This blogger has just come back from New York, where she attended the 20th Fordham IP Conference, a symposium held every year, when leading academics, representatives of the judiciary and industry alike gather together at the Upper West Side premises of the Fordham Law School to discuss the most recent trends in the über-cool world of IP.

As far as copyright is concerned, this year particular attention was devoted to the current state of affairs in the EU, with specific sessions covering an entire afternoon of the two-day conference.

A blue print

As is well known, a lot is going on at the moment in EU copyright. Taking account of the activism of the Court of Justice of the European Union (CJEU), which has resulted in the de facto harmonisation of important aspects of EU copyright, and considering both the political (see the Commission’s agenda as set out in its 2011 blueprint) and academic (see the 2010 Wittem Project) efforts to engage in a thorough discussion as to the future of this area of the law, it is undeniable that copyright is THE must-have debate this season.

The Wittem Castle, The Netherlands

Starting with views from the Commission, Head of Unit – Copyright, DG Internal Market & Services Maria Martin-Prat first recalled that in the 1990-2000s copyright harmonisation occurred whenever this was necessary to ensure the proper functioning of the internal market. This objective is and remains at the centre of attention when it comes to legislative initiatives.

At the moment, said Martin-Prat, the priority of the Commission is to facilitate licensing across the EU. Interestingly enough, this implies facing the issue of territoriality. In any case, the establishment of EU-wide licensing system is not going to affect the territoriality of Member States’ copyright laws. This is because territorial rights do not necessarily imply territorial licensing, explained the Head of Unit.

This said, the Commission’s efforts are directed at tackling five areas of copyright. These include improving the functioning of collective licensing and management and, possibly, setting out an extended collective licensing system; favoring mass digitisation of works and facilitating the use of out-of-commerce works, along with orphan works.

As to the issue of whether we need more harmonisation (read: do we need a EU-wide copyright law?), Martin-Prat thought it correct to say that the CJEU has been very active lately (in the last year only, twelve decisions were published and nine references are still pending). However, she found that the concepts harmonised by the CJEU (such as ‘originality’, ‘work’, etc) would have never been defined at the level of EU directives alone, so the CJEU has just been filling out gaps which could not but be left out of EU legislation. When she heard this, this blogger was a bit concerned about the implications of such a view. First, it is questionable whether this has been actually the case (see the case of ‘originality’, which was actually defined, but in relation to limited and specific subject matter, such as computer programs, databases and photographs).  Secondly, such a view implies that CJEU interventions can (ought to) be pretty pervasive as regards the copyright laws of EU Member States.

An EU copyright code, held Martin-Prat, may be a good idea, but this is not going to happen any time soon, as more urgent issues need to be addressed first. These concern private copying; rights of (online) reproduction, licensing and making available; and copyright limitations and exceptions.

As announced in the 2011 blueprint, the review of the InfoSoc Directive has just been started and, in any case, no legislative initiatives will be taken till next year (to say the least?).

Having highlighted the position of the Commission as to EU copyright harmonisation, an assessment of the last twenty years of harmonisation was provided – inter alia – by Prof Bernt Hugenholtz of the University of Amsterdam.

First, he divided the harmonisation process into three phases, these being (1) 1991-2000, when core copyright directives were issued; (2) 2002-2008, when Member States transposed such directives into national laws; (3) 2009-, in which the CJEU has been playing a pivotal role in interpreting such directives.

Overall, copyright harmonisation has had positive effects, in that approximating the laws of EU Member States has enhanced legal certainty, favoured the emergence of common principles, as well as the establishment of EU external competence in this field. The negative effects of copyright harmonisation can be held to be the following: (1) slow response to technological development; (2) harmonisation has always moved upwards (see  databases); and (3) the overall process has been fairly intransparent, thus favoring lobbying (see the case of term extension(s)).

