Letter from AmeriKat II: Viacom v YouTube - The Viacom Appeal

Willfull Blindness cannot save you now

Viacom argues that, even if Section 512(c) excludes from liability those that do no not have URL-specific knowledge of infringement, the district court erred by finding for YouTube where the evidence showed that it was willfully blind to the massive scale of copyright infringement on the site. It was held In re Aimster Copyright Litigation (2003), cited in Arista Records v Doe 3 (2010) and recently in Tiffany v eBay that “willful blindness is knowledge in copyright law…as it is in the law generally.” Willful blindess occurs where a person engages in “deliberate avoidance” amounting to knowledge where “the circumstances were such to alert [the person] to a high probability” of the relevant fact, but the defendant “consciously avoided learning” that fact. A potential finding of willful blindness can be defeated where a defendant “continually taking steps to further refine its anti-fraud measures”, as was the case of eBay in Tiffany v eBay. Viacom argues that YouTube actually did the opposite of eBay in taking “affirmative steps to shut down any mechanism that might have provided the URL-specific knowledge YouTube claims is indispensable” for a finding of liability by removing the ability for community users to flag suspected infringing videos and only “selectively” implementing fingerprint technology. (picture, top left - YouTube's business policy? - "See no evil, hear no evil, speak no evil")

The Section 512(1)(B) Problem: YouTube Profiteering from Infringement

Section 512(c)(1)(B) requires that a defendant who benefits from a safe harbour protection must “not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity.” Judge Stanton held that YouTube lacked the “right and ability to control” the activity because they did not have “item-specific” knowledge of the activity, but did not rule on whether or not they received a financial benefit. Viacom again argues that the touchstone of “item-specific” knowledge is not a pre-requisite for being able to control an activity. This is because, says Viacom, YouTube has the “ability” to control third-party infringement by implementing Audible Magic filtering.

Further, like with the district court’s interpretation holding Section 512(c)(1)(A)(ii) virtually meaningless, their interpretation of Section 512(c)(1)(B) is rendered likewise. This is because, if “right and ability to control” requires an ISP to have “item-specific knowledge”, this appears to be the same knowledge required for and ISP to fall foul of Section 512(c)(1)(A)(i) and (ii). Section 512(B), on this construction, essentially duplicates Section 512(c)(1)(A) as any service provider who has item specific knowledge of users’ acts of infringement automatically falls foul of Section 512(c)(1)(A) and thus never gets to Section 512(B).

Viacom argues that Congressional intent of Section 512(c)(1)(B) was to track the common law rule that a defendant may be found vicariously liable for copyright infringement where the defendant

“derive[s] a direct financial benefit from the infringement and ha[s] the right and ability to supervise the infringing activity.” (Ellison v Robertson (2004); Matthew Bender v W. Publishing Co. (1998))

This interpretation, says Viacom, is confirmed by Congress in the HR Rep NO 105-551(I) at 25-26, by the courts in Perfect10 and by academics in Nimmer on Copyright (section 12B.04[A][2] at 12B-38). Because vicarious liability turns on financial benefit and control, even in the absence of actual knowledge of infringement (Shapiro (1966); Grokster (2005)), YouTube’s activities clearly fall within the scope of Section 512(c)(1)(B). This is because, Viacom argues, YouTube has the right to control activities on the site by reserving editorial control in and the right to remove content and terminate accounts. It also has the ability to control the site by way of community flagging of suspected infringing videos, by way of its search feature and index and by implementation of fingerprint filtering technologies. YouTube also obtained a direct financial benefit attributable to the infringement because the infringing material acted as a “draw” or “major lure” for an ever-increasing YouTube audience. Such popularity resulted in YouTube being bought by Google for $1.65 billion only about 18 months after it was founded. This financial element is also seen by the placement of ads next to videos up until 2007.

No storage, no harbour!

A final requirement of Section 512(c)’s safe harbour is that the infringement is “by reason of the storage at the direction of a user” of the material. This includes service space for a user’s website, chatroom, or other forum where material is posted by users, which on the face of it may include a YouTube-type service. However, Viacom argues that its claims of infringement do not have anything to do with “storage” with or without the direction of a user: YouTube, in transcoding user-uploaded material into a standard format for display, distribution and performance of the content from its site, does not just facilitate storage but facilitates broadcasting. Viacom argues that a user’s decision to upload a video on to YouTube is not a direction to YouTube to then make copies of the video in different formats, to index and feature the material, or to licence the material to third parties to make viewing of the video easier on hand-held devices (such as the case with Verizon wireless). Viacom argues that YouTube takes those actions independently and for its own benefit and profit.

