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How Credit Unions Can Beat Patent Trolls

Not-for-profit cooperatives like credit unions are not immune from patent trolls.  This article in CU Times offers a way for credit unions to take on patent trolls—cooperatively.

Google Books is Fair Use

On November 14, 2013, federal district court judge Denny Chin of the Southern district of New York dismissed a long-running class action copyright infringement lawsuit against Google for running Google Books. This case has important implications for the fair use doctrine of copyright law in the digital era.

In 2004, Google began scanning books. Lots of books. Entire libraries full of books. In color. To date, the search engine giant has scanned over twenty million books into its database. Many of these books are subject to copyright, and Google made no attempt to obtain the copyright holders’ permission to scan the books. Initially, Google did share ad revenue with those copyright holders that gave permission for the scanning, who viewed the project as a means for promoting the books and making them discoverable. In 2011, Google ceased displaying ads in connection with the display of any books, and terminated the payments.

Users may search the books’ text, and Google displays “snippets” of books selected from a list of search results. For example, a user may peruse the first 70 pages (and front and back covers) of the 321-page book The Mediterranean History, including its many rich, full-color illustrations – with the exception of page 44. Users may then click an “About this Book” link, which provides information on each book, such as bibliographic information, information about the author, other editions, user reviews, and links to bookstores and/or libraries where the book may be found.

In 2005, several individual authors and The Authors Guild, Inc., the nation’s largest authors’ organization, sued Google in a class action for copyright infringement. The parties negotiated a settlement over 2008-2011, under which Google would gain blanket rights (excluding some individual works identified by copyright owners) to scan and index the books, run the searchable database, online access to individual books, and sell advertising on pages displaying book snippets. Google would pay 60-70% of ad revenues, which would be distributed to copyright owners by a Book Rights Registry created by the agreement. The settlement included provisions for so-called “orphan works” – books that are under copyright, but which are out of print, and/or for which the copyright owners are unknown or cannot be found. Over 500 objections to the settlement agreement were filed – including by Google competitors Microsoft and Amazon – and over 6800 class members opted out. In 2011, the court struck the settlement agreement, holding that it was not “fair, adequate, and reasonable.” The litigation continued.

Eight years into the litigation, Judge Chen granted summary judgment to Google, ruling that the creation and operation of Google Books, while violating the protections of copyright law, falls under the “fair use” provisions of 17 U.S.C. § 107. Fair use holds that the use of a copyrighted work for certain purposes – among which scholarship and research are explicitly listed – is not an infringement of copyright. The fair use statute lists four non-exclusive factors to be considered in deciding whether a use is “fair:”

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

Considering the first factor, Judge Chen found Google’s use of the copyrighted works “highly transformative,” and that it does not merely supplant the work. Under the second factor, the judge found that the majority of books in Google Books’ collection are non-fiction and published, factors indicating fair use. Regarding the third factor, the court held that since only snippets are displayed, random pages are omitted from a displayed passage, and considering other protections Google built in to protect works from being wholly copied, the display of snippets is fair use. Finally, considering the fourth factor, the court held that “a reasonable factfinder could only find that Google Books enhances the sales of books to the benefit of copyright holders.” Going beyond the four statutory factors, the court stated,

In my view, Google Books provides significant public benefits. It advances the progress of the arts and sciences, while maintaining respectful consideration for the rights of authors and other creative individuals, and without adversely impacting the rights of copyright holders. It has become an invaluable research tool that permits students, teachers, librarians, and others to more effectively identify and locate books. It has given scholars the ability, for the first time, to conduct full-text searches of tens of millions of books. It preserves books, in particular out-of-print and old books that have been forgotten in the bowels of libraries, and it gives them new life. It facilitates access to books for print-disabled and remote or underserved populations. It generates new audiences and creates new sources of income for authors and publishers. Indeed, all society benefits.

The Authors Guild plans to appeal.


     The U.S. Supreme Court has accepted to hear two patent-related matters during their upcoming term.  Both cases involve the awarding of attorney fees to a prevailing party.  The first case (Octane Fitness v ICON Health & Fitness, Docket 12-1184) involves the issue of what constitutes an “exceptional case” that provides for the awarding of attorney fees under 35 USC 285.  The second case (Highmark Inc. v. Allcare Health Management Sys., Docket No. 12-1163) involves the issue of whether an appeals court must give deference to a previous award of attorney fees. 

     It appears that the Court may also decide to hear a third patent-related case directed to induced infringement under 35 USC 271(b).  In Limelight Networks, Inc. v. Akamai (692 F.3d 1301), the Federal Circuit in a split en banc decision overturned precedent by holding that infringement through inducement does not require a showing that a single party be liable for direct infringement.  The Supreme Court has invited to US Solicitor General to file a brief on the determination of infringement when the steps of the claimed invention are performed by multiple parties. 

     The Supreme Court will also hear a copyright issue.  Petrella v MGM, Docket 12-1315 deals with the issue of laches in a copyright matter and what is the proper interpretation of the three-year statute of limitations for copyright claims under 17 USC 507(b).  The case involves the daughter of Jake LaMotta and her claims of ownership to the 1980 movie Raging Bull.

From Ancient Grudge Break To New Mutiny

They aren’t the Montagues or the Capulets, but their feud is just as legendary. The Hatfields and McCoys rose to infamy in the mid-to-late 1800s after a series of events more exciting and intriguing than what Shakespeare provided in fair Verona - think murders, love triangles, arson, courtroom drama, and a very famous pig.  You can learn more about the feud between the Hatfields and McCoys here.

These days, the McCoys and Hatfields aren’t feuding along family lines. A new feud, however, has started – over the right to use HATFIELD & MCCOY in trademarks for whiskey (namely moonshine). According to news reports, some members of the Hatfield and McCoy families joined together with The History Channel and Monselle Darville to enter into the commercial alcohol (and reality television) business. They have applied to trademark THE LEGENDARY HATFIELD & MCCOY MOONSHINE (see here). Meanwhile, another member of the Hatfield family (apparently along with an unidentified McCoy) is also trying to break into the alcohol business with the trademark HATFIELD & MCCOY MOONSHINE THE DRINK OF DEVIL ANSE HATFIELD (see here).  While there won't be quite as much intrigue with this fued, there may still be some courtroom drama.  Unless the parties are able to resolve their differences, the question of who gets to use what trademark will likely be decided by the United States Patent and Trademark Office or a judge.

  * Title courtesy of William Shakespeare, Romeo and Juliet, Act 1, Prologue


New Zealand Eliminates Patents on Software

The New Zealand Parliament has passed a bill banning software patents.  How will this impact New Zealand's software industry?  Will it deal a mortal wound to patent trolls there?  Both sides of the debate about software patents in the United States should keep a close eye on these developments.

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