As to the future of EU copyright, Prof Hugenholtz indicated that lawmaking at the EU level has the potential to become increasingly difficult, due to the following aspects: (1) ever growing number of Member States; (2) increasingly central role of the European Parliament; (3) ongoing discussions as to social legitimacy of copyright; (4) lack of normative constitutional mandate in primary EU law to legislate in the area of copyright.

This said, the alternatives on the table are substantially two: do nothing or unify copyright at the EU level.

Trevor Cook

Speaking of copyright reforms, Trevor Cook of Bird&Bird LLP offered an enlightening insight into copyright’s exceptions and limitations and dealt with the heated topic concerning whether something like US fair use should be pursued in Europe too. This, claimedTrevor, would be inconsistent with the InfoSoc Directive and it is not sure that it would be desirable to introduce in the first place. This is beacuse of the unpredictable outcome of fair use defences in the US. In any case, exceptions and limitations may be extended and updated at the EU level, even lacking an initiative at the level of EU legislative. Reliance on fundamental rights has increased, both before national courts and the CJEU. The latter is because of the new status of the Charter of Fundamental Rights following the Lisbon Reform Treaty (as very recent examples, see the decisions in Scarlet and Netlog). This view was upheld also by Mr Justice Peter Charleton of the High Court of Ireland, Dublin.

Graham Smith

An analysis of recent CJEU decisions was offered in the presentations by Graham Smith of Bird&Bird LLP and Professor Lionel Bently of the University of Cambridge.

Graham has offered a thoughtful overview of aggregating and related cases in the EU.

Lionel Bently

Prof Bently, who has called the harmonising effects of CJEU case law ‘harmonisation by stealth’ (see earlier 1709 Blog post here), has highlighted how CJEU activism is likely to cast ambiguities on the scope and meaning of EU copyright. This may result in Member States asking the Commission to be more active in the future, so to prevent contradictory and ambigous outcomes. Despite this, harmonisation via CJEU case law has had positive effects too, as it has touched upon aspects which could have not been harmonised with legislation alone. Above all, the outcomes of CJEU decisions are legitimate, though it is doubtful in the first place whether the Court was legitimated to act in lieu of EU legislative. In addition to this, doubts persist as to whether the harmonising effects of CJEU judgments are consistent with national legislation. Finally, the effects of these decisions have contributed to transitional uncertainty in the laws of some Member Stares, notably the UK.

In conclusion, from the presentations offered at Fordham, EU copyright is in need of amelioration. At the moment, there are no ambitious EU legislative initiatives. In any case, these are regarded cautiously and are deemed to require careful consideration before being undertaken. So, at the end of the day, it is not clear whether CJEU activism is the result of unavoidable gaps in legislative instruments or whether, instead, harmonisation via CJEU case law has been made necessary to supply lack of legislative initiative tout court. The best guideline for future action at the EU level? Directly from the LEGO store at the Rockfeller Center.

Source:

http://the1709blog.blogspot.com/2012/04/eu-copyright-at-fordham-report-part-i.html

Oracle’s claim that Google violated several of its patents and copyrights goes to trial in a San Francisco court on Monday.

It is one of the biggest such tech lawsuits to date. Oracle is claiming about $1bn (£630m) in compensation.

The Java developer claims Google’s Android system infringes intellectual property rights relating to the programming language.

Software engineers warn the case could set a worrying precedent.

‘Write once, run anywhere’

Java was first released in 1995 and allows software to be run across computer platforms, rather than just being limited to one type of operating system.

Oracle – a business hardware and software provider – inherited the intellectual properties when it took over Java’s original developer, Sun Microsystems, in 2009.

The language is used by many business applications as well as other software, such as the video game Minecraft, on PCs.

Oracle argues that by using its intellectual property, and then giving Android away for free, Google undermined the possibility of it licensing Java to mobile phone makers.

It adds: “Because Android exploits Java but is not fully compatible with it, Android represents Sun’s, and now Oracle’s, nightmare: an incompatible forking of the Java platform, which undermines the fundamental ‘write once, run anywhere’ premise of Java that is so critical to its value and appeal.”

