On July 30, 2021, a New York district court declined to dismiss copyright infringement claims with respect to an online article that included an “embedded” video (i.e., shown via a link to a video hosted on another site).  The case involved a video hosted on a social media platform that made embedding available as a function of the platform.  The court ruled that the plaintiff-photographer plausibly alleged that the defendants’ “embed” may constitute copyright infringement and violate his display right in the copyrighted video, rejecting the defendants’ argument that embedding is not a “display” when the image at issue remains on a third-party’s server (Nicklen v. Sinclair Broadcast Group, Inc., No. 20-10300 (S.D.N.Y. July 30, 2021)).  Notably, this is the second New York court to decline to adopt the Ninth Circuit’s “server test” first adopted in the 2007 Perfect 10 decision, which held that the infringement of the public display right in a photographic image depends, in part, on where the image was hosted.  With this being the latest New York court finding the server test inapt for an online infringement case outside of the search engine context (even if other meritorious defenses may exist), website publishers have received another stark reminder to reexamine inline linking practices.

In a narrowly drawn, yet significant decision, the Supreme Court reversed the Federal Circuit and ruled that Google LLC’s (“Google”) copying of some of the Sun Java Application Programming Interface (API) declaring code was a fair use as a matter of law, ending Oracle America Inc.’s (“Oracle”) infringement claims over Google’s use of portions of the Java API code in the Android mobile platform. (Google LLC v. Oracle America, Inc., No. 18-956, 593 U.S. ___ (Apr. 5, 2021)).  In reversing the 2018 Federal Circuit decision that found Google’s use of the Java API packages was not fair use, the Supreme Court, in a 6-2 decision (Justice Barrett did not take part in the case) found where Google reimplemented the Java user interface, taking only what was needed to allow outside developers to work in a new and transformative mobile smartphone program, Google’s copying of the Sun Java API was a fair use as a matter of law. This decade-long dispute had been previously dubbed “The World Series of IP cases” by the trial court judge, and like many classic series, this one culminated in a winner-take-all Game 7 at the highest court.

Oracle is one of the most notable Supreme Court decisions affecting the software and technology industry in recent memory since, perhaps, the Court’s 2010 Bilski patent opinion, its 2012 Jones decision on GPS tracking, privacy and the Fourth Amendment and its 2005 Grokster decision on copyright inducement in the peer-to-peer network context, and certainly the most notable decision implicating fair use since its well-cited 1994 Campbell decision that expounded on the nature of “transformative” use. It was no surprise that this case attracted a stack of amicus briefs from various technology companies, organizations, and academia. In the months following oral argument, it was difficult to discern how the Court would decide the case – would it be on procedural grounds based on the Federal Circuit’s standard of review of the jury verdict on fair use, on the issue of the copyrightability of the Java API packages, directly on the fair use issue, or some combination.  The majority decision is a huge victory for the idea that fair use in the software context is not only a legal defense but a beneficial method to foster innovation by developing something transformative in a new environment on top of the functional building blocks that came before. One has to think hard to recall an opinion involving software and technology that referenced and applied the big picture principles of copyright – “to stimulate artistic creativity for the general public good,” as the Supreme Court once stated in a prior case – so indelibly into the fair use analysis.

The decision is also notable for the potential impact on copyright’s “transformative use test.” By considering Google’s intent for using the Java API code, the Court’s discussion of what constitutes a “transformative” use appears to diverge somewhat from recent Circuit Court holdings outside the software context.  The decision may redirect the transformative use analysis going forward, or future decisions may cabin the holding to the software context.

In an innovative initiative in the battle against the Coronavirus, the newly-formed Open COVID Coalition (the “Coalition”) launched the Open COVID Pledge (the “Pledge”), a framework for organizations to contribute intellectual property to the fight against COVID-19. Pursuant to the Pledge, rightsholders can openly license intellectual property to facilitate the development of tools and technologies to counter the COVID pandemic. These would include the manufacturing of medical equipment and testing kits, as well as the development of software, AI and biotech solutions to contain and end the virus. Many major technology companies and other organizations have signed on to the Pledge.