However, the AmeriKat cannot help but find fault with this argument because, if YouTube users just wanted their videos to be stored they would not be uploading them onto YouTube. YouTube users upload their videos on the site for the very reason that YouTube transforms the video into the particular viewable format. Surely their “direction” is implicit from the mere fact they are using YouTube to upload their video.

What’s Next

Almost 55 pages later, the bulk of Viacom’s substantive arguments end and its arguments for their motions for summary judgment on these issues begin—all in all 13,880 words or 15,000 more than this post.

A large swarm of amici curiae including Microsoft, The Washington Post, Newspaper Association of America, The Associated Press, and a group of economic professors also aligned with Viacom – a summary of their briefs can be found here. Microsoft’s brief in particular focused on YouTube’s “intentional efforts to build – and expand – its business based on a model that invited users to upload copyright infringing content to its site” and stating that this type of activity was not intended by Congress to benefit from the DMCA’s safe harbour provisions.

The AmeriKat is cautious about Viacom’s chances of success in their appeal and motion for summary judgment. Although she sees some logic in their arguments, especially in relation to redundancy of Section 512(c)(1)(A)(ii) with the heightened standard of knowledge, the US courts have in recent history been interpreting IP statutes in a way which benefits a Google, YouTube and eBay-type business model and she does not think that this case will be all that different. What do readers think? Will the Appeals Court save Viacom?

As far as the AmeriKat is aware, we have yet to receive a response from YouTube’s camp, be it press release or court filing. The AmeriKat has not been able to find any evidence of a peep or meow from YouTube, but if any reader knows of any, please let her know.

Letter from AmeriKat I: Viacom v YouTube - The Viacom Appeal

This summary is not available. Please click here to view the post.

Letter from AmeriKat: Uggs, The Daily fight, Bayh-Dole turns 30, & more!!

The AmeriKat has managed to survive a week bursting with holiday work parties, lunches, dinners, and dances. Although always eager to socialize and mingle in the festive holiday cheer, by the end of last week - having sustained 6 holiday events in the course of 5 days, the prospect of teetering around another room in high heels while sustaining her hunger on only a handful of hors d'oeuvres was becoming a touch exasperating. Now that her party onslaught is over, she can return to her regularly scheduled program of returning home after a long day's work, kicking off her heels, and plopping on the sofa. (picture, left - the AmeriKat snuggling into her sofa for the night) To keep her paws warm in the evenings she either elects for her ancient red Gap slipper boots or her Uggs. The AmeriKat continues to receive abuse from her friends for the latter choice of footwear and she is the first to admit that she did formerly judge Ugg-wearers. However, she has found that after a day of cold, painful high heels, fluffy warm Uggs are really the footwear equivalent of warm tomato soup during the dark winter evenings.

Ugg chases after Emu: Besides keeping feet warm, the American company Ugg Australia is also keeping the US Courts warm with their trade mark infringement filing last week against their competitor, Emu, for the use of their registered trademark,UGG. (picture, right - examples of Ugg boots). Deckers Outdoor Corporation, who own Ugg Australia, has sued Emu Australia in the District Court for the Central District of California for describing their products on their US website as "ugg boots". Emu is defending Ugg Australia's claim by suggesting that "ugg"is a generic word used in Australia meaning "sheepskin boots". Emu also say that there are more than 70 registrations for UGG in Australia.

Last year Ugg Australia sold over $712 million worth of footwear. With Ugg look-a-likes infiltrating the market at record speeds it is no surprise that they would be keen to stamp out any alleged trade mark infringement as quickly as possible. Angel Martinez, Decker's chairman and CEO stated that:

“The success of Ugg Australia has created an entire industry of companies that market their wares by deliberately confusing consumers. Emu’s trademark infringement is intentionally misleading consumers into believing they are buying a genuine Ugg Australia product when in fact, they are not.”

The AmeriKat constantly sees Ugg rip-offs around and about, but of course the scope of protection for the design of the classic Ugg boot itself is very minimal (if at all existent). The greatest protection for Ugg is therefore in their trade mark and brand names - of which they have a reported more than 100 trade mark registrations in their portfolio.

