First Sale Doctrine: In Like a Lion, Out Like a Lamb

In Mid-March, the Supreme Court issued its decision in Kirtsaeng v. John Wiley & Sons, Inc., ruling that a consumer’s rights to resell a purchased copyrighted work under the “First Sale Doctrine” preempts an author’s right to control the importation of his works. This decision was met with cheer from those seeking weaker copyright protection and the freer movement of content, including librarians. It didn’t take long, however, for the judiciary to limit the First Sale Doctrine along a new dimension.

Scaling back the First Sale Doctrine, Judge Richard Sullivan of the Southern District of New York handed down a summary judgment ruling determining that ReDigi, a service that facilitates the sale of previously-purchased digital music, could not escape liability via the First Sale Doctrine. Notwithstanding the results of this case, Apple and Amazon appear to be exploring mechanisms for the licensed resale of digital music.

A Bit More on Digital Copyright

Speaking of the limitations of digital copyright, Slate posted an indictment of the Digital Millenium Copyright Act from a researcher in digital security in consumer products. He notes the breadth of the law’s definition of “circumvention” of security measures and the narrowness of its exception for research.

Aereo

Proponents of broader exceptions under the DMCA did see one victory this week, however, as the Second Circuit affirmed the denial of an injunction against Aereo, a company which uses arrays of antennae to retransmit over-the-air television content over the internet to its subscribers. Much to the chagrin of television broadcasters, the court found that Aereo’s service was legally indistinguishable from the retransmission practice that was found protected in Cartoon Network, LP v. CSC Holdings, Inc.

Motion in Mobile: MetroPCS, Mohave Mergers and More

The FCC has approved T-Mobile’s plan to acquire discount carrier, MetroPCS, and the plan has been met with some favorable reviews from the perspective of the public interest, though investor advisory firms have panned the terms of the offer.

Verizon announced plans for 3G and 4G LTE buildout upon completion of its acquisition of the Arizona mobile carrier, Mohave.

AT&T has sought to stave off the increasing belief that mobile carriers are shifting towards becoming mere “dumb pipes.” AT&T’s development of innovative services was the subject of an executive’s talk at Venture Beat’s Mobile Summit this week.

Harvard faculty reacted angrily to Harvard’s search of Resident Deans’ emails. (Resident Deans are administrators who oversee the affairs of Harvard’s residential dorms.) Harvard conducted the search, without notice to the deans whose accounts were searched, in order to determine how confidential information regarding last year’s cheating scandal leaked to the press. Through the search, Harvard determined that the memo was forwarded by one Resident Dean to two students.

Harvard faculty criticized the search on the ground that it violated Harvard policy, which guaranteed faculty members that their Harvard email accounts would not be searched except in “extraordinary circumstances” and only then with prior notice. (See, for example, computer science professor Michael Mitzenmacher’s post, which describes Harvard’s email policy.) Harvard countered that the policy was not violated because Resident Deans were assigned two email accounts – a personal account and an account to use in connection with their responsibilities as Resident Deans, and only the Resident Dean accounts were searched. Additionally, the email searches accessed only the subject lines and not the other content of the emails.

Much of the debate over the search has focused on whether Harvard violated its own email policies and guarantees to its faculty. But the story brings up a number of interesting what-ifs that are interesting to contemplate. If Harvard had been a public institution instead of a private university, the search might have violated the Fourth Amendment. (See City of Ontario v. Quon.) If Harvard had stored its emails on a third-party service rather than its own server, accessing the communications might have violated the Stored Communications Act. Even if Harvard’s IT department offered email accounts to the public rather than only to Harvard employees, the IT department may have been required to keep the content of the emails confidential. Another interesting aspect of the case is that Harvard defended its actions in part by saying it only accessed the subject lines of emails and not the “contents” of the emails – but the DOJ considers subject lines “content.” (See page 123 of the DOJ manual on obtaining electronic evidence in criminal investigations.)