Interfaces

Much of the case does not centre on Google’s use of Java itself – which is free for anyone to use without licence – but rather the Android-maker’s use of 37 APIs (application programming interfaces) which allow developers to write Java-compatible code.

APIs allow different parts of a programme to communicate together as well as letting one application share content with another.

“APIs are the glue that allows computer programs to talk to each other – in this case Android apps use them to access the phone’s features like its screen and memory,” said Dan Crow, chief technology officer at Songkick and a former Google tech team leader.

“If Oracle wins the case and APIs are held to be copyrighted, then in theory, virtually every application – on Android, Mac OS, Windows, iPhone or any other platform – has to be at least re-released under new licence terms,” told the BBC.

“This could result in many applications being withdrawn until their legality is resolved.”

‘Deaf, dumb and blind’

Oracle alleges that 103,400 lines of its API specifications appeared on Android’s developer website.

“The APIs represent years of creative design,” Oracle said in a filed court document.

“Other than a few classes, Google was not required to copy the selection, organisation, and structure of the APIs to be compatible with the Java programming language.”

However, Google argues that the technologies involved should not be covered by copyright law.

“Without the APIs, the Java programming language is deaf, dumb and blind,” its lawyers have claimed.

“In addition, witnesses at trial will testify that developers expect the APIs to be available when they program in the Java programming language.”

Oracle also alleges that Google has infringed two of its patents relating to a data processing enhancement and a method to generate executable code.

API anger

If Oracle wins the API copyright claims it could force Google to alter Android – a move likely to mean independent software developers would also have to recode apps designed for the platform.

But engineers say they have more fundamental concerns about the precedent that could be set in what is already a lawsuit-prone industry.

“The lives of developers would be much more complex,” Simon Phipps, an ex-Sun employee, blogged for the Infoworld news site.

“Complexity and confusion would return to a world where they have largely been expunged, bringing fear, uncertainty, and doubt back into open source software development.”

Malcolm Barclay, an independent developer of travel apps for iPhones, told the BBC: “It would be utterly ridiculous to think that using an API could infringe upon the intellectual property rights of an open platform.

“It would not be practical to go under the hood of each API to see if someone was going to sue you over using it.

“It would be the equivalent of buying a music CD and suddenly finding someone wanted to charge you for listening to track 10.”

Oracle would not comment on the developers’ claims.

The trial is expected to last eight weeks.

Source:

http://www.bbc.co.uk/news/technology-17705873?ocid=us_news_syndication_pulse

In a high-profile case, the Second Circuit has defined contours of the safe harbor provisions of the Digital Millennium Copyright Act, 17 U.S.C. § 512(c); those provisions relieve a service provider of liability for certain copyright infringements.  Viacom Int’l, Inc. v. YouTube, Inc, Nos. 10-3270-cv and 10-3342-cv (2nd Cir. April 5, 2012).  In a detailed opinion that, while vacating summary judgment in favor of the defendants, was not as friendly as the plaintiff copyright owners surely hoped for, the court explained that, among other things, a service provider loses the DMCA’s safe harbor protection for copyright infringement only where the service provider has knowledge of “specific and identifiable infringements.”

The plaintiffs sued YouTube and Google, alleging “direct and secondary copyright infringement based on the public performance, display, and reproduction of approximately 79,000 audiovisual ‘clips’ that appeared on the YouTube website between 2005 and 2008.”  The district court had found that the defendants “had insufficient notice of the particular infringements in suit,” and had therefore granted the defendants’ summary judgment motion, holding “that the defendants were entitled to DMCA safe harbor protection.”

The district court had reasoned that the defendants could have been disqualified from the safe harbor of § 512(c)(1)(A) only where they had “knowledge of specific and identifiable infringements.”  Further, the district court thought that a service provider must have “item-specific knowledge of infringing activity” in order “to have the ‘right and ability to control’ infringing activity under § 512(c)(1)(B).”  Moreover, according to the district court, “the replication, transmittal, and display of videos on YouTube constituted activity ‘by reason of the storage at the direction of a user’ within the meaning of § 512(c)(1).”

