream (which is essentially information) and provide that information to Clear Logic, despite the terms of the agreement that restrict the customers to using that information for programming Altera products. The right at issue is not the reproduction of the software as Clear Logic argues, but is more appropriately characterized as the use of the bitstream."

"We find these cases compelling. A state law tort claim concerning the unauthorized use of the software's end product is not within the rights protected by the federal Copyright Act, and accordingly, we affirm the district court's ruling rejecting preemption."

A Rare Ruling under Semiconductor Chip Protection Act

The case is also noteworthy because it is only the second reported case interpreting the Semiconductor Chip Protection Act, 17 U.S.C. Sections 901-914, which created sui generis protection for mask works embodied in semiconductor chips. The first case was Brooktree Corp. v. Advanced Micro Devices, Inc., (Fed. Cir. 1992). With two cases in twenty years, this reflects that mask work rights are clearly not a meaningful type of intellectual property protection for the semiconductor industry.

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The Free Software Foundation has begun its GPL v3 revision, which includes a "development and publicity project".

"The project will bring together thousands of organisations, software developers, and software users from around the globe during 2006, in an effort to update the world's most popular Free Software licence. The GPLv3 promises to be one of the largest participatory comments and adoption efforts ever undertaken."

According to Peter Brown, Executive Director of the Free Software Foundation, "With the release of GPLv3, we aim to increase the international reach of the Free Software movement."

To say this is an ambitious project is an understatement, especially because all of the comments from various jurisdictions will need to be synthesized into one license, in accordance with overarching principles of the GPL manifesto.

See prior post on the various purposes that the GPL document is serving: worldwide license, code of conduct, constitution and Stallman literary expression.

Predictions: fascinating result; no improved clarity; full employment for lawyers helping clients deal with the license.

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The 9th Circuit has that held Lexmark's printer cartridges sales terms do not violate California's laws against unfair business practices. The case is Arizona Cartridge Remanufacturers Assocation, Inc., v. Lexmark International, Inc.,Download file

The facts of the case reflect the growing trend towards shrink-wrap licensing of goods of all kinds. Lexmark's printer cartridges were sold with a license agreement on the outside packaging that contained shrink-wrap style terms:

"Please read before opening. Opening of this package or using the patented cartridge inside confirms your acceptance of the following license agreement. . . . If you don't accept these terms, return the unopened package to your point of purchase."

The salient part of the agreement states that:

"The patented cartridge is sold at a special price subject to a restriction that it may be used only once. Following this initial use, you agree to return the empty cartridge only to Lexmark for remanufaturing and recycling."

The quid-pro-quo for this was Lexmark's promise that the consumer received a discounted price for the cartridge sold under these terms. The Court rejected the argument that these terms were deceptive or false because it found that Lexmark's restriction created a valid agreement.

"We hold that the contract on its face appears to be enforceable based on the district court's findings that consumers (1) have notice of the condition, (2) have a chance to reject the contract on that basis and (3) receive consideration in the form of a reduced price in exchange for the limits placed on reuse of the cartridge."

In a footnote the Court said that its holding does not preclude challenges to the contract that a customer might raise.

The Electronic Frontier Foundation had advocated in its amicus brief that the 9th Circuit should explicitly reject the Federal Circuit's reasoning in Mallinckrodt v. Medipart, which held that a restriction on the sale of a patented good can be permissible as long as it does not go beyond the scope of the patent grant and does not have unjustified anticompetitive effect.

The Court declined to address the patent exhaustion issue, however, on the grounds that ACRA had conceded that such constraints are permissible. Instead, the ACRA had argued that a valid contract with consumers was necessary for such restrictions to be enforceable, which the Court found to exist as discussed above.

In light of this outcome, it will not be a surprise to see other sellers of patented goods impose shrink-wrap-style terms, such as to prohibit modifications, limit to home use or prevent aftermarket sale. It's unclear under these circumstances how the doctrine of patent exhaustion on first sale of the patented good would retain continued relevance except in the most egregious circumstances.

See the excellent summary and links on Dennis Crouch's Patently-O: Patent Law Blog.

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The Federal Circuit decided Storage Technology Corp. v. Custom Hardware Engineering & Consulting,Download file last week. The case is noteworthy for a number of reasons -- it takes a limited view of the scope of the DMCA anti-circumvention provisions, and it takes a broad view of the rights of third party agents to access software for maintenance purposes under copyright law, as well under software license terms.