Report on China Cyberattacks Renews Discussion on Cyberespionage Law

In other news, the security group Mandiant released a report that traced the majority of the cyberattacks originating inside China and targeted at Americans to a neighborhood in Shanghai where a unit of the People’s Liberation Army is located. The attacks originating in the neighborhood, tied circumstantially to P.L.A. Unit 61398, included intrusions on American government, infrastructure, and companies. One of the most surprising items in the report was that the P.L.A. allegedly deployed its hackers to give Chinese beverage company Huiyuan Juice Group an advantage in negotiations with Coca-Cola, by accessing Coca-Cola’s servers to steal confidential company files. According to the report, five legal services organizations were also targeted. The information renewed the discussion on creating new international law on cyberespionage.

Higher Standard for Search of Computers at Border in Ninth Circuit

The border-search exception, a doctrine allowing Border Patrol agents to conduct routine searches of closed containers at an international border or airport, was qualified by a Ninth Circuit decision last Friday requiring that agents have “reasonable suspicion” of wrongdoing before searching electronic devices. The “reasonable suspicion” standard is lower than the “probable cause” standard for a warrant, but is a higher standard than not requiring any suspicion at all. The decision was limited to “comprehensive searches,” leaving undecided the question of what constitutes a comprehensive search. But for now, travelers leaving or entering the country from a point within the Ninth Circuit can be slightly more assured of the privacy of their computer files.

Digital Rights Management Feature Makes SimCity Fans Angry

The newest version of SimCity, SimCity 2013, was released on March 5, only to be pulled on Amazon a week later. The cause? Complaints of SimCity fans, many of whom probably started their connection with the franchise before they had a home Internet connection. To prevent pirating and protect digital rights, SimCity used a common technique – requiring a persistent Internet connection during gameplay to verify that the copy was legally obtained. But the plan turned out poorly for many SimCity players, who had trouble connecting to SimCity’s servers and in some cases lost games when their connections failed. Although SimCity’s manufacturer, Electronic Arts, says it has by now addressed most of the problems, the case illustrates one of the pitfalls of a technological safeguards for digital rights management. This could provide fodder for either those who argue that EA should try less hard to prevent piracy or those who believe that government should step in with harsher or more-enforced penalties to dissuade would-be pirates in the absence of hardwired safeguards.

The F.C.C. announced that it supports unlocking of cellphones for consumers not bound by a service agreement. Under a ruling from last fall by the Copyright Office of the Library of Congress, unlocking cellphones would be in violation of the Digital Millennium Copyright Act’s Circumvention of Technological Protection Measures. R. David Edleman, an Obama administration adviser on Internet and privacy issues, said that the F.C.C.’s position was “common sense [and] crucial for protecting consumer choices…. All consumers deserve that flexibility [of changing service providers].” The Library of Congress currently stands by its position but agrees that the policy may be worth another look.

Google Reveals FBI’s Demands for Users’ Data

Google has published a “range” of times it received National Security Letters (NSL) for account information on users without warrants. The report says that Google received between 0 and 999 NSLs last year for information on between 1,000 and 1,999 accounts. Although Google was attempting to provide transparency on the use of user data, concerns raised by the FBI, Justice Department and other agencies restricted the tech titan from releasing exact numbers. Additionally, Google has stated that it does not believe that the FBI can use the NSLs to obtain “Gmail content, search queries, YouTube videos or user IP addresses.” Instead, it only believes that “the name, address, length of service, and local and long distance toll billing records” are available to Federal investigators.

China Growing Weary of Android Platform’s Dominance

China’s Ministry of Industry and Information Technology warned that the Chinese smartphone market was dependent on Google’s Android platform. Android controls about 86% of the Chinese smartphone market, and 70% worldwide. The risk, the Chinese government reasoned, is that even though Android is “open source” it still runs the risks of paying royalties for patent licensing or litigation. To counteract this market dominance, the white paper calls for emerging Chinese tech companies, like Huawei, ZTE and Baidu, to develop their own proprietary platform. Whether Chinese manufacturers will be able to fight in the battle of smartphone platforms remains to be seen, with the market already saturated by Apple and Google.

