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What a Deal! Car Dealers Retain Control over Their Own Data

by Jodi Benassi | Nov 11, 2021 | Copyrights

The US Court of Appeals for the Ninth Circuit affirmed a district court’s conclusion that there is no conflict between an Arizona statute aimed at strengthening privacy protections for consumers whose data is collected by car dealers and the Copyright Act provision that grants the owner of a copyrighted work the exclusive right “to reproduce the copyrighted work in copies.” CDK Global LLC v. Mark Brnovich, et al., Case No. 20-16469 (9th Cir. Oct. 25, 2021) (Miller, J.)

Car dealers use specialized dealer management software (DMS), which at its core is a database containing information about a dealer’s customers, vehicles, accounting, parts and services. Some of the data includes personal information, such as social security numbers and credit histories. The data is used for a variety of tasks, from financing to inventory management. Dealers also rely on separate software applications for various aspects of their business, such as marketing and customer relations. For those applications to properly function, they must access the data stored in a dealer’s DMS.

CDK is a technology company that licenses DMS to dealers. In the past, CDK allowed dealers to share access to the DMS with third-party companies that would integrate data from the DMS with other software applications. Recently, however, CDK began to prohibit the practice and instead offered its own data integration services to dealers.

In 2019, the Arizona legislature enacted a statute, known as the Dealer Law, to ensure that dealers retain control over their data. There are two provisions of the Dealer Law central to this case. First, the statute prohibits DMS providers from taking any actions (contractual, technical or otherwise) to prohibit a dealer’s ability to protect, store, copy, share or use the data stored in its DMS. Second, the statute requires DMS providers to adopt and make available a standardized framework for the exchange, integration and sharing of data.

CDK sued the attorney general of Arizona for declaratory and injunctive relief, asserting a range of claims. In one of its claims, CDK argued that the Dealer Law is preempted by the Copyright Act, 17 U.S.C. § 101 et seq. CDK asserted that the Dealer Law conflicts with the Copyright Act because the Dealer Law grants dealers and their authorized integrators the right to access CDK’s systems and create unlicensed copies of its DMS, its application programming interfaces (APIs) and its data compilations. CDK argued that in all three respects, the statute conflicts with 17 U.S.C. § 106(1), which grants the owner of a copyrighted work the exclusive right “to reproduce the copyrighted work in copies.” The district court dismissed most of the claims but allowed the copyright preemption claims and a few others to proceed. Following a hearing, the district court denied a preliminary injunction. CDK appealed.

On appeal, the Ninth Circuit found that CDK presented no evidence that the Dealer Law would require the embodiments of CDK’s DMS to persist for a period of more than transitory duration. The Court explained that the reproduction right set forth in [...]

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Oh the Horror: No Work for Hire in Friday the 13th Screenplay

by Joshua Revilla | Oct 14, 2021 | Copyrights

The US Court of Appeals for the Second Circuit affirmed a summary judgment grant, ruling that an author was an independent contractor when writing the screenplay for a horror film and entitled to authorship rights, and therefore entitled to exercise his copyright § 203 termination right. Horror Inc. v. Miller, Case No. 18-3123 (2d Cir. Sept. 30, 2021) (Carney, J.)

Victor Miller is an author who has written numerous novels, screenplays and teleplays. Sean Cunningham is a producer, director and writer of feature films and is the general partner of Manny Company. Miller and Cunningham were close friends who began working together around 1976 and collaborated on five motion pictures in their first five years working together. Miller was a member of the Writers Guild of America, East (WGA) and was a signatory of their Minimum Basic Agreement (MBA), which was the collective bargaining agreement at the time.

In 1979, the success of the horror film Halloween inspired Cunningham to produce a horror film. Cunningham reached out to Miller and they orally agreed that Miller would write the screenplay for their upcoming project. The two came to an agreement using the WGA standard form. Miller then began developing the screenplay and the two worked closely together in discussing ideas for the film. Miller picked his working hours but was responsible for completing drafts based on the production schedule of the film. Cunningham had no right to assign additional works to Miller beyond the screenplay.

