Taking a Bite out of Apple: iPhone Hackers File Lawsuits

Posted with the permission of the author Matthew Williams, Esquire.  Matthew is an intellectual property attorney practicing with the firm of Mitchell Silberberg & Knupp.  All rights reserved.

Apple’s release of the iPhone in June 2007 was an unqualified business success - 1.4 million iPhones were sold in just a few months. However, as has become the norm when a business is successful, several legal problems have arisen for Apple and its telecommunications partner, AT&T. Many of these problems began shortly after the iPhone’s release, when a New Jersey teenager announced that he had circumvented the technological 'lock' that renders the iPhone inoperable with wireless telephone carriers other than AT&T. The hacking of the iPhone received almost as much press attention as its release and Apple estimates that as many as 250,000 iPhones have been unlocked . 

In response, Apple issued a press release which warned consumers that modifying iPhones in order to switch wireless carriers could damage the product and void Apple’s warranty. Apple also announced that future Apple software updates would likely render modified iPhones permanently inoperable. Shortly afterwards, an Apple software update did just that. Predictably, two class action lawsuits alleging unfair competition and antitrust claims were filed against Apple in October 2007: one, which also names AT&T as a defendant, in the US District Court for the Northern District of California,(1) and one in the California Superior Court in the County of Santa Clara.(2)

Among other things, the complaints allege that consumers may unlock iPhones legally on the basis of a November 2006 regulation promulgated by the librarian of Congress regarding exceptions to the Digital Millennium Copyright Act’s prohibition against circumventing technological protection measures. Furthermore, the complaints allege that the software update issued by Apple, rendering thousands of iPhones inoperable, was an illegal effort to prevent consumers from exercising this exception.

Whether the unlocking of iPhones fits within the librarian of Congress’s exception to the act depends on the answers to a number of difficult questions. It is far from clear that unlocking an iPhone is legal. The librarian crafted narrow language which limits the exception to circumstances in which “circumvention is accomplished for the sole purpose of lawfully connecting to a wireless telephone communication network”. 

At least one court(3) has ruled that unlocking a mobile phone for the purpose of reselling it to third parties violates the act and does not fall within the exception; fearing that many of the iPhone hackers purchased multiple iPhones for resale, Apple recently limited the number of iPhones that an individual may purchase and stopped accepting cash for iPhones. Determining whether the librarian’s exception applies to unlocking iPhones and, if so, how many of the class members involved in the cases fall within the scope of the exception are likely to be central issues. Copyright owners should follow these cases carefully, especially because the anti-circumvention provisions of the act are infrequently interpreted and are often critical to many business models.

Endnotes

(1) Holman v Apple, Inc.

(2) Smith v Apple, Inc.

(3) In TracFone Wireless, Inc v Dixon, 475 F Supp 2d 1236 (MD Fla 2007).

You Say You Want A REVOLUTION?

You say you want a revolution

Well, you know

We all want to change the world . . .

 

You say you've got a real solution

Well, you know

We'd all love to see the plan

You ask me for a contribution

Well, you know

We are doing what we can

 

But if you want money

for people with minds that hate

All I can tell is, brother, you'll have to wait

 

Don't you know it's gonna be alright?

 

-John Lennon

Perhaps John Lennon said it best:  if you push people hard enough and long enough, they will revolt.  The question is, has the RIAA gone too far for too long? A recent motion filed in their case against students at the University of Maine may very well answer that question.

The RIAA named numerous "John Doe" students in their complaint in Arista Records v. Does 1-27, as is their practice in all of their lawsuits.   The RIAA's purpose of naming the John Doe defendants is so that they may obtain an ex parte (i.e., without the other party being notified) order from the Judge requiring the targeted university to provide the various students' name, address, and, particularly, their IP address.

Student lawyers at the University school of law Cumberland Legal Clinic have filed a motion for Rule 11 sanctions against the RIAA claiming that this practice improperly seeks to circumvent the student's rights under the Family Educational Rights and Privacy Act, §1232g(b)(2)(B) ("FERPA"), gain publicity for its cause, and coerce students into settling for "nominal" amounts in the $3-5000 range.

Rule 11 of the Federal Rules of Civil Procedure allows sanctions against an attorney who signs a pleading without properly investigating the facts and the law and does so with an improper purpose.

