In This Issue:

TABLE OF CONTENTS -

I. INTRODUCTION 13

II. RIGHTS IMPLICATED BY TRANSMISSION AND USE OF WORKS ON THE INTERNET 14

A. The Right of Reproduction 14

1. The Ubiquitous Nature of “Copies” on the Internet 15

2. Whether Images of Data Stored in RAM Qualify as “Copies” 15

3. The WIPO Treaties & the European Copyright Directive Are Unclear With Respect to Interim “Copies” 22

(a) Introduction to the WIPO Treaties & the European Copyright Directive 22

(b) The WIPO Copyright Treaty 24

(c) The WIPO Performances and Phonograms Treaty 27

4. Whether Volition Is Required for Direct Liability 29

(a) The Netcom Case 30

(b) The MAPHIA Case 32

(c) The Sabella Case 33

(d) The Frena Case 34

(e) The Webbworld Case 35

(f) The Sanfilippo Case 36

(g) The Free Republic Case 37

(h) The MP3.com Cases 39

(i) The CoStar Case 42

(j) The Ellison Case 43

(k) Perfect 10 v. Cybernet Ventures 43

(l) Field v. Google 44

(m) Parker v. Google 45

(n) The Cablevision Case 45

(o) Arista Records v. Usenet.com 48

(p) Quantum Systems v. Sprint Nextel 49

(q) Disney Enterprises v. Hotfile 50

(r) Perfect 10 v. Megaupload 51

(s) Wolk v. Kodak Imaging Network 52

(t) Summary of Case Law 52

5. The Reproduction Right Under WIPO Implementing Legislation 53

(a) United States Legislation 53

(1) The Digital Millennium Copyright Act 53

(2) Legislation Not Adopted 54

(b) The European Copyright Directive 55

6. Peer-to-Peer File Sharing 61

(a) BMG Music v. Gonzalez 61

(b) Columbia Pictures v. Bunnell 62

(c) Sony BMG Music Entertainment v. Tenenbaum 62 - 3 -

(d) Capitol Records v. Thomas-Rasset 66

7. The Immunity of the Audio Home Recording Act (AHRA) 67

(a) The Napster Cases 68

(b) The Aimster Case 68

(c) Atlantic Recording Corp. v. XM Satellite Radio 69

B. The Right of Public Performance 71

1. Isochronous Versus Asynchronous Transmissions 72

2. The Meaning of “Publicly” 73

3. Live Nation Motor Sports v. Davis 74

4. United States v. ASCAP 75

5. The Cablevision Case 76

6. Ringtones – In re Application of Cellco Partnership 78

7. Warner Bros. v. WTV Systems 79

8. Capitol Records v. MP3tunes 82

C. The Right of Public Display 82

1. The Frena, Marobie-FL, Hardenburgh and Webbworld Cases 83

2. Kelly v. Arriba Soft 84

3. Ticketmaster v. Tickets.com 88

4. Perfect 10 v. Google (aka Perfect 10 v. Amazon) 88

5. Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey 100

6. ICG-Internet Commerce Group, Inc. v. Wolf 102

D. The Right of Public Distribution 102

1. The Requirement of a “Copy” 102

(a) Cases Addressing Whether Mere Posting Is a Distribution 103

(1) Cases Holding That Mere Posting Is a Distribution 104

(2) Cases Holding That Mere Posting Is Not a Distribution 108

(3) Cases Refusing To Decide the Issue 116

2. The Requirement of a “Public” Distribution 117

3. The Requirement of a Rental or Transfer of Ownership 118

4. The Right of Distribution Under the WIPO Treaties 118

5. The Right of Distribution Under WIPO Implementing Legislation 119

(a) United States Legislation 119

(b) The European Copyright Directive 119

E. The Right of Importation 120

F. The New Right of Transmission and Access Under the WIPO Treaties 121

1. The Right of Communication to the Public in the WIPO Copyright Treaty 121

2. The Right of Making Available to the Public in the WIPO Performances and Phonograms Treaty 123

3. The Right of Transmission and Access Under WIPO Implementing Legislation 124

(a) United States Legislation 124

(b) The European Copyright Directive 125 - 4 -

G. New Rights and Provisions Under The Digital Millennium Copyright Act, the European Copyright Directive & Legislation That Did Not Pass 127

