LawTalk Blog

Google Wins Key Copyright Ruling

Google won a major victory late last month as a Federal Judge in New York granted Google’s motion for summary judgment in Viacom’s lawsuit with YouTube. Viacom, which sued Google in 2007, accused the video sharing site of copyright infringement after tens of thousands of copyrighted Viacom videos were uploaded to the site while Google had “actual knowledge...but failed to do anything about it.” Viacom had sought damages of at least $1 billion.

Judge Louis L. Stanton of United States District Court for the Southern District of New York granted Google’s motion for summary judgment, saying that the company was shielded by “safe harbor” provisions in the Digital Millennium Copyright Act. The provisions generally protect a Web site from liability for copyrighted material uploaded by its users as long as the operator of the site takes down the material when notified by its rightful owner that it was uploaded without permission. The decision reiterated that Internet companies are not legally required to develop and implement filtering systems such as YouTube’s Content ID System. Internet companies can expect legal protection as long as they take down content when copyright holders complain or when the company has specific knowledge of infringing activity. The judge wrote:

The present case shows that the D.M.C.A. notification regime works efficiently: when Viacom over a period of months accumulated some 100,000 videos and then sent a mass take-down notice on February 2, 2007, by the next business day YouTube had removed virtually all of them.

Kent Walker, Google’s Vice President and General Counsel, said in a blog post that “the decision follows established judicial consensus that online services like YouTube are protected when they work cooperatively with copyright holders to help them manage their rights online.”

The decision was widely supported as it would protect not only YouTube but also Facebook and other websites that are largely built with content uploaded by their users. Mr. Walker said “this is an important victory not just for us, but also for the billions of people around the world who use the web to communicate and share experiences with each other.”

Disappointed with the ruling, Michael Fricklas, Viacom’s Executive Vice President and General Counsel, vowed to appeal. Fricklas called the ruling “fundamentally flawed”. “It is, and should be, illegal for companies to build their businesses with creative material they have stolen from others,“ he said, adding that “legitimate websites shouldn’t have to compete with pirates.”  

 

Hulu Goes Premium “More wherever. More whenever. Than ever.”

Announced June 29^th, Hulu Plus is now available on an invitation only basis. Although free content is still available, subscribers to Hulu Plus pay a monthly fee of $9.99. Even with the paid subscription model, there will still be some ads, with the first advertisements coming from Bud Light and Nissan.

Customers are getting quite a bit for their $9.99 a month. NBC Universal, News Corp., and Walt Disney Co. are providing the initial content for the service by providing full access to 45 current programs as well as full seasons of past programs such as “Arrested Development.” Also, most of that programming will be shown in 720p HD. Furthermore, customers will get access to programming on their TV, iPhone, iPad, and more.What does this all mean for Hulu? Primarily, it allows Hulu to be able to gain access to better viewing windows from content providers. Windows are the time frames for which Content Providers license their content. Because more people watch television and that generates more income, Content Providers generally sell the first window to Cable Providers. By generating more revenue, Hulu will be able to pay more for content, and this will allow Hulu to negotiate for earlier windows. In the future, this will probably allow Hulu to skip the traditional first window of television. Unless Cable Providers want to end up like Blockbuster Movies, they need to find a way to compete with Hulu Plus’ ability to give customers the content they want, wherever that costumer happens to be.

Second, Hulu is helping to push the envelope on the TV Everywhere movement. By providing “More wherever. More whenever. Than ever,” Hulu is in a great place to gain a larger market share than before. Customers constantly want more. By streaming online content to their mobile devices, a customer gets more and is no longer restrained to their television set. They are free to watch when they want, where they want. This freedom to view content anywhere provides Hulu with a unique opportunity to get more data about viewing habits than the traditional cable model.

Along with this freedom for the customer and information for the provider comes the threat of costumer backlash and piracy. Customers do not necessarily want big brother knowing their every move, and Content Providers do not want their content stolen before it can get to the screens. Hulu’s next couple of years will provide a lot of answers for the questions the TV Everywhere model poses. Hulu has poised itself to overtake a lot of great models, such as Netflix and YouTube, if it manages customer expectations properly. Right now, only time can tell if this is the right model. If it is, the possibility of bridging the gap into other types of content is not only existent but also highly probable.

•http://www.hulu.com/plus

•http://mediadecoder.blogs.nytimes.com/2010/06/29/hulu-unveils-subscription-service-for-9-99-a-month/

•http://online.wsj.com/article/SB10001424052748704103904575336973452088244.html?mod=WSJ_hps_SECONDTopStories

AT&T’s Data Price Shift and the Effect on the Digital Marketplace

On June 2, 2010, AT&T announced a new pricing model for its data plans.  The $30 per month unlimited data plan is no longer available unless you are a legacy user.  AT&T purports that its new two-tier pricing model makes smartphone Internet access more affordable for more people. The first tier provides 200 megabytes of data for $15 per month. The second tier provides 2 gigabytes of data, ten times the amount of the first tier, for $25 per month.  AT&T reassures customers that they will have unlimited access to over 20,000 AT&T Wi-Fi hotspots along with unlimited access to Wi-Fi hotspots in the home, office, or elsewhere.  Also, for an extra $20 per month, top tier users get the ability to tether their smartphones to their computers. To keep customers informed on data usage, text updates are sent to a user when customers reach 65%, 90%, and 100% of their monthly allotment.  

