A number of lawsuits and court decisions came to light today (at least, they came to light for me), but none of them merited a stand-alone post for this blog. So in what may be a one-time phenomena (but hopefully will become a recurring post section), we're presenting the first Courtroom Roundup - a brief overview of interesting cases and decisions that in some (typically tangential) way impact the video games industry (if there was a direct impact, it would likely merit its own post).
With that being said, welcome to Courtroom Roundup: The Supreme Denial Edition
- IAC/Interactive Corp. et al. v. Cosmetic Ideas Inc. - What is required to sue for copyright infringement, filing an application for copyright registration, or having that application granted?
The first case - IAC/Interactive Corp. et al. v. Cosmetic Ideas Inc., case number 10-268 in the U.S. Supreme Court - concerned the question of whether someone can sue for copyright infringement after merely filing for registration, or whether someone must wait to file a lawsuit until the Copyright Office grants a registration. The question stems from the text of 17 U.S.C. 411, which states (in relevant part) "no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title."
Some circuits - the Tenth and Eleven - have interpreted this statute as making registration - that is, registration granted by the Copyright Office - a precondition to filing a copyright infringement lawsuit. (Ed. Note: there are some explicit exceptions to Section 411 for works refused registration and audiovisual broadcasts, but we're ignoring them for now). Other circuits - the Fifth, Seventh, and Ninth - have interpreted Section 411 as requiring only that a registration be filed, not granted, prior to having the ability to sue for copyright infringement.
Bottom Line for the Games Industry: As of now, the circuit split stands. Depending upon where you file suit, you may have to wait for the Copyright Office to grant a registration, which in some cases is taking more than two years to process (without paying special fees, that is).
- Tiffany (NJ) Inc. et al. v. eBay Inc. - Should an online auction site be liable for trademark infringement committed by its users?
Our second case (also a denial of cert. by the Supremes) is Tiffany (NJ) Inc. et al. v. eBay Inc., case number 10-300 in the U.S. Supreme Court. This case stems from the six year-long battle between Tiffany and eBay over eBay users selling knock-offs as "authentic" or "real" Tiffany jewelry. The question raised by Tiffany's was whether eBay should be liable for damages caused by the sale of knock-offs. To get to liability, Tiffany's raised several causes of action including contributory trademark infringement and false advertising.
At trial, eBay won on all counts because it showed that it took affirmative steps to remove infringing items once those items had been reported. On appeal to the Second Circuit, the appellate court agreed with the district court as to trademark liability, but revived Tiffany's false advertising claim. With the denial of cert. from the Supreme Court, the case (from the trademark side) has been effectively ended. (Ed. Note: the false advertising claim was recently rejected - again - by the district court. See here).
Bottom Line for the Games Industry: When it comes to online portals and trademark infringement claims, potential plaintiffs should think of portals as falling into one of two buckets: those sites that play "above board" (that is, have procedures for dealing with infringements, and follow those procedures), and those that do not. Compare eBay, with its infringement response protocols, to a bit torrent site like Pirate Bay, which typically does not. While both may have generalized knowledge of infringements occurring through their online services, infringement actions against Pirate Bay-like entities are far more likely to success than those against eBay-like entities. This is due in no small part to the eBay-like entities playing "above board." So pick your targets carefully.
(Ed. Note: This is just a US perspective, though. Recently, eBay was fined 1.7M Eur by a French court for failing to stop sales of fake Louis Vuittion items on its site. So perhaps we should have a Bottom Line #2: the US is not the only law that should be considered when looking into infringement claims).
- Harper v. Maverick Recording Co. et al. - availability of the "innocent infringer" defense to copyright infringement
As if you couldn't see this coming, the third case of this Roundup is also a denial of cert. The case - Harper v. Maverick Recording Co. et al., case number 10-94 in the U.S. Supreme Court - concerns alleged copyright infringer and Kazaa-downloader Whitney Harper, and whether she can claim the "innocent infringer" defense. The "innocent infringer defense" isn't really a "defense" at all since it does not mean the infringer is free from liability; rather, it just goes to reduce the amount of statutory that the infringer pays the copyright holder. Under 17 U.S.C. 512(c), a court may reduce the statutory damage award to not less than $200 if the court determines that the infringer did not know, and had no reason to know, that the actions at issue constituted copyright infringement. In Ms. Harper's case, the district court determined that she was an "innocent infringer" and reduced the damage award from $750 to $200 for each of the 37 works (that's a reduction to $7,400 from the minimum $27,750 that could have been obtained).
Upon appeal, however, the Fifth Circuit determined that the innocent infringer defense was foreclosed as a matter of law in this case under 17 U.S.C. 402. This provision states (in relevant part) that the "innocent infringer" defense is not available if a copyright notice appears on the published phonorecord to which a defendant had access. In other words, because record companies put copyright notices on physical CDs, and Ms. Harper could have accessed the CDs by visiting a retail store, she could not claim the "innocent infringer" defense. By denying cert. in this case, the Supreme Court has upheld the appellate court's determination, which will raise the statutory penalties back into the $750 per work range.
Interestingly, Justice Alito dissented from the denial of cert. (he disagreed with the Supreme's decision to not hear the case), and wrote that since the law was drafted in 1988, before music downloading was a reality, there was an argument that Section 402 should not apply to music downloaders (an interesting point of view for this justice - it smacks a bit of the "living law" theory, doesn't it?).
Bottom Line for the Games Industry: Although this case dealt with phonorecords (that is, music), there is an analogous provision in 17 U.S.C. 401 - just replace "phonorecord" with "copy." So putting copyright notices on physical copies of a game is not only a good idea, it can help forestall the application of the "innocent infringer" defense and thereby preserve a higher statutory damage award. But unlike music, which cannot easily include a copyright notice within the work itself (imagine a HAL-like voiceover stating copyright notices for the first 4 seconds of every song), video games can. There are load screens, transition screens, and other places where placing a copyright notice can be done without wrecking the gameplay experience. And putting the copyright notice in the work itself can make it even less likely that the "innocent infringer" defense is available. So in my opinion it's a good idea (and common practice) to include a copyright notice somewhere in-game.