by Mike Masnick
Thu, Jun 21st 2012 10:44am
by Mike Masnick
Fri, Jun 8th 2012 12:16pm
Judge Posner Dumps Ridiculous Patent Fight Between Apple & Motorola As Contrary To The Public Interest
from the with-prejudice dept
While he normally is on the 7th Circuit Appeals Court, appeals court judges will sometimes "slum it" down at a district court. So Posner was handling a big patent fight: one filed by Apple against Motorola for patent infringement concerning (of course) smartphones, down in the Northern Illinois district court. As we've discussed at length in the past, there are a whole bunch of patent disputes concerning smartphones, with companies suing each other in the courts or seeking injunctions from the ITC. This case was one of the "main events," especially considering Google's purchase of Motorola.
So it's pretty interesting to see that Posner has told everyone he's dumping the case. The trial was supposed to start on Monday, but he released a statement saying that there's nothing worth reviewing at a trial, and that he's dismissing the case with prejudice (meaning it can't be refiled), and effectively saying (in much nicer language) that the whole thing is a joke. The note concerning this says he'll issue a full ruling within a week -- though, he says that "in the course of... preparation I may change my mind" on the reasoning for the dismissal. Still, he lays out the basics, which are that there's simply nothing worth discussing. As he puts it: "neither party can establish a right to relief." Apple has admitted that "it cannot prove damages for the alleged infringement" of two of the patents, that two other patents do "not create a genuine issue of material fact" that would allow a trial to move forward and, with the final patent, Apple's evidence of damages "fails to create a genuine issue of material fact."
This isn't a huge surprise, since Posner's statements in filings from a few weeks ago certainly suggested his annoyance that a lawsuit had been filed over these patents. As quoted by Jeff Roberts at GigaOm, Posner had hit back at claims from both sides with pretty strong language:
[re a slide-to-unlock patent] Apple’s .. argument is that “a tap is a zero-length swipe.” That’s silly. It’s like saying that a point is a zero-length line.The statement from Posner also rejects the idea that, outside of the damages question, "injunctive relief" (blocking one another from offering the products) was reasonable, stating that it would "impose costs disproportionate to the harm" and "would be contrary to the public interest."
Motorola’s contention that the term has a “plain and ordinary meaning” is ridiculous; Motorola seems to have forgotten that this is a jury trial.
Roberts also notes that, in a bit of interesting timing, Posner had just a few days ago posted a blog post discussing the importance of capitalism, but noting that our version of capitalism is lacking in many ways -- with him specifically calling out the "dysfunctional patent system" as one of a litany of problems with the way we've embraced "capitalism."
Posner has certainly always appeared to recognize that intellectual property law could be abused, but this seems like a strong indication that he's realizing just how widely it is being abused under today's patent system.
by Mike Masnick
Wed, Apr 18th 2012 3:50pm
Ridiculous Statutory Damages Rules Mean Judge Regretfully Awards $3.6 Million For Circumvention Of DRM
from the totally-out-of-touch-with-reality dept
In this case, the people behind UMaple apparently ignored the lawsuit, leading to a default judgment. However, even there, it appears that MapleStory went too far, and the judge is clearly annoyed with them at times. Even though judges often side entirely with winners in default judgments, in this case, the judge repeatedly expresses skepticism about arguments made for determining "damages" to be awarded. Thus on most of the claims, the judge seems to look for ways to avoid giving MapleStory much, if any, money. For example, in determining profits made by UMaple, the judge repeatedly knocks MapleStory for failing to show what profits were specific to UMaple's infringement, telling it that it can't just assume all money made by UMaple belongs to MapleStory. So the judge dumps a request for $68,764.23 in profits made by UMaple down to just $398.98.
But... then we get to the anti-circumvention stuff. Here, the ridiculous statutory rates set a minimum of $200 per infringement. Multiply that by 17,938 users of UMaple... and you get $3.6 million. MapleStory, of course, asked for the statutory maximum of $44,845,000, which the court refuses to grant. In fact, the judge chides MapleStory for its request for the maximum -- even to the point of noting that the arguments by MapleStory make it "question very seriously whether Plaintiff intended to actively mislead the Court or whether these oversights were merely the result of poor legal research."
