You Don't Get To Double (Or Triple) Dip On Damages For Both Copyright And Trademark Infringement

from the it's-really-only-one-copy dept

Lately, we've been seeing a lot more copyright lawsuits coupled with trademark lawsuits. Quite often, the idea is to use the trademark claim to get around any DMCA safe harbor that's been claimed, but some may be doing it to try to increase damages. It looks like at least one court has stopped one attempt to do just that. Michael Scott points us to a ruling in NY, where a software developer charged someone else with both copyright and trademark infringement. The accused never responded to the lawsuit, so the original developer won a default judgment. However, on requesting separate statutor claims for infringing on copyrights and trademarks, as well as on violating the DMCA, the court said no, pointing out that it was really only one copy, not three, and thus the end result only "produced one harm."

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Tenenbaum Dinged $22,500 Per Song; $675,000 Total

from the and-onto-the-appeal dept

After admitting flat out yesterday that he downloaded and distributed songs using file sharing software, and that he lied about it, there wasn't a question of whether or not Joel Tenenbaum would be found guilty. In fact, the judge even said that the question wasn't even at issue. The only thing the jury had to work out was how much the damages would be, and they didn't take long at all, awarding $22,500 per song, or a total of $675,000. While a lot less than what the Jammie Thomas jury awarded, it's still a hefty chunk of change.

I've already expressed my distaste for how this trial was handled by Nesson and "Team Tenenbaum," but honestly, if he was going to just admit that he did it, it's unbelievable that he didn't just settle earlier when he had the chance. The only reason to go through with this is if the entire purpose is to create a later constitutional challenge on the statutory rates -- which many assume was Nesson's plan all along. However, if that's the case, is this really a good test case for that? Gleefully ignoring the law isn't the sort of thing that I think many judges/justices will find endearing. If this case does move up the appeals chain, one would hope that a better team of folks will handle Tenenbaum's appeal, and focus on the real legal issues. Of course, even before the appeal, it appears that Judge Gertner is planning to review whether or not the amount appears to be unconstitutional. It seems that particular ruling will be a lot more important than what the jury had to say.

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Trainwreck From Team Tenenbaum

from the really? dept

So, I had said I was going to try to avoid talking about the Tenenbaum file-sharing trial until it was over or unless something major happened, but reading through the reports of the first day it's hard not to declare it to be a train wreck in motion. So far, it appears that Charlie Nesson's argument is that "everybody's doing it!" While I obviously don't know the jury and don't know what else (if anything) Nesson has up his sleeve, that doesn't seem like the sort of argument that's all that convincing. In the meantime, I'm going to do something that I almost never do, and actually agree with entertainment industry lawyer Ben Sheffner (who regularly goes out of his way to misrepresent what I write here) and say that it's unconscionable that Nesson/Tenenbaum don't have an economic expert to testify on the "damages" caused by Tenenbaum. It's not like the idea hasn't been brought up before. Hell, we here had a lengthy discussion on exactly that back in March.

There are numerous economic experts out there who could clearly point out that there's no causal evidence that file sharing does any damage at all. There may be a correlation with a decline in CD sales, but not with any other aspect of the music industry -- and recent research is showing that the overall industry is growing. Even some of the music industry's own research is showing the overall industry is growing -- it's just that spending has shifted. It would have certainly been possible to make a strong case that file sharing alone doesn't cause any significant damage to the industry. They could have shown the recent economic studies, along with evidence of many, many, many artists who have embraced file sharing and used better business models to take that attention to make more money than they had in the past. At that point, they could make the case that it's not piracy that's causing harm to the plaintiffs, but their failure to adapt and embrace better business models. And, from that, show that Tenenbaum's actions didn't cause any direct harm.

But Nesson went on a wild goose chase pursuing "fair use" -- an argument that never really made much sense, and did so in a way that annoyed the judge and pretty much everyone associated with the case. He also screwed up getting the witnesses lined up for the case, only requesting that the author of one of those recent studies be allowed to testify long-past the deadline to do so. And, of course, with fair use being knocked out before the case started, and without any experts to present on damages, and a (so far) defense of "everyone's doing it," you have a recipe for disaster. Nesson seems much more focused on putting the whole RIAA strategy on trial, and seemed to forget that there were specific legal questions that had to be dealt with in this case. As with Jammie Thomas, I think that Tenenbaum is a bad case to go to trial, and I dread the results. At this point, the "best" result may be that they flub the case so badly that super high damages are awarded, and you end up with a repeat of the bad PR that came out following the Jammie Thomas trial (though, things are so twisted so far, I wouldn't be surprised if the RIAA themselves to do their best to convince the jury to keep the award low).