Despite Emu's claims regarding the use of "ugg" as a generic word in Australia, this is irrelevant. The case is based on the exclusive rights of Ugg Australia in their trade mark UGG in the U.S., and therefore the question is whether the term UGG is generic in this jurisdiction. From experience, the average consumer in the US does not use the word "ugg" generically. When the AmeriKat has asked her American friends if they have a pair of Uggs some have said "No, but I have some fake ones though.". Such evidence, the AmeriKat suggests, will not be difficult for Ugg Australia to obtain if necessary to defend the distinctiveness of the mark. (picture, left - an example of an Emu boot) Further, in 2005 a California court ruled in Decker's favor when the UGG mark's validity was challenged as being generic. The court held that the mark's meaning had been ascribed to that of indicating the brand, rather than a generic term. Given that the reputation of Ugg as a brand has only increased since 2005, it would seem bizarre if the court would hold otherwise. Ugg's case will also have to show a likelihood of confusion, the test for which in the Ninth Circuit follows that of the AMF v Sleekcraft Boats (1979) case. Of the several factors of confusion that will be adduced, it is the evidence of actual confusion that will be most challenging for Ugg Australia, as well as showing the Defendant's intention in using the mark on the website.

Ugg Australia's legal efforts are not without controversy, especially in Australia. For an excellent article on the business and law of Uggs please see this Wall Street Journal article here.

Murdoch set to fight for "Daily": Generic marks seem to be the name of the game in US trade mark litigation at the moment. Last week News Corp owned company, The Daily Holdings Inc (all ultimately owned by Rupert Murdoch) filed a pre-emptive lawsuit against IMG Worldwide asking the court to bar them from claiming ownership of any trade mark rights in the sign THE DAILY. They argue that THE DAILY is a generic phrase in the media - think The Daily Mail, The Daily Mirror, The Daily Hysteric, etc. IMG Worldwide own a fashion title called The Daily Front Row and claim to have common law (unregistered) trademark rights in the words THE DAILY dating back to 2003. As those who have been keeping up with Murdoch's pay-wall and iPad experiment know, News Corporation is planning an iPad and other tablet news, sports and lifestyle media service called "The Daily". IMG Worldwide previously indicated to The Daily Holdings that it would be seeking to enforce its rights against the media conglomeration if their plans for "The Daily" were to go ahead. The Daily Front Row already have their own iPad news application - click here (picture, above).

According to Reuters, the two parties met last week in order to reach an agreement. The talks were unsuccessful so The Daily Holdings rushed to get their filing in before IMG had a chance to file their "imminent" trade mark infringement law suit. The AmeriKat checked the USPTO trade mark register to find that on 6 December 2010 IMG filed a trade mark application for THE DAILY for magazines in the fashion industry. The Daily Holdings filed a trade mark registration for the words and design of their seemingly soon-to-be logo THE DAILY on 22 October 2010. To search for these applications please click here. (picture, left - a mark applied for by The Daily Holdings)

Given that The Daily Holdings is alleging that the sign "The Daily" is generic, is it really wise to be using it to launch a new subscription service and indeed to apply for a trade mark for the words and design which incorporates the "generic" term? Is it not the first rule of branding to come up with a brand that isn't generic in your industry? (picture, left - another mark applied for by The Daily Holdings as found on the USPTO website)

Bayh-Dole Act Turns 30!: Last week the USPTO celebrated the 30th anniversary of the 1980 Bayh-Dole Act - whose birthday is actually today. The Act was created to unite patent policy throughout the many federal agencies that fund scientific research which enabled small businesses and non-profits such as universities the ability to retain ownership in patents made under federally funded research programs. According to the USTPO press statement, Senator Bayh (D-Indiana)(picture, right)stated that:

“Bayh-Dole shows that citizens really can change government. That doesn't mean that the process is easy or quick. A handful of determined men and women made the law a reality and have preserved it for 30 years. Now we need new hands to help carry the message of how valuable Bayh-Dole is to the continued health and wealth of the United States.”