Europe to Fine Microsoft For Failure To Comply With Settlement Agreement

The European Union is expected to impose a large fine on Microsoft for failure to comply with a 2009 antitrust settlement that required Microsoft to give a choice of Web browsers with their Windows software. Under the 2009 settlement, Microsoft was to provide a “browser ballot” with download links to other browsers, including Safari, Chrome, Firefox and Opera. Microsoft ultimately did not comply with the settlement, but apologized, stating that the failure was a “technical error.” While the amount of the fine will be revealed on Wednesday, under E.U. regulations, it can assess fines of up to $7.4 billion for this violation. This isn’t the first time the E.U. has gone after U.S. tech companies; Intel is still appealing a $1.3 billion dollar fine that was assessed last year.

Congressmen Peter DeFazio (D-OR) and Jason Chaffetz (R-UT) have introduced the Saving High-tech Innovators from Egregious Legal Disputes (SHIELD) Act, an act that attempts to fight back against patent trolls. The bill would force plaintiffs to pay for the defendant’s attorney fees and other legal costs if their patent lawsuit fails in court.  Plaintiffs would be exempt if they invented the patent themselves or could show that they had made a substantial investment in trying to bring the patent to market.  The SHIELD Act has the support of various organizations, who view patent trolls as a threat to innovation, a threat that adds no economic value to the country.  On the other hand, some warn that any legislation on patent trolls would be a “gift to infringers”

Nintendo Sued for Patent Infringement Over 3DS

The gaming giant Nintendo is being sued for patent infringement for its 3DS handheld gaming system.  Sejiro Tomita, a former SONY employee, claims that Nintendo used technology that he developed and patented relating to the ability to provide 3-D images without the use of glasses.  Opening arguments were heard on Monday in U.S. District Court in Manhattan, with Tomita’s legal team arguing that Nintendo used Tomita’s technology to develop the 3DS.  Tomita claims that he showed his technology in a 2003 meeting with seven Nintento officials, four of which went on to be key developers for the 3DS.  Nintendo claims that the 3DS doesn’t use key aspects of Tomita’s patent.  It claims that the meeting with Tomita was one of hundreds, including one with Sharp Corp., the manufacturer of the 3DS’s screen.  Tomita is seeking $9.80 for every 3DS sold, which, given the nearly 29 million units already sold, amounts to approximately $280 million in damages.  This is not the first time that Nintendo has faced this kind of lawsuit.  Back in 2006, similar claims were brought regarding Nintendo’s “wii-mote.”

LegalTech New York

This week at LegalTech New York the FBI warned that law firms are increasingly becoming the target of hackers.  Mary Galligan, special agent in charge of cyber and special operations, went on to say that cyberintrusions are more dangerous and sophisticated than just a few years ago.  With the amount of documents sent by law firms on a daily basis, they are an easy target for skilled hackers.  Galligan gave several examples of what’s being done.  She said having up-to-date network diagrams, physical access logs, and legal notices upon logging in are all helpful methods to prevent them, adding that Firewalls, intrusion detection systems, remote access servers, virtual private networks, and web servers all also should be logged.  Derrick Donnelly, CTO of mobile forensics company BlackBag Technologies Inc., mentioned that they are seeing increased security on smartphones, citing the new iOS operating system on iPhones as an example. Leaders of firms’ security operations maintain that the best form of law firm security is still risk awareness training. Not only is this a safety issue, but are required under ABA Rules of Professional Responsibility 1.1 and 1.6.

Samsung and Apple: The Battle Continues

Samsung’s attempt to block sales of the iPhone and iPad in Japan failed last week.  The judge ruled that the Korean firm didn’t negotiate in good faith with Apple before bringing the case to court.  The judge also ruled that Samsung did not have a right to seek damages from Apple.  The case in Japan is just one of many between the world’s two largest makers of smartphones.  Samsung had won a previous case in Japanese court in which Apple alleged Samsung had infringed its patents.  Samsung also prevailed in a British case, with the judge finding that Apple had to reissue its apology to Samsung because in addition to stating that Samsung had not infringed any patents, the apology included quotes from British consumers that Samsung tablets were “not as cool” as apples.