1. Circumvention of Technological Measures and Rights Management Information Under the DMCA 127

(a) Circumvention of Technological Protection Measures 129

(1) Prohibition on Conduct 129

(i) Exemptions Adopted by the Librarian of Congress. 129

a. Scope of the Network Connection Exemption – The TracFone Cases 136

(ii) Epic Games v. Altmeyer 139

(iii) Facebook v. Power Ventures 139

(iv) Bose v. Zavala 140

(v) MGE UPS Systems v. GE 140

(2) Prohibition on Devices 141

(i) Sony Computer Entertainment America v. Gamemasters 142

(ii) DirecTV, Inc. v. Borow 143

(iii) Sony Computer Entertainment America v. Divineo 143

(iv) DirecTV, Inc. v. Carrillo 144

(v) Ticketmaster L.L.C. v. RMG Technologies, Inc. 144

(vi) The Tracfone Cases 145

(vii) Movida Communications, Inc. v. Haifa 145

(viii) Microsoft Corp. v. EEE Business Inc. 146

(ix) MDY Industries v. Blizzard Entertainment 146

(x) Coupons, Inc. v. Stottlemire 151

(xi) CoxCom, Inc. v. Chafee 152

(xii) DISH Network v. Sonicview 153

(xiii) Realnetworks v. DVD Copy Control Association. 153

(xiv) Apple v. Psystar 155

(xv) The Craigslist Cases 158

(xvi) Dish Network v. SatFTA 160

(xvii) Echostar v. Viewtech 160

(3) What Constitutes an Effective Technological Measure 161

(i) Auto Inspection Services v. Flint Auto Auction 161

(ii) Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey 161

(iii) Apple v. Psystar 164

(4) No Requirements With Respect to Design of a Product 164

(5) Other Rights Not Affected 164

(6) Exemption for Nonprofit Organizations and Law Enforcement 165

(7) Reverse Engineering for Interoperability 166

(i) Universal City Studios Inc. v. Reimerdes 171

(ii) Storage Technology Corporation v. Custom Hardware Engineering & Consulting 172

(iii) Chamberlain Group, Inc. v. Skylink Technologies, Inc. 172 - 5 -

(iv) Lexmark International, Inc. v. Static Control Components, Inc. 173

(v) Davidson Assocs. v. Internet Gateway 173

(vi) Sony Computer Entertainment America v. Divineo 177

(8) Encryption Research 177

(9) Protection of Minors 178

(10) Protection of Personally Identifying Information 178

(11) Security Testing 178

(12) Copy Restrictions To Be Built Into VCRs and Camcorders 178

(13) Other Cases Filed Under the Anti-Circumvention Provisions 179

(i) Sony Computer Entertainment, Inc. v. Connectix, Inc. 179

(ii) RealNetworks, Inc. v. Streambox Inc. 180

(iii) Universal City Studios, Inc. v. Reimerdes 184

(iv) A Related DVD Case Involving Trade Secret Claims – DVD Copy Control Association, Inc. v. McLaughlin (the Bunner case) 189

(v) A Related DVD Case – Norwegian Prosecution of Jon Johansen 193

(vi) Another Challenge to the DMCA – The Felten Case. 193

(vii) Pearl Investments, LLC v. Standard I/O, Inc. 194

(viii) 321 Studios v. Metro Goldwyn Mayer Studios, Inc. 195

(ix) I.M.S. Inquiry Management Systems, Ltd. v. Berkshire Information Systems, Inc. 196

