Technology Law Update

Ticketmaster Granted $18.2 Million Default Judgment against "Ticket Bot" Software Supplier

A California district court entered a default judgment in favor of Ticketmaster in the amount exceeding $18.2 million, representing the disgorgement of the profits that the defendant RMG Technologies wrongfully earned through infringement of Ticketmaster’s copyrights. 

In this action, Ticketmaster alleged that Defendant RMG developed and marketed software to access and navigate through Ticketmaster's website, bypassing CAPTCHAs that were designed to prevent purchasers from using automated devices to purchase tickets, and thereby infringing Ticketmaster's copyrights and violating the website's Terms of Use (which prohibited commercial use).  The defendant RMG was also permanently enjoined from, among other things, creating or trafficking in computer programs to circumvent the technological copy protection systems in Ticketmaster’s website, copying or facilitating the copying of Ticketmaster’s website in excess the Ticketmaster website’s Terms of Use.  According to reports,  the defendant RMG could no longer afford to keep up its legal defense following the adverse ruling at the preliminary injunction phase of the litigation.

In the prior ruling granting Ticketmaster a preliminary injunction, the court held that the online ticket seller was likely to prevail on its claim that the defendant's software violated the DMCA, and was entitled to a preliminary injunction against the distribution or use of the defendant's software program. Ticketmaster L.L.C. v. RMG Technologies, Inc. No. 2:07-cv-02534, 507 F. Supp. 2d 1096 (C.D.Cal. 2007).  The court found that software that automatically circumvents the "CAPTCHA" technology (described below) deployed on a ticket seller's Web site to limit access to human users is a device that violates the anticircumvention provisions of the Digital Millennium Copyright Act (DMCA). CAPTCHA is an acronym for "Completely Automated Public Turing test to tell Computers and Humans Apart," a term trademarked by Carnegie Mellon University. This kind of technology is usually presented to a user in the form of an image containing distorted letters and numbers that the user must correctly decipher and enter in order to obtain access to a website or a particular function or area of a Web site. 

The court ruled, among other things, that the use of the software on the ticket seller's site violated the ticket seller's posted terms of use that prohibited use for commercial purposes, prohibited access by automated devices, prohibited interference with the proper working of the site, and limited frequency of access. The court also ruled that copies of pages of the site made in excess of the authorized number provided in the terms of use constituted copyright infringement.

The robots.txt file as a technological protection measure under the DMCA

Law.com reported today on the decision by Judge Robert Kelly, Jr., in Healthcare Advocates Inc. v. Harding Earley Follmer & Frailey, No. 05-3524 (E.D. Pa. July 20, 2007), the case in which trademark owner Healthcare Advocates sued the law firm that represented a rival company in prior litigation, for accessing archived versions of its Web site that were available on the Internet Archive's "Wayback Machine." Healthcare Advocates filed suit against the law firm and certain of its individual attorneys, as well as the Internet Archive (which earlier was dismissed from the litigation), when it learned that the law firm had viewed archived versions of its Web site on the Wayback Machine, and made printouts of those Web pages for use in the underlying litigation. Healthcare Advocates alleged that it had deployed a "robots.txt" file on its Web site to prevent access to the archived versions on the WayBack Machine, but the law firm bypassed that "technological measure" and succeeded in accessing the archived pages.

Judge Kelly dismissed Healthcare Advocates' claims under copyright law, the anticircumvention provisions of the Digital Millennium Copyright Act, the Computer Fraud and Abuse Act and state common law, ruling among other things that the law firm's access to and use of the archived Web pages in order to investigate the allegations of Healthcare Associates' underlying lawsuit against its client was permissible fair use. But the finding of fair use with respect to the copyright claims did not dispose of the DMCA anticircumvention claims or the Computer Fraud and Abuse claims.

A prominent feature of the DMCA anticircumvention portion of the opinion is the discussion of the role of the mundane and little-discussed "robots.txt" file in the archiving of Web sites, and the court's holding that in this case at least, a robots.txt file constitutes a "technological measure that effectively controls access to a work" within the meaning of the DMCA. What is a robots.txt file? It's a simple text file containing instructions to Web crawlers detailing which parts of a Web site is has permission to crawl and archive. A "robots.txt" exclusion file previously figured prominently in the reported opinion in Field v. Google, 412 F. Supp. 2d 1106 (D. Nev. Jan. 19, 2006), in which a Web site owner's failure to configure his robots.txt file to exclude search engine caching of his copyrighted content supported a ruling that the owner was estopped from asserting a copyright claim against the search engine.

As the Healthcare Associates v. Harding opinion relates in great detail, the Internet Archive periodically "crawls" the Internet and harvests screen shots of Web sites, and saves the results in the computer database that constitutes the WayBack Machine. The archived results, showing views of the archived Web site on a number of discrete dates in the past, can then be retrieved by entering the url of the Web site in a search box on the WayBack Machine Web site.