The Second Circuit agreed with much of the district court’s reasoning, but vacated the summary judgment order because “a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website,” and because it was error to interpret “the ‘right and ability to control’ provision to require ‘item-specific’ knowledge.”  Further, the Second Circuit remanded the case for additional fact-finding concerning whether one YouTube software function fell “within the safe harbor for infringement that occurs ‘by reason of’ user storage.’”

In particular, looking at 17 U.S.C. § 512(c)(1)(A), the Second Circuit agreed with the district court that “the statutory phrases ‘actual knowledge that the material . . . is infringing’ and ‘facts or circumstances from which infringing activity is apparent’ refer to ‘knowledge of specific and identifiable infringements.”  The court explained that its reasoning was based on the text of the statute.  If a service provider became aware of infringing material, the statute provided that the safe harbor was retained by acting expeditiously to remove it.  Allowing the service provider to be liable for general knowledge of infringing activity would undercut the statute’s incentive for the service provider to take steps to disable infringing material of which it was specifically aware.

The plaintiffs had also argued that summary judgment for YouTube was inappropriate because YouTube had been willfully blind to alleged infringements.  The court noted that DMCA Section 512(m) explicitly stated that DMCA safe harbor protection cannot be conditioned on affirmative monitoring by a service provider.”  However, the willful blindness doctrine does not impose an affirmative duty to monitor.  Therefore, the court held that “that the willful blindness doctrine may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA.”  Willful blindness was an issue for the district court to consider on remand.

Concerning the “right and ability to control” infringing activity, the court remanded the case “for further fact-finding on the issue of control” because the district court “erred by importing a specific knowledge requirement into the control and benefit provision.”  Congress did not intend the “right and ability to control” provision, § 512(c)(1)(B), to be coextensive with the doctrine of vicarious liability.  Therefore “the ‘right and ability to control’ infringing activity under § 512(c)(1)(B) requires something more than the ability to remove or block access to materials posted on a service provider’s website.” (Internal quotations omitted.)  The determination of that “something more” was a difficult question to be answered on remand.

Concerning whether “YouTube’s software functions fell within the safe harbor for infringements that occur ‘by reason of’ user storage,” 17 U.S.C. § 512(c)(1), the Second Circuit affirmed the district court’s “holding with respect to three of the challenged software functions–the conversion (or ‘transcoding’) of videos into a standard display format, the playback of videos on ‘watch’ pages, and the ‘related videos’ function [used to identify clips related to a clip being watched by a user].”  However, further fact-finding was needed concerning “the third-party syndication of videos uploaded to YouTube.”  The first three functions were not, as the plaintiffs alleged, content production, but instead were used to facilitate use access to content.  Third party syndication, in contrast, may not occur “at the direction of a user” when involving manual selection of copyrighted material for a third party.

Source:

http://swipreport.com/dmca-copyright-infringement-safe-harbors-addressed-by-2nd-circuit/

The National Copyright Administration in China has published a preliminary amendment draft to revise China’s copyright laws (Copyright Law of the People’s Republic of China (modified draft))  on its official website (on March 31st). The draft has been  posted to “collect public opinion and constructive feedback”, and there has already been a vocal response as bloggers, songwriters and music producers (amongst others) digest the news – and many have singled out revisions to Articles 46 and 48 for criticism.

The amendment to Article 46 (which governs infringement of copyright) is interesting and says that any record producer who acts pursuant to Article 48 shall have the right to make recordings of musical works owned by another, without needing authorisation from the original owner, provided that the content had been published for three months or longer. The existing law says (and I quote from a press article) “no such work may be used where the copyright owner declares that use is not permitted”. You can see the current wording of Article 46 and Article 47 here. Now if I understand that correctly surely that’s what would be called ‘statutory licensing’? However there is some confusion as a number of the press reports seemed to confuse the copyright in sound recordings with the copyright in the song itself, with one website reporting the proposed amendment as “Any sound recording, after being published for three months, may be used by other recording producers, according to the process provided in Article 48, to produce their own sound recording, without the permission of its copyright owner”. That would be seem to constitute (at least) an automatic right to sample, and taken to an (illogical) extreme, the right to copy a recording in return for a statutory payment.

