David Carney provides an excellent summary and background of the Pro-IP Act at his Tech Law Journal site, which I reproduce below with his permission. (The TLJ site is subscription only for current content - all becomes public after 30 days)

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The Senate amended and passed by unanimous consent S 3325 [LOC | WW], the "Prioritizing Resources and Organization for Intellectual Property (PRO-IP) Act of 2008" on September 26, 2008. The House passed this bill on September 28, 2008, by a vote of 381-41. See, Roll Call No. 664. The bill is ready for the signature of President Bush.

The Senate amendment, among other things, changed the title from "Enforcement of Intellectual Property Rights Act" to "PRO-IP Act". A similar bill, HR 4279 [LOC | WW], which is not the bill passed by the Congress, was also titled "PRO-IP Act".

This bill addresses remedies for infringement and counterfeiting, and the organization and funding of government efforts to enforce intellectual property rights (IPR).

Legislative History. Both the House and Senate worked on IPR enforcement bills in the 110th Congress. S 3325 is the Senate bill, while HR 4279 was the House bill.

Rep. John Conyers (D-MI) introduced HR 4279 on December 5, 2007. See, story titled "Representatives Introduce PRO IP Act" in TLJ Daily E-Mail Alert No. 1,683, December 5, 2008.

On March 6, 2008, the House Judiciary Committee's (HJC) Subcommittee on Courts, the Internet and Intellecual Property amended and approved this bill. See, story titled "House Subcommittee Amends PRO-IP Act" in TLJ Daily E-Mail Alert No. 1,727, March 5, 2008.

On April 30, 2008, the HJC amended and approved the bill. See, story titled "House Judiciary Committee Approves PRO IP Act" in TLJ Daily E-Mail Alert No. 1,758, May 1, 2008.

On May 7, 2008, the House approved the bill by a vote of 410-11. See, Roll Call No. 300. See also, story titled "House Passes PRO IP Act" in TLJ Daily E-Mail Alert No. 1,763, May 8, 2008.

The Senate, however, did not take up this House bill.

Sen. Patrick Leahy (D-VT) introduced S 3325 on July 24, 2008. On September 11, 2008, the Senate Judiciary Committee (SJC) amended and approved the bill. See, story titled "Senate Judiciary Committee Approves IP Enforcement Bill" in TLJ Daily E-Mail Alert No. 1,824, September 12, 2008.

On September 26 the full Senate amended and approved the bill.

The House then approved the Senate bill, without further amendment, on Sunday, September 29, 2008, by a vote of 381-41. The voting was nonpartisan.

Rep. Rick Boucher (D-VA), who tends to advocate a weakening, rather than a strengthening of IP rights and enforcement, voted against the bill.

Some of the votes against the bill were cast by members from northern California, Oregon, Washington and Utah, including Rep. Zoe Lofgren (D-CA), Rep. John Doolittle (R-CA), Rep. Mike Thompson (D-CA) Rep. Lynn Woolsey (D-CA), Rep. Mike Honda (D-CA), Barbara Lee (D-CA), Rep. Earl Blumenauer (D-OR), Rep. David Wu (D-OR), Rep. Brian Baird (D-WA), Rep. Jim McDermott (D-WA), Rep. Chris Cannon (R-UT), and Rep. Rob Bishop (R-UT).

Bill Summary. Previous versions had contained language that would have enabled the Department of Justice (DOJ) to bring civil actions for copyright infringement. Currently, the government can only bring criminal actions, pursuant to 17 U.S.C. § 506, or decline to take action. However, this language was removed from the bill by its amendment in the Senate on September 26.

Title I of the bill as passed addresses civil remedies. Section 101 contains a copyright registration harmless error exception. That is, it would amend 17 U.S.C. § 411 to provide that "A certificate of registration satisfies the requirements of this section and section 412, regardless of whether the certificate contains any inaccurate information, unless -- (A) the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate; and (B) the inaccuracy of the information, if known, would have caused the Register of Copyrights to refuse

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In a recent case, Venture Tape Corp. v. McGills Glass Warehouse, the U.S. Court of Appeals for the First Circuit held that hiding the competitor's trademarks on a website for the purpose of increasing search engine ranking constitutes trademark infringement.  The court subsequently affirmed the award of attorney's fee, costs, and profits for the period of infringement.