The Coalition created a form of license which participants may to use to fulfill the pledge.  Under the license, the Open COVID License 1.0 (“OCL”), the pledgor grants a “non-exclusive, royalty-free, worldwide, fully paid-up license (without the right to sublicense)” to exploit the IP (other than trademarks or trade secrets) in products, services and other articles of manufacture “for the sole purpose of ending the ‘COVID-19 Pandemic’ (as defined by the World Health Organization, “WHO”) and minimizing the impact of the disease, including without limitation the diagnosis, prevention, containment, and treatment of the COVID-19 Pandemic.” The term of the OCL is retroactive to December 1, 2019 and runs until one year after WHO declares the end of the pandemic. Under the OCL, the pledgor “will not assert any regulatory exclusivity against any entity for use of the Licensed IP” in accordance with the license grant, and agrees to not seek injunctive or regulatory relief to prevent any entity from using the licensed IP. As with some traditional open source licenses, the licensed IP is granted without any warranties and the license is suspended if the license threatens or initiates any legal proceeding against the pledgor. Lastly, all copyright and related rights granted under the OCL are deemed waived pursuant to the Creative Commons 1.0 Universal License (public domain dedication).

The U.S. Supreme Court’s busy intellectual property term (with six copyright and trademark cases) rolls on. On March 23, SCOTUS ruled in Allen v. Cooper, 589 U.S. ___, No. 18-877 (Mar. 23, 2020), that states, absent consent, may not be sued for copyright infringement. In particular, SCOTUS held that Congress did not have a sufficient constitutional basis to abrogate states’ sovereign immunity in copyright infringement actions when it passed the Copyright Remedy Clarification Act of 1990 (CRCA). However, the Court noted that, going forward, the ruling would not prohibit Congress from passing a more “tailored” copyright remedy statute if it found a valid basis to suspend sovereign immunity in copyright infringement cases against states.

Recently, the Ninth Circuit reinstated a $460,000 jury verdict against print-on-demand site Zazzle, Inc. (“Zazzle”) for willful copyright infringement, putting a final stamp (perhaps) on a long-running dispute that explored important DMCA safe harbor issues for online print-on-demand services. (Greg Young Publishing, Inc. v. Zazzle, Inc., No. 18-55522 (9th Cir. Nov. 20, 2019) (unpublished). The appeals court found that Zazzle’s anti-infringement oversight mechanisms were insufficient during the period of infringement when a number of the plaintiff’s Greg Young Publishing, Inc.’s (“GYPI”) visual art works were uploaded by users onto Zazzle’s site without authorization.

In early July, Ticketmaster reached a favorable settlement in its action against a ticket broker that was alleged to have used automated bots to purchase tickets in bulk, thus ending a dispute that produced notable court decisions examining the potential liabilities for unwanted scraping and website access. (Ticketmaster L.L.C. v. Prestige Entertainment West Inc., No. 17-07232 (C.D. Cal. Final Judgment July 8, 2019)).

In the litigation, Ticketmaster alleged that the defendant-ticket broker, Prestige, used bots and dummy accounts to navigate Ticketmaster’s website and mobile app to purchase large quantities of tickets to popular events to resell for higher prices on the secondary market. Under the terms of the settlement, Prestige is permanently enjoined from using ticket bot software to search for, reserve or purchase tickets on Ticketmaster’s site or app (at rates faster than human users can do using standard web browsers or mobile apps) or circumventing any CAPTCHA or other access control measure on Ticketmaster’s sites that enforce ticket purchasing limits and purchasing order rules.  Prestige is also barred from violating Ticketmaster’s terms of use or conspiring with anyone else to violate the terms, or engage in any other prohibited activity.

UPDATE: In March 2021, the Second Circuit reversed the lower court’s ruling on fair use. On March 28, 2022, the Supreme Court granted cert. and agreed to hear the case. On May 18, 2023, the Supreme Court handed down its much‑anticipated opinion in the case. For a writeup of the opinion, please see our firm’s Minding your Business blog.

