New Media, Technology and the Law (January 2011)

Author:Proskauer's and Technology Practice Group
Profession:Proskauer Rose LLP

Edited by Jeffrey D. Neuburger


Download of Copyrighted Digital Music File Not a Public Performance under Copyright Act

Downloading a copyrighted digital music file does not constitute a public performance under the Copyright Act, the U.S. Court of Appeals for the Second Circuit ruled. The court upheld the lower court ruling that while companies that sell digital music online must pay a royalty fee for the right to make a copy of a work, they need not separately and additionally pay a royalty for downloading the copy. The appeals court found that a digital music file is neither recited, rendered or played within the Copyright Act definition of "perform," nor does downloading "show" a work or make it audible. "The downloaded songs are not performed in any perceptible manner during the transfers; the user must take some further action to play the songs after they are downloaded," the court commented.

United States v. American Society of Composers, Authors and Publishers, 2010 U.S. App. LEXIS 19983 (2d Cir. Sept. 28, 2010) Download PDF

Editor's Note: The parties did not dispute that Internet streaming of a digital music file constitutes a public performance of the work.

Transfer of Packaged Software Was a License, Not a Sale, under Copyright First Sale Doctrine

A transaction involving the transfer of packaged software from a developer to a user was a license, not a sale, under the copyright first sale doctrine, the U.S. Court of Appeals for the Ninth Circuit ruled. The appeals court held "a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user's ability to transfer the software; and (3) imposes notable use restrictions." The court also noted, among other things, that the developer expressly retained title to the software, prohibited further transfers or leases of the software without the developer's consent, and provided for the termination of the license for unauthorized copying.

Vernor v. Autodesk, Inc., 2010 U.S. App. LEXIS 18957 (9th Cir. Sept. 10, 2010)  Download PDF

Editor's Note: The ruling is discussed further on the Proskauer New Media and Technology Law blog.

Developer of Automated Videogame-Playing Program Violated DMCA But Did Not Infringe Copyright

The developer of an automated videogame-playing software program violated the anticircumvention provisions of the Digital Millennium Copyright Act, but is not liable for copyright infringement, the U.S. Court of Appeals for the Ninth Circuit ruled. The court reasoned that game players did not directly infringe the copyright rights of the videogame owner when they used the software in violation of the game's Terms of Use, because the prohibition against the use of such software was a covenant, not a license condition. and therefore gave rise only to a breach of contract claim. Accordingly, the developer was not liable for secondary copyright infringement. However, the court found that the developer had violated the prohibition in DMCA Section 1201(a) against trafficking in technology that circumvents measures deployed by a copyright owner to control access to a copyrighted work.

MDY Industries, LLC v. Blizzard Entertainment, Inc., 2010 U.S. App. LEXIS 25424 (9th Cir. Dec. 14, 2010) Download PDF

Editor's Note: This ruling is discussed further on the Proskauer New Media and Technology Law blog  here and here.

Music Downloads and Ringtones Are Licensed, Not Sold, under Royalty Agreement

Sales of music by digital downloads and by ringtones sold through carriers must be accounted to an artist under a royalty contract with a recording company as licenses rather than sales of the music, the U.S. Court of Appeals for the Ninth Circuit ruled. The court concluded that the record company's agreements with the iTunes Store and the wireless carriers fell into the provision in the royalty agreement that specified that the artist receive a percentage of royalties "[o]n masters licensed by us . . . to others for their manufacture and sale of records or for any other uses." The court ruled that the term "license" should be given its ordinary meaning, i.e., "permission to act," and that the agreements qualified as licenses in the ordinary meaning of the term because they gave third parties permission to use the sound recordings to produce and sell permanent downloads.

