Ed Nanney's presentation about intellectual property law in Chattanooga on 11/27/2012 - Notes

IP-law.mkdn

Introduction

Presented to CHUGALUG on 11/27/12 by Ed Nanney at the Chattanooga Public Library (4th floor)

He "has an affinity for" with entrepreneurs / small businesses; previously worked for a Fortune 500 company

Elevator speech: Anything worth doing has a certain amount of risk associated with it. Doing business has to do with how effective you are at managing the risks you face. Ed tries to identify and mitigate (unnecessary legal) risks in ways that the client considers acceptable.

People have different appetites for risk

Consider the financial costs and potential consequences associated with each course of action. Ed tries to give pragmatic advice because some legal strategies may be prohibitively costly.

Ed is not an IP expert. He has more of a broad, shallow practice than a narrow, deep practice. We are here to learn more about how to ask IP-related questions, not necessarily to get legal answers.

Copyrighting online material

The DMCA (1998) is the main law here.

1. It's a crime to circumvent anti-piracy measures

2. Most code-cracking devices are outlawed

3. Exemptions for libraries, archives, educational institutions

   • Do public schools count as educational institutions?

4. Limits ISP liability but requires that the ISP take down any infringing content when they are made aware of it.

   • Verner case: eBay was involved

5. Webcasters pay licensing fees to recording companies

   • The Napster problem

6. Fair use doctrine still applies

   • Example: Ed used a Dilbert comic in his presentation.
     1. He's not making any money from it
     2. It's used for an educational purpose

Civil and/or criminal penalties can be sought and enforced.

Governing principles

How it's done

(Why and how to copyright)

Copyright covers text, artwork, music, audiovisual material, sound recordings, etc. It DOES NOT include ideas, procedures, systems, or methods of operation.

Circulars are the best way to get information about copyrights from the government. They are revised periodically. Important circulars of the US Copyright Office:

• No. 1 "Copyright Basics"
• No. 66 "Copyright Registration of Online Works"

Processes are patentable; descriptions and illustrations of processes are copyrightable. (Patents are mostly outside the scope of this presentation).

By [common law](common law "wikilink"), you have a protected copyright interest in material as soon as it is published, regardless of whether it is registered. However, register your copyrighted works because:

• It notifies the world that you created this content on such-and-such date.
• It's harder to prove infringement against an unregistered copyright (the defense is innocent infringement because the offender may not have known about the copyright).

Poor man's copyright: If you have published something, and you send yourself a letter saying that you have established copyright, you don't have to go through the process and pay the fees. This is BS. If there's a postmark on the letter, it at least shows that you possessed the material as of that date, but it doesn't prove that you originated it or were using it in any meaningful way.

Registration of digital content: It's not particularly expensive. It's explained in the circular that you should call or visit the website. Fees may be as cheap as $30. (If you go to an attorney it'll cost you more than that.) They will want a "deposit" (an example of the content) with very specific rules for how things should be labeled, etc. Details in Circ 66.

If you are developing copyrightable content while working for somebody else, that copyright belongs to the employer. Questions:

• Does this mean that they own it in every way?
• Does this hold true even if I took the initiative in creating it?
  • If I haven't created it yet, then I just won't do it.
  • If the larger process won't function without my component, that strengthens the employer's ownership argument.
  • "I see an application for this component outside of the company, and I'd like to own it." This is a better argument when you haven't actually done the work yet.
    • Aaron says that here, documentation and process scope is critical. Define which components are yours and which ones are not.

If there's a defect/weakness in the legal language of a contract, the ambiguity will be construed against the person who drew up the language. This could extend to project specifications.

If you're engaged as a contractor, be very careful in how your consulting agreement is worded regarding who will own the copyright.

Is software a "machine" or a "process"? Ed's answer: it depends. It is usually copyrightable since code is text, but there may be certain components that may be patentable instead if they deal with a process.

• Cost-benefit consideration: Decide your appetite for risk and/or how much you're willing to spend to mitigate risks. Prosecution of these cases is NOT cheap.

EULAs and their enforcement

• A word about jurisdiction

  • US Supreme Court is the ultimate decider - they have not really spoken on this issue.
  • 12 federal circuit courts can theoretically come up with different conclusions based on the same facts.

• Vernor v. Autodesk, Inc. - 621 F.3d 1103 (9th Cir., 2020)

  • Vernor (a guy) bought 5 used, outdated copies of AutoCAD. 1 at a garage sale, 4 from a company who bought some upgrades and sold the original CDs with activation codes.

  • Vernor turned around and put them on eBay. The first one sold several years before the 4 were listed. He sold the 4 for $600 each.

  • Vernor then filed a declaratory judgment action ("I have reason to believe that this other party has a problem with me and I want to know what my rights and responsibilities are before it goes any further.")

  • eBay is an ISP, and ISPs have to take down copyrighted material.

  • AutoDesk griped to eBay, and eBay took down Vernor's account. This was a big deal to him - he had sold over 10,000 items on eBay.

  • Important license agreement provisions (Ed has never read one of these all the way through):

    1. AutoDesk retains title to all software (they own it). All the purchaser has is the permission to use it.
    2. It's a non-exclusive, non-transferable license. (Certain kinds of transfers may be OK, but it still can't be done without AutoDesk's prior written consent).
    3. You may not decompile, re-engineer, reproduce, etc.
    4. You must destroy all previous versions of the software if you upgrade.

  • The "first sale" doctrine did not apply since Vernor didn't legally own the product.

  • The "essential step" doctrine says that copying program files to disk is allowed because it's essential to use the product. Vernor tried to use this argument somehow, but the court didn't buy it.

  • The US Supreme Court denied certiorari.

(Ed said that on the day of the presentation he saw that a "used" copy of AutoDesk Lite sold for $612 on eBay.)

AutoDesk did take the initiative to have Vernor banished from eBay before any of this happened. This is why Vernor filed for declaratory judgment.

How this relates to copyrights

Bitcoins

• Is it legal? Well, it's not illegal.

• Allure: No 3rd party, no governments, anonymity

• Regulatory/public policy concerns:

  • Can purchase anything this way (physical goods, contributions to WikiLeaks, Silk Road narcotics network)
  • An investment option?

• Ed used "Nerdy Money" (abstract | paper) to prepare for this presentation. (TODO: There was one other article he used?)

  • What kind of regulation, if any, is appropriate for Bitcoins?
  • The article concludes that most of the regulatory vehicles that apply to traditional situations are inadequate.
  • You can begin to penetrate the veil of unregulated commerce when people exchange their Bitcoin balances for "real" money.

• CAVEAT: If you think of Bitcoins like bartering, then you owe taxes on any transactions that create real financial value. Bartering is taxable.

Legality, public policy concerns, other issues

Arguably, more untraceable systems like Bitcoin are coming. Lawmakers are saying "what can we do to police systems like WikiLeaks" (prevent funds from going to illegal / treasonous activities)?