The court then notes that the minimum statutory amount -- the $3.6 million -- is already "a significant windfall to Plaintiff far in excess of any amount necessary to deter future infringing conduct," and also that the "award here likely bears little plausible relationship to Plaintiff’s actual damages." In fact, it sounds like the court would very much like to decrease the amount, but notes that "nevertheless, the court is powerless to deviate from the DMCA's statutory minimum."
As Goldman says, this is "guffaw-inducing", because the minimum award seems to have no bearing on the actual seriousness of the infringement. As he points out:
this case does provide an excellent example of the ridiculousness of anti-circumvention statutory damages. $3.4M can't be the right damages award in this case, and it's so guffaw-inducing that it further erodes the legitimacy of our copyright rules.Indeed. And yet no one seems interested in exploring just how disconnected statutory damages are from reality.
by Glyn Moody
Wed, Apr 4th 2012 2:45pm
from the but-is-it-really-over? dept
We're so inured to hearing about unjustified claims of copyright infringement going unpunished that's it's good to come across a case where extensive damages were awarded for the harm caused. It concerns a film that the Australian artist Richard Bell made in New York, with the help of an assistant called Tanya Steele:
Between June 2009 and September 2011, while on a fellowship in New York, Mr Bell produced and directed approximately 18 hours of raw footage for a film “The Blackfella’s Guide to New York”. He engaged Ms Steele to help him make the film, and paid her for these services.
Mr Bell made a trailer from the raw footage, which his agent posted on the Vimeo website.
Then things started to turn unpleasant:
Ms Steele, through her American lawyers, sent letters to Mr Bell and his agent claiming that she owned the copyright in the footage and demanding that the trailer be removed from the Internet. She also caused the Vimeo website to remove the trailer.
According to the official court proceedings, "threats of legal action were made in a calculated fashion by the respondent [Steele] through her New York law form [sic]" to both Bell and his agent. As a result of those threats:
Mr Bell’s agent did not display the footage on the Internet, postponed a showing of Mr Bell’s artworks, and delayed the sale of a catalogue of Mr Bell’s artworks that included a still from the trailer.
In response, Bell went to the (Australian) courts, which declared him the owner of the copyright in the film, and deemed Steele's threats "unjustifiable". Bell then asked for damages. These were granted in the latest judgment because Bell had lost the opportunity to sell some of his works, which typically cost tens of thousands of dollars, as a result of Steels' threats. The Australian judge awarded over $150,000 in damages plus another $23,000 costs against her.
As the article quoted above points out:
The decision sets an important precedent. As far as we are aware, this is the first time damages have been awarded where a third party had content removed from the Internet without legal justification. In light of this decision, if a person falsely tells a file-sharing or social media website that they own copyright in an image or movie to have it taken down, and in fact that is not the case, it could be actionable as an unjustifiable threat.
That's obviously good news in terms of deterring future unjustified claims of copyright infringment, at least in the Australian jurisdiction. But there are a couple of curious features about this case that are worth noting.
One is that Tanya Steele not only didn't turn up for the court case in Australia -- perhaps understandable, given the distance of Brisbane from New York -- but didn't even file a submission explaining her actions, so we don't really know her side of the story.
The second is that the article says: "The trailer for the video is now on YouTube". What's odd is that following that link brings up an ominous black screen with the following message:
This video is no longer available due to a copyright claim by Tanya Steele.
The original problem was over a posting of the trailer to Vimeo (and to the agent's Web site), not YouTube, which is nowhere mentioned in any of the documents, so this seems to be a new takedown. Maybe the case isn't over yet...
by Mike Masnick
Fri, Nov 18th 2011 3:05pm
Appeals Court Reject's Tenenbaum's Request To Rehear Arguments For Rejecting $675,000 Award For File Sharing
from the no-surprise dept
by Mike Masnick
Fri, Sep 16th 2011 5:29pm
from the too-bad dept
As happens often enough in such things, almost nothing that was heard during the oral hearings really mattered in the decision. The question of due process and remittitur didn't even make it into the hearing -- or if it did, it was a very minor part that didn't make an impact. And yet, that issue was central to the court reinstating the original $675,000 award.
The key points here are really procedural. The court notes that Gertner jumped to the constitutional question, which judges are supposed to avoid if they can. The court also suggests that Gertner should have used the remittitur process, like Judge Davis, allowing the record labels to (as they would have) reject the lower amount and redo the trial. Of course, as we've seen in the Jammie Thomas situation, that seems to lead to a series of wasteful cases.