By placing a properly formatted and located robots.txt file on a Web site, the owner can control the crawling and archiving activities of the WayBack Machine, as well as other search engines that abide by the "robots.txt exclusion standard." Using the term standard may be a little strong, however, to the extent that it implies a formally adopted standard. The robots.txt exclusion standard, according to this Web site page authored by Martijn Koster, "represents a consensus on 30 June 1994 on the robots mailing list." That mailing list is now defunct, but the consensus has persisted. Wikipedia and other sources, including the Google search engine refer to this Web page as the authoritative source for the robots.txt exclusion standard.

AS related in the Healthcare Advocates opinion, the WayBack Machine also honors a robots.txt file retroactively. In other words, a Web site owner can retroactively block access to pages that were already crawled and archived by the WayBack machine by placing a robots.txt file on its site at any time. See the WayBack Machine explanation of retroactive blocking here.

And that's exactly what Healthcare Advocates Inc. did, deploying a robots.txt exclusion file on its Web site shortly after filing the complaint in the underlying litigation.

So how was the Harding Earley firm able to access the WayBack machine archive, after Healthcare Advocates deployed the robots.txt file? Healthcare Advocates claimed that the law firm "hacked" the WayBack Machine database in order to access the archive, despite the robots.txt "digital padlock" that it had deployed on its Web site. But the court found otherwise, based upon the consistent testimony of the experts presented by both the defendant and the plaintiff, that on the days that the law firm accessed the archive, the WayBack Machine's retroactive blocking functionality was not working due to a malfunction in the servers that controlled the blocking functionality.

Relying on dictionary definitions of the statutory terms terms "avoid" and "bypass," the court concluded that "[t]hese words, as well as the remainder of the words describing circumvention, imply that a person circumvents a technological measure only when he affirmatively performs an action that disables or voids the measure that was installed to prevent them from accessing the copyrighted material." According to the court, when the law firm accessed the archive, there was no protective measure to circumvent. The law firm "could not avoid or bypass any protective measure, because nothing stood in the way of them viewing these screenshots."

The court's finding that the blocking functionality was malfunctioning was fatal not only to Healthcare Associates' DMCA anticircumvention claim, it doomed its Computer Fraud and Abuse Act claim as well: "The Harding firm got lucky, because the servers were malfunctioning, but getting lucky is not equivalent to exceeding authorized access."

Judgment for the defendants.

Is a contract to promote the sale of a DVD copying program void for illegality? A Georgia court says "No."

A case recently litigated in Georgia state courts involves interesting fallout from the successful actions by the motion picture industry to stop the sales of software programs that enable unlawful copying of motion picture DVDs. The issue addressed in Smith v. Saulsbury, 2007 Ga. App. LEXIS 759 (Ga. Ct. App. July 5, 2007) is whether a contract to promote sales of a DVD copying program that violates federal copyright law is void for illegality, thereby relieving the former producer of the copying program from its obligation to pay for services rendered under the contract.

The contract involved sales of "CloneMyDVD," marketed and sold by David Smith and his company More2Save, LLC. Smith et al engaged Richard Saulsbury to advertise CloneMyDVD via mass electronic mail messages at a set commission per sale, with the sales processed through PaySystems, a third-party merchant system. When Smith et al subsequently learned of the motion picture industry lawsuits against sellers of products similar to CloneMyDVD, they ceased production and distribution of the product, and PaySystems froze the company's account. Smith et al then stoped paying Saulsbury for commissions that he had earned from sales of the product to that date.

Saulsbury sued for breach of contract, and Smith et al defended on the theory that the contract with Smith was void and unenforceable because CloneMyDVD violated federal copyright law, in particular, the anticirumvention provisions of the Digital Millennium Copyright Act. The court looked to Georgia statutory law providing that "[a] contract to do an ... illegal thing is void." The court noted precedents to the effect that the provision is only applicable if the object or purpose of the contract is illegal, and it is inapplicable "where the object of the contract is not illegal or against public policy, but where the illegality is only collateral or remotely connected to the contract."

The court concluded that the defendants had failed to show that the purpose of their contract with Saulsbury was illegal:

Here, the Defendants have not shown that the purpose of their agreement with Saulsbury was illegal. Pursuant to the parties' contract, Saulsbury sent e-mails to potential customers whose e-mail addresses he obtained by purchasing distribution lists. The e-mails contained a link to the More2Save website. There is nothing inherently illegal about the services provided by Saulsbury. Although the ultimate sale or use of CloneMyDVD — if used to copy commercial DVDs that contained encryption to preclude copying — might have violated federal copyright law, such alleged illegality "was not required by the [parties'] contract and was incidental to contract performance." Thus, the trial court did not err in denying the Defendants' motion for summary judgment on this basis.

The relevant reference to federal copyright law in the court's opinion (at n. 7) is to 17 U.S.C. §1201(a)(2), the prohibition against trafficking in technology that circumvents a technological measure that prevents access to a work. Perhaps the court also should have considered 17 U.S.C. §1201(b)(1), which prohibits trafficking in technology that "effectively protects a right of a copyright owner" under the Copyright Act. The distinction between technology that completely prevents access to a work, and technology that allows access but prevents copying, is explained in Universal City Studios v. Corley, 273 F.3d 429 (2d Cir. 2001), aff'ing 111 F. Supp. 2d 294 (S.D.N.Y. 2000).