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Wait, Editing An XML Document Is Patented And Worth $98 Per Application?

from the say-what-now? dept

A bunch of folks sent in variations on the story about Microsoft losing a patent infringement lawsuit to the tune of $200 million to a small Toronto firm (the ruling also came right on the heals of another ruling against Microsoft in a patent case, for $388 million). Since both rulings will certainly be appealed, it seemed a bit early to pay too much attention, but Joe Mullin has dug into the details of the $200 million ruling, and it's fairly startling. The patent in question is for separating the manipulation of content from the architecture of the document, which the company, named i4i argues, covers basic XML editing. It's quite troubling that doing something as simple as adding an XML editor should infringe on a patent, but what's even more troubling is that the court somehow ruled that such an editor was worth $98 in the copies of Microsoft Word where it was used. An XML editor. $98. And people say patent awards aren't out of sync with reality?

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Remember How ACTA Wasn't Supposed To Be A 'Major' Change To Copyright Laws?

from the yeah...-not-so-much dept

One of the excuses given by the various trade representatives negotiating the ACTA treaty for the fact that they were keeping it quite secret, was that it wouldn't represent any significant change to copyright laws, and thus it was no big deal. Yet, the various drafts of the proposed treaty have suggested otherwise. TorrentFreak examines one of the latest leaked drafts and notes that it would require agreeing nations to change copyright laws concerning damages, pushing judges to consider every unauthorized file to be considered as a lost sale for the calculation of damages. This is a key point that plenty of folks have made clear over the years: assuming that every shared file would have been a lost sale is absolutely false. Putting that into the law and suggesting judges use that false concept as a basis for calculating damages is quite troubling. In the meantime, we're still trying to figure out why ACTA is even necessary? And... on top of that, no one has yet explained why industry lobbyists have been integral to the negotiations, but the public and public interest groups are being blocked from any information based on bogus national security claims.

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More Judges Realizing That Statutory Damages In Copyright Suits Out Of Line

from the bringing-some-sanity-back dept

The heart of Charles Nessons' case against the RIAA is that the copyright law cited to attack file-sharers is unconstitutional due to the ridiculous statutory fines put on copyright infringement. The original fines were really meant for commercial copyright counterfeiters -- and the law was never intended to be used against random internet users sharing some songs off of their computer with no profit motive at all. The law also didn't anticipate songs being sold for less than $1. So, with statutory fines for each act of infringement sitting between $750 and $150,000, there are some big problems. Luckily, it appears some judges are beginning to agree with the idea that these fines are ridiculous. Ray Beckerman highlights a recent ruling by District Judge Shira A. Scheindlin in the Southern District of New York, where Schendlin stated:

"At the end of the day, 'statutory damages should bear some relation to actual damages suffered'... and 'cannot be divorced entirely from economic reality'"

Beckerman notes that a more reasonable standard would be somewhere between zero and nine times the actual damages -- with the lost profit on a single download being approximately $0.35 -- meaning damages per song should range from $0 to $3.15 per song file. Somehow, I'm guessing the RIAA will disagree.

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E-Voting Isn't Perfect, But It Takes Less Work to Corrupt Big Elections

from the O(1) dept

Thad Hall, a political scientist at Caltech, complains that e-voting critics rarely make apples-to-apples comparisons between electronic and paper voting systems. They contend that if traditional paper voting systems were subjected to the same kind of close scrutiny that e-voting endures, security experts would find flaws—ballot tampering, ballot box stuffing, and so forth—at least as serious as the problems commonly identified in touch-screen voting machines. Rice computer scientist Dan Wallach responds by pointing to a new paper he's written proposing an elegant way to think about the security of voting systems. Computer scientists use "big-O" notation to describe the complexity of algorithms. He suggests a similar terminology to describe the effort required to compromise voting systems as a function of the size of the election. A security flaw that can be compromised with an effort proportional to the number of voters N is said to be a O(N) flaw. A flaw that can be exploited with an effort proportional to the number of polling places is an O(P) flaw. A flaw that can be exploited with a constant amount of effort, regardless of the number of voters, is an O(1) flaw.

The last kind of attack is the most dangerous because it's feasible for a small number of people—perhaps even a single individual—to do a lot of damage. The reason paper-based elections tend to be better than touch-screen elections isn't that the former don't have flaws. The difference is that attacks against paper-based voting systems are far more likely to be O(N) or O(P)—that is, you have to tamper with a lot of ballots or corrupt a lot of poll workers. In contrast, because they contain re-programmable computers at their hearts, touch-screen voting systems are far more susceptible to O(1) attacks such as a custom-developed virus or a corrupt employee at the e-voting vendor. Because they allow a single individual to do extensive damage, they're much more dangerous than other kinds of attacks, even if carrying them out takes relatively more skill or effort than other attacks with O(P) or O(N) cost. The reason to prefer paper-based voting to touch-screen voting isn't that paper voting is flawless, but that the attacks against them are labor-intensive enough that it's difficult to carry out large-scale attacks without getting caught.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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When Suing For Copyright Infringement On A $500 License, Don't Ask For $766 Million