McGills sells adhesive tapes and foils through its Internet website in direct competition with Venture.  From 2000 to 2003, McGills' website hosted web pages with the embedded marks "Venture Tape" and "Venture Foil." Both marks were federally registered and owned by Venture.  The marks were placed in the website's meta tags and also in white lettering on a white background screen for the purpose of improving its ranking with Internet search engines.  Since the infringing content was invisible to persons viewing the webpage, the Court did not rely on the "likelihood of confusion" doctrine but based its decision on the "initial interest confusion" theory.  The Court noted that evidence of actual consumer confusion is difficult to gather and, thus, not required.  Finally, the Court affirmed the infringement determination of the district court by analyzing factors including the similarity of marks, similarity of goods, channels of trade, the classes of purchasers, the strength of the marks, and the intent in using the marks.

The "initial interest confusion" analogy was first applied to a meta tag case in 1999 by the Ninth Circuit in Brookfield Communications Inc. v. West Coast Entertainment Corp.  The Ninth Circuit reasoned that

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The Open Source Community has based it's business model on the assumption that it could enforce compliance with various open source license agreements by bringing causes of action for copyright infringement against those who do not comply. The theory has been tested in the case of Jacobson v. Katzer, a copyright case involving alleged infringement of open source control software for model railroad enthusiasts.

The District Court had denied the copyright holder's motion for a preliminary injunction on the basis that non-compliance with the applicable open source license constituted merely breach of contract, and not copyright infringement. The Federal Circuit Court of Appeals vacated and remanded the District Court, concluding that the key provisions in the open source license were conditions rather than covenants. In so doing, the court concluded that by violating those conditions, the violator no longer had a license to copy and use, and was therefore engaging in copyright infringement. Accordingly, the plaintiff had injunctive relief available as a potential remedy for the infringement.

In other words, the court has provided an affirmative answer to the frequently asked question about the open source license model, namely, "does this work?" In so doing, the Court provided an explanation of the open source licensing model that the open source community should be thrilled with, and which will no doubt be often cited in open source opinions that will inevitably follow. Here is a sampling

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In Lenz v. Universal Music Corp., a federal district court in California ruled that copyright holder contemplating a takedown notice under the DMCA must consider fair use to meet its obligation to have a good faith belief that infringement has occurred.  The case involved a mother of young children who submitted a YouTube video that contained the Prince song "Let's Go Crazy" playing in the background.  Universal argued that fair use was only an excused infringement. The court held that fair use did amount to a use "authorized by law" for DMCA takedown purposes and thus must be considered in the takedown analysis.  Score a victory for those concerned about abuse of the takedown process, a fair use analysis may cause holders to think twice.  Copyright holders may end up needing to call that shrink in Beverly Hills. 

In a case that confirms the advisability of registering your copyright in software and websites, the Ninth Circuit Court of Appeals has denied statutory damages in the context of a continuing infringement.  The copyright act does not allow statutory damages or attorney’s fees if the infringement “commenced” prior to the registration of the copyright (subject to a 3 month relation back exception for newly published works). 17 U.S.C. Sec. 412.

In Derek Andrews v. Poof Apparel, the defendant had copied the decorative tags that the plaintiff attached to its clothing items, and attached them to its own clothing line.  The tags gave rise to the copyright claim (the case also involved trademark infringement claims).  On the copyright claim, the District Court awarded the plaintiff $15,000 in statutory damages and  $296,090.50 in attorneys' fees.  The Court of Appeals stated that the Copyright Act leaves no room for discretion on this point: “in order to recover statutory damages, the copyrighted work must have been registered prior to commencement of the infringement, unless the registration is made within three months after first publication of the work.”  The court noted that other courts have construed Section 412 in a similar manner, finding that infringement commences for the purposes of § 412 when the first act in a series of acts constituting continuing infringement occurs. Accordingly, “the first act of infringement in a series of ongoing infringements of the same kind marks the commencement of one continuing infringement under § 412.”

