Patents, infrastructure, and payouts

Joe Mullin at Ars Technica reports on a disturbing new trend, public sector patent-trolling:

Patent holders will file a lawsuit about anything under the sun these days, but a man named Martin Jones has embraced an alarming new strategy—suing cash-strapped American cities over their bus-tracking systems.

The most recent suit was filed last week, claiming that Portland’s TransitTracker system infringes a patent owned by ArrivalStar, the patent-holding company that enforces Jones’ patents. Two more, filed in February, claim that transit systems in Cleveland, Ohio and Monterey, California infringe three ArrivalStar patents.

While it appears that ArrivalStar may have a profitable run with this strategy, I have to believe that such suits will inevitably backfire.  Patent trolling is already a big problem that is getting increasing scrutiny, and going after local political entities like cities and transit authorities is only going to increase the amount of unfavorable scrutiny.

The threat to iOS

Ars Technica has a post about Apple’s latest response to a lawsuit filed by Lodsys, a reputed patent troll, against of Apple’s app developers:

Lodsys began threatening both iOS and Android developers with lawsuits in May if the developers didn’t pay licensing fees for its claimed in-app-purchasing-related patents. Many independent developers lack the financial and legal resources to litigate a patent infringement claim, so a number of iOS developers began a campaign to get Apple to help, threatening a boycott of in-app purchasing if only to avoid such legal threats.

Lodsys acquired its four patents from former Microsoft CTO Nathan Myhrvold’s Intellectual Ventures patent holding company. It turns out that Apple already has a license to those patents by virtue of an investment deal in Intellectual Ventures. That deal gave Apple (among other companies, including Google) a license to some 30,000 or so patents under Intellectual Ventures’ control.

(In case you missed it, this is the same Intellectual Ventures that was the subject of a recent This American Life episode, which has sparked—to put it mildly—quite a discussion around the blogosphere.)

If Apple isn’t successful in defending its developers here, the whole iOS app ecosystem may be in jeopardy.  As innovative as Apple has been in creating and updating iOS devices—iPhone, iPod Touch, iPad—over the past few years, a lot of their success is due to non-Apple creativity.  There’s no way that Steve Jobs’ company could have created 425,000 apps over the past four years, and those apps are a (the?) main selling point for consumers purchasing iOS.

If Apple’s licenses with Lodsys/Intellectual Ventures don’t cover its developers and those developers can get sued one by one, two things will probable happen.  First, the largest/financially strongest developers will (like Apple itself) reluctantly pay off the patent trolls, surviving by ultimately passing the costs onto consumers.  Second, small developers will go out of business.

Righthaven drops another case

Righthaven comes up a lot here at Legally Sociable, and I’ve mentioned their suit against Brian Hill, a 20-year-old blogger with autism and severe diabetes, before.  In another victory for defendants in Righthaven lawsuits, Ars Technica reports that Righthaven is dropping its suit against Brian, after the judge noted that enabling a cheap, easy settlement “is not my primary concern”:

Though the case was moving forward, Righthaven made clear it wasn’t actually interested in litigating the suit; it wanted to settle. “Righthaven is no longer willing to engage in settlement discussions over trivial issues while the Defendant and his counsel seek to extend this action for publicity purposes,” said the company. With settlement not a possibility, the company now just wants the suit to go away. [emphasis added]

Indeed, Righthaven’s lawsuits are starting to drop like flies.  It was just two weeks ago that Righthaven dismissed a suit against the freelance author of another Ars Technica article that covered Righthaven’s litigation antics.  In dropping the suit against Ars’ reporter, Righthaven claimed it was all just a mistake:

“We took immediate corrective action” after learning that Righthaven had just sued a reporter, said [Righthaven lawyer Shawn] Mangano. He added that, since reporters make use of copyright and tend to know a good deal about fair use, “It’s somewhat counterintuitive to sue a reporter for copyright infringement!”

While I certainly applaud Righthaven’s decision to drop these two particularly suits, I have to wonder about the outcomes in the other 260+ lawsuits they have filed over the past year. defines “bully” as “a blustering, quarrelsome, overbearing person who habitually badgers and intimidates smaller or weaker people.”  This definition appears to describe Righthaven perfectly; indeed, it is only when a defendant proves not to be “smaller or weaker” that they tuck tail and run.  Clearly, Righthaven didn’t think it was worth fighting a reporter backed by one of the largest magazine publishers in the U.S. or a highly sympathetic blogger with a clearly competent lawyer (PDF).  However laudatory in result, its dismissals in these cases seem to confirm that Righthaven is not truly defending a principled (if overzealous) view of copyright law.  Instead, Righthaven appears to be a garden-variety bully out to shake down the small and weak for four-digit settlements.

Copyright reform, anyone?