The dispute concerns whether, for Copyright Act purposes, Miller was an employee or independent contractor of Manny Company, of which Cunningham was the general partner. Cunningham argued that he taught Miller the key elements of a successful horror film, that he gave significant contributions and that he had final authority over what ended up in the screenplay. Miller agreed that Cunningham gave notes but stated that Cunningham never dictated what he wrote. The parties agreed that Cunningham did provide the ideas for making the movie killings “personal,” that the killer remain masked and that they kill a major character early. Miller received “sole ‘written by’ credit” as the screenwriter.

Horror Inc. (successor to Georgetown Horror) financed the project and was given complete control over the screenplay and film. Manny assigned its rights in the film and screenplay to Horror, which registered the copyrights. In the registration, Horror was listed as the film’s work made for hire author with a credit given to Miller for the screenplay. The initial film was a huge hit and has spawned 11 sequels.

In 2016, Miller attempted to reclaim his copyright ownership by invoking his termination rights under 17 U.S.C. § 203 and served notices of termination to Manny and Horror. The two responded by suing Miller and seeking a declaration that the screenplay was a “work for hire,” and therefore Miller could not give a valid termination notice. The district court granted summary judgment to Miller, stating that Miller was the author as he did not prepare the screenplay as [...]

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No Immunity: State Right of Publicity Law is § 230 “Law Pertaining to Intellectual Property”

by Paul Devinsky | Oct 7, 2021 | Trademarks

The US Court of Appeals for the Third Circuit held that § 230 of the Communications Decency Act, 47 U.S.C. § 230(c), does not preclude claims based on state intellectual property laws, reversing in part a district court’s dismissal of a plaintiff’s state law claims for violation of her right of publicity. Hepp v. Facebook, Case Nos. 20-2725; – 2885 (3d Cir. Sept. 23, 2021) (Hardiman, J.) (Cowen, J., concurring in part and dissenting in part).

In 2018, Karen Hepp, a Philadelphia newscaster, discovered a photo of herself making its way around the internet. The picture, taken without Hepp’s knowledge or consent, depicts her smiling in a convenience store and was posted in two locations online. The first post was a Facebook advertisement promoting a dating service, which encouraged users to “meet and chat with single women near you.” The second post was to Imgur and was subsequently linked to a Reddit thread, where it spurred a flurry of indecent user commentary. Hepp sued Facebook, Imgur and Reddit for violations of Pennsylvania’s right of publicity statute. The district court dismissed Hepp’s claims with prejudice, holding that all three companies were entitled to immunity as internet service providers under § 230(c). Hepp appealed.

The Third Circuit found that the district court lacked personal jurisdiction over Imgur and Reddit on a “purposeful availment” minimum contacts basis and affirmed dismissal of the claims against those parties.

With respect to Facebook, the Third Circuit considered whether it was immune under § 230(c). Section 230 of the Communications Decency Act was intended to promote the internet, specifically by preserving “the vibrant and competitive free market …unfettered by Federal or State regulation.” Accordingly, § 230(c) provides Good Samaritan protection for internet service providers, encouraging them to host and moderate third-party content by immunizing them from some publisher liability regarding certain moderation decisions. However, pursuant to § 230(e)(2), such immunization does not “limit or expand any law pertaining to intellectual property.”

The first question addressed by the Third Circuit was whether § 230(e)(2) can apply to state law claims generally. The Court acknowledged that precious few cases interpreting § 230’s intellectual property provision exist, and that the existing cases present a clear split on whether § 230(e)(2) applies only to federal intellectual property claims. The Court, adhering to what it regarded as the most natural reading of § 230(e)(2), (i.e., that a state law can be a “law pertaining to intellectual property law”) determined that application of § 230(e)(2) was not limited to federal claims. The Court was not persuaded by Facebook’s policy arguments regarding a purported increase in uncertainty regarding the contours of § 230(c) immunity if state law intellectual property claims, which vary from state to state, were exempt from such immunity.

The second question the Third Circuit addressed was whether Hepp’s right of publicity claim arose from a “law pertaining to intellectual property.” In finding that it did, the Court relied on a survey of legal dictionaries and determined that the term “intellectual property” [...]