To summarize: the court here basically avoided the big questions and sent the ruling back, and reinstating the jury award because Judge Gertner jumped the gun, and went straight to the Constitutional questions, when there were still other steps in the process that needed to be taken. This seems disappointing and wasteful in terms of resources, but such are the rules.
Separately, the court, as pretty much everyone not named Tenenbaum or Nesson suspected, didn't give any weight at all to Tenenbaum's separate appeal arguing that the Copyright Act itself was unconstitutional. These arguments were never going to persuade the court, and seemed more like (wasteful) academic exercises all along. In particular, the court eviscerates the idea that mere "consumers" should be treated differently by copyright law than those who are doing more than consuming. It notes that such a distinction is not mentioned by Congress anywhere, and if it wanted to amend copyright law to fix that, it's had plenty of time.
So, for the most part, this ruling is procedural... though it does go out of its way to note that "this case raises concerns about application of the Copyright Act which Congress may wish to examine." Of course, by now we know that if Congress opened up the Copyright Act to tinker, the end result would almost certainly be worse.
Either way, I'm assuming this case is far from over, and Tenenbaum, Nesson and some other Harvard Law students will keep banging the drum -- though, to date, it hasn't been all that successful. This is definitely a disappointing ruling, but hardly a surprising one.
by Mike Masnick
Tue, Apr 5th 2011 8:01am
from the we-will-soon-find-out dept
The appeal was just heard on Monday, and you can listen to the oral arguments (mp3) from the court's website. It's definitely an interesting hearing and worth listening to. As with most appeals court situations, the bulk of the work is done in the briefs that were filed prior to the hearing, and which everyone is familiar with. The oral hearings get right to the point and drill down on where the panel of judges has questions.
Was file sharing in existence at the time the statute was passed?The Justice Department tries to get around this by pointing to the legislative record from the last time the statutory damage rates were changed, but the judge is not buying it. He immediately points out that if this is what Congress intended, it's quite odd that no such cases (or perhaps one other case -- by which they're referring to the Jammie Thomas case) have been tried, involving file sharing for non-commercial means. The judge clearly seems skeptical that copyright law was intended for such cases. While the lawyer tries to explain all of this away, with some claim about how everyone makes choices in who they sue, another judge chimes in and points out that for all the claims that Congress meant for these damages to cover non-commercial file sharing, wouldn't Congress also know that the law had never been used that way.
The lawyer again goes on to insist that since file sharing "greatly multiplies the harm" to the copyright holder (um... citation needed on that one...), Congress must have meant for such ridiculous statutory rates to cover file sharing as well. Again, the judges seem skeptical, pointing out that in this particular case, the only evidence was that Joel Tenenbaum downloaded 30 songs, and the RIAA presented no evidence that anyone else copied from him. In other words, they immediately push back on the claims of "harm." The lawyer, again says that there's lots of other evidence, even though the labels chose not to bring it.
Once again, the court is skeptical. They ask the DoJ lawyer: if Tenenbaum had sat down in a single setting and downloaded 1,000 songs, would it be appropriate under the law to claim he owed $75,000 for each download. And the lawyer says, effectively, yes, after going through the specific statutory rates ($750 to $30,000 for non-willful, and up to $150,000 for willful). Realizing how ridiculous this sounds, the lawyer tries to focus on the fact that the judge can tell the jury about mitigating factors and be specific in the jury instructions.
From there, the lawyer for the record labels, Paul Clement, steps in, and claims that the ridiculously high damages are fine because Congress wanted to send a message about the harm of "willful" infringement. He then goes on to rail about how Tenenbaum's downloading destroyed "the value of the copyright," and complains about how the district court judge likened downloading to public performance rights. At that point, another judge interrupts, and says that he basically doesn't understand "the mechanics" of infringement, and would like more specific info.
After explaining (somewhat misleadingly, but carefully) how file sharing works, Clement goes on to rail against file sharing as being incredibly damaging, because it pushes people who download to also upload... and immediately a judge cuts to the heart of one of the key legal questions:
Is "making available" the same as distribution?Clement sidesteps this, by noting that while the RIAA obviously thinks it is, that's "not an issue in this case." The judge doesn't want to give up, though, and asks him if the record labels "have the technological capacity to determine if distribution was actually effectuated?" Again, Clement tries to get around this, by saying it doesn't matter in this case.