The case highlights the importance of registering copyrights early.  One of the most frequent areas of copyright infringement we see involves software and content from websites (or entire websites themselves).  In these situations actual damages can be very difficult to prove, and the availability of attorneys fees and statutory damages greatly enhances your case, and ability to resolve these issues quickly and on favorable terms.

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The 2008 PricewaterhouseCoopers Patent Litigation Study has been released.  Peter Zura's excellent 271 Patent Blog summarizes some highlights as follows:

Interestingly, with the alleged "explosion" in patent litigation, there were no identifiable increases in time-to-trial. In fact, since 2005, the median time-to-trial has dropped by more than 6 months.

Regarding the "Top Ten" Rocket Dockets, the breakdown is as follows, along with the median time-to-trial (in years):

1) ED Virginia - 0.88
2) WD Wisconsin - 0.91
3) CD California - 1.71
4) MD Florida - 1.71
5) ED Texas - 1.79
6) Delaware - 1.89
6) Kansas - 1.89
8) ED Pennsylvania - 1.91
9) SD Texas - 1.99
10) ED Michigan - 2.03

Some notable "Crawler" dockets include Massachusetts (3.76 years) and Connecticut (4.66 years).

The "Top Five" patent-friendly jurisdictions, along with overall success rates, include:

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In the morass of licensing transactions from 2007 we have noticed some trends that will be relevant to your software license negotiations in 2008.

1. Increased use of the vendor hosted software model. A few years ago, it seemed like the vast majority of software licensing transactions that passed across our desks were traditional software on a disk or downloaded software hosted on the servers of the customer. This year, we saw a significant increase in vendor hosted applications, often referred to as ASP or Application Service Provider

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Let’s assume that you have an un-pickable lock on an impenetrable freezer in your basement, and assume further that freezer is full of body parts from your victims (these are assumptions – right?). The Feds think they know what's in there, but they can’t get in unless you unlock it. Can they legally compel you to open it, or can you avoid being so compelled by invoking your 5^th Amendment right to not incriminate yourself?

The equivalent of this scenario is playing out in child pornography cases around the country, where the alleged pornographers have used widely available public encryption products (which are very secure), to lock up the damning content on their computers. Without the magic words (or encryption key), law enforcement will, as a practical matter, never know what is on that drive. Law enforcement argues that where the intent is purely to hide evidence of a crime, there needs to be some way for the courts to allow law enforcement to access the evidence.  They are starting to ask the courts to compel the bad guys to cough up the passwords. 

Interestingly, in the case that is currently getting all of the attention on this, US v. Boucher, federal Magistrate Judge Jerome J. Niedermeier has addressed the “opening of the safe” analogy, concluding that if the safe requires a physical key, a suspect can be compelled to turn it over, but if it is a combination that exists in the persons head, disclosing that is tantamount to a “testimonial act” implicating the 5^th Amendment. Therefore, he ruled that requiring the suspect to enter his password would violate his right against self-incrimination. (So what if the combination is written down – is that writing the equivalent to a physical key? And even if it is the same as a physical key, isn’t the knowledge of the location of the writing in that person's head - the disclosure of which would involve a “testimonial act”, and on and on). The government has appealed, and the case is currently being investigated by a grand jury.

The case is unique to digital information, because the analogy that there is just no other way to get the evidence does not really hold up in the physical world. There is always some way to get into the safe. However, using widely available open source encryption software, such as PGP, it is virtually impossible to unencrypt files without the password. The only thing to do is to use automated guessing software, that systematically and repeatedly guesses at the password - a process that could take many years, even with a lot of computing power. The Feds are scared, because an adverse ruling here could create a safe harbor for information that would be essentially unreachable, potentially benefiting drug dealers, terrorists, and the child pornography industry. Civil Liberty groups such as the EFF say unbreakable encryption “is one of the few ways people can protect what they write, read and watch online,” and support the application of 5^th Amendment rights in cases such as these.  This will be interesting to follow.  It is definitely one where the new technology is creating some interesting challenges for the application of existing laws.