StorageTek sued Custom Hardware for DMCA and copyright infringement violations arising out of Custom Hardware's business of repairing data libraries manufactured by StorageTek. These activities included diagnosing problems with the libraries and accessing error messages produced by StorageTek's maintenance code. The opinion does a great job in laying out the facts clearly in terms of the technology and how it was used.

DMCA Claim

On the DMCA claim, the court referred to its 2004 ruling in Chamberlain Group v. Skylink Technologies. There the court stated that in enacting the DMCA:

"[Congress] chose to create new causes of action for circumvention and for trafficking in circumvention devices. Congress did not choose to create new property rights."

As a result, in Chamberlain the Court held that:

"[Section 1201] prohibits only forms of access that bear a reasonable relationship to the protections that the Copyright Act otherwise affords copyright owners."

Accordingly,

"A copyright owner alleging a violation of section 1201(a) consequently must prove that the circumvention of the technological measure either 'infringes or facilitates infringing a right protected by the Copyright Act.'"

Because the Court held that Custom Hardware's activities were not an infringement of copyright (as discussed below), the DMCA claim thereby failed. This suggests that if a technological control were circumvented for a noninfringing personal or fair use, the DMCA circumvention could be permissible.

The Court also rejected the notion that a contractual violation of the StorageTek license agreement would be sufficient basis for redress under the DMCA:

"The activiation of the maintenance code may violate StorageTek's contractual rights vis-a-vis its customers, but those rights are not the rights protected by copyright law."

This conclusion merits further thought, in terms of how broadly this proposition might apply. Custom Hardware was not under contract with StorageTek. However it would seem that this could also apply to a party in privity where the conduct prohibited by contract would otherwise not be copyright infringement. This could be complicated however by a license grant that is conditioned upon the prohibited conduct.

Copyright Claim

The Court also concluded that Custom Hardware was not an infringer, even though it accessed and used the StorageTek software without permission. Custom Hardware's clients were licensed by StorageTek, but Custom Hardware was not.

The Court construed Section 117(c) of the Copyright Act broadly and held that Custom Hardware's on-going maintenance analytic activities were covered by this exemption for software infringement.

Section 117(c) provides that it is not an infringement of copyright to make a copy of a software program if it is made to activate the machine for purpose of maintenance or repair.

The gist of the Court's ruling is that a broad construction of Section 117(c) is necessary in order to effectuate the intent of the statute to permit maintenance and repair of computer systems. It rejected a legalistic reading that could result in infringement "gotchas" for maintenance and repair providers.

Customer License Agreement

The Court also construed StorageTek's customer license agreement broadly to permit Custom Hardware's conduct under the license as an alternate theory. StorageTek argued that its license did not extend rights to third parties, because it stated that the licensee may not "permit another person to use" the code. However the Court looked to other clauses of the agreement to conclude:

"The clear implication of those sections is that the license is tied to the piece of equipment on which the software resides. Thus, the authorized use is tied to a particular machine, rather than a particular person."

The clauses in question stated that the software may be transferred only with the equipment, and the license is solely for use in enabling the equipment on which the code was provided.

It seems questionable for the implication of particular license language to override an express prohibition on permitting access by third parties. It would also seem that these restrictions should be read in addition, not as an alternative, to the express prohibitions.

The Court distinguished the MAI Systems case in the 9th Circuit, which held that a third party was not authorized to copy software into RAM by activating a computer. It did so on the grounds that the license in that case had "severe, explicit restrictions," and then stated further:

"The court in MAI Systems would not have had to rest its decision on those restrictive license terms if third parties were disallowed from copying the software even in the absence of such restrictive languge in the license."

"StorageTek, of course, could have drafted the license agreement to explicitly disallow copying by third parties through activiation of the equipment owners' machines. In the absence of such language, however, CHE's copying appears to be protected as long as CHE is acting as an agent of the equipment owners."

These conclusions reflect that license agreements need to be drafted with precision and clarity, and should be drafted from an "all rights not expressly granted are reserved" standpoint.

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The Federal Circuit cited the Grokster case today in a patent inducement ruling, MEMC Electronic Materials v. Mitsubishi Materials Silicon Corp,Download file. Dennis Crouch has the summary. We also note a recent copyright case citing Grokster, Monotype Imaging v. Bitstream, discussed below.

In MEMC, the Court concluded that a genuine issue of material fact exists in the case with respect to the patent inducement claim, and thus reversed the lower court's summary judgement decision:

"In light of the above evidence of record and viewing this evidence in the light most favorable to MEMC, we are not prepared to hold that a reasonable jury could not find intent to induce infringement."