This week marks the launch of the Copyright Alert System, a cooperative effort between internet service providers and content owners to proactively limit piracy and file-sharing  via peer-to-peer networks like BitTorrent. A beefed-up version of the three-strike system that universities like Stanford are internally implementing to protect their own users from the legal consequences of illegal file-sharing, the system involves content owners sharing offending IP addresses with service providers when they detect illegal file sharing. The ISP then warns allegedly offending users of the infraction using a “six-strike” system of ramifications increasing in severity – from warning emails and educational videos to throttling network speeds or blocking certain websites.

Though some groups advocating for internet liberty equate the measure to spying and a violation of due process, it is worth noting that this initiative is not a government organization, nor do ISPs actually spy on their users. Instead, content owners monitor public peer-to-peer traffic as they already do, and ISPs simply claim to engage their users before content owners resort to litigation. An internal appeal process allows users to clear their name if they contend the infraction – but with a controversial $35 filing fee attached. Despite the pundit tumult, though, detection by the system is relatively easy to avoid, lending credence to ISPs who play down the initiative as merely a deterrent to the public at large, not a crackdown on actual pirates. A final word of warning to downloaders, though, is that this private initiative does not necessarily reduce the threat of actual DMCA-backed lawsuits. Groups on the sidelines anxiously await the system’s rollout for now.

Is Google Still a Gentle Giant?

Google has had to walk a fine line lately; its struggles highlight the balancing act that large information companies must conduct with regard to expression and privacy. On one hand, the Silicon Valley behemoth inspired cheers from freedom-of-information activists when it decided not to comply with an order from the Spanish Data Authority to remove links to public websites from its search results. The case began when a Spanish citizen, through a Google search, found public legal records about himself online. A Spanish court ordered Google to remove the links; Google, throughout the appeals process, has insisted that its search results merely link to publicly and legally available sites and that it cannot play a role in removing content that the publisher controls.

On the other hand, privacy advocates must have raised a brow when the European Union’s Data Protection Authorities will vote on possible legal action against Google in response to what it sees as violations of European privacy laws. Google has denied the Authorities’ allegations, perhaps because the Authorities have limited enforcement capabilities even if they successfully pursue Google in court (potential fines total only several hundred thousand dollars). Pundits at Wired, however, foresee a result where new rules passed by the European Parliament would dramatically increase the fines they can impose on Google in 2014, to over $1 billion. If the Data Protection Authorities continue to challenge the boys at Mountain View, they very well deal a significant blow to Google when their enforcement powers are scaled up.

Meanwhile, Google is still hashing out a deal with the European Union over a different antitrust investigation. It appears Europe is where Google’s users and competitors have chosen their battlegrounds; it remains to be seen where the once-noble search giant will go from here.

Warrantless Surveillance and the Catch-22 of Establishing Standing

Opponents of government surveillance were reeling Tuesday from a Supreme Court decision that blocked a challenge to government surveillance. A 5-4 majority of the high court ruled that journalist plaintiffs and the ACLU lacked standing to challenge  the constitutionality of §1881 of the Foreign Intelligence Surveillance Act (FISA), enacted in 2008 and extended in 2012. The law legalized the Bush-era wiretap programs begun shortly after terrorist attacks on September 11^th, 2001. Though the program has been challenged in several appellate circuits, it reached the Supreme Court for the first time this term. The ACLU brought the case on behalf of journalists and lawyers on the basis that their communications had probably been subject to government wiretapping at some time without a warrant.