Another judge asks a pertinent question about damages, wondering if the actual damage to the record labels was just "the lost sales" from people not buying the music, and Clement, quite ridiculously, then tries to pin the entire demise of copyright law on Tenenbaum:
"It's more than that, your honor. It's really the complete undermining of the copyright. What I mean by that is you can't just isolate what's going on here as if it's an individual's, by copying it, has not gone and bought the work on iTunes or not bought the work in a record store when we used to have record stores. What happens is, by distributing it to others, there are... the viral nature of this technology, really has a substantial impact on the value of the work. And the way I'd ask you to think about it is this: one, I think, relevant question in a statutory damages case is, what would it cost to get a license for what the defendant has done. And, if all the defendant had done was making a copy and that was it, then maybe an analogy to just getting a copy off of iTunes would be appropriate. But here, by distributing it... if someone wanted to go to one of the record companies and say 'we'd like to do what the defendant did in this case,' the value of that license would be essentially the value of the entire copyrighted work. Because the effect of putting this work up on peer-to-peer technology is essentially you take a copyrighted work, and put it in the public domain."He goes on to blame the poor financial state of the record labels on file sharing, and seems to indicate that we should blame Tenenbaum for this.
After a brief, and somewhat inconsequential, discussion by Julie Ahrens, representing the EFF (which the judges clearly didn't have much interest in, pointing out that any of the issues raised should have been raised to the jury, not to them -- even though that would have raised questions by the RIAA folks of an attempt at jury nullification...), we move on to Tenenbaum's own defense, which was handled (with permission) by a Harvard Law student, Jason Harrow. He kicks off his talk by pointing out that the Justice Department's claim that companies didn't bring such lawsuits for non-commercial infringement in the past because it wasn't cost effective, is on its face ridiculous. After all, if you can get $150,000 per infringement for someone infringing on a $1 work, how is it not cost effective to bring that lawsuit over and over again (just ask the various mass file sharing lawsuit filers...). Instead, he notes that the better explanation is that "no one thought that the statute would apply to such consumer usage."
One of the judges immediately jumps in and says that Congress could have made an exception, but didn't. Harrow points out that perhaps it didn't because the result would naturally be absurd: the idea that someone sitting at home, listening to music, would suddenly be liable for billions of dollars, doesn't make any sense. The judges' questioning of Harrow seems focused on the specific standards and jury instructions, rather than on the larger issue.
Finally, Charlie Nesson presents, and goes through the history of copyright law, and how statutory damages were clearly, originally intended for commercial infringement, not non-commercial. One of the judges points out that the RIAA began these lawsuits in 2003, and if Congress was upset about them, it's had eight years to amend the statute to specify that statutory damages don't apply to non-commercial use. Of course, that ignores the reality, which is that it's effectively impossible for Congress to change copyright law in a manner that benefits consumers, since the entertainment industry would go ballistic. The court also chides Nesson a bit for "pushing the bubble" very far in some of his arguments.
Clement then comes back for a brief rebuttal, trying to claim that the very first Congress put in place statutory damages for copyright... which is immediately shot down by one of the judges, who notes that the Congress felt that statutory damages should not be punitive, which Clement tries to sidestep around (not very successfully, in my opinion).
And that's about it. If you had asked me prior to the oral hearing, I would have said that the court would almost certainly uphold the statutory damage rates as being perfectly reasonable. It just seems like the sort of question that the courts don't want to touch -- especially (as mentioned by one of the judges in the case) noting that Congress has said nothing on the issue in the last decade. However, I have to admit that I was surprised at how (I believe) two of the judges really seemed to dig in against both the Justice Department lawyer and the RIAA/labels lawyer, on the big key questions, and suggested, repeatedly, that they're not buying the overall claim. I'm still guessing that the court won't say that the award was unconstitutionally excessive, but I'm not nearly as certain after listening to the hearing as I was before it...
by Mike Masnick
Fri, Mar 11th 2011 3:39pm
from the try-again dept
"Plaintiffs are suggesting an award that is more money than the entire music recording industry has made since Edison's invention of the phonograph in 1877," Wood wrote, citing a Lime Group court filing referring to the inventor Thomas Edison. She called this an "absurd result."