The conduct in question includes "substantial" technical support in the form of email communications, shipment of wafers to address technical issues, and on-site visits involving technical presentations.

The court cites Grokster for the proposition that:

"Evidence of active steps taken to encourage direct infringement, such as advertising an infringing use or instructing how to engage in an infringing use, show an affirmative intent that the product be used to infringe."

However the citation leaves out the rest of the sentence, which continues:

"and a showing that infringement was encouraged overcomes the law's reluctance to find liability when a defendant merely sells a commercial product suitable for some lawful use".

The Court in Grokster also said:

"Nor would ordinary acts incident to product distribution, such as offering customers technical support or product updates, support liability in themselves."

Thus, while it would be folly to ignore the substantial differences between the nature of a patent and a copyright infringement action, and despite the fact that some in the patent bar may wish to disavow the Supreme Court's articulation of the intentional inducement doctrine, it looks like the "historic kinship" between patents and copyrights will continue in this context.

MEMC appears to be the third case citing Grokster to date. The other two cases are the 9th Circuit remand of Grokster to the district court on August 15th, and a decision of the Northern District of Illinois on July 12th. In Monotype Imaging v. Bitstream, Inc.,Download file, the district court distinguished Grokster and found no evidence of inducement. Monotype Imaging involved a contributory infringement claims over software that replicates typeface fonts.

"Here, the most that Plaintiffs can point to are Bitstream's repeated advertisements that its TrueDoc software could be used with any fonts and did not infringe upon intellectual property rights. As several Bitstream witnesses credibly explained, however, the statement that the software could be used with any fonts, referred to the fact that it could work with both Bitstream fonts, as well as fonts from other font distributors that had authorized the use of their fonts with TrueDoc. This differs substantially from the situation in Grokster where the defendants specifically targeted an audience that was seeking to download copyrighted material."

[citations omitted]

"Further, unlike in Grokster, . . . Bitstream submitted evidence that it had taken steps to avoid the use of its TrueDoc with protected fonts of other companies. Lastly, unlike in Grokster, there is no evidence in the record to show that Bitstream's business was benefited by increasing the number of infringing uses of TrueDoc. Instead, the record shows that it was not in Bitstream's business interests to increase any infringement of other parties' fonts using TrueDoc. Rather, by distributing TrueDoc along with Bitstream's own fonts, Bitstream sought to increase sales of its fonts. Accordingly, there is no evidence in the record that supports that Bitstream acted with the requisite intent to make it liable under Grokster's intentional inducement of infringement cause of action."

Monotype Imaging was docketed for appeal last week,Download file, so we will look to see what the 7th Circuit has to say about this.

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The Free Software Foundation is mobilizing to submit reply comments en masse from the free software community in opposition to the Copyright Office's proposal to require use of Internet Explorer for pre-registration of copyright claims. The proposal about Internet Explorer is ancillary to the question of what types of works will qualify for special pre-registration treatment under the law. See prior post for background. Comments on the Copyright Office's proposal are due by August 22nd.

The FSF says:

"This is billed as something temporary; they say that support for other browsers will be added later on. Since this is an issue of freedom, such a temporary restriction is not acceptable. They also don't have a specific timeline for when this future support will be added."

And:

"We will let the federal government know that requiring citizens to use proprietary software to interact with the government is unacceptable, and remind them that as a democracy, they must prioritize consideration of the impact of such decisions on freedom. Presenting the comments from the free software community all together will make a powerful statement."

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In the Supreme Court's reversal,Download file,today in the FCC v. BrandX case, the Court analyzed whether the FCC's construction of the Communications Act was a "reasonable policy choice". The ISPs had argued that the Commission's interpretation was unreasonable because it would allow a communications provider to evade common-carrier regulation by bundling information services with telecommunications.

The Court disagreed, stating:

"[T]he high-speed transmission used to provide cable modem service is a functionally integrated component of that service because it transmits data only in connection with the further processing of information and is necessary to provide Internet service. The Commission's construction therefore was more limited than respondents assume."

The FCC's Declaratory Ruling had classified Internet service provided by cable companies solely as an "information service". The FCC concluded that "cable modem service, as it is currently offered, is properly classified as an interstate information service, not as a cable service, and that there is no separate offering of telecommunications service." The effect of the FCC's ruling was that cable modem services would be governed by a lower level of regulation, and among other things would not be required to serve as common carriers of competing Internet services from other ISPs.