from the just-a-suggestion dept

Eric Goldman has a short blurb describing the outcome in a copyright lawsuit where a title company apparently infringed on the copyright of another company by reusing its web-based "rate calculator" on its own site without a license. Where the case got bizarre was that the copyright holder tried to claim that the title company now owed it every single cent it made, which amounted to $766 million in revenue -- even though (1) a license for the calculator would run $500 for the year and (2) it's difficult to see how all of the company's revenue could have been because of that single rate calculator. Luckily, the judge practically laughed them out of court, calling the request "preposterous." Instead, the court awarded a mere $1,500, or the equivalent of a three year license. As Goldman notes:

[This is] an amount that the defendant surely would have happily paid to settle before going to court if the plaintiff would have accepted it. Instead, this is great example of a dispute that had no chance of settling because the plaintiff’s demands were so out of this universe.

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Funny How Universal Music Thinks Infringement Fines Are Unconstitutional When It's On The Receiving End

from the and-how-does-that-work? dept

You may recall Bridgeport Music as a company that claims to own the rights to various musical compositions and has a long history of suing anyone who samples even the tiniest bits of that music. The worst part is that there are very serious questions concerning whether or not it really has the rights to much of the music it claims to control. George Clinton, for example, claims that Bridgeport used forged signatures to get control over his catalog. A recent Bridgeport case may be interesting for a different reason, though -- one that shows how the record labels have no problem contradicting themselves when on the receiving end of a copyright infringement lawsuit.

The lawsuit involved Univeral Music, who lost the original decision and was hit with a rather large fine. Universal Music appealed that decision on a variety of points -- and appears to have convinced the judge that the punitive damages tacked onto the copyright infringement claims were unconstitutional. This is quite interesting because, as Ray Beckerman notes in that link, Universal Music is involved in a bunch of lawsuits where it's pushing for extremely high fines for individuals found guilty of infringement. In fact, Universal Music is actually on the receiving end of a lawsuit that accuses the company of requesting unconstitutionally high fines. In that case, Universal Music is asking for fines that are more than 1,000x the actual damages. Pretty high, right? So what were the damages that Universal Music (and the court) found so unconstitutionally high in this case from Bridgeport? Turns out they were about 10x the actual damages. Funny how that works.

It seems like Universal Music may come to regret pointing out the variety of reasons (pdf) why punitive damages can be seen as unconstitutional, as one would imagine that UMG's own filing will be raised against it in its own copyright infringement suits:

"While the Supreme Court has declined to adopt concrete or bright-line constitutional limits for the ratio between actual or potential harm and a punitive-damage award, the Court nonetheless observed that, "in practice, few awards exceeding a singled-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process."... The court cited a 4-to-1 ratio as being close to the line of unconstitutional impropriety."

Universal Music would likely claim in its own defense that it was complaining about punitive damages, and in the other lawsuits it's fighting for statutory damages, but there are already plenty of folks pointing out that there really isn't much of a difference in many cases.

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Court Questions Patent Damages Against Microsoft For Guatemalan Patent Holder

from the more-delays dept

Microsoft has been fighting for years against a Guatemalan patent holder, Carlos Amado, who claims to hold a patent on the concept of linking a database to a spreadsheet. The patent itself has been thoroughly debunked. Even the patent itself admits that it's merely taken a bunch of concepts that were widely used before and combining them -- which is exactly the type of thing that the Supreme Court has said should not be patentable. Microsoft has appealed the ruling, but the Supreme Court turned it down. However, it then appealed the amount of damages, and the appeals court has now thrown out the lower court's damages based on the fact that it appeared to pick the damages number out of thin air. It seems likely that Microsoft will still have to pay damages for infringement (though, the court also admits that new Supreme Court rulings may impact the amount as well), but the lower court is going to at least have to justify how much Microsoft needs to pay Amado for basically putting such an obvious idea on paper and filing a patent.

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RIAA Can't Explain Why Copyright Damages Should Be Higher

from the um...-just-'cause? dept

Back in December, many people were surprised that Congress had put forth the PRO IP bill that would increase the fines that could be assessed to people found violating copyrights -- especially coming so soon after the outrage over the huge amount allowed under existing law. As Congress is trying to figure this issue out, the US Copyright Office held a roundtable discussion to examine the issue, where it asked the RIAA to explain why larger fines would be a good thing, and even the RIAA couldn't come up with a decent answer. Specifically, RIAA supporters were asked to name a single case where the damages were seen as too low under existing laws, and there was little response. While there was some discussion of cases where the RIAA didn't like the outcome, that wasn't because the fines were limited to too low a number based on the law.

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