Article 48 stipulates guidelines for individuals or corporations who use this non-original content: It means producers must contact the National Copyright Administration; specify the original author and source of material; and submit a usage fee to the copyright collective administration organisations as stipulated by the National Copyright Administration (under the State Council) within one month of use. The copyright collective administration organisations will then transfer payment to relevant copyright owners.

Well know Chinese songwriters including Li Guangping, Gao Xiaosong and Wang Feng have said that they believe Article 46 will harm the interests of original music producers and songwriters, pointing to the short window before re-use is allowed with Gao Xiaosong saying “it is very difficult to popularise a new song within three months. Getting your song heard and appreciated by others is completely different from a song that has been around for years. This new amendment will encourage internet copyright infringement” but Gao Xiaosong then added in comment on his blog “The only positive by-product of this amendment is that it allows Chinese parties to record and distribute a new Lady Gaga album after it has been on the market for three months”. More dramatically, Li Guangping, a renowned songwriter, wrote on his blog  “Dear musicians, we are done! Who will protect our rights? The draft is really ridiculous”.

Zhou Yaping, CEO of Beijing based New Run Entertainment Co pointed out that that if the revisions to Article 46 and 48 are passed, record companies would no longer invest in large advertising spends saying that “this will harm original content producers and that there will be a weakened purchasing position for record companies when bidding to assume control of a copyright as the window is so short”. Zhou also acknowledged that as Article 48 also forces users to submit a usage fee to the copyright collective administration organisations within one month after using the original content, this will strengthen the power of the Music Copyright Society of China

A new “suggestion mailbox” has been set up on behalf of Fuzhi Chenglin and Jin Zhaojun, the chairman and the standing deputy chairman of the Pop Music Society of Chinese Musicians’ Association. The Record Industry Committee of China Audio and Video Association also posted on its blog that it will hold a meeting on April 9th and 10th  to discuss the draft and “consolidate it’s position to fight the proposed amendment”.
Responding to Gao Xiaosong’s blog, Ma Kun, a lawyer at Zhejiang Zeda Law Firm, said: “Copyright systems are created to balance the public interest against the private rights of those who control copyrighted materials. Every country has a compulsory licensing system. Our current copyright law includes licensing regulations for phonograms.”

It is also proposed that the maximum level of compensation for copyright infringement would be increased from 500,000 yuan (US$ 79,238) to 1 million yuan (US$ 158,474). The draft changes to the legislation also adds administrative powers to pursue cases of copyright infringement.

Meanwhile, China Daily says that the drafters of the proposal have said that they’ve noticed the comments and will stay open-minded to different opinions: “We are collecting public opinions until April 30 and we will take every suggestion seriously. It is still too early for us to make any comment,” said Xu Wei from the law department under the General Administration of Press and Publication, which drafted the proposal.

I am most certainly NOT a Chinese copyright lawyer and any comments, illuminations or detail from our Chinese readers would be most appreciated – and clarification of the scope of the proposed amendment to Article 46 would be most appreciated!

http://english.eastday.com/e/120406/u1a6469438.html
http://www.china.org.cn/arts/2012-04/06/content_25077760.htm
China’s Copyright Dilemma here

and more of enforcing copyright law in China here

Source: http://the1709blog.blogspot.com/2012/04/chinas-proposed-copyright-reforms.html

Australia court finds Google hosted misleading ads

The Associated PressApril 3, 2012, 07:40AM ET

An Australian court on Tuesday found Google Inc. guilty of breaching trade law by hosting misleading or deceptive advertisements in a ruling that holds search engines responsible for their advertisers’ content.