(x) Paramount Pictures Corp. v. 321 Studios. 197

(xi) Macrovision Corp. v. 321 Studios 197

(xii) Comcast of Illinois X v. Hightech Electronics, Inc. 197

(xiii) Davidson & Assocs. v. Internet Gateway 198

(xiv) Agfa Monotype Corp. v. Adobe Sys. 198

(xv) Egilman v. Keller & Heckman 201

(xvi) Macrovision v. Sima Products Corp. 201

(xvii) Nordstrom Consulting, Inc. v. M&S Technologies, Inc. 202

(xviii) R.C. Olmstead v. CU Interface 203

(xix) Avaya v. Telecom Labs 203

(xx) Actuate v. IBM 204

(14) Criminal Prosecutions Under the DMCA 205

(i) The Sklyarov/Elcomsoft Case 205

(ii) Other Criminal Prosecutions Under the DMCA 206

(15) Other Uses of the Anti-Circumvention Provisions as a Sword 207

(i) Lexmark International, Inc. v. Static Control Components, Inc. 207

(ii) Chamberlain Group, Inc. v. Skylink Technologies, Inc. 213

(iii) In re Certain Universal Transmitters for Garage Door Openers 219

(iv) Storage Technology Corporation v. Custom Hardware Engineering & Consulting 220 - 6 -

(b) Integrity of Copyright Management Information 224

(1) Definition of CMI 224

(i) Cases Requiring CMI to be Part of a Technological System or Process 225

a. The IQ Group, Ltd. v. Wiesner Publishing, LLC 225

b. Textile Secrets Int?l, Inc. v. Ya-Ya Brand Inc. 227

c. Jacobsen v. Katzer 228

d. Silver v. Lavadeira 229

(ii) Cases Not Requiring CMI to be Part of a Technological System or Process 230

a. McClatchey v. The Associated Press 230

b. Associated Press v. All Headline News Corp. 231

c. Fox v. Hildebrand 231

d. Faulkner Press v. Class Notes 231

e. Agence France Presse v. Morel 232

f. Murphy v. Millennium Radio 233

g. William Wade Waller Co. v. Nexstar Broadcasting 234

(2) Prohibitions on False CMI and Removal/Alteration of CMI 234

(i) Cases re Removal or Alteration of CMI 235

a. Kelly v. Arriba Soft Corp. 235

b. Thron v. Harper Collins Publishers 236

c. Gordon v. Nextel Communications 236

d. Monotype Imaging, Inc. v. Bitstream Inc. 238

e. Keogh v. Big Lots Corp. 239

f. Goldman v. Healthcare Management Systems 240

g. Thomas M Gilbert Architects v. Accent Builders 240

h. Banxcorp v. Costco 240

i. Agence France Presse v. Morel 241

j. Scholz Design v. Custom Homes 241

(ii) Cases re False CMI 242

a. Schiffer Publishing, Ltd. v. Chronicle Books, LLC 242

b. Agence France Presse v. Morel 243

(3) Exceptions and Limitations 243

(c) Remedies for Violations of Sections 1201 and 1202 243

(1) Statutory Damages 244

(i) Sony Computer Entertainment America v. Filipiak 244

(ii) Sony Computer Entertainment v. Divineo 245

(iii) McClatchey v. The Associated Press 245

(iv) MDY Industries, LLC v. Blizzard Entertainment, Inc. 246

(2) Jurisdictional Issues – Blueport Co. v. United States 246

(d) Alternative Approaches to the DMCA That Did Not Pass 247

(e) The Battle Between Content Owners and Technology Companies Over Built-In Technological Measures 247

2. Anticircumvention Provisions Under the European Copyright Directive 248

3. Anti-Circumvention Provisions in Other Foreign Countries 252 - 7 -

4. Fair Use 252

(a) United States Legislation That Did Not Pass 252

(b) The European Copyright Directive 253

5. Expansion of Library/Archives Exemptions 254

6. Distance Education 254

7. Copying in the Course of Computer Maintenance or Repair 255

8. Other Provisions of the DMCA 256

(a) Evaluation of Impact of Copyright Law on Electronic Commerce 256

(b) Clarification of the Authority of the Copyright Office 256

(c) Ephemeral Recordings 257

(d) Statutory Licenses With Respect to Performances of Sound Recordings 258

(e) Assumption of Contractual Obligations Related to Transfers of Rights in Motion Pictures 258