F.B.T. Productions v. Aftermath Records, 621 F.3d 958 (9th Cir. Sept. 3, 2010) Download PDF

No Fair Use Defense for Online Post of 21-Page Book Excerpt

The blog posting of images of 21 pages of a soon-to-be-published book is not protected by the fair use doctrine and thus may be temporarily enjoined, a district court ruled. The court noted that the post contained no commentary about the book; therefore it was not for the purpose of criticism, comment, news reporting, teaching, scholarship or research, but rather for the purpose of attracting viewers to the blog. The court further ruled that the use of the excerpt was commercial because it was displayed in conjunction with advertising, and its purpose was to increase traffic to the blog and thereby enhance its attractiveness to advertisers in the future. The court also noted that the book was as-yet unpublished, which further undermined the defendant's fair use claim.

Harpercollins Publishers L.L.C. v. Gawker Media LLC, 2010 U.S. Dist. LEXIS 123624 (S.D.N.Y. Nov. 22, 2010) Download PDF

Editor's Note: The book in question was authored by political figure Sarah Palin; the case was settled following the court's ruing with an agreement by the defendant to permanently remove the disputed excerpts.

Implied License, Fair Use, Held Meritorious Defenses in Online Newspaper Article Copyright Infringement Action

The implied license and fair use defenses raised by the operator of an online forum are meritorious defenses that warrant reopening a default judgment for copyright infringement, a district court ruled. Examining the statutory fair use factors, the court concluded that it could be found that the third-party user who posted a complete copy of an online news article did so "for the non-commercial purpose of sharing information and not for the purpose of making a profit for the reader or the site," thus the purpose and character of the use factor could favor the operator. The court also concluded that because the article was "primarily informational," the nature of the work factor could be found to favor the Web site owner. The court concluded that the effect of the posting on the market for or value of the original work was a factor that raised issues that would have to be resolved later in the litigation. The court further concluded that the operator had made a "plausible argument" that the conduct of the original copyright owner of the news article in posting it on the Internet for free, encouraging readers to share the article with others, and permitting users to "right-click" and copy it, gave rise to an implied license.

Righthaven LLC v. Klerks (D. Nev. Sept. 17, 2010) Download PDF

Editor's Note: Righthaven is an entity that acquires copyright rights in online content for the purpose of bringing similar copyright infringement actions. See It appears that the Web site owner did not post any DMCA-compliant notices on the site. See also the rulings in other Righthaven lawsuits discussed below.

Excerpting and Linking to Online News Article Protected by Fair Use Doctrine

A blogger's posting of an eight-line excerpt from a 30-line online newspaper article, coupled with a link to the full article on the newspaper Web site, is protected by the copyright fair use doctrine, a district court ruled. Reviewing the statutory fair use factors, the court found that while the blog provided information on the real estate market, the underlying purpose of the blog was to advertise the blogger's real estate business. However, the court found that the remaining factors favored the blogger: the portion of the work that he excerpted was factual in nature; only eight out of 30 sentences were used; he directed readers to the full text of the article; and his use of the copyrighted material was not likely to have an effect on the market for the article, because the portion copied did not contain the author's original commentary and thus did not dilute the market for the work.

Righthaven LLC v. Realty One Group, Inc., 2010 U.S. Dist. LEXIS 111576 (D. Nev. Oct. 19, 2010) Download PDF

Editor's Note: See also the ruling of another district court judge sitting in the same district in Righthaven v. Jama, No. 2:10-CV-1322 (D. Nev. Nov. 15, 2010) (ordering Righthaven to show cause why the complaint should not be dismissed under the fair use provision of the Copyright Act).

Software Licensor's Contract Prohibition against Automated Download of Support Materials Does Not Constitute Copyright Misuse

A prohibition in a software license agreement against the use of automated tools to download support materials related to the software is not a misuse of copyright, a district court found. The court ruled in a copyright infringement action brought by the licensor against a third-party support provider that allegedly used a licensee's log-in credentials to access the licensor's database in order to download software and support materials. The third-party provider alleged that the contract prohibition against the use of automated tools, coupled with the technical design of the Web site which "makes it impossible for the licensees to identify all of the materials to which they are entitled," effectively required licensees to use the licensor's costly after-market support services. The court concluded...

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