Three Federal Court judges unanimously overturned a lower court’s ruling from September last year that Google was not responsible for advertisers’ breaches of Australia’s Trade Practices Act.

The appeal court ruled that Google had engaged in misleading or deceptive conduct with four ads that appeared on its Google Australia website. The advertisers used the names of competitors as keywords to trigger their own ads appearing.

The court ruled this was likely to mislead people searching for information about those competitors. Google’s “AdWords” system posts small text-only advertisements next to search results based on search keywords selected by the advertisers.

The section of the law that Google breached does not impose a fine. But the court ordered Google to make changes to prevent future breaches and to pay court costs to the Australian Competition and Consumer Commission, which appealed the September ruling.

Google said it was disappointed by the decision and is considering its options, which include a High Court appeal.

“Google AdWords is an ads hosting platform and we believe that advertisers should be responsible for the ads they create on the AdWords platform,” Google said in a statement.

ACCC chairman Rod Sims said he had appealed the original ruling because it raised important issues about the role of search engine providers as publishers of paid content.

“This is an important outcome because it makes it clear that Google and other search engine providers which use similar technology to Google will be directly accountable for misleading or deceptive paid search results,” Sims said in a statement.

Source: http://www.businessweek.com/ap/2012-04/D9TTE3HG0.htm

[The IPKat] Breaking News: 4th Circuit paves a partial path for Rosetta Stone in Google Adwords case‏

By  Annsley Merelle Ward  to  The IPKat  on  4/10/2012 02:44:00 AM

IP judgments are like buses, it seems. After weeks and months of prowling around her room waiting for judgments, the AmeriKat has suddenly been inundated with several of them over the past week. Today was no exception with the Court of Appeals for the Fourth Circuit handing down their decisionin the Google AdWords case involving Rosetta Stone. Their decision marks the first appellate decision to discuss whether Google’s AdWords program gives rise to trade mark infringement liability against Google.

The AmeriKat will be delving into the nitty-gritty of the decision on Sunday once she has time to fully absorb the 47-page decision, but in the meantime, she quickly summarizes the background and key points of the judgment.

Background

In 2009 Rosetta Stone, the language-learning software company,sued Google in relation to Google’s use of its trade mark names, namely ROSETTA STONE, as part of its Google’s AdWords program. In a 6-year period from 2003-2009, Rosetta Stone spent approximately $57 million for TV and radio advertising, $40 million for print media marketing and $212.5 million to advertise on the Internet. The Appeals Court referred to Rosetta’s Stone as enjoying, in 2009, “the highest level of brand recognition by far in the domestic language-learning market.” There was, it follows, a lot of reputation for parties to take advantage of, including purchasing AdWords from Google which included Rosetta Stone’s trade marks. For a quick re-cap on AdWords in relation to this case, specifically, please click here for a little summary put together by the AmeriKat.

Rosetta Stone’s court filling claimed that under the Lanham Act Google was liable for direct trade mark infringement, contributory trade mark infringement, vicarious trade mark infringement, trade mark dilution and unjust enrichment. Rosetta Stone also argued that Google’s AdWords policies created a likelihood of confusion by directing users to Rosetta Stone’s competitors and actual confusion in misleading internet users to purchasing counterfeit ROSETTA STONE software; a problem that Rosetta Stone argues has increased since Google’s 2009 policy change which permitted purchasers of AdWords to use trade mark words in the body of a Sponsored Link’s text (see previous AmeriKat reports here, including on the other US AdWords cases).

In 2010, Judge Gerald Bruce Lee of the Eastern District of Virginia (4^th Circuit) granted Google’s summary judgment motion in respect of all of the claims, save for the unjust enrichment claim which Google moved to dismiss and which the court also granted. Rosetta Stone appealed.