(f) Protection of Certain Industrial Designs 258

(1) Protection of Designs Embodied in Useful Articles 259

(2) Originality 259

(3) Exclusions from Protection 260

(4) Adaptations of Unprotectable Elements 260

(5) Duration of Protection and Design Notice 260

(6) Rights of a Design Owner and Limitations 261

(7) Standard of Infringement 261

(8) Benefit of Foreign Filing Date 262

(9) Vesting and Transfer of Ownership 262

(10) Remedies of Injunctive Relief, Damages, Attorneys? Fees and Destruction 262

(11) Private Rights of Action Against Pirated Designs 263

(12) Relation to Design Patents and Retroactive Effect 263

(g) Limitation of Liability of Online Service Providers 263

(h) Subpoenas to Service Providers 263

(1) Jurisdictional Issues 264

(2) RIAA v. Verizon Internet Services 264

(3) The Charter Communications Litigation 267

(4) Fatwallet v. Best Buy 268

(5) In re Subpoena to University of North Carolina at Chapel Hill 269

(6) Subpoenas in John Doe Actions 269

(7) Interscope Records v. Does 1-7 270

(8) In re Maximized Living 270

9. Proposed Limitation of Scope of Shrinkwrap and Clickwrap Licenses That Did Not Pass 270

III. APPLICATION OF COPYRIGHT RIGHTS TO SPECIFIC ACTS ON THE INTERNET 272

A. Browsing 272

B. Caching 274 - 8 -

1. Types of Caching 274

2. The Detriments of Caching 275

3. The Netcom Case and Application of the Fair Use Doctrine 277

(a) Purpose and Character of the Use 277

(b) Nature of the Copyrighted Work 278

(c) Amount and Substantiality of the Portion Used 278

(d) Effect of Use on the Potential Market 279

4. Cases Adjudicating Caching Under the Fair Use and Implied License Doctrines 281

(a) Field v. Google 281

(b) Perfect 10 v. Google (aka Perfect 10 v. Amazon) 284

(c) Ticketmaster L.L.C. v. RMG Technologies, Inc. 285

(d) Parker v. Yahoo!, Inc. 286

5. Other Caching Cases 287

(a) Facebook v. Power Ventures 287

C. Liability of Online Service Providers 288

1. Direct Liability 288

(a) Louis Vuitton v. Akanoc Solutions 289

(b) Flava Works v. Gunter 290

2. Contributory Liability 290

(a) The Netcom Case 291

(b) The MAPHIA Case 292

(c) The Peer-to-Peer Filing Sharing Cases 293

(1) The Napster Cases 293

(2) The Scour.com Lawsuit 328

(3) The Aimster/Madster Lawsuits 329

(4) The StreamCast/Kazaa/Grokster Lawsuits 335

(5) The Supreme Court?s Grokster Decision 342

(6) The Grokster Decision on Remand 357

(i) The Ruling on Liability 357

(ii) The Permanent Injunction 361

(7) The Audiogalaxy Case 364

(8) The Hummer Winblad/Bertelsmann Litigation 365

(9) Arista Records v. Lime Group 368

(d) The CoStar Case 368

(e) Ellison v. Robertson 369

(f) Perfect 10 v. Cybernet Ventures 370