At oral argument on March 29, 2005,Download file, Paul Capuccio, counsel for the National Cable and Telecommunications Association, offered the following analytics that apparently were persuasive to the Court:

"Are these two separate products? Is this communications and Chicken McNuggets bundled together? Or are these two ingredients that are so interwoven . . . as to form a distinct product?"

"[I[f I bake cakes and someone was to say, 'If you offer cakes, you don't offer butter,' there's nothing in the English language, Justice Scalia, that makes that unreasonable, that a person who offers cakes to the public does not offer butter to the public. And if you believe that example is correct, then you have to uphold the FCC, because what it says is, the offer of the final product is not offering, to the public, the ingredient."

This apparently did not persuade Justice Scalia, who dissented,Download file, possibly swayed by the analogies of Thomas Goldstein, counsel for the ISPs:

"But take anything that Congress regulates. Take, for example, that we regulate offering of cigarettes to children. Now a merchandiser couldn't come along and say, "I'm not offering cigarettes. What I've done is, I've created a smoking service. I've taken the cigarettes, and I've put a lighter in it, and you've just got one bill that you have to pay for it.' The idea that that would evade what Congress is concerned about is loopy."

"Now this is not a question of whether or not there's butter in a cake, because . . . . fundamentally, the telecommunications is the same; it hasn't been 'cooked' into something else."

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The Business Software Alliance occupies a unique position in relations between Silicon Valley and Hollywood. The BSA supports strong copyright protection and enforcement, recognizing the value of copyright to protect software and the toll on the industry from software piracy, including recent congressional testimony by BSA President Robert Holleyman, and joint policy statements with the RIAA. However the BSA also is an advocate of innovation, as reflected by its amicus brief in the Grokster case in favor of retaining the Sony Betamax doctrine, and its support for H.R. 2795, the Patent Reform Act of 2005. A January, 2005 report titled "Intellectual Property in the 21st Century" lays out the BSA's views on copyrights and patents.

The BSA has recently released new white papers relating to IP, which could well serve as an indicator of where we are going.

The most recent is titled "Trade in the Digital Age," dated June 2005. It points to high piracy rates, inadequate IP laws, discriminatory government procurement preferences, discriminatory national technology standards, and high tariff rates as existing trade barriers that impede software industry growth.

It advocates use of the World Trade Organization's current Doha Round negotiations to address e-commerce and digital download issues that weren't contemplated in the Uruguay Round back in 1986. It argues that software delivered electronically should receive the same trade treatment as software delivered in tangible media, and electronic IT services delivered via the Internet should be confirmed as covered by existing trade commitments.

Another recent report, titled "Securing Cyberspace in the 21st Century," dated May 2005, advocates ratification of the Council of Europe Convention on Cybercrime and creation of a presidential commission on cybercrime and identity theft, as well as increased law enforcement efforts.

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The Free Software Foundation has announced plans to version the GNU General Public License (GPL). The current version, GPL Version 2, was released in 1991. The FSF has not indicated the substantive changes that will be made, only that the re-versioning will be done through a public discussion process.

While the inaccessibility of the GPL has been great fodder for lawyers, it would seem desirable for the GPL to become a more lucid document, given its worldwide reach and impact. At this point in the lifecycle of the license, and its well-publicized ambiguities, you would have to assume that any failure to address this issue would have to be purposeful, even strategic.

However when you look at the "four distinct purposes" that the GPL serves (as outlined below), it seems doubtful that the GPL will improve as a coherent legal document, since this is only a limited part of its stated purpose. In fact, the FSF release states that "The GPL serves, and must continue to serve, multiple purposes. Those purposes are fundamentally diverse, and they inevitably conflict."

The "four distinct purposes" that the GPL serves, according to the FSF, are:

(1)"The GPL is a worldwide copyright license"

The FSF explains that GPL2 was written with reference to US law, and accordingly GPL3 will seek to "ease internationalization difficulties" in view of the "otherwise unsought ideal of the global copyright license."

(2)"The GPL is the code of conduct for free software distributors"

As such, the FSF says its role is in the nature of "standard-setting", or 'best practices' definition".

(3)"The GPL is the constitution of the free software movement"

The FSF notes that its primary goals are "social and political" not "technical or economic." Accordingly, it may address measures that it sees as "harmful to freedom," such as trusted computing and patents.

(4)"The GPL is the literary work of Richard M. Stallman"

As the author of the GPL, Stallman will continue to guide its evolution. It is interesting that this fact qualifies as a distinct "purpose" of the GPL, according to the FSF, -- i.e., for Stallman to preserve the integrity of the work as representative of his intentions.