Unfortunately for the plaintiffs, the majority, in an opinion written by Justice Samuel Alito, held that the plaintiffs lacked standing because they had not shown that the alleged harms were not speculative. In other words, the plaintiffs could not prove that the government was likely to wiretap their communications– mostly because in lieu of warrants, government surveillance plans are instead approved by the Foreign Intelligence Surveillance Court, a single-purpose court that operates in secret. The Court’s concerns are valid – a sufficiently low bar for standing would bring intelligence operations to a grinding halt. However, the dissenting justices charge that the Court’s refusal to grant standing based even on “probable injury” bars plaintiffs from bringing a case even when it is virtually certain the government has conducted surveillance, simply because the program by design will never reveal whether the surveillance operation actually exists.

While civil liberty groups were hoping to pick apart the FISA Amendments Act using the Fourth Amendment, it appears this Court may never broach the subject of its constitutionality unless one day the government accidentally reveals its secret programs. And in the 9^th Circuit, it appears that sovereign immunity would shield the government from liability even in that unlikely scenario. Joseph Heller would be proud.

On Tuesday February 19, the Supreme Court heard oral argument in Bowman v. Monsanto concerning patent rights of self-replicating technology.

Monsanto created and patented a genetically altered soybean resistant to the herbicide Roundup, coined Roundup Ready.  Vernon Hugh Bowman, an Indiana farmer, obtained second-generation Roundup Ready seeds lawfully, planted the seeds, and then saved the seeds from his grown soybean plants for subsequent planting.  Bowman then replanted the next-generation seeds without paying Monsanto a fee for eight consecutive seasons.  Monsanto sued Bowman for patent infringement.

Bowman relies on a theory of patent exhaustion, arguing that Monsanto’s patent rights to the seed are extinguished after the initial authorized sale.  The Federal Circuit disagreed, holding that each replicated seed is a “newly infringing article” and thus patent rights extend beyond the first generation.  Bowman subsequently appealed to the Supreme Court.

As for Chief Justice Robert’s thoughts:  “Why in the world would anybody spend any money to try to improve the seed if as soon as they sold the first one anybody could grow more and have as many of those seeds as they want?”

No IPhones in Brazil?

On February 13, Brazil’s National Institute of Industrial Property (INPI) denied Apple’s request to trademark the iPhone name for use in mobile phones in Brazil.  The INPI ruled that the iPhone name is already registered by Brazilian company Gradiente.

The INPI granted the trademark iPhone to Gradiente in January 2008.  Under Brazilian law, however, a company has five years to make use of a registered trademark or the exclusive right expires.  On the eve of the trademark expiring in December 2012, Gradiente launched the “Gradiente iphone.”  Apple questions Gradiente’s motives and argues the trademark was registered in “bad faith” and should be canceled for non-use.  As a result, Apple has immediately filed a petition challenging the INPI’s recent decision.

EU’s $1 Billion Threat to Google

European Union lawmakers and regulators are in the process of overhauling the EU’s data protection rules.  Under current rules, companies that violate EU data privacy laws are subject to fines by individual countries of 300,000 – 600,000 euros.  The new rules, which could go into affect next year, would allow a single regulator to fine companies on behalf of the entire EU up to two percent of global revenues.

Viviane Reding, the EU’s commissioner for justice, told Reuters, “The test case (Google) is a clear one.” European Union regulators believe Google’s current privacy policy infringes users’ privacy.  In particular, they disprove of Google’s pooling together of personal information from all its services – Gmail, YouTube, Google+, Android.

Google’s revenues last year were $50 billion, and thus a fine as high as $1 billion is possible.

A Great Mystery:  Who Owns Sherlock Holmes?

Everyone knows the story of Sherlock Holmes and soon enough we may all own him as well.

Leslie S. Klinger, an author and leading Holmes scholar, filed a civil complaint on Thursday, February 14, 2013, in Illinois federal court over the ownership of Sherlock Holmes.  Klinger argues that since the original Sherlock Holmes novels by Arthur Conan Doyle were published before January 1, 1923, U.S. copyright law no longer covers the materials.  As a result, licensing fees paid to Arthur Conan Doyle’s estate are unnecessary.  Sherlock Holmes, Dr. Watson, and Baker Street should belong to the public domain.