(g) Perfect 10 v. Visa International 371

(h) Parker v. Google 373

(i) MDY Industries v. Blizzard Entertainment 373

(j) Louis Vuitton v. Akanoc Solutions, Inc. 376

(k) Arista Records v. Usenet.com 379

(l) Hermeris v. Brandenburg 379

(m) Flava Works v. Gunter 381

(n) Summary 382 - 9 -

3. Vicarious Liability 383

(a) The Netcom Case and its Progeny 383

(b) The Napster Cases 384

(c) Ellison v. Robertson 385

(d) Perfect 10 v. Cybernet Ventures 385

(e) The Aimster/Madster Lawsuits 385

(f) The StreamCast/Kazaa/Grokster Lawsuits 386

(g) Perfect 10 v. Visa International 388

(h) Parker v. Google 390

(i) Louis Vuitton v. Akanoc Solutions 391

(j) Live Face on Web v. Howard Stern Productions 392

(k) Arista Records v. Usenet.com 392

(l) Corbis v. Starr 393

(m) Arista Records v. Lime Group 393

(n) Hermeris v. Brandenburg 393

(o) Luvdarts v. AT&T Mobility 393

(p) Flava Works v. Gunter 394

4. Inducement Liability 394

(a) The Supreme Court?s Grokster Decision 394

(b) Arista Records v. Usenet.com 395

(c) Columbia Pictures v. Fung 396

(d) Arista Records v. Lime Group 398

(e) Flava Works v. Gunter 404

5. Adequacy of Pleadings of Secondary Liability Against Service Providers 404

(a) Miller v. Facebook 404

(b) Williams v. Scribd 405

6. Limitations of Liability of Online Service Providers in the DMCA 406

(a) History of the Various Legislative Efforts 406

(b) The OSP Liability Provisions of the DMCA 407

(1) Safe Harbors – Definition of a “Service Provider” 407

(i) Acting as a Mere Conduit for Infringing Information – Section 512(a) 408

a. The Napster Case 409

b. Ellison v. Robertson 411

c. The Aimster/Madster Lawsuits 416

d. Perfect 10 v. CCBill 418

e. Columbia Pictures v. Fung 425

(ii) Caching – Section 512(b) 425

a. Field v. Google 427

b. Parker v. Google 428

c. Perfect 10 v. Google 429

(iii) Innocent Storage of Infringing Information – Section 512(c) 433

a. The ALS Scan Case – What Constitutes a “Substantially” Compliant Notice 435 - 10 -

b. Hendrickson v. eBay 439

c. CoStar v. LoopNet 443

d. Perfect 10 v. Cybernet Ventures 451

e. The Aimster/Madster Lawsuits 454

f. Hendrickson v. Amazon.com 454

g. Rossi v. MPAA 456

h. Perfect 10 v. CCBill 457

i. Corbis Corp. v. Amazon.com, Inc. 459

j. Tur v. YouTube, Inc. 465

k. Io Group v. Veoh Networks 465

l. UMG Recordings v. Veoh Networks 470

m. Perfect 10 v. Amazon 481

n. Louis Vuitton v. Akanoc Solutions 482

o. Viacom v. YouTube 483

p. Perfect 10 v. Google 492

q. Wolk v. Kodak Imaging Network 492

r. Flava v. Gunter 495

s. Capitol Records v. MP3tunes 495

(iv) Referral or Linking to Infringing Material (Information Location Tools) – Section 512(d) 501