Via Ernest Miller's The Importance Of . . .

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BitTorrent, Inc. founder Bram Cohen announced today that he is launching a search engine to focus on finding torrent files. According to a report in Yahoo!News, "the goal is to get every single torrent on the Internet indexed," and as of today, 60,000 torrent files had been indexed.

While BitTorrent, Inc. still appears to be in donation mode, this comes on the heels of BitTorrent releasing a tracker-less version of its file-sharing software, and just a short bit after the MPAA's press release about illegal copies of "Revenge of the Sith" being made available through BitTorrent. So don't think BitTorrent is not in the cross hairs - just because the MPAA has only sued tracker sites so far. While the MPAA waits for June to find out what the Supreme Court will do with the law of contributory infringement in Grokster, if anything, BitTorrent makes its move with a search engine that ostensibly is relying on DMCA safe harbors for "information location tools" under Section 512(d) of the Copyright Act to avoid infringement liability.

In order to qualify for the search engine safe harbor, the search engine must not have the right and ability to control the infringing activity, and must not have knowledge or reason to know of the infringing activity. Upon obtaining such knowledge, the search engine must act promptly to disable access to the infringing material. So it will remain to be seen whether the MPAA tries to challenge whether the search engine has reason to know of infringing activity, based on infringing usage of torrent files. Or whether the MPAA will engage in an on-going notice and take-down battle with them. We expect there's a lot more to come here from both sides.

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Patently-O has posted a summary and translation of the French case that has held DVD's anti-piracy mechanisms to violate French law. The ruling states that the DVD copy protection violates the "right to make a private copy" under French IP law, as well as a law that requires consumer disclosures of essential product characteristics. Thanks to Dennis Crouch!

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In American Library Association v. Federal Communications Commission, Download file, the Court struck down the FCC's broadcast flag regulations on the grounds that they went beyond the scope of the FCC's agency authority as delegated by Congress. The MPAA intervened in the case, due to its concerns about unauthorized redistribution of broadcast content in the impending new world of digital television. It now seems likely that the MPAA will seek a direct Congressional mandate for the broadcast flag or other protective technology. See the MPAA's press release on the case.

Congress has mandated anti-piracy technology to protect television broadcasts in the past. In 1998, as part of the Digital Millenium Copyright Act, Congress mandated that by 2000 all analog VCRs and camcorders must contain certain Macrovision technologies. The relevant Macrovision technologies are "automatic gain control copy control" and "colorstripe copy control". The mandate is found in Secction 1201(k)(1) of the DMCA, codified at 17 USC 1201, subsection(k)(1).

At the same time, under Section 1201(k)(2) of the DMCA, codified at 17 USC 1201(k)(2), copyright owners were prohibited from applying these Macrovision technologies to free television and basic/extended basic tier cable broadcasts. Copyright owners were permitted to use this technology to prevent copying of pay-per-view, video-on-demand and recorded disc programming. And they were allowed to use these technologies to prevent second-generation copies of pay television programming (such as HBO).

According to the DMCA legislative history, H.R. 105-796,Download file,:

"the provisions of paragraph (2) are intended to operate to allow copyright owners to use these technologies to prevent the making of a viewable copy of a pay-per-view, near video on demand, or video on demand transmission or prerecorded tape or disc containing one or more motion pictures or other audiovisual works, at the same time as consumers are afforded their customary ability to make analog copies of programming offered through other channels or services. Copyright owners may utilize these technologies to prevent the making of a "second generation" copy where the original transmission was through a pay television service (such as HBO, Showtime, or the like). The basic and extended basic tiers of programming services, whether provided through cable or other wireline, satellite, or future over the air terrestrial systems, may not be encoded with these technologies at all."

The Macrovision technology mandates were actually an exception to a "no mandate" clause included in Section 1201(c)(3) of the DMCA, which clarified that the prohibition on circumvention devices does not require manufacturers to design their products to support any particular technological measure. However in implementing the broadcast flag regulations, the FCC took the position that this clause only limits the anti-circumvention provisions of the Copyright Act, and does not apply to restrict other technological mandates. This was on the grounds that the clause states that "nothing in this section" causes such a mandate, which does not exclude other enactments outside of the DMCA. And Congress of course is free to make law as it will.

What sort of balance will be struck between protection of content and consumer usage in connection with digital television remains to be seen. As Greg Papadapoulous notes, given the polarized nature of the debate, finding a workable solution for this problem should merit a trip to Stockholm.