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A Tale of Two Authors: Determining Ownership Rights of Novels Adapted for Theatre

by Tim Dunker | Sep 30, 2021 | Copyrights

The US Court of Appeals for the First Circuit vacated the district court’s opinion and order that Roberto Ramos Perea, the playwright who adapted the novels of prominent Puerto Rican author Enrique Laguerre for theatre, was not a proper copyright owner. Perea v. Editorial Cultural Inc., Case Nos. 19-2119, -2129 (1st Cir. Sept. 13, 2021) (Thompson J.) The issue before the Court was whether Editorial, a publishing company, was liable for copyright infringement after it printed and sold 20,000 copies of the theatrical adaptations of two novels (La Llamarada and La Resaca) written by Laguerre and adapted by Ramos.

In 2001, Laguerre contracted with Producciones Teatro Caribeño, authorizing Ramos to create the adaptation of La Resaca and retain the moral rights (protecting the link between Ramos and his work). The parties again contracted in 2003 for the adaptation of La Llamarada. Laguerre and Editorial entered into a contract in 2002 that gave Editorial the right to print “one edition” of the “dramatic adaptation of La Resaca” for seven consecutive years from the first printing date. Editorial received the right to print up to 25,000 copies of La Llamarada (the novel) in exchange for royalties.

During the district court action, both sides moved for partial summary judgment on the infringement claim. Editorial argued that, pursuant to the Laguerre-Caribeño contracts, Laguerre reserved the printing rights to the adaptations to himself exclusively, and Ramos therefore was not entitled to damages for infringement. Ramos argued that he owned the copyrights in the the adaptations and was entitled to recover for infringement because “(1) Laguerre authorized Ramos to create the Adaptations, therefore those creative works belong to him, or, alternatively, (2) La Resaca and La Llamarada were in the public domain when the Adaptations were written (meaning they were available for public use) and as such Laguerre’s authorization was not required.” The district court eliminated the playwright, Ramos, as the copyright owner and, following a jury trial, entered a judgment against Editorial Cultural awarding damages to Laguerre’s heirs. In dismissing Ramos’ claim, the district court exclusively relied on the language of the Laguerre-Caribeño contracts, under which Laguerre retained publishing rights. The issue on appeal involved which party owned the publishing rights to the adaptations when Editorial sold them in 2013.

The district court did not consider whether the novels were in the public domain when Ramos created his adaptations. Under the 1909 Copyright Act, works created before 1978 retained copyright protection for 28 years (plus an additional 28 years if renewed). The novels were written in 1935 (La Llamarada, not renewed) and 1949 (La Resaca, never registered in the Copyright Office). The First Circuit explained it is clear that both novels had passed into the public domain well before the contracts were signed.

Reviewing the summary judgment orders de novo, the First Circuit found that when Ramos adapted the novels into the play scripts in 2001 and 2003, Laguerre had no copyright interest in either of these novels (or any work derived from them) and [...]

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De Minimis Defense Doesn’t Protect Minimal Use of Concededly Infringing Material

by Jodi Benassi | Sep 23, 2021 | Copyrights

The US Court of Appeals for the Ninth Circuit reversed a district court’s grant of summary judgment in favor of the defendant in a copyright case based on a “minimal usage” or de minimis use defense. Richard N. Bell v. Wilmott Storage Services, LLC, et al., Case Nos. 19-55882, -56181 (9th Cir. July 26, 2021) (Wardlaw, J.) (Clifton, J., and Choe-Groves, J., concurring).

Richard Bell took a photo of the Indianapolis skyline and published it on various websites. Eleven years later, he registered the photo with the US Copyright Office. Bell later conducted an online reverse image search of his photo to identify potential infringers and subsequently filed more than 100 copyright infringement lawsuits. One of the sites on which Bell found the photo was VisitUSA.com. The image was only available to those who had conducted a reverse image search or knew the precise web address to the photo. Wilmott Storage Services purchased VisitUSA.com in 2012. In 2018, Bell notified Wilmott that it was displaying the photo without his permission. Wilmott removed the photo in response to Bell’s request. In 2019, Wilmott continued to display a copy of the photo, but at a slightly different address than before. Wilmott explained that its webmaster was supposed to remove the photo but instead only changed the file name. Wilmott subsequently removed the photo.