a. The Napster Case 502

b. Perfect 10 v. Cybernet Ventures 503

c. The MP3Board Case 503

d. The Aimster/Madster Lawsuits 503

e. The Diebold Lawsuit 504

f. Perfect 10 v. CCBill 506

g. Columbia Pictures v. Fung 507

h. Perfect 10 v. Google 508

(2) General Requirements for Limitations of Liability 508

(3) Special Provisions for Nonprofit Educational Institutions 509

(4) Filing of False DMCA Notices – Section 512(f) 509

(i) Rossi v. MPAA 510

(ii) Online Policy Group v. Diebold, Inc. 510

(iii) Dudnikov v. MGA Entertainment 510

(iv) Novotny v. Chapman 510

(v) BioSafe-One, Inc. v. Hawks 511

(vi) Lenz v. Universal Music Corp. 512

(vii) UMG Recordings v. Augusto 515

(viii) Capitol Records v. MP3tunes, LLC 516

(ix) Brave New Films v. Weiner 516

(x) Design Furnishings v. Zen Path 517

(xi) Amaretto Ranch Breedables v. Ozimals 517

(xii) Shropshire v. Canning 518

(xiii) Rock River Communications v. Universal Music Group 519

(xiv) Smith v. Summit Entertainment 520 - 11 -

(5) Other Provisions 520

(6) Injunctions Against Service Providers 521

(7) Designation of Agent to Receive Notification of Claimed Infringement 521

7. Limitations of Liability of Online Service Providers under the Communications Decency Act 522

(a) Stoner v. eBay 522

(b) Perfect 10 v. CCBill 524

8. Secondary Liability of Investors 525

(a) The Hummer Winblad/Bertelsmann Litigation 525

(b) UMG Recordings v. Veoh Networks 525

D. Linking and Framing 526

1. The Shetland Times Case 529

2. The Total News Case 530

3. The Seattle Sidewalk Case 532

4. The Futuredontics Case 533

5. The Bernstein Case 534

6. The Intellectual Reserve Case 535

7. Ticketmaster v. Tickets.com 536

8. The MP3Board Case 539

9. Kelly v. Arriba Soft 542

10. Batesville Services, Inc. v. Funeral Depot, Inc. 542

11. Live Nation Sports v. Davis 544

12. Perfect 10 v. Google (aka Perfect 10 v. Amazon) 544

E. Streaming and Downloading 544

1. The Digital Performance Right – The Section 114(d)(1) Exemption and Streaming by FCC-Licensed Broadcasters 545

2. The Digital Performance Right – Statutory Licenses Under Section 114 for Certain Nonsubscription and Subscription Services 549

(a) Preexisting Subscription Services 551

(b) Eligible Nonsubscription Services (Webcasters) 553

(c) New Subscription Services 559

3. The Digital Performance Right – What Constitutes an “Interactive” Service 560

(a) Arista Records v. Launch Media 562

4. The Reproduction Right – Mechanical Licenses and Streaming/Downloading 564

(a) Applicability of the Section 115 Compulsory License to Streaming 566

(b) The Copyright Office?s Position – The 2001 DMCA Report and Comment Proceedings 568

(c) The NMPA/HFA/RIAA Agreement of 2001 570

(d) Applicability of the Section 115 Compulsory License to Ringtones 572

5. International Licensing Efforts 573

F. First Sales in Electronic Commerce 573

G. Pop-Up Advertising 576 - 12 -

1. The Gator Litigations 576

2. The WhenU Litigations 577

(a) U-Haul v. WhenU.com 577

(b) Wells Fargo v. WhenU.com 579

(c) 1-800 Contacts v. WhenU.com 581

3. The MetroGuide Litigation 584

4. The D Squared Litigation 584

5. International Decisions 584

H. Harvesting of Web Data 585

1. The FatWallet Dispute 585

2. Nautical Solutions Marketing v. Boats.com 585

IV. CONCLUSION 586

Execerpt From Introduction:

During recent years, the Internet has become the basic foundational infrastructure for the global movement of data of all kinds. With continued growth at a phenomenal rate, the Internet has moved from a quiet means of communication among academic and scientific research circles into ubiquity in both the commercial arena and private homes. The Internet is now a major global data pipeline through which large amounts of intellectual property are moved. As this pipeline is increasingly used in the mainstream of commerce to sell and deliver creative content and information across transnational borders, issues of intellectual property protection for the material available on and through the Internet are rising in importance.

Copyright law provides one of the most important forms of intellectual property protection on the Internet for at least two reasons. First, much of the material that moves in commerce on the Internet is works of authorship, such as musical works, multimedia works, audiovisual works, movies, software, database information and the like, which are within the usual subject matter of copyright. Second, because the very nature of an electronic online medium requires that data be “copied” as it is transmitted through the various nodes of the network, copyright rights are obviously at issue.

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