Australian software developer Dan Nolan claimed in a February 13 blog post that Google shares personal information without the proper consent of users who download applications. The information sent to app developers includes the full name, location, and e-mail address of users.

Sharing such information may be useful for developers to directly handle customer service issues, as developer Barry Schwartz points out. Google also claims that developers can only use account information for “limited purposes” for which they’re received permission from users.

However, others such as Marc Rotenberg, executive director of the Electronic Privacy Information Center, and Joel Ridenberg, Director of the Center of Law and Information Policy at Fordham School of Law, have expressed their concern that users may not have been informed properly and given a chance for meaningful consent.

Nolan added that if he wanted to, he could use the information available to him through Google’s checkout portal to track down and harass users who left negative reviews or refunded the app purchase.

Google, on the other hand, denied that Google Play’s handling of personal information violated its 2011 agreement with the FTC to ask users before sharing their data with outsiders. In 2012, Google had to pay $22.5 million, the largest penalty the FTC levied on a company, to settle charges for bypassing the privacy settings of millions of Apple users.

In other news, EU privacy regulators decided to take action on Google, alleging various privacy violations.

Egypt’s Telecom Ministry Appeals 30-day YouTube Ban

Egypt’s telecom ministry filed an appeal to halt a February 9 court mandate to ban YouTube within Egypt’s borders, claiming that the mandate was not enforceable.

According to a statement issued after talks between ministry officials and the telecoms regulator,

“[b]locking YouTube would affect the search engine of Google, of which Egypt is the second biggest user in the Middle East,” which would cause losses to the economy of up to tens of millions of dollars and affect thousands of jobs.

The 30-day ban was issued earlier this month after public outrage and more than 50 casualties in the Middle East over the 14-minute video “Innocence of Muslims” posted on YouTube last July. Judge Hassouna Tawfiq of the Cairo administrative court described the video as “offensive to Islam” and to the Prophet Muhammad, violating the new constitution that includes a ban on causing insult to “religious messengers and prophets.”

Electronic Arts and Zynga Settle Copyright Violation and Employee Recruitment Lawsuits

Electronic Arts and Zynga settled competing lawsuits against each other on copyright violations and employee recruitment.

Electronic Arts, the second biggest U.S. video game publisher and developer of the famous Sims series, filed suit last August against Zynga, claiming that Zynga cloned “The Sims Social,” an Electronic Arts game on Facebook, in creating its game “The Ville” with the help of former Electronic Arts executives who knew how “The Sims Social” was developed.

Zynga, the biggest developer of games played on Facebook, countersued Electronic Arts for trying to improperly stop employees from switching companies. Zynga said this violated a 2011 agreement between the companies over employee solicitations.

The two companies agreed to permanently drop all claims and counterclaims raised in litigation since last August in San Francisco federal court.

AT&T Price-Fixing Suit Reinstated

AT&T’s price-fixing suit against AU Optronics Corp. and Samsung Electronics Co., Ltd. was reinstated in the 9th Circuit after partial dismissal at a lower court for insufficient ties to California state antitrust law. The court ruled that “A defendant cannot reasonably complain that the application of California law is arbitrary or unfair when its alleged conspiracy took place, at least in part, in California.” Full opinion of the case, AT&T Mobility LLC v. AU Optronics Corp, 9th U.S. Circuit Court of Appeals, No. 11-16188, is available here.

Last week, Amazon and Overstock.com challenged a New York state law requiring the collection and payment of sales tax on all online transactions for which a New York-based entity “directly or indirectly refer[ed the] customers.” States have the authority to tax sales that occur within their borders. However, “virtual presence” has blurred state lines and created a valuable, tax-free e-commerce market.