How are consumers and companies going to respond to this shift? That is the question being asked all across the country, and AT&T is asking the very same thing.  Spencer Ante of the Wall Street Journal reports that mobile-device software developers are worried that customers are going to think twice before buying more apps.  If customers do not know their current data usage, they could be worried about future overage fees. All of this worry could be a good thing though.  If customers are more aware on their data usage and developers are increasing the efficiency of their applications, the networks should run more efficiently.  BlackBerry maker Research In Motion has put a premium on efficient use of networks.  A February Consumer Reports study points out that iPhone users consume an average of 273 megabytes per month while BlackBerry users only consume an average of 54 megabytes per month.

From the developer side, the mobile music-streaming monster Pandora already has efficiency on the brain. Founder Tim Westergren said that Pandora does not consume much data, and they have been working on efficiency for years.  Plus, he says that less than .5% of Pandora users would feel any constraint under the 2 gigabyte option. This second statement is not even too bold.  AT&T reports that 65% of its users consume less than 200 megabytes per month, while 98% of AT&T users consume less than 2 gigabytes per month.

Those numbers seem great for now, but what about the future? With the recent release of a 4th generation iPhone that includes video chat capabilityy, and with smartphone usage increasing, the demand on data networks is destined to rise. Already 23% of mobile consumers have a smartphone. This is up from 16% early last year.  With a tug-of-war between consumer fear and an ever-increasing burden on data networks, the best thing to do is to ease customer expectations by promoting more efficient mobile applications. This strategy allows developers to play into current consumer fear while preparing for the future. Efficiency is a great current marketing tool, and a more efficient app would presumably run more smoothly on a possibly strained future data network.

http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=30854

Apple Places New Limits on App Developers

Apple is now placing more limitations on outside programmers with regard to what software can run on the iPhone. The new rules mandate that app developers must use Apple’s programming tools instead of other services. This creates a serious problem for programmers using other systems, like Adobe, that can generate a version of the app for the iPhone as well as other devices. While Apple wants to encourage the development of apps, developers from now on may only do so on the Apple platform.

These changes are putting some app developers on hold as they determine whether compliance with new standards is possible. For some companies the new rules will result in a few minor adjustments but for others, pre-existing agreements with other services will make compliance far more difficult.

The new programming rules are partly the result of a substantial shift in Apple’s main source of revenue. Mobile devices are becoming a more significant source of revenue than desktop computing, and there is far more pressure on app developers as a result.  While some argue that new standards will promote the development of quality apps, others contend that these changes will ultimately stifle creativity.

Source: http://www.nytimes.com/2010/04/13/technology/companies/13apple.html?hpw

UK Passes Controversial Digital Economy Bill

UK Passes Controversial Digital Economy Bill

The UK’s parliament passed the Digital Economy bill, which allows for ISP throttling and clears the path for the implementation of a so-called “three strikes” antipiracy regime.  A “three strikes” system, also known as “graduated response,” requires ISPs to send cease and desist letters to its users who violate copyright law through file sharing, and eventually disconnect the service of repeat offenders.  A similar law passed in France last year has been shown to be an ineffective antipiracy measure.  In France, file sharers have simply migrated to other services which better mask their activities. 

UK Bill:
http://www.nytimes.com/2010/04/09/technology/09piracy.html?ref=technology
http://news.bbc.co.uk/2/hi/uk_news/politics/8569750.stm

re French Law’s ineffectiveness:
http://news.bbc.co.uk/2/hi/technology/8592444.stm 

Comcast Victory Against FCC Deals Setback to Net Neutrality

The DC Circuit Court of Appeals overruled the Federal Communications Commission’s (FCC’s) decision to sanction Comcast for slowing the Internet service of certain users.  Comcast’s practice, known as “throttling,” targets users of peer-to-peer file sharing programs that occupy immense amounts of Comcast’s bandwidth.  The Court ruled that the FCC did not have the authority from Congress to impose the sanction under Title I of the Communications Act, which allows the FCC to regulate “information” services.  Comcast’s victory appears to be a blow to the FCC’s promotion of Net Neutrality, which requires Internet services to be content neutral.  The FCC’s lack of authority to regulate Internet service providers (ISPs) seemingly clears the way for ISPs to begin charging for certain content, much as a cable television provider would.  However, it is expected that the FCC will seek to reclassify ISPs as “telecommunications” providers under Title II of the Communications Act, which, if successful, would grant the FCC the authority to regulate ISPs. 

http://pacer.cadc.uscourts.gov/common/opinions/201004/08-1291-1238302.pdf  (decision)
http://arstechnica.com/telecom/news/2010/04/comcast-1-fcc-0-what-to-look-for-in-the-inevitable-rematch.ars

Google Avoids Liability within EU for Keyword Advertising Program

GOn Tuesday, March 23, 2010, the European Court of Justice (ECJ), the European Union’s top judicial body, issued its long-awaited opinion on whether Google’s Adwords program infringes trademark owners’ rights.  Through its Adwords program, Google sells keyword phrases, often consisting of trademarks, to advertisers, who are sometimes competitors of the trademark owners.  When a user searches for the phrase via Google’s search engine, an advertisement for the competitor will appear on the search results page. 