Bell sued Wilmott for copyright infringement in 2018, asserting that Wilmott infringed his right to “display the copyrighted work publicly” by making it accessible to the public on Wilmott’s server. Assuming infringement, Wilmott filed for summary judgment based on the affirmative defenses of de minimis use, fair use and the statute of limitations. The district court granted summary judgment to Wilmott on the de minimis use defense. Although Wilmott conceded that an identical copy of the photo was hosted on its server, the district court found no infringement. Bell appealed.

The Ninth Circuit noted that it had not previously addressed the issue of whether one “publicly displays” a work where it is accessible only to members of the public who either possess the specific pinpoint address or who perform a particular type of online search—here, a reverse image search. Applying Ninth Circuit precedent from Perfect 10, the Court concluded that Wilmott publicly displayed the photo.

The Ninth Circuit also found that there was no place for an inquiry into whether there was de minimis copying because the “degree of copying” was total since the infringing work was an identical copy of the copyrighted photo. The Court explained that it and a majority of other circuits do not view the de minimis doctrine as a defense to infringement but rather as an answer to the inquiry whether an infringing work and copyrighted work are substantially similar so as to make the copying actionable. The Court reiterated that the de minimis defense applies to the amount of copying, not to the extent of the defendant’s use of the infringing work. The Court also explained that the de minimis copying defense is [...]

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Not With a Bang but a Whimper

by Paul Devinsky | May 27, 2021 | Copyrights

In a non-precedential Order issued by the US Court of Appeals for the Federal Circuit—on remand from the US Supreme Court’s April 2021 decision upholding Google’s fair use defense to Oracle’s copyright infringement claim—the Court recalled its mandate in the case “solely with respect to fair use,” leaving intact the Federal Circuit’s May 2014 judgment favoring Oracle on the question of copyrightability. Oracle America Inc. v. Google LLC, Case Nos. 17-1118; 1202 (Fed. Cir. May 14, 2021)(PER CURIAM). After recalling its mandate, the Federal Circuit issued its order without further briefing by the parties.

If it’s Not Legit, You Can’t Admit

by Paul Devinsky | Apr 15, 2021 | Patents

The US Court of Appeals for the Federal Circuit affirmed a district court ruling of non-infringement based on the inadmissibility of unauthenticated printouts of source code as evidence. Wi-LAN Inc. v. Sharp Elecs. Corp., Case No. 20-1041 (Fed. Cir. Apr. 6, 2021) (Dyk, J.)

In 2015, Wi-LAN brought two separate patent infringement suits against Sharp Electronics and Vizio, both of which alleged direct and induced infringement of various claims of two Wi-Lan patents. The cases were managed in parallel by the district court, but consolidated on appeal. In both cases, the district court entered a stipulation of non-infringement with respect to one of the patents, which “relates generally to multimedia encoders and specifically [to] an integrated multimedia stream multiplexer,” based on Wi-LAN’s concession that it could not prove infringement under the district court’s construction of two claim terms. On appeal, the Federal Circuit had little difficulty concluding that the district court’s constructions were correct and affirming its ruling of non-infringement.

With respect to the other patent, the district court granted summary judgment of non-infringement, holding that Wi-LAN lacked sufficient admissible evidence to prove direct infringement. The involved patent is directed to “methods to display interlaced video on [a] noninterlaced monitor,” also known as “deinterlacing.” The deinterlacing functions of Sharp and Vizio’s televisions reside on each of the television’s “system-on-chip.” To establish that the source code underlying these deinterlacing functions practiced the patented methods, Wi-LAN filed (and subsequently dismissed without prejudice) additional lawsuits against third-party chip manufacturers from which it obtained source code printouts—purportedly reflecting the implementation of the deinterlacing process in a specified list of chips used in Sharp and Vizio’s televisions—along with declarations from employees of the manufacturers purporting to authenticate the source code printouts. The district court held that the source code printouts were inadmissible and that Wi-LAN therefore had failed to raise a genuine issue of material fact as to non-infringement. On appeal, Wi-LAN presented three theories as to why the district court erred in finding this evidence inadmissible, all of which the Federal Circuit rejected.