In the 1992 decision in Quill Corp. v. North Dakota, the Supreme Court held that retailers who do not operate within a particular state need not collect sales taxes on sales to buyers in that state. New York, however, has tried to skirt the issue by defining the Supreme Court’s “nexus” requirement as one satisfied by the presence of third-party referrers, an action Amazon and Overstock dub unconstitutional. Only time will tell if New York has gone too far.

Standards-Essential Patents: Court-Mandated “Sharing” of Intellectual Property Rights

Last Friday, ITC’s (U.S. International Trade Commission) Administrative Law Judge Pender dismissed one of Nokia’s patent infringement claims against HTC, holding that the patent was “standards-essential” and, therefore, must be available to other companies on a fair, reasonable, and nondiscriminatory (FRAND) basis.

U.S. Patent No. 7,366,529 grants Nokia the exclusive (not so much anymore) rights to the use of a “communication network terminal supporting a plurality of applications.” Basically, the patent claims a method for synthesizing information for the performance of multiple applications and effectively transmitting them for use on a smartphone. Judge to Nokia: It is your property. But they get to have it too. At a “fair, reasonable, and nondiscriminatory” price.

Life, Liberty, and Tax-Free Internet Access

In difficult economy times, Senators Ayotte (N.H.) and Heller (Nev.) look to protect the Internet from government opportunism. The surge of Internet communication has resulted in a significant hit to the U.S. Postal Service, causing the Postal Service to max out its available credit of $15 billion in loans from the U.S. Treasury, and the Internet has been eyed at all levels of government as a lucrative, potential revenue source.

In 1998, Congress passed the Internet Tax Freedom Act, which barred all levels of government from taxing the use of e-mail and various other forms of Internet access and usage. The current Act is due to expire near the end of 2014. Ayotte and Heller hope to extend the ban on Internet taxation indefinitely in an act they claim will “provide certainty to the marketplace, helping the Internet continue to be a driving force for jobs and growth.” “In this world nothing can be said to be certain, except death and taxes.” But then again, Benjamin Franklin did not have the Internet.

Illegal Spammers Migrate to Legal Alternatives for the Lower Pricetag

Spamming has become a serious problem ever since the ubiquitization of the Internet and cheap, almost-zero-marginal-cost modes of communication. The never-ending deluge of legal and governmental attacks, constantly reengineered mail filters, and sophisticated Internet security measures have failed to quash, or even successfully temper, mailbox inundations. However, the almighty dollar has significantly ameliorated the spamming problem.

With the overwhelming popularity of Facebook and similar social networking sites, it has become more cost-effective for would-be-spammers to buy banner space than to pursue their more sordid alternatives. Depending on the selected “universe” to which one’s advertisement is posted, side-of-the-page Facebook ads cost only pennies per click.

Never underestimate the power of a dollar.

The intellectual property battle between Apple and Samsung continues. On January 29, the US federal court has refused Apple’s request to increase the $1 billion in damages. The court ruled that Samsung did not “willfully” violate Apple’s patents and refused to triple the damages that were owed by Samsung. Furthermore, the court has refused to impose a sales ban on Samsung Galaxy Nexus, which had been banned in June of 2012 and lifted in October of 2012. The two companies are expected to meet next month.

Patentability of Software

The US Court of Appeals will be rehearing CLS Bank Int’l v. Alice Corp. (Fed. Cir. 2012) en banc this Friday (February 8, 2013). The initial panel held that computer-implemented methods were patentable subject matter, unless it was “manifestly evident” that they cover an abstract idea. Just few days later, Federal Circuit panel distinguished CLS Bank from Bancorp Services v. Sun Life, and held that a computer-implemented process was an unpatentable abstract idea. The questions presented in the en banc order are:

1. What test should the court adopt to determine whether a computer-implemented invention is a patent ineligible “abstract idea”; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?
2. In assessing patent eligibility under 35 U.S.C. sec. 101 of a computer-implemented invention, should it matter whether the invention is claimed as a method, system, or storage medium; and should such claims at times be considered equivalent for sec. 101 purposes?

By revisiting these questions, the hope is that there will be more guidance on whether certain software is patentable.