Update 4/12/2011:  Joe Mullin at paidContent has additional information about the Hill dismissal:

In a 3-page motion, Righthaven tries to let Hill off the hook but maintains a complainy sort of tone….Judge Kane responded to that by taking another extraordinary action—he actually ordered Righthaven’s “warning” to be stricken from the record entirely, along with all the company’s complaints about Hill’s bad behavior. That part of the filing was “immaterial and impertinent,” Kane wrote. That’s a strong suggestion that Kane has become quite annoyed by Righthaven’s tone and actions in this case.

Wow.  I think I’d be quite worried about sanctions if I were representing Righthaven in this case.

Further reading (hat tip to paidContent):

  • Order Denying Righthaven Extension, April 7 [Scribd]
  • Righthaven Notice of Dismissal, April 10 [Scribd]
  • Order To Strike, April 11 [Scribd]

Head in the cloud

Amazon launched its Cloud Player yesterday which, as Wired explains,

can stream your music library to any web browser or Android mobile device. Cloud Player also allows you to download files and create playlists through its web-based interface.

So Amazon lets you store your music on a remote hard drive and stream it to local devices?  Sounds pretty straightforward.  Of course, the record labels don’t think so.  From Ars Technica:

We wondered aloud how Amazon managed to strike such an impressive licensing deal with the record labels, given the fact that Apple seems to still be working out the details for its own digital locker service. It turns out that Amazon hasn’t struck a deal, and seems to be hoping that the record companies will be the ones to blink.

“[W]e do not need a license to store music in Cloud Drive,” Griffin added in an e-mail to Ars. “The functionality of saving MP3s to Cloud Drive is the same as if a customer were to save their music to an external hard drive or even iTunes.”

That’s certainly not what the music industry seems to think, though—at least in regards to Cloud Player. In an interview with Reuters, Sony Music spokesperson Liz Young said the company hoped for a license deal but that it was keeping its “legal options open.”

Amazon certainly has made a gutsy play here.  The major labels are currently embroiled in a lawsuit against MP3tunes for providing essentially the same service as Amazon.  According to an amici curiae brief (PDF) in that case, the primary legal issue turns on whether or not Internet streaming necessarily constitutes a “public performance” (which would violate copyright owners’ rights unless licensed).  There is a powerful argument that it does not:

MP3tunes does not transmit music to the general public, nor to all of its subscribers. A particular work in a particular locker will only be transmitted to a user who has placed it there—in other words, after he or she has averred to MP3tunes that she either legally owns the file and have uploaded it to her locker, or that she has legal authorization to access the file on the Web and has sideloaded it into her locker. The subset of MP3tunes users who have uploaded or sideloaded any one particular track (and thus have stated to MP3tunes that they are authorized to do so) still falls far short of the “public” required by the transmit clause.

Of course, the simple fact that it has become necessary to make this legal argument illustrates just how broken copyright law is.  The statute is long, complicated, and muddled enough to lend at least some plausibility to virtually any argument imaginable.  Even an argument claiming that storing one’s own music on a private, password-protected server for convenience violates the letter (if not the spirit) of copyright law.

Stay tuned…

Updated 3/31/2011: Ars Technica has a follow-up piece today that quotes from their interview with MP3tunes’ CEO Michael Robertson (bio from his blog):

The word “streaming” and the word “download” are nowhere in copyright law.  It may be a very logical, common sense position, but all that matters is what the law says. Can you store your own music? Can you listen from anywhere? What if your wife or kids want to listen to it? All those things are completely unchartered [sic] territory.

Of course, as we routinely point out around here, “logic” and “common sense” have absolutely nothing to do with the current state of U.S. copyright law.

Who will enforce IP laws?

Ars Technica and TorrentFreak are reporting that Australian ISP iiNet (Wikipedia backgrounder) recently released a policy report calling for changes in the way that IP laws are enforced:

The ‘Hollywood solution’ (in very simple terms) involves the employment of private detectives, hired by content owners, to trawl the public internet and gather information. The content owner uses this information to generate notices which are sent to internet service providers. The notices demand that the ISP should terminate the service of a customer subsequently determined by the ISP (not the content owner).

Naturally, ISPs find this approach unattractive and unsatisfactory, to say the least.

Rather than merely passively complaining about Hollywood’s solution, however:

iiNet has developed a model which it believes addresses ISP concerns and is likely to be far more effective. We believe it to be attractive to all participants and one which offers a sustainable strategy that includes an impartial referee, for resolution of disputes between the parties and the issue of penalties to offenders.

Here is iiNet’s proposal:

1.    A content owner will carry out their own detective work and identify an offending computer making unauthorised copies of their content available for sharing via (typically) bit-torrent software. This will provide them with an ‘IP Address’ that can be traced by the issuing ISP to a specific internet service.

2.    The independent body will determine whether the evidence meets a test of ‘cogent and unequivocal evidence’.

3.    IP addresses can be provided to an independent body who is able to identify the issuing ISP and ask that ISP for contact details for the service account holder. The ISP provides those matching contact details to the independent body.

4.    Using those contact details the independent body can issue notices to the account holder informing them that they had been detected making unauthorised copies available, provide educative information, advise the consequences that may follow continued behaviour and ask the account holder to ensure that the behaviour stops.