If this Act sounds familiar it is because over a month ago the US Supreme Court granted the writ of certiorari to hear Stanford University's claim against Roche Holding AG in respect of patents for methods of testing the effectiveness of AIDS treatments by measuring the HIV concentration in blood plasma. Scientists at the university created the invention while under contract to the university, but one of the scientists agreed to assign his future rights in the method to Roche. A scuffle between the two entities then ensued. The Supreme Court case will focus on the interpretation Sections 200-212 of the Bahy-Dole Act which the university contends trumps the rights of Roche. The university's question to the Supreme Court reads as follows:

Whether a federal contractor university's statutory right under the Bayh-Dole Act, 35 U.S.C. §§ 200-212, in inventions arising from federally funded research can be terminated unilaterally by an individual inventor through a separate agreement purporting to assign the inventor's rights to a third party.

For more details on this story please see the original IPKat story here.

Viacom v YouTube: Two weeks ago, as expected (so expected, the AmeriKat adds, that she didn't even think it was news), Viacom filed their appeal in the Viacom v YouTube case in the appeals court in New York (see previous AmeriKat posts on the case here). Several amici briefs from the great and the good in the media industry were also filed last Friday, including a filing from Microsoft on behalf of Viacom. The AmeriKat will be taking the 72-page brief from Viacom on her long flight back to the US next week to digest in preparation for a jet-lagged induced AmeriKat post on the appeal next Sunday!

Letter from AmeriKat: Full of Surprises - USPTO fights TM bullies, the Hulk, and Olson takes on YouTube

Two Fridays ago, the AmeriKat was involved in a technical discussion with a partner at her firm, when a bouquet of beautiful pink and purple flowers interrupted the dialogue as it landed on her desk. Convinced the bouquet was meant for someone else she looked at the card, but it was indeed addressed to her, an ipkitten, from an anonymous reader. The AmeriKat, unsure of what was more surprising, receiving flowers or receiving them from an anonymous source, began to quiz the usual suspects - all of whom knew nothing of the greenery. The flowers, still blooming away on her desk, are a little reminder to the AmeriKat that when you least expect it, your otherwise run-of-the-mill day can surprise you. (picture, left - the AmeriKat smelling her bouquet on her desk) Thank you, anonymous reader!

USPTO to stop trade mark bullies?: Recess - either the enjoyable half hour that many look forward to, or dread as the encounter with the playground bully nears. Teachers and students are not the only individuals concerned with bullies - surprisingly, the USPTO is as well! Earlier this year the US Congress and President Obama passed into law the Trademark Technical and Conforming Amendment Act of 2010 (TTCAA). The bill focused primarily on technical aspects of trade mark law such as affidavit filing for continued use of trade marks and other fascinating issues. However, there is a surprise in the Act. Every IP lawyer's favourite politician, Senator Patrick Leahy (D-Vermont, picture right), included a provision, now lovingly known as the "trade mark bullies" provision, that requires the Secretary of Commerce to study and report to Congress on:

"the extent to which small businesses may be harmed by litigation tactics attempting to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to the trademark owner"

So where does Senator Leahy's concern about trade mark bullies derive? Well, it turns out it is good old fashion state politics. Senator Leahy is a senator from Vermont. His election to Senate, therefore, depends on the good people of Vermont. Some of these good people include a husband-and-wife run Vermont brewery, Rock Art Brewery, who had been on the receiving end of Hansen Natural Corporation's lawyers. Hansen produce a variety of beverages, including Monster Energy Drink. Rock Art Brewery produce a beer called VERMONSTER. Not infringing to the AmeriKat and little chance a consumer would be confused between buying a energy drink and a beer. However, Rock Art Brewery duly received a cease and desist letter from Hansen claiming that Rock Art's VERMONSTER infringed their MONSTER ENERGY trade marks. Instead of submitting to the multi-million dollar coroporation, the Vermont brewery fought back and generated enough negative publicity to lead to a settlement agreement whereby Rock Art Brewery could continue to use their mark. To hear Rock Art Brewery's story - click the links here and here.

The AmeriKat reads several reports of multi-million dollar corporations sending out such cease and desist letters (remember the DoughBoy/Girl saga here?) and with such commonplace stories the USPTO is now calling for submissions from small business owners about their experiences with such "bullies". Specific questions include:

• In approximately the last 5 years, please describe any instances of which you have first-hand knowledge where a small business may have been the target of litigation tactics attempting to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to the trademark owner
• Whether you think “trademark bullies” are currently a problem for trademark owners, and if so, how significant is the problem?
• Whether you think aggressive litigation tactics are more pervasive in the trademark area than in other areas of the law?
• Whether you think the USPTO has a responsibility to discourage or prevent trademark bullying? If yes, what should the USPTO do?