First, Wi-LAN argued that the source code printouts constituted a business record and thus were admissible as an exception to the hearsay rule under Federal Rule of Evidence 803(6). Specifically, Wi-LAN argued that it properly authenticated the printouts through the declarations of the chip manufacturers’ employees. The Federal Circuit acknowledged that declarations are typically used at summary judgment as a proxy for trial testimony, but explained that they cannot be used that way unless the witness would also be available to testify at trial. Because Wi-LAN conceded that it did not think it would be able to force the chip manufacturers’ employees to testify at trial, the Court found that the declarations could not be used as a substitute for trial testimony to authenticate the printouts and that the printouts therefore were not properly authenticated pursuant to Rule 803(6)(D).

Wi-LAN also argued that the declarations themselves constituted a business record. Because they were procured specifically for the purpose of litigation, however, [...]

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Purple Pain: Warhol’s Prince Series Isn’t Fair Use of Photographer’s Image

by Sarah Bro | Apr 8, 2021 | Copyrights

In a case spanning nearly 40 years of art and touching the estates of two of the world’s most well-known artists, the US Court of Appeals for the Second Circuit clarified its position on the application of the fair use doctrine and its protection of transformative works. In doing so, the Second Circuit reversed the district court’s finding of fair use and held that a series of prints and illustrations of the musical artist Prince created by the visual artist Andy Warhol were substantially similar to a 1981 portrait photograph of Prince taken by the photographer Lynn Goldsmith. The Court remanded for further proceedings. The Andy Warhol Foundation for the Visual Arts, Inc. v. Lynn Goldsmith, et al., Case No. 19-2420-cv (2d Cir. Mar. 26, 2021) (Lynch, J.) (Sullivan, J., joined by Jacobs, J., concurring) (Jacobs, J., concurring).

In 1984, Goldsmith’s agency licensed her 1981 photograph of Prince to Vanity Fair for use as an artist reference for creating a rendering of Prince to accompany Vanity Fair‘s profile of the artist. What Goldsmith did not learn until more than 30 years later, shortly after Prince’s untimely death, was that the artist commissioned by Vanity Fair to create the Prince drawing was Andy Warhol, and that Warhol had also used the photograph to create an additional 15 silkscreen prints and illustrations, known as the Prince Series. In 2017, Goldsmith notified The Andy Warhol Foundation for the Visual Arts (AWF), as the successor to Warhol’s copyright in the Prince Series, of her claims of copyright infringement. AWF responded with a lawsuit seeking a declaratory judgment that the Prince Series works were non-infringing or, in the alternative, qualified as fair use of Goldsmith’s photograph. Goldsmith countersued for infringement. Relying on the Second Circuit’s 2013 holding in the copyright case Cariou v. Prince, the district court granted summary judgment to AWF, agreeing with its assertion of fair use and considering the Warhol work to be “transformative” of the original. Goldsmith appealed.

The appeal required the Second Circuit to consider, de novo, the four fair use factors under § 107 of the Copyright Act: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.

The Court focused its analysis on the first fair use factor, and specifically the extent to which the Prince Series works were transformative of the original. The transformative nature of a work is determined by whether the new work merely supersedes the “objects of the original creation,” or whether it “instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.” The Court noted that the assessment of a transformative work is less clear where the [...]

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Subscription to RSS Feed Doesn’t Trigger Implied-License Defense

by Jackie Toney | Mar 17, 2021 | Copyrights

The US Court of Appeals for the 11th Circuit affirmed a district court’s grant of judgment as a matter of law against an alleged copyright infringer on its implied-license defense, finding that a blog operator’s publication of entire articles through a really simple syndication (RSS) feed does not give rise to an implied license without substantial evidence showing an intent to grant a license. MidlevelU, Inc. v. ACI Information Group, Case No. 20-10856 (11th Cir. Mar. 3, 2021) (Pryor, J.)

MidlevelU published a free blog designed to attract potential customers in the midlevel healthcare market. MidlevelU made the full text of its blog articles (instead of only headlines and article summaries) available in an RSS feed. ACI is a content aggregator that subscribed to the blog’s RSS feed. ACI copied and published more than 800 entries from MidlevelU’s blog by including those articles in a curated index of abstracts and full-text articles of academic blogs. ACI had no license agreement with MidlevelU.