Earlier this month, in The Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, No. 17-cv-2532 (S.D.N.Y. July 1, 2019), a New York district court granted the Andy Warhol Foundation for the Visual Arts’ (“AWF”) motion for summary judgment that Warhol’s series of screen prints and silkscreen paintings (the “Prince Series”) did not infringe Lynn Goldsmith’s (“Goldsmith”) original 1981 photograph of the musician Prince, ruling that the Warhol works were transformative and qualified as fair use.

This Monday, the Supreme Court unanimously ruled in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 586 U.S. ____ (Mar. 4, 2019), that a copyright owner may commence an infringement suit only when the Copyright Office determines whether or not to register a copyright, as opposed to when the owner submits an application and fee for registration. The widely-followed case resolves a simple question, but has far-reaching practical implications for U.S. copyright litigation.

Fair use can be one of the most difficult issues that copyright lawyers have to address due to decades of varying court rulings applying the multi-factor balancing test, particularly in the face of new technologies that use, modify, and aggregate data in ways not envisioned under the Copyright Act. The Second Circuit’s February 2018 fair use decision in the dispute between Fox News Network, LLC (“Fox”) and TVEyes, Inc. (“TVEyes”) added yet another wrinkle to fair use jurisprudence when the court emphasized market effect over transformative use, seemingly a departure from recent trends in the application of the balancing test. (See Fox News Network, LLC v. TVEyes, Inc., 883 F.3d 169 (2d Cir. 2018)).  In recent weeks, the Supreme Court denied TVEyes’ petition for certiorari, leaving in place the appeals court’s decision; and Fox and TVEyes settled the case, stipulating that TVEyes may no longer make available, distribute, or publicly perform or display Fox’s copyrighted video content.

TVEyes is likely to be an important decision for future fair use cases within the Second Circuit.

UPDATE: On November 1, 2018, the court dismissed the plaintiff’s amended complaint (which apparently dropped the CFAA claim and asserted Lanham Act and DMCA claims).  Specifically, the plaintiff asserted, among other things, that defendant removed the copyright management information (CMI) from plaintiff’s listings and website source code. The court ruled that plaintiff failed to show that the generic copyright notice at the footer of each web page covered the listings and images that the defendant allegedly scraped, noting that “websites generally do not claim ownership or authorship over an image just because the image appears on the website.” With no evidence that the defendant removed or altered any CMI from the listings it allegedly scraped, the court held that the DMCA claim failed. Following the filing of a second amended complaint, the court, on March 22, 2019, dismissed the action, with prejudice. Regarding the DMCA claim, the court stated that it was “simply not reasonable to expect a viewer of the website to understand that each photograph was subject to protection when there is nothing near the photographs indicating who owns them. Had Alan Ross intended to assert copyright protection for the photographs it owned, it should have included a watermark or other mark on or near the listings, rather than a general copyright notice at the bottom of the page that does not indicate to what it refers.” The court ruled that a general copyright notice on the bottom of a webpage is not CMI “conveyed in connection with” photographs and listings contained on those webpages. Lastly, the court held that the link to plaintiff’s website terms was also not CMI “conveyed in connection with the work” because the terms were located on a separate page than the listings that were allegedly scraped and did not expressly state ownership of the images and listings, merely that unauthorized copying is prohibited.  Following the dismissal, the plaintiff filed a notice of appeal to the Seventh Circuit.

This past week, an Illinois district court dismissed, with leave to amend, claims relating to a competitor’s alleged scraping of sales listings from a company’s website for use on its own site. (Alan Ross Machinery Corp. v. Machinio Corp., No. 17-3569 (N.D. Ill. July 9, 2018)).

The court dismissed a federal Computer Fraud and Abuse Act (CFAA) claim that the defendant accessed the plaintiff’s servers “without authorization,” finding that the plaintiff failed to plead with specificity any damage or loss related to the scraping and did not allege that the unlawful access resulted in monetary damages of $5,000 or more as required to maintain a civil action under the CFAA.  In the court’s view, the “mere copying of electronic information from a computer system is not enough to satisfy the CFAA’s damage requirement.”  The court also dismissed plaintiff’s breach of contract claims, concluding that defendant did not have notice of the plaintiff’s website terms and conditions based upon an unenforceable browsewrap agreement.