Summary of Appeals Court Decision

Today the Appeals Court vacated the District Court’s judgment in favor of Google in respect of Rosetta Stone’s (1) direct trade mark infringement claim, (2) contributory trade mark infringement claim and (3) trade mark dilution claim and remanded these claims for further proceedings. The Appeals Court affirmed the District Court’s judgment in favor of Google in respect of vicarious trade mark liability and unjust enrichment claims.

Direct Trade Mark Infringement

Under the Lanham Act, to establish trade mark infringement, a claimant must prove that it owns a valid mark, that the defendant has used the mark, without authorization, in commerce in connection with the sale, offering for sale, distribution or advertising of goods and the defendant’s use of the mark is likely to confuse consumers. It is this final limb that has proved the most difficult for claimants in the US in relation to the Google Adwords cases. Indeed, in this case Google did not dispute that Rosetta Stone could surmount all the criteria in its claim except the last one. The Appeals Court therefore stated that Google’s AdWord’s program would be assumed for the purposes of the appeal as unauthorized use in commerce in connection with the sale, offering for sale distribution or advertising of any goods or services (section 1114(1)(a)).

The massive hurdle is, as stated, confusion. The US has a multifactor test for confusion and the test varies from Circuit to Circuit. In the 4^th Circuit, the multifactor test set out in George & Co, LLC v Imagination Entm’t Ltd (2009) lists the factors as follows:

1. the strength or distinctiveness of the plaintiff’s mark as actually used in the marketplace;
2. the similarity of the two marks to consumers;
3. the similarity of the goods or services that the marks identify;
4. the similarity of the facilities used by the markholders;
5. the similarity of advertising used by the markholders;
6. the defendant’s intent;
7. actual confusion;
8. the quality of the defendant’s product; and
9. the sophistication of the consuming public.

The District Court entered summary judgment for Google by holding that (A) there was no genuine issue of fact as to whether Google’s use of ROSETTA STONE created a likelihood of confusion and (B) that the functionality doctrine shielded Google in any event. The Appeals Court held that the District Court erred in these findings.

In relation to (A) the Appeals Court considered that the District Court viewed the evidence on the disputed confusion factors — the intent of the Defendant, actual confusion and consuming public’s sophistication — as it would during a bench trial, instead of properly applying the summary judgment standard. The thrust of the Appeals Court decision was that there was substantial evidence on record ( by way of survey evidence, expert reports, etc adduced by Google and by Rosetta Stone) to create genuine issues of fact on the various elements to be taken into account when assessing likelihood of confusion, and therefore was not suitable to be resolved on summary judgment.

 The District Court’s application of  the “functionality doctrine”  found no favor in the Court of Appeals

In relation to (B), the “functionality doctrine” prohibits trade dress or trade mark rights in functional features of a product or its packaging, i.e., anything that is essential to the use of or affects the cost or quality of the article – Qualitex (1995)/Inwood (1982). The District Court had concluded that trade mark keywords are “functional” when entered into Google’s AdWord’s program because:

“The keywords . . . have an essential indexing function because they enable Google to readily identify in its databases relevant information in response to a web user’s query . . . [T]he keywords also serve an advertising function that benefits consumers who expend the time and energy to locate particular information, goods, or services, and to compare prices.”

Making quick work of this ruling the Appeals Court held that the functionality doctrine simply did not apply in these circumstances because the District Court had incorrectly focused on whether Rosetta Stone’s mark made Google’s product more useful, ignoring whether the mark was functional in how the proprietor, Rosetta Stone, used it. The functionality doctrine’s touchstone must first reference back to the proprietor’s use of the mark in determining whether it is functional, not the defendant’s use. Rosetta Stone’s use of ROSETTA STONE, the Appeals Court held, is not essential for the functioning of its language-learning products. In closing on this point the Appeals Court said:

“As the case progresses on remand, Google may well be able to establish that its use of Rosetta Stone’s marks in its AdWords program is not an infringing use of such marks; however, Google will not be able to do so based on the functionality doctrine. The doctrine does not apply here, and wereject it as a possible affirmative defense for Google.”