After discovering the ACI’s activities, MidlevelU registered 50 of its most recent articles for copyright protection with the US Copyright Office. MidlevelU also sent ACI a cease-and-desist letter demanding that its content be removed from ACI’s index. ACI removed the content from the index and coded links to index entries for MidlevelU’s articles so that they would redirect to the MidlevelU’s website. Months later, MidlevelU discovered that, although its content was no longer available on the index website, it still appeared in the website repositories of university libraries. These entries credited ACI as the content’s publisher and directed visitors to view the blog’s full-text content in the “subscribers only” section of the blog aggregator’s website.

MidlevelU sued ACI in federal district court, alleging copyright infringement of the registered articles. ACI asserted an implied-license defense. Relying on the Latimer case, which sets forth the test for implied license in work-for-hire situations, the district court entered judgment as a matter of law in MidlevelU’s favor, finding that there could be no implied license because the ACI could not meet the “creates a work at another person’s request” element of the Latimer test. ACI appealed.

The 11th Circuit found that the district court read Latimer too broadly by applying its holding outside of the work-for-hire context, but the Court nevertheless affirmed the district court’s decision because a jury could not have reasonably inferred from the evidence that the MidlevelU impliedly granted a license to ACI. The Court noted that it had never held that the Latimer test was the only way to prove an implied license. An implied license may arise from circumstances outside of work-for-hire situations: “Creating material at another’s request is not the essence of a license: an owner’s grant of permission to use the material is.”

When an owner clearly manifests consent to use of its copyrighted material, the owner impliedly grants a non-exclusive license. Citing Fields, a district court case in the search-engine web crawler context, ACI argued that an implied license arose because the MidlevelU did [...]

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Ahoy There: If License Terms Not Clearly Intended to Be a Condition Precedent, It’s a Covenant

by Paul Devinsky | Mar 4, 2021 | Copyrights

The US Court of Appeals for the Federal Circuit held that the US Court of Federal Claims erred by failing to consider defendant’s non-compliance with the terms of an implied license, vacating the claims court’s finding of non-infringement and remanding the case for a calculation of damages. Bitmanagement Software GmbH v. U.S., Case No. 20-1139 (Fed. Cir. Feb. 25, 2021) (O’Malley, J.) (Newman, J., concurring).

Bitmanagement Software filed suit against the US government for infringement of its copyrighted graphics-rendering software, BS Contact Geo. The claims court found that Bitmanagement had established a prima facie case of copyright infringement based on the US Navy’s copying of the software onto all computers in the Navy Marine Corps Intranet, but found that the Navy was not liable for infringement because Bitmanagement had granted the Navy an implied license to make such copies. Bitmanagement appealed, arguing that:

The claims court erred in finding an implied-in-fact license between the parties.
An implied-in-fact license was precluded as a matter of law.
Even if an implied-in-fact license existed, the claims court erred by failing to consider whether the Navy had complied with the terms of the license.

The Federal Circuit did not disturb the claims court’s findings with respect to the existence of an implied license authorizing the Navy to make copies of Bitmanagement’s software.

The Federal Circuit further declined to apply its preclusion rule as set forth in Seh Ahn Lee, i.e., that “the existence of an express contract precludes the existence of an implied-in-fact contract dealing with the same subject matter,” because the Navy and Bitmanagement never actually entered into an express contract with one another. Rather, both parties entered into express contracts with a third party, Planet 9, through which they intentionally chose to conduct their business. The express contracts “do not capture or reflect the discussions that occurred between the Navy and Bitmanagement directly,” nor do they cover the topic of the implied license between the parties, “i.e., the license to copy BS Contact Geo onto all Navy computers.”

With respect to Bitmanagement’s claim that the Navy failed to comply with the terms of the implied license, the Court considered whether a term requiring the Navy’s use of Flexera, a license-tracking software, was a condition that limited the scope of the license, or merely a covenant. The Court explained that a term of a license is presumed to be a covenant—addressable only in contract—rather than a condition, unless it is clear that the term was intended to be a condition precedent. Accepting the lower court’s factual findings that “Bitmanagement agreed to [the] licensing scheme because Flexera would limit the number of simultaneous users of BS Contact Geo, regardless of how many copies were installed on Navy computers,” the Court found that the required use of Flexera was a condition of the license. The Court found there was no reason Bitmanagement would have entered into an implied license that allowed mass copying of its software without the use of Flexera because, absent [...]

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