Privacy Issues

The California Supreme Court ruled that online retailers like Apple could require California customers making purchases with credit cards to give personal information as a way to verify purchases and to minimize fraud. While minimizing fraud is very important for online retailers, this decision could lead to more private information being vulnerable. Companies like Twitter and Washington Post have reported that their system had been hacked and some personal information was compromised last week.

Kodak Sells Its Digital Patents

Kodak has completed the sale of its patents on digital imaging for about $527 million. Kodak had wanted to get a price in the neighborhood of $2 billion but was unable to find a buyer. With the proceeds of the sale, Kodak will try to get itself out of bankruptcy.

3D printing is all the rage these days – as our own Darren Haber mused, the technology democratizes production while bringing up some interesting questions on the intellectual property front. Printers that used to cost hundreds of thousands of dollars now cost as little as $2,200 shipped. Benign 3D artists are attracting a following by creating open-source puzzles and guitars, while more aggressive thinkers are turning their attention to guns.

Defense Distributed, a “wiki weapon” initiative taken up by University of Texas law student Josh Wilson, aims not only to exercise second amendment rights by printing gun parts, but also to democratize gun manufacturing by establishing a wiki site where users can collectively improve on designs. Wilson certainly grabbed someone’s attention last week when his leased 3D printer was repossessed by the company making the printers. His Twitter feed openly declaring his open dislike of politicians and “socialists” may have played a role in that.

Stratasys, the printer maker, stated in a letter to Mr. Wilson that they would not “knowingly allow [their] printers to be used for illegal purposes.” But is what Defense Distributed is doing actually illegal? Regardless of Wilson’s rather blunt political views, his activities do bring up interesting legal questions. The 1968 Gun Control Act only requires a license to manufacturer arms if one intends to sell them. However, any actual printed gun can probably be categorized as a Title II-class weapon under 26 USC § 5856(e), a catch-all category for concealable firearms originally drafted to regulate crude homemade guns.

As Mr. Haber astutely pointed out, the chief problem is then one of enforcement, for printing advancements mean users can print prohibited or protected objects in the privacy of their own homes. A new patent filed last week by a company called Intellectual Ventures may hint at an initial response by traditional manufacturers. The patent covers a new form of DRM, or digital rights management, that restricts the sharing of 3D plans much in the same way purchased music and videos are restricted from being shared today. Notoriously unpopular, DRM has caused enough headaches that even giants like Apple have dropped the lock-down technology from the music it sells. It remains to be seen whether 3D printer makers will adapt to DRM. Coincidentally, Intellectual Ventures’ reputation as a patent troll means would-be enforcers may themselves be strong-armed into paying to license the technology. It appears everyone involved will have obstacles to deal with in this new legal frontier.

The Robocalls Just Won’t End

Tired of getting automated calls on behalf of political candidates or market research companies? Turns out they’re often illegal too. In response, the FTC today has issued a challenge to the public, offering a $50,000 prize for the best solution to the problem. They hope to come up with something – anything – to stop the annoyance that has irritated both ordinary citizens taking the battle to court and Washington politicians alike. The FTC issued new regulations recently to combat this annoying, robotic menace – but the federal rules don’t cover the political ads so prevalent this this year, only telemarketing. A few states like California have issued their own rules stricter than the FTC’s to curb the practice, but calls originating outside the state are fair game. FCC rules do prohibit political calls to cell phones without the recipient’s prior consent, but enforcement has been non-existent.

How do these robocalls work? As the FTC’s infographic shows, complicated global telephone and VoIP networks combine to make thousands of automated calls a minute while covering their tracks through services that fake or hide caller IDs. This not only means that regulators are dealing with multiple culprits in different jurisdictions, but they’re often impossible to track down in the first place, much less punish. Some think that robocalls may be bothersome enough to determine a Senate race or two. However, without regulatory teeth to ban the practice, it is likely our landlines and airwaves will continue to transmit robocalls that are questionably legal – and always irritating.