The motion also questions whether the joinder of plaintiffs and defendants under the RIAA-type lawsuits is proper because the actions do not, in fact, arise out of the same transaction.  Rule 20 of the Federal Rules of Procedure provides that multiple plaintiffs can join in one action if “they assert any right to relief jointly, severally, or in the alternative with respect or arising out of the same transaction, occurrence, or series of transactions or occurrences…and any question of law or fact common to all plaintiffs will arise in the action.” Fed. R. Civ. P. 20(a).  Similarly, multiple defendants can be joined in one action if “any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transaction or occurrences . . . and any question of law or fact common to all defendants will arise in the action.” Id.  The student motion alleges that the RIAA does not, in fact, believe that all of these copyright infringements arise out of the same facts, but join together against multiple defendants for the sole purpose of trimming litigation and discovery costs.

In this case, the student lawyers are seeking more than just monetary damages under this Rule 11 motion:  they also seek dismissal of the complaint and a permanent injunction preventing the RIAA from filing "fishing expedition" type complaints against "unconnected" defendants in the future.  These types of injunctions may be applied in jurisdictions other than the one in which it was issued, so in theory such an order may be applied to thwart lawsuits in other Federal courts across the country.

This in one ruling that should be very interesting.

 

Technorati Tags: RIAA Litigation,Digital Downloads,MP3,Entertainment Lawyer,Music Lawyer,Music Law,Copyright Infringement

Music Row Magazine sold

Music Row magazine has been "Nashville's Music Industry Publication" for 26 years.  Yesterday, Music Row announced that it was being acquired by SouthComm Communications, Inc. 

SouthComm is a Nashville-based media company founded in 2007 by Chris Ferrell and Nashville investment firm Solidus Co., led by Townes Duncan.  Duncan is chairman of SouthComm and Ferrell is CEO.  Their first acquisition was SouthComm Publishing Company, Inc. of Alphraetta, Georgia.

Ferrell was formerly a council person in Nashville and publishers of The Scene, an alternative weekly publication owned by New Times Media of New York.

SouthComm is a custom publishing company focusing on local and niche news, information markets, membership directories and city publications. Music Row joins SouthComm's current stable of publications, which includes the print and digital publications Nashville Post and Business Tennessee.

"I'm a believer in niche publications. My belief about the future of print is that it needs to be very targeted."

Ferrell said in an article for Nashville Business Journal in January of this year.

"The SouthComm collaboration is a great fit," says David Ross, current publishers of Music Row magazine.  He will remain CEO of the industry publication, but will given the position of Vice President for SouthComm and a seat on the Board of Directors.

"Joining a larger organization means Music Row [magazine] will benefit with added resources, efficiencies of scale and cross marketing opportunities. SouthComm also provides added conduits for music industry news to reach a wider network of Nashville business leaders and bolster the process of uniting Nashville's music and business communities."

Music Row's current staff will remain intact, including Ross' wife and partner Susana and Robert K. Oermann, who has appeared in MusicRow for most of its existence.

Technorati Tags: Music Row,music industry,Nashville

Fair is not always "Fair Use"

The concept of “fair use” is a very misunderstood concept.  The first common misunderstanding that people espouse is that the concept of “fair use” is a right or privilege granted by copyright law.  It is not.  Secondly, many people mistakenly believe that so long as they do not make any money from an infringing use of copyrighted material, then the use is a fair use.  This is also an incorrect assumption. 

Fair use is not a right or a privilege to be exercised at one’s whim.  Rather, the doctrine is an “equitable rule of reason” that may be used as an affirmative d

efense in a copyright infringement action.  The purpose of the rule is to balance the equities between the desire to protect and therefore encourage the creation of new ideas and the desire to encourage the free exchange of speech in the marketplace of ideas.  The tension was described by Justice Souter as “simultaneously protect[ing] copyrighted material and allow[ing] others to build upon it.”  Nonetheless, the thing to remember is that application of the fair use defense is declared by judicial fiat in the context of a copyright infringement action.  It is applied on a case-by-case analysis of the factual situation.  Thus, fair use is not a presumptive right or privilege that may be exercised by the infringing party.

There are four factors weighed by the Supreme Court in making a determination of whether a derivative work constitutes a “fair use.”  These factors are (1) the nature of the work itself; (2) whether or not the work is commercial in nature; (3) the amount of the copyright work that is used; and (4) the effect of the use on the potential market or value of the copyright at issue. Folsom v. Marsh, 9 F. Cas. 342 (C.C.D. Mass. 1841), codified at §107 of the 1976 Copyright Act.