If you are the David in one of these David and Goliath sagas, the USPTO asks you to respond to questions and send your comments to TMFeedback@uspto.gov, with the subject line “Small Business Study” by no later than January 7, 2011.

The AmeriKat loves this provision and the call for evidence, but is questioning what Congress is really going to do with the evidence? What protection should be afforded small businesses? Perhaps an unjustified threats action? What do readers think?

Trade mark infringement makes Hulk mad: In the field of "surprising' (and potentially keeping with the trade mark bullies theme), nothing could be less surprising than a Disney-owned subsidiary, Marvel Comics, suing a much smaller company for use of one of their marks. Marvel Comics has filed a complaint against Airbase Industries, an Ohio-based power tool manufacturer, for use of a line of industrial and domestic equipment under a "Hulk" brand. The line's marketing logo is "Unleash the Power". One of Airbase's subsidiaries registered the HULK mark with the USPTO last year, which Marvel opposed, but an USPTO examiner gave the go ahead nevertheless. Now with the sale of Airbase's air compressor (picture, right) under the HULK mark, Marvel has initiated proceedings in the Ohio Southern District court.

The complaint states that the products slimy green shade is "confusingly similar" to the Hulk's green character. The lettering and font of the product's HULK mark is also, they allege, "nearly identical" to Marvel's Hulk logo. These two elements are so similar to the look and feel of Marvel's Hulk (picture, left) that your average power tool consumer will think that Marvel licensed the use of their Hulk rights to Airbase. Does your average power tool consumer think much except "that is an awesome air compressor!", anyway? Marvel is asking the court for the usual remedies - injunction, cancellation of the Airbase trade mark and all the profits from the infringing products.

Although several other companies and individuals have used and indeed registered HULK for products without too much of a squeak from Marvel, it is Airbase's product that has awoken the dragon. The AmeriKat believes this is due to the mistaken choice, by Airbase, to use such a similar green color to that of the Hulk. But the timing is also telling. Reported by The Hollywood Reporter last week, Marvel and American TV channel, ABC, are planning the return of the Incredible Hulk. Lesson: don't mess with the Hulk when he has a new show and merchandise coming out...

YouTube to face superstar lawyer in Viacom appeal: Another superstar that is planning a bit of an upcoming show is Theodore Olson. Olson, one of the most renowned appellate lawyers in the U.S. , has been hired by Viacom in their appeal against Judge Stanton's ruling earlier this summer. As reported by the AmeriKat (here), the judge ruled that YouTube qualified for the Safe Harbor protections under the Copyright Act for direct and contributory copyright infringement in hosting Viacom content illegally posted by other users. The loss was a huge knock to Viacom and other rights-holders in their fight against YouTube. The hiring of Olson, however, means that Viacom - far from being defeated, is coming back for another round.

Olson, (picture, right) a Republican, grew up mainly in the San Fransisco Bay area and later worked as the Assistant Attorney General in the Reagan Administration. He also defended former President Reagan during the Iran-Contra affair. From 2001 to 2004, Olson was, unsurprisingly, Solicitor General of the United States following his victory in Bush v Gore which permitted President Bush to take office. Obviously, the AmeriKat is painting a picture of Olson as a Republican ally, used to representing the more powerful and liquidated of parties. However, keeping in line with the theme of surprise this week, Olson also joined forces with his opposing counsel in Bush v Gore, David Boies, to bring and win a federal suit to overturn Prop 8 banning gay marriage in California in Perry v Schwarzenegger.

A few weeks ago, Google submitted a motion to the 2nd Circuit court to consolidate the appeals of Viacom and the class action suit headed by the Premier League. Had Google gotten their way, Viacom would have had to join forces with Premier League et al to file one appeal brief. However, last Monday the 2nd Circuit court ruled that although the case would be consolidated and heard in tandem per Viacom's motion, each of the parties would have the chance to file their own briefs. So as of 3 December, when Viacom is expected to file their appeal, the AmeriKat anticipates their brief, with Olson at the helm, will not fall too short of their 14,000 word limit. The oral hearings in the appeal are sent to take place next summer.

The AmeriKat wonders if Olson is keeping some surprising arguments up his sleeve for the appeal, because where she stands right now it will only be the most creative and impressive of arguments that will defeat YouTube,now.