 In the instant case, Google sold the keyword phrase consisting of the trademark “Louis Vuitton” to a counterfeiter of trademark owner Louis Vuitton’s goods.  In its opinion, the ECJ found that Google’s Adwords program did not constitute an actionable “use” of the Plaintiff Louis Vuitton’s trademark, thus relieving Google of liability.  Facially, the decision appears to be a major victory for Google.  However, the ECJ made clear that liability could attach to advertisers who purchase competitors’ trademarks as keywords.  As such, even where Google will have a legitimate defense going forward, its advertisers will not, which could have a chilling effect on Google’s Adwords business. 

 Stanford Law School

Technology & Marketing Law Blog

 Decision

Hulu Will Create an Application for Apple’s iPad

Hulu, the free online video website, has plans to create an application for Apple’s iPad. While Hulu has been successful in bringing online TV to a mainstream audience, there has been increasing pressure from the companies that supply its content. Aiming to earn more in advertising, such companies are in favor of setting up a subscription service where customers would be required to pay a monthly fee to access some of the website’s content. Hulu has resisted implementing a subscription service in the past, but some say Hulu is now open to the possibility as the industry continues to change.

Some believe a subscription service might be put into practice with the Hulu iPad application. More than ever, consumers want Hulu access from other platforms including mobile devices and HDTVs that connect to the internet, but media companies have been resisting moving Hulu content to other platforms out of concern for low advertising revenue, even as use of the site has grown.

Finding a business model that would allow Hulu to move its content to other platforms and also increase revenue has been a challenge, and because of pressure from content suppliers, consumers might see a Hulu subscription service in the future.

 Source: http://www.nytimes.com/2010/04/01/technology/01hulu.html?ref=technology

Google Sidestepping Censorship, Redirecting Chinese Search Traffic

Google announced on Monday, March 22 that it will stop censuring its Chinese search site, Google.cn. Chinese users will now be redirected to Google’s Hong Kong site, Google.com.hk, which offers uncensored search results.

 Previously, Google was censoring its results on Google.cn in accordance with Chinese censorship laws, but now the Chinese government will be responsible for censuring search results it finds objectionable for users in mainland China. While Google was hopeful that mainland China would have uncensored access to the information and services the company provides, the Chinese government has fervently maintained their position.  Although Google has shut down its search operations, it will maintain a presence through its ad sales business, Android mobile phone operating system and Chrome browser, which constitute the majority of the revenue from the Chinese market.

 Many argue that both Google and China stand to gain a great deal from Google’s continued presence in China. China is the fastest-growing cell phone market with about 700 million customers, and Chinese wireless providers are increasingly offering phones with an Android operating system. Furthermore, the Chinese government wants to encourage business with foreign companies, and a Google exit would be unfavorable from a public relations standpoint.

 For now, Google will remain a strong presence in China.

 http://money.cnn.com/2010/03/22/technology/google_china/index.htm?source=cnn_bin&hpt=Sbin

Harvard Law Professor Helps Senator Chuck Schumer Draft Controversial Fashion Industry Copyright Law

Several months after co-authoring a Stanford Law Review article advocating copyright protection for fashion designers, Harvard Law professor Julie Suk is now working on a bill with US Senator Charles Schumer of New York that would grant copyright protection to fashion designers.  Currently, copyright protection does not extend to the fashion industry.  As such, it is common to see cheaper “knock-offs” of a designer’s work shortly after the work comes to the market. (http://fashionista.com/shopping/adventures-in-copyright/ ). 

The new law seeks to extend similar protection afforded those in the music, film and print industries to designers.  Those supporting the bill say that allowing a company to wholeheartedly copy another’s design is simply unfair, as is granting protection to other creative industries but none to the fashion industry.

While few argue that designers are any less creative than musicians or filmmakers, some feel that such protection is at best unnecessary in the fashion industry, and at worst a way for larger players to stifle creative innovation by asserting monopolies over designs.  Those who find such a law unnecessary, argue that the fashion industry functions well without copyright protection by pointing to studies that suggest that consumers who can afford to purchase more expensive original goods do so, even where less expensive copies exist.  Further, the prime reason cited for granting copyright protection is to promote creativity.  Opponents of the bill point out that the lack of copyright protection has not slowed innovation or prevented designers from creating and releasing new works into the market. 

Similar bills were unsuccessfully introduced to Congress in each of the last three years.  While this bill’s prospect for success is unclear, the cause appears to be gaining momentum with each successive year.  In general, creative industries have been successful when it comes to lobbying efforts designed to protect their livelihood. 

Sources: Boston Globe & Techdirt