The nature of the work refers to the “nature” of the unauthorized derivative work, not the original copyright work.  In order for such an unauthorized use of copyrighted material to be entitled to the“fair use” defense, the new creation must transform the original copyrighted material.  A “transformative work” is defined by the U.S. Supreme Court as one that “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.”  See, Campbell v. Acuff Rose Music, Inc., 510 U.S. 569 (1994).   While all factors must be considered, this is perhaps one of the more critical factors in the analysis.  Merely modulating the pitch of a song or inverting the sequence of a chord progression would probably not be considered transformative.   A very good example of a derivative work that is transformative in nature is Alice Randall’s The Wind Done Gone, the same story as Margaret Mitchell’s Gone with the Wind, but told from the perspective of a mulatto slave who is the half-sister of Scarlet O’Hara, the main character in the original work.  See Suntrust v. Houghton Mifflin Co., 252 F.3d 1165 (11th Cir 2001) per curiam, opinion at 268 F.3d 1257.  In that case, the Eleventh Circuit extended the protection of a musical parody in Acuff Rose to the novel.

With regard to the second factor as to whether a use is commercial in nature, it should be noted that this does not necessarily mean that the new creation has to generate profits.  If the new work create a significant fan, donor and/or advertiser base, those factors tend to lead to a conclusion that it is commercial in nature.  A person simply does not have the “right” to use copyrighted works in any manner as long as no profit is generated from the use.   It is also evident that this factor does not mean that simply because a derivative use does in fact generate profits, that it is by default not a fair use.  In Acuff Rose, 2 Live Crew’s parody version of Roy Orbison’s Oh Pretty Woman had sold over 250,000 copies, yet was still considered a “fair use.”  The thing to be remembered is that this is but one of the factors.

The third factor is fairly easy to evaluate: the more material “borrowed” from the copyrighted source, the less likely the infringer is to have a “fair use” defense.  Again, another misconception is that there is a bright line test for fair use:  that a few measures of a song, a couple of lines from a poem, a few hundred words of a paragraph, or a few paragraphs from a book, are considered fair use.  This misconception has no basis in either the Copyright Act or the case law interpreting it.  It is merely folklore.  The factor, as used by the courts, is more of a sliding scale based, again, on the quantity of the material used from the copyrighted work as compared to the total material.

Finally, the last factor weighs the impact on the infringing use on the potential market and value of the copyright.  This was an integral part of the Supreme Court’s ruling in Acuff Rose that 2 Live Crew’s parody of Roy Orbison’s Oh Pretty Woman did not impact the potential market for the original.   The more a derivative work negatively impacts the potential market for and value of the copyright, the less likely it will a "fair use."

In summary, as you may have noticed, the fair use doctrine is by no means a bright line test.  Each “fair use” defense is, by its very nature, evaluated on a case by case analysis in the context of a copyright infringement action.  Fair use is not something to be relied on as a presumptive right.

Technorati Tags: Fair Use,Copyright Infringement,Parody,Music Lawyer,Entertainment Lawyer,Music Law,Entertainment Law,Campell v. Acuff Rose

"More than a Feeling" - Momma, look what they've done to my song!

I received a call from one of my readers to address the topic of whether a songwriter has the ability to restrict the use of his or her composition in the instance it is being used in advancing a cause opposite to that espoused by the songwriter.  This was spawned, of course, by the recent allegations of Tom Scholz, lead member of the group Boston, that his 1970's mega-smash "More than a Feeling" was being used by Mike Huckabee, whose views were opposite those held by Scholz.  It is an interesting inquiry, and one that has simple solutions, mostly based in contract law.

There are two contract concepts that are usually incorporated into standard music publishing agreements which impact this issue:  one is the concept of droit or moral rights and two is the restrictions on exploitation.  I'll address them in reverse order.

Grant of Rights

Typically, when a songwriter assigns his copyright in a song to a music publisher, there is grant language contained in the agreement expressly establishing the rights he or she is granting to the music publisher.  In that contract language, there is typically a clause that reads something like this:

The Publisher shall have the right to administer, use and exploit all interests in the Compositions . . . provided, however, that the approval of Writer shall be required for the use of any Composition:

             (i)    in any motion picture which Publisher has actual knowledge of an "X" or equivalent rating; 

             (ii)    in any advertisement or other promotion for  tobacco, firearms or personal hygiene products; or

             (iii)    in connection with religious or political purposes.