5.    The independent body keeps records of the notices and may modify the notice for a repeat infringer, or seek further sanctions. Some of those sanctions may include fines, court charges or changes to the internet service.

6.    Consumers who believe the allegations are incorrect will be able to appeal the notice to the independent body. These appeals and/or complaints would be dealt with by the independent body.

7.    Consumers who believe an insecure wireless access (or other technical issue) may be involved, will be referred, by the independent body, to their ISP for technical assistance.

As I read the proposal, it seems like iiNet is primarily trying to do two things:

  1. Remove itself as arbiter of IP-related disputes; and
  2. Lower the transaction costs involved in full-blown litigation by setting up a quicker (and cheaper?) arbiter of disputes.  (Perhaps they have something in mind like the Uniform Domain-Name Dispute-Resolution Policy, which administratively resolves certain types of domain name disputes without having to go to court.)

With respect to #1, I agree with iiNet.  ISPs are ill-positioned to adjudicate IP disputes, especially since the cheapest solution (and thus a compelling business model) is simply to comply with any content owner’s request, no matter how tenuous the underlying legal cases.

With respect to #2, however, I have serious doubts.  iiNet’s proposal could be read as an ISP’s attempt to shift online infringement clearly from a malum in se crime (crimes that are inherently wrong, like murder) to a malum prohibitum crime (crimes that are wrong by statute, like minor speeding violations).  Acts that are malum prohibitum generally require less evidence for conviction (e.g., strict liability), but this is supposedly outweighed by lesser penalties and less social censure (e.g., fines for speeding are relatively small and do not carry the social opprobrium of murder).

Here’s the problem:  current copyright statutes don’t have the malum prohibitum “balance” built in.  While there may be lesser social censure for copyright infringement than for other crimes, it is hard to think of many non-violent crimes with higher penalties.  U.S. law assesses damages as high as $150,000 per infringing act, and there are never-ending proposals to increase penalties.  Even if such penalties seem grossly disproportionate to the underlying crimes and raise serious constitutional concerns regarding due process and punitive damages, they nonetheless are “the law” as it exists on the books.

Given the reality of enormous statutory penalties for infringement, streamlining copyright enforcement procedures could lead to disaster.  As a policy matter, it’s one thing to argue for streamlined procedures (i.e., fewer due process protections) in exchange for lower penalties.  Under certain circumstances, that can be a reasonable policy tradeoff.  But it’s a dangerous thing to argue that every content owner in the world should have a fast, easy way to sue individuals up for $150,000.  Copyright trolls like Righthaven exist even in a world with the due process protections of courts; it’s truly frightening to imagine how many new trolls will arise if the potential payoffs remain the (astronomical) same but the bar for suit is set even lower.

To be fair, iiNet appears to recognize this danger and suggests:

Infringements can be ranked as minor (say, single instances), major (say multiple instances of different files) or serious (at a commercial level). Each level having prescribed penalties….A scale of fines can be established, relative to the economic loss represented, and demerit points could also be awarded in line with the severity of the infringements.

Nonetheless, I fear that their report does not highlight just how pivotal such gradation and balancing would be to any implementation.

Senate hearing on COICA

Ars Technica has a good wrap-up of yesterday’s Senate Judiciary Committee hearing on the proposed Combating Online Infringement and Counterfeits Act (COICA):

The bill would give the government legal tools to blacklist a “rogue” website from the Internet’s Domain Name System, ban credit card companies from processing US payments to the site, and forbid US-based online ad networks from working with the site. It even directs the government to keep a list of suspect sites, even though no evidence has been presented against them in court.

If you’d like to watch the hearing yourself, video is available on the Senate’s website (note:  the actual video doesn’t begin until around the 20 minute 15 second mark).

No gaming the system

Although the fictional legal world of TV, movies, and mass-market paperbacks often turns on dramatic courtroom surprises, trying to sneak in unexpected witness testimony can destroy your case in real life.  David Kravets over at Ars Technica reports on the fate of Matthew Crippen, who the government accused of running “a small business from his Anaheim home modifying the firmware on Xbox 360 optical drives to make them capable of running pirated or unauthorized games” in violation of the Digital Millennium Copyright Act.  The trouble started on the prosecution’s very first witness, who

said Crippen inserted a pirated video game into the console to verify that the hack worked. That was a new detail that helped the government meet an obligation imposed by the judge that very morning, when [the judge] ruled that the government had to prove Crippen knew he was breaking the law by modding Xboxes.

Unfortunately, this was the first time any witness for the prosecution accused Crippen of actually running a pirated game:

nowhere in [the witness’s] reports or sworn declarations was it mentioned that Crippen put a pirated game into the console.

This was a huge mistake by the prosecution and deeply unfair to Crippen.  With the judge chewing them out and their case unraveling, the prosecution decided,

[i]n light of that omission and “based on fairness and justice,” [to move] to dismiss the case, conceding that the government had made errors….

Unlike the fictional worlds of David E. Kelley, the real law doesn’t like surprises.