Contributory Trade Mark Infringement

Under the judicially created doctrine of contributory infringement, liability may be imposed upon those who facilitate or encourage infringement. General knowledge that some users of a service will use it to engage in infringing activities is not enough– a claimant has to show that the defendant “intentionally induce[ed] its customers to make infringing uses” of the marks or “supplied] its products to identified individuals known by it to be engaging in continuing infringement” (Von Drehle (2010)).

The District Court had acknowledged Rosetta Stone’s evidence that Google, even after notification by Rosetta Stone of the presence of infringing activity, allegedly continued to permit known infringers and counterfeiters to bid on Rosetta Stone marks as keywords. However, the District Court was “unpersuaded” by the evidence and based its finding for Google on this issue on the 2010 decision of Tiffany v eBay, i.e., that Rosetta Stone failed to establish with the requisite specificity that Google knew or should have known of the infringing activity -generalized knowledge was not enough and , unlike eBay, Google had been notified of even fewer instances of infringement. The Appeals Court did not find favor with this reasoning and distinguished the present case from Tiffany because Tiffany was the subject of a full trial, not a summary judgment motion. The Appeals Court held:

“The only question in this appeal is whether, viewing the evidence and drawing all reasonable inferences from that evidence in a light most favorable to Rosetta Stone, a reasonable trier of fact could find in favor of Rosetta Stone, the nonmoving party. Of course, the Tiffany court did not view the evidence through the lense of summary judgment; rather, Tiffany involved an of judgment rendered after a lengthy bench trial. Because of its procedural posture, the district court in Tiffany appropriately weighed the evidence sitting as a trier of fact.

Accordingly, Tiffany is of limited application in these circumstances, and the district court’s heavy reliance on Tiffany was misplaced. We conclude that the evidence recited by the district court is sufficient to establish a question of fact as to whether Google continued to supply its services to known infringers. Accordingly, we vacate the district court’s order to the extent it grants summary judgment in favor of Google on Rosetta Stone’s contributory infringement claim.”

Vicarious Liability, Unjust Enrichment and Trade Mark Dilution

For a finding of vicarious liability for trade mark infringement a claimant must show that the defendant and the infringer “have an apparent or actual partnership, have authority to bind one another in transactions with third parties or exercise joint ownership or control over the infringing product” (Hard Rock Café Licensing Corp v Concession Servs., Inc (1992). Although Rosetta Stone argued that the evidence already put forward was sufficient to create a question of fact regarding whether Google jointly controls the appearance of the ads or sponsored links the Appeals Court held that this was not evidence that Google acts jointly with advertisers in controlling the counterfeit Rosetta Stone products. The Appeals Court thus affirmed the District Court’s summary judgment in favor of Google in this respect.

Chief Judge Traxler writing for the Court, also affirmed the District Court’s dismissal of Rosetta Stone’s unjust enrichment claim, but vacated the lower court’s decision against Rosetta Stone in respect of its trade mark dilution claim. For sake of space and time, the AmeriKat will not go into the details of these claims until Sunday.

What judges wear when they conduct de novo reviews

The long and short of the Court of Appeal’s decision is that there appears to have been substantial disputed evidence on record to make the direct infringement claim a genuine issue of fact ripe, not for summary judgment, but for a full trial. It is also important to remember, that the Appeals Court standard of review was a de novo review. In conducting a de novo review the appellate court views “the facts and draws all reasonable inferences therefrom in the light most favorable to [Rosetta Stone], as a non-moving party”,(i.e. the party who did not make the summary judgment motion). That means that the decision can be viewed from a rosy Rosetta Stone perspective. When these issues are revisited on remand there may not be such a Rosetta-tint on the evidence. Just like with the Viacom v YouTube news of last week, we will have to await the next stage before we have clarity on Google’s potential liability for the AdWords program.

For more information see these articles on MSNBC, Bloomberg and Business Week.

Source:

http://ipkitten.blogspot.com/2012/04/breaking-news-4th-circuit-paves-partial.html