The Washington Post article on this topic is here.

Related New York Times article is here.

Photo complements of Colin Ashe under creative commons

Several recent cases and events have focused significant attention on the use of the Internet for defamatory and harassing activities.  In the New York divorce case of Garrido v. Krasnansky a court has ordered that a husband stop posting inflammatory remarks about his wife on his blog.  First Amendment advocates are up in arms because the order comes not in the context of a defamation case but as part of a motion in a divorce proceeding.   The wife's defamation case would not be a slam dunk.  The husband has tried to avoid a defamation claim by calling his postings a "fictional" account of his failed marriage.   Of course the traditional truth defense presents a high hurdle as well. 

Meanwhile, on the other end of the country, an LA federal grand jury is issuing subpoenas in a  case involving MySpace postings and a Missouri teenager who committed suicide after rejection by a person she thought was a sixteen year old boy.  The poster was actually the mother of a former friend.   Prosecutors in Missouri declined to take action against the mother.  LA authorities are proceeding under a theory that the mother may have defrauded the social networking community on MySpace. 

Cases like these may raise interesting issues for ISP and web site immunity.  Section 230 of the Communications Decency Act provides immunity against an ISP being held to be a "publisher or a speaker," clearly focusing on defamation.   Does aiding a harassment claim in a divorce fall outside of those protections or chip away at them in some form?  Does a harassment claim on a social networking cite fall outside of 230? Does a criminal prosecution protecting a site against fraud frustrate any attempt to tear down immunity by the party truly harmed by the

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The lists are starting to roll in.  Check out Pogo's Chronicles of Dissent: Top Ten Privacy Breaches of 2007, and Threat Level's look at the year 2007  from a privacy/security perspective.  The Metropolitan Counsel provides us with the Advertising, Marketing And Promotions Law Year In Review,   and the USPTO Announces it's year end results, touting "historic improvement in the quality of patent and trademark reviews and subsequently the quality of issued patents and registered trademarks."  Euclid Managers offers its Predictions for 2008 Security Threats, PatentlyO offers Ten Ways to Spend your Holiday Bonus (I got the Nuvi), the TTAB Blog reports that the Leo Stoller Blog Has Returned, and Chevy Chase reports that Generalissimo Francisco Franco is Still Dead. 

Happy Holidays, and Best Wishes for a prosperous 2008 from the TechKnowledgy Blog!

On October 16, 2007, the Eighth Circuit ruled that the First Amendment protected the use of player names and statistics on fantasy baseball sites established by C.B.C. Distribution and Marketing, Inc.    C.B.C.  brought a declaratory judgement action against Major League Baseball Advanced Media, L.P. to permit the unlicensed use of names and statistics of major league baseball players in connection with fantasy baseball products available on-line.   The district court granted summary judgment in favor of C.B.C and the Eighth Circuit Court of Appeals completed the sweep by affirming the district court in C.B.C. Distribution and Marketing Inc., v.  Major League Baseball Advanced Media, L.P.

 In affirming the district court, the 8th Circuit seemed to espouse the broader proposition that the use of information in the public domain is protected by the First Amendment.  "First, the information used in CBC's fantasy baseball games is all readily available in the public domain, and it would be strange law that a person would not have a first amendment right to use information that is available to everyone."    The court also countered arguments that the use of statistics wasn't speech at all.  One particularly interesting argument by the Court related to the protection of economic interests under the right of publicity,  stating that "major league baseball players are rewarded, and handsomely, too, for their participation in games and can earn additional large sums from endorsements and sponsorship arrangements."  Sounds like the court followed the Red Sox media hyped romp through the playoffs to the exclusion of the 8th Circuit's own small market Kansas City Royals team.    (Image licensed from Jeffrey Beall under Creative Commons)

Updated Oct. 26, 2007  to add a link to the document - see:  Principles for User Generated Content Services

Several of the largest media companies have agreed to use technology to eliminate copyright-infringing content uploaded by Web users and to block any pirated material before it is publicly accessible.  That is part of a set of principles designed to "offer a road map for unlocking the enormous potential of online video and user-generated content," Disney Chief Executive Bob Iger said in a statement issued by the participating companies.