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In overturning the FCC's broadcast flag regulations, the Court in American Library Association v. Federal Communications Commission, Download file, held that the regulations exceeded the scope of agency authority as delegated by Congress. This was due to the fact that the rules went beyond regulating DTV broadcast transmissions to cover redistribution of completed transmissions.

The ruling was quite timely, insofar as the FCC's 2003 broadcast flag regulations,Download file, would have required adoption of broadcast flag technology in all TVs and other "covered demodulator products" manufactured after July 1, 2005. The broadcast flag, or Redistribution Control Descriptor, is a digital code embedded in a digital transmission, which prevents television equipment from redistributing digital broadcast content.

The Court agreed with the ALA's argument that:

"the Broadcast Flag rules do not regulate interstate 'radio communications' as defined by Title I [of the Communications Act of 1934], because the Flag is not needed to make a DTV transmission, does not change whether DTV signals can be received, and has no effect until after the DTV transmission is complete."

The relevant statutory authority, Section 336 of Title 47, only authorizes the FCC to regulate DTV broadcast licensees and the quality of signals transmitted by such licensees. The FCC did not assert any direct authority to promulgate the regulations, as there was none, but instead claimed "ancillary" jurisdiction based on its general powers to regulate radio and wire transmissions under the Communications Act of 1934. However the Court agreed with the argument that this open-ended view of FCC jurisdiction proves too much:

"Were it true, the FCC would have plenary authority to regulate consumer electronics and computer devices."

In reaching its holding, the Court noted that the All Channel Receiver Act of 1962, which mandated that television sets support UHF signals, reflected that FCC did not have authority over receiver equipment. And in the Communications Amendments Act of 1982, Congress authorized the FCC to impose performance standards on consumer electronics, reflecting that it does not otherwise have general authority to do so.

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Mark Cooper, director of research at the Consumer Federation of America, and Fellow at the Stanford Law School Center for Internet and Society (CIS), spoke there yesterday about open architecture as communications policy.

Light moments included a vignette about "Larry (Free Culture) Lessig vs. The Hoover Tower" - including the observation that a daily chill passes over CIS when Stanford's conservative think-tank casts its long shadow in the direction of the law school.

A self-styled full-time advocate and part-time academic, Mark argues that open communications and transport networks are "deeply embedded in the DNA of capitalism and the lifeblood of democracy." He points to common law tariffs and the 1910 opening up of the telephone networks by legally mandated interconnection during the Progressive Era, making a comparison to the issues before the Supreme Court in the FCC v. Brand X case.

He argues that the MGM v. Grokster case is also about open access, but at a higher layer of the Internet (applications/content), whereas the BrandX case is about the lower physical layer. He says that Grokster can also be seen as an attack on the Internet at the middleware layer, insofar as it reflects a desire to have every file fingerprinted, every transaction tracked, and every user tagged.

His recent book, Open Architecture as Communications Policy (CIS 2004), is available under Creative Commons license or in hard copy, and the CFA has filed an amicus brief in Grokster.

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Various technology industry players have filed amicus briefs in support of upholding the 9th Circuit ruling in the MGM v. Grokster case being argued next week. These include Intel, smaller technology companies such as Kaleidescape, various telecommunications industry associations and the National Venture Capital Association. However the Business Software Alliance has filed an amicus brief in favor of reversal, but without advocating for reversal of the Sony Betamax doctrine.

The BSA brief notes that it has both compelling interests in copyright protection as well as in technological innovation. It cites the estimated annual piracy figures of $7.2 billion in the content industry and $32 billion in the software industry. However it contextualizes these losses by comparing them to the $500 billion that the Department of Commerce estimates is spent annually on IT hardware and software procurement in the U.S., and to the $1 trillion in annual sales of U.S. information technology companies and their overseas affiliates.

The BSA brief makes two points: (1) the Betamax doctrine should be left intact (with the "capable" of substantial noninfringing uses standard) and the interpretation of it in the 7th Circuit's Aimster decision should be rejected; and (2) the defendants in Grokster may have engaged in conduct that falls outside the Betamax doctrine -- by encouraging and teaching the use of the technology for infringing purposes, and the case should be remanded on this basis.

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Several digital media technology firms have filed amicus briefs "in support of neither party" in the MGM v. Grokster litigation. These so-called Brandeis briefs are aimed at providing the Supreme Court with factual information on available technology to address illegal file-sharing that it could find useful in formulating its decision. This includes a joint brief by Audible Magic, Digimarc and Gracenote, as well as briefs from iMesh.com and Snocap.

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