As you can plainly see, in this instance at least, the music publisher would be contractually required to obtain the approval of the writer prior to authorizing the use of the composition in a political rally, among other things. 

If this type of language is not included in the songwriter agreement, or if the grant language included in the songwriter's agreement is, in general, more broadly worded, then the rights of the songwriter to restrict the use of the song would be greatly impaired.

Droit or Moral Rights

The other legal concept which comes in to play, both from an historic perspective and contractually, is the concept of droit or "moral" rights, although it is important to realize up front that this concept is most often applied, in the U.S. at least, to works of visual art, not musical compositions. 

First, in connection to the copyright concept, don't infuse the the word "moral" with the ethical connotations generally associated with in in the United States.  The use in this concept is much more in the sense of an embodiment of a type of something, i.e., the Monet painting is the moral equivalent of impressionist art.  As used in this sense, it refers to the ability of the creator of a copyright to control the "embodiment" of his work, or its "integrity."  The French-derived word "Droit" is, perhaps, more to the point when discussing copyright:  it means "a legal right." 

So, in the United States at least, the phrase "droit" or "moral rights" generally refers to the right of the copyright creator to prevent third parties from taking credit for, revising, altering, or distorting his or her creation, regardless of who owns the work, i.e., regardless of whether the copyright has been assigned or transferred. 

In contrast, the concept has generally received much broader application in European states.  France, for example, recognizes four moral rights: 

1. the right of disclosure;
2. the right to correct or withdraw works previously disclosed to the public;
3. the right of attribution; and
4. the right of integrity (the right to "respect" the work).

When the U.S. joined the Berne Convention, Congress attempted to bring its copyright laws into line with those of the other signatory companies by passing Visual Artists Rights Act of 1990 (VARA) codified generally at 17 U.S.C. §§106, 106A, and 113.   As implied earlier, however, this statute applies solely to visual arts and not musical compositions.  Nonetheless, the concept of droit or moral rights may be invoked when dealing with the misappropriation of a songwriter's musical composition.

In addition to copyright law, there a several other legal concepts which may be implicated in this situation.  For example, if a person is somehow giving false attribution to a creative work, e.g., attempting to pass off an creator's work as his or her own, that person may be liable under the concept of "unfair competition," which is barred by the Lanham Act (15 U.S.C. §1051).  Or, if the creation is widely recognized as a work of the creator, any distortion or alteration of the creation may constitute trademark "dilution" under trade dress laws and statutes.   More generally, if authorship of a work is somehow falsely attributed, the creator may have a state action for defamation against the person responsible for the false attribution.  If a person uses the identity of an songwriter, or the compositions, for his or her own benefit without permission, a violation the songwriter's right of publicity may have occurred.  Thus, there may be several remedies available in this type of situation.

In the US, however, it is accepted practice that if a person can waive a right, such a waiver will be in a contract.  This is no exception.  Again, there is language in most songwriting agreements which "waives all droit or moral rights" in the copyright.  Such a waiver would likely nullify any of these general legal remedies available to the songwriter.

As always, I highly recommend that any songwriter contemplating a deal with a music publisher contact a reputable entertainment attorney.

Technorati Tags: More than a Feeling,Tom Schulz,Boston,70's Rock,Copyright Infringement,Music Publishing,Songwriters,Songwriting,Music Lawyer,Copyright law,Droit Rights,Moral Rights

Columnist David Pogue sings a humorous diddy about the RIAA

New York Times technology columnist and Emmy-award winning CBS news correspondent David Pogue is featured in this YouTube video singing a fun diddy about the digital wave of media on the Internet, ending with a humorous take on the RIAA and its wave of litigation against college students nationwide.  Enjoy

 

Technorati Tags: digital copyright law online internet law legal download upload peer to peer p2p file sharing filesharing music movies indie independent label freeculture creative commons pop/rock artists riaa independent mp3 cd favorite songs intellectual property

Atlantic Records et al. v. Brennan: Federal Judge Denies Default Judgment for RIAA

U.S. District Judge for the District of Connecticut  Justice Janet Bond Arterton, handed down a very pointed and decisive opinion hammering the R.I.A.A. for its boilerplate style of pleading in the nationwide wide campaign against illegal file sharing.   Justice Arterton was appointed by President Clinton in 1995.  The full decision is here:  Decision.  At several key junctures in the opinion, Justice Arterton based her opinion on the fact that the Plaintiff's complaint was based on "information and belief" rather than direct evidence.