by Mike Masnick
Thu, Jan 6th 2011 7:02pm
from the made-up-rules,-made-up-results dept
In a ruling in a patent infringement lawsuit between Uniloc and Microsoft, the appeals court for the Federal Circuit (CAFC) finally pointed out just how ridiculous the 25% rule really is and suggested that it should die a quick death. The court noted how the 25% rule is widely used, and even how the district court was troubled by such a "rule of thumb" rather than any actual look into damages, but that since it was so widely used, the lower court effectively shrugged its shoulders, and let the 25% rule remain. The appeals court rejected this commonly used tool, however, noting serious problems with it. CAFC admits that it has been just as guilty in accepting the 25% rule in the past and many other courts have simply used it just because everyone else is using it -- but no one's ever really asked a court if it's legitimate. But, no longer:
This court now holds as a matter of Federal Circuit law that the 25 percent rule of thumb is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation. Evidence relying on the 25 percent rule of thumb is thus inadmissible under Daubert and the Federal Rules of Evidence, because it fails to tie a reasonable royalty base to the facts of the case at issue.The court then points out that the patent holder has the responsibility for demonstrating what the actual damages are and they must sufficiently tie the damages estimates to the facts of the case -- without doing that, and just using a rule of thumb, means that "the testimony must be excluded." The court doesn't beat around the bush here:
The meaning of these cases is clear: there must be a basis in fact to associate the royalty rates used in prior licenses to the particular hypothetical negotiation at issue in the case. The 25 percent rule of thumb as an abstract and largely theoretical construct fails to satisfy this fundamental requirement. The rule does not say any-thing about a particular hypothetical negotiation or reasonable royalty involving any particular technology, industry, or party. Relying on the 25 percent rule of thumb in a reasonable royalty calculation is far more unreliable and irrelevant than reliance on parties’ unre-lated licenses, which we rejected in ResQNet and Lucent Technologies....Separately, CAFC also rejected the idea of using the "entire market value rule," in determining a reasonable royalty rate. Again, the court dismisses this commonly used rule as not being tied to the specifics of the situation. This rule involves a patent holder trying to determine the reasonable royalty rate on the overall market value of a product, rather than figuring out the actual market value of the invention in question. This trick is useful for patent holders because they can toss out some huge number, to make any (otherwise huge) number sound reasonable. For example, in this case, the patent holder pointed out that Microsoft had made "approximately $20 billion" selling "the infringing product." When you use an amount that large, then a few hundred million dollars seems "small." The full market value is misleading, and CAFC makes that clear:
.... Beginning from a fundamentally flawed premise and adjusting it based on legitimate considerations spe-cific to the facts of the case nevertheless results in a fundamentally flawed conclusion....
This case provides a good example of the danger of admitting consideration of the entire market value of the accused where the patented component does not create the basis for customer demand.... The disclosure that a company has made $19 billion dollars in revenue from an infringing product cannot help but skew the damages horizon for the jury, regardless of the contribution of the patented component to this revenue.The court highlights how the patent holder's lawyers played up the "approximately $20 billion," and mocked a proposed $7 million royalty as only being "an effective royalty of approximately .000035%," which ignored, of course, that the patent in question was a very, very, very minor part of the larger product. In fact, Uniloc's lawyer specifically asked a witness:
And at the end of the day, the in-fringer, Microsoft, who violated the patent law, they get to keep 99.9999% of the box and the inventor, whose patent they in-fringed, he gets the privilege of keeping .00003%?It's not hard to see how that clearly biases the jury. But CAFC is thankfully rejecting that too. While I often find that CAFC sides too strongly with patent holders, it's nice to see it pushing back a bit on some of the more ridiculous "rules of thumb" used for damages that are way out of scale with reality.
by Mike Masnick
Fri, Dec 17th 2010 10:57am
from the this-could-be-interesting... dept
On Tuesday, Judge Freeman said tough noogies, with some interesting language written in the margins of a court-endorsed memo to the parties. She scribbled -- barely legible -- that Lime Wire should enjoy enough discovery to mount a defense on the damages issue. Both Lime Wire and the labels must pick 100 works -- 80 songs and 20 albums -- that each believes to be representative of the damage (real or not) that file-sharing has on the record companies. In addition, 100 more works -- another 80 songs and 20 albums -- will be selected at random.It's not entirely clear, from there, how each side will go about showing damages, but it is interesting that the plan seems to be to look for empirical evidence to determine actual damages. I'm really surprised by this -- since my understanding was that with statutory rates, the whole idea was that the copyright holder never had to bother proving any actual damage (something I disagree with -- but it's what I thought the law said...). Either way, it certainly would be nice if there were some reasonable data to work with, so this should be worth following.