Some of the other companies involved are Viacom Inc, Walt Disney Co, Microsoft Corp, News Corp's Fox and MySpace units, CBS Corp, General Electric Co's NBC Universal, and online video services such as Veoh Networks and Dailymotion.  Notably absent was Google, owner of YouTube.

Essentially, the copyright holders in the group have agreed not to pursue Internet companies for infringement claims if their sites adhere to certain principles. Those principles include eliminating copyright-infringing content uploaded by users to Web sites, and blocking any infringing material before it is publicly accessible.  The pact reportedly is not legally binding, but more of a trust-building exercise among the companies, according to the Wall Street Journal report. 

That is how Raymond T. Nimmer explains a trio of decisions by that court that have been handed down in the last several months.  Collectively, the decisions strike down arbitration clauses, class action waivers, and choice of law/forum selection clauses in various agreements. 

In Nagrampa v. Mailcoups, Inc., the Ninth Circuit, focussing on the concept of procedural unconscionability, found a mandatory arbitration and forum selection clause included in a franchise agreement unconscionable.  The reason cited by the court was that the clause lacked mutuality where the franchisor could use the judicial process in some circumstances, but the franchisee could not.  Of course, according to that reasoning, presumably each and every contract clause would have to have mirror image mutuality.  Nimmer points out that this has never been a requirement of contract law.  The court also cited as a basis for its reasoning, the conclusion that the forum selection clause had "no justification other than as a means of maximizing an advantage over [Franchisees]."  Nimmer's take on that is basically…right-so the problem with that would be?

The next case in the trio is Douglas v. U.S. District Court, where the Ninth Circuit held that an amendment of an online agreement lacked assent.  The court went on to conclude that even if there had been assent, the terms for waiver of class action rights and mandatory arbitration were unconscionable.  In doing so, the Court noted the stance it had taken in Nagrampa that the mere fact that a customer has meaningful choices as to other service providers does not defeat a claim of procedural unconscionability.  In other words, the customer is free to shop around for other service providers who may have different contractual terms.  According to the Ninth Circuit, the customer need not do so, and it can simply ignore the terms with the service provider it chooses.

The last case is Davis v. O'Melveny & Myers.  In the Davis case, the Ninth Circuit held that an arbitration clause in an agreement with an employee was unconscionable.  Nimmer explains that the Davis court found the agreement "procedurally unconscionable because the law firm did not offer the employee the option of rejecting the clause and continuing as an employee with an unmodified contract."

I guess it might be helpful to back up a bit, and talk about when an agreement, or part of an agreement, can be disregarded as unconscionable.  Historically, courts have required both substantive and procedural unconscionability to exist before striking down an agreement. In general, substantive unconscionability exists when an agreement itself is so one-sided that it shocks the senses, while procedural unconscionability focuses on the bargaining process (or lack thereof) used to reach the final agreement. The current view is that these two elements must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. 

In effect, the Ninth Circuit appears to be expanding the concept of procedural unconscionability to essentially eliminate the ability of companies to include mandatory arbitration, class action waivers, or forum selection clauses in any standard, non-negotiated contracts.  Under the views of the Ninth Circuit, companies do not have the option of presenting a take it or leave it contract to their customers (even though the customers could choose other service providers).  The Ninth Circuit, instead, is simply zapping those provisions out of standard contracts, which Nimmer argues is the kind of thing typically reserved to the legislature (and courts on the planet Xenon). 

Photo courtesy of David Darkmatter under Creative Commons