But the broader point is that both of these DMCA anticircumvention provisions broadly prohibit trafficking in anticircumvention technology, that is, "[n]o person shall manufacture, import, offer to the public, provide, or otherwise traffic in" any such technology. For example, in the Corley/Reimerdes case, the court enjoined the mere provision of links to copies of a software program that "cracks" the encryption technology protecting DVDs from copying. More to the point, in 321 Studios v. Metro Goldwyn Mayer Studios, Inc., 307 F. Supp. 2d 1085(N.D. Cal. 2004), the court held that the marketing of DVD copying software violated the provisions of 17 U.S.C. §§ 1201(a)(2) and (b)(1). So the court's suggestion that the DMCA is violated only when a software program is actually used to make an unlawful copy  is a little off the mark. In defining the purpose of the contract, the court made a distinction that the DMCA anticircumvention provisions do not recognize.

Whether in the long run that fact should relieve the defendants of their obligation to pay commissions that were already earned on the sale of the program in question, before they (apparently) realized that it was unlawful, is another matter.

EFF Files DMCA Takedown Claim Against Psychic Uri Geller

He should have seen it coming.

As detailed in the EFF Press Release, a DMCA takdown notice was sent by psychic Uri Geller to YouTube with respect to the posting of a video clip from a TV program in which the psychic appeared, but in which, apparently, the Geller has no copyright right. The complaint is available here.

The case is interesting because it is one of a relative few involving an alleged wrongful DMCA takedown notice. In a previous DMCA takedown litigation against electronic voting machine maker Diebold, the EFF obtained a settlement of $125,000 for an alleged wrongful DMCA takedown notice to students who posted Diebold documents in an effort to expose defects with the Diebold machines.

Copyright And DMCA Claims Arising From Software License Agreement Are Arbitrable

In a dispute that concerns the parties' obligations under a software license agreement, alleged violations of the Digital Millennium Copyright Act (DMCA) and copyright law are subject to arbitration. Packeteer, Inc. v. Valencia Systems, Inc., No. C-06-07342, 2007 U.S. Dist. LEXIS 21348 (N.D. Cal. Mar. 6, 2007).

Need For Injunction Against Bad Faith DMCA Takedown Notices Not Shown In Copyright Dispute

Plaintiffs, in a dispute over copyright rights in posted videos, were not entitled to an injunction against the defendant's alleged bad-faith takedown notices under the Digital Millennium Copyright Act where they failed to show that they would suffer irreparable harm in the absence of an injunction. Novotny v. Chapman, No. 3:05cv370, 2006 U.S. Dist. LEXIS 55471 (W.D. N.C. Aug. 9, 2006).

DMCA Fair Use Exemption For Users Not Available To Manufacturers Of Circumvention Devices

The manufacturer of a device designed to circumvent copy protection technology on DVDs that contain copyrighted works may not claim the protection of the Digital Millennium Copyright Act's "fair use" provision. Macrovision v. Sima Products Corp., No. 05-5587 (S.D.N.Y. Apr. 20, 2006).  

DMCA Fair Use Exemption For Users Not Available To Manufacturers Of Circumvention Devices

The manufacturer of a device designed to circumvent copy protection technology on DVDs that contain copyrighted works may not claim the protection of the Digital Millennium Copyright Act's "fair use" provision. Macrovision v. Sima Products Corp., No. 05-5587 (S.D.N.Y. Apr. 20, 2006).  

Tracfone Files DMCA Suit Over "Unlocking" Of Prepaid Phones

The complaint alleges that the defendant purchases Tracfone prepaid wireless telephones from retail stores, erases or disables the proprietary software that enables consumers to access Tracfone's prepaid wireless service, and then resells the wireless telephones as new for use on other wireless carriers' networks, thereby violating the anticircumvention provisions of the DMCA. Tracfone Wireless, Inc. v. Sol Wireless Group, Inc., No. 05-23279 (S.D. Fla. complaint filed Dec. 21, 2005).<br><br>


Complaint: http://www.copyright.gov/1201/2006/reply/14granick_WA.pdf

Tracfone Files DMCA Suit Over "Unlocking" Of Prepaid Phones

The complaint alleges that the defendant purchases Tracfone prepaid wireless telephones from retail stores, erases or disables the proprietary software that enables consumers to access Tracfone's prepaid wireless service, and then resells the wireless telephones as new for use on other wireless carriers' networks, thereby violating the anticircumvention provisions of the DMCA. Tracfone Wireless, Inc. v. Sol Wireless Group, Inc., No. 05-23279 (S.D. Fla. complaint filed Dec. 21, 2005).<br><br>


Complaint: http://www.copyright.gov/1201/2006/reply/14granick_WA.pdf