The two areas of concern in the opinion, one is whether to grant a default judgment under Federal Rule of Civil Procedure 55(b)(2) and the second is whether the complaint fails to state a claim for which relief can be granted under Rule 12(b).

Default Judgment Analysis under Rule 55(b)(2)

The granting of default judgment is generally almost a "rubber stamp" kind of process.  If the defendant is properly served and fails to respond to the complaint, a default judgment is almost always automatic.  If the complaint demands an exact amount as judgment, the default judgment can even be entered by the court's clerk under Rule 55(b)(1).  If not, then the court holds a hearing to determine the amount of damages under Rule 55(b)(2).  In this instance, however, the court stepped in and took it upon herself to examine the validity of the claims.

Reasoning from a 2nd Circuit case, Au Bon Pain Corp.v. Artect, Inc., 653 F.2d 61 (2d Cir. 1981), the court found that the default judgment process is not, in fact, automatic, but that “a district court has discretion . . . to require proof of necessary facts and need not agree that the alleged facts constitute a valid cause of action.”  Artect, at 65, citing Wright & Miller, a well known legal treatise on procedure. 

Looking a another legal treatise, Moore's Federal Practice, Justice Arterton reasoned that the analysis should combine elements from Rule 55(c), the rule allowing the setting aside of a default judgment, and Rule 60(b), a more generic rule allowing  a court to set aside judgments.  Finding support for this analysis in 2nd Circuit case law, the court held that three factors arose in determining whether to set aside a judgment under either of the two rules:  (1) “the willfulness of default”; (2) “the existence of a meritorious defense”; and (3) “the possibility of prejudice to the plaintiffs should the default judgment be vacated.”

In weighing these factors, the judge determined that the latter two factors shifted in favor of the defendant, i.e., there were abundant meritorious defenses raised in similar cases filed by the RIAA across the country, and the Plaintiff would not be prejudiced by being required to produce more specific evidence.  In both instances, the court again mentioned the language that the Plaintiff's complaint was based on "information and belief."

Failure to State a Claim Upon Which Relief Can be Granted under Rule 12(b)(6)

The more telling section of the opinion is the court's ostensibly sua sponte (i.e., of its own accord) analysis of whether the Plaintiff's complaint failed to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure.  This rule generally gives the defendant a right to raise this defense in a response to a complaint.   Ostensibly, the court raised this issue in the context of possible meritorious defenses.

Justice Arterton cites the recent Supreme Court opinion that a complaint “does not need detailed factual allegations, [but] a plaintiff's obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions.”  Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964–65 (2007).  She then observed that Plaintiff's complaint in this case was almost identical to the one filed in Interscope Records v. Rodriguez, where the court held:

Plaintiff here must present at least some facts to show the plausibility of their allegations of copyright infringement against the Defendant. However, other than the bare conclusory statement that on “information and belief” Defendant has downloaded, distributed and/or made available for distribution to the public copyrighted works, Plaintiffs have presented no facts that would indicate that this allegation is anything more than speculation. The complaint is simply a boilerplate listing of the elements of copyright infringement without any facts pertaining specifically to the instant Defendant. The Court therefore finds that the complaint fails to sufficiently state a claim upon which relief can be granted and entry of default judgment is not warranted.

Rodriguez, No. 06-2485, 2007 WL 2408484, at *1 (S.D. Cal. Aug. 17, 2007).  Citing the Second Circuit case Greyhound Exhibit Group, Inc. v. E.L.U.L. Realty
Corp., 973 F.2d 155, 158 (2d Cir. 1992), which held that the entry of default “constitute[s] a concession of all well pleaded allegations of liability," Justice Arterton ruled that Plaintiff's complaint was "speculative" and "inadequate."

Eric Bangeman, of Ars Technica reports that the RIAA plans to file a brief, probably accompanying a motion for reconsideration, and possible an amended complaint, as they did in Interscope v. Rodriguez.  The amended complaint provided additional details about dates, times, and IP addresses.  Whether the additional details of that amendment will alter the application of Rule 12(b)(6) is still unknown, as the judge in that case has since retired.

Technorati Tags: RIAA Litigation,Digital Downloads,Copyright Infringement,File Sharing