Loyola is hosting the Society for Economic Research on Copyright Issues Annual Meeting Today

The SERCI Annual Congress 2016 is being held at Loyola University Chicago School of Law, Chicago, 7-8th July and is co-hosted by University of Illinois College of Law.

The Society for Economic Research on Copyright Issues or SERCI was established in 2001 to provide a solid academic platform for the application of economic theory to copyright policy.

The complete program is posted online at http://www.serci.org/congress.htm.

My slides for my presentation on empirical studies of copyright litigation are available here.

Getty’s high-resolution competition law complaint against Google in the EU

Getty Images has filed a competition law complaint against Google

I have some initial thoughts as follows:

Image Search vs. High-Resolution Image Search

Google’s rationale for image search in general is that displaying the image is necessary for the user to assess how well the image corresponds to their search. This practice has been litigated at least twice in the U.S. in relation to thumbnail images and has easily passed the test of fair use.

Getty’s complaint is directed more specifically to the creation of high-resolution galleries. Although Google could make a similar argument that you need to see the image in high resolution to properly evaluate it, my view is that this argument is not nearly so compelling. The high resolution display is more expressive and less informational and the potential adverse effect on the copyright owner is greater for that reason and because, as Getty points out once consumers see an image on the Web, they aren’t likely to go to the source and look at it again. Getty argues that Google Images’ creation of high-res galleries of copyrighted content is thus impacting Getty’s own image licensing business; promoting piracy and copyright infringement; and bolstering Google’s monopoly over site traffic, engagement data and ad spend.

[Update: It is worth noting that other design changes may have reduced the flow on traffic from Google Image search see this 2013 Search Engine Land story]

Basically, Getty is worried that it is far too easy to right-click and copy image from Google Image Search and that as a result people won’t click down to Getty’s now site.

Illustration: Right-Click Options On Getty’s Own Press Release

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Is there a copyright case?

Getty is an American company complaining about another American company’s treatment of its copyrighted properties and so it is less than obvious that the complaint would be dealt with in the EU under antitrust law rather than in the US under copyright law. I would need to understand the technology behind the high resolution image display to say whether Getty has a strong case for copyright infringement under U.S. law, but I think there are clear differences between the fair use status of low-resolution thumbnails and the high resolution images available on Google image search today.

Is there a competition law case?

It seems to me that providing high resolution galleries makes it at least marginally less likely that users will click through to the original site. This in turn makes it marginally more likely that users will copy and paste without authorization. But I would note that Google is under no obligation to design its information services in a way that drives traffic to a particular website, or external websites in general. The design of Google image search would make a poor antitrust case in the US but it might go further in the EU because they take a broader view of “abuse of dominance”. The main problem I see is that even if Google image search increases the unauthorized use of images, it probably does not affect the market for licensed images. I think that people looking to license stock footage will go to stock photo sites, but this is an empirical question so we would need to look at how the market actually works.

 

Getty Images says that, when it first raised concerns about this with Google, it was told to accept Google’s presenting of images in high-res format or opt out of image search. Since its founding, Google has relied on the fact that people can opt out of search to address complaints about the way search is run. Participation in Google image search is voluntary – on an opt out basis – but that does not give Getty, or anyone else, the right to say exactly how they would like the search engine to run. In 2013 Google agreed with the FTC to make changes to the way it scrapes the content of rivals like Yelp. Sites like Yelp can now opt out of having their content scraped without opting out of search entirely. This is probably what Getty is looking for. But the issue for Getty is that it does not compete with Google they way Yelp does, so their case is not as strong.

It’s hard to say how might EU regulators will view Getty’s complaint. It depends on some facts that we don’t have access to at the moment — I have only seen the press release, not the complaint itself. It also depends on whether the EU case against Google has more to do with politics and protectionism than it does with the merits of competition law. If Google settles with the European commission, the settlement might include modifications to the way image search works and that would be a significant win for Getty. From Google’s point of view the worst case scenario is that it would be forced to make a change to image display within the EU. I don’t think Google will change image search in the US unless it thought Getty had a case under American copyright or antitrust law.

CREATIVE DIGITAL ARTS — Event Announcement

CREATIVE DIGITAL ARTS FREE PUBLIC EVENT

“CREATIVE DIGITAL ARTS: Copyrights and Pathways to Success” is a free public event that has organized by faculty at Loyola Law School Chicago, Northwestern Law School and Columbia College and a group of Chicago lawyers and business leaders. The event is on Tuesday, April 26, 2016 from 5-8pm at Columbia College.
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The CREATIVE DIGITAL ARTS event will feature photographers, digital strategists, intellectual property attorneys and law professors. Our speakers will address the essentials of copyright law for today’s artists and lessons from working artists and professionals in creative industries. The event will conclude with a pizza reception and a chance for one-on-one Q&A with the speakers.
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A link to the online registration and further details are included in the attached flyer (Creative Digital Arts (World IP Day)). Email WorldIPDayChicago@gmail.com with questions.

#DMCA512 Comments and Keywords

I downloaded a selection of the longford comments re DMCA Section 512 and ran some basic word searches to try and organize the material. It would be great to someone do this on a more systematic basis! Even better if they tried some topic modeling.

At the end of the day, I am going to have to read most of these, but I am glad I don’t have to read them all!

Comments and key words (2) in Excel. 

 

Some thoughts on Malibu Media’s recent loss and its implications

(Malibu Media LLC v. Doe, Docket No. 1:13-cv-06312 (N.D. Ill. Sept 04, 2013)

Malibu Media’s case against yet another John Doe defendant was tossed out of court on February 8th by United States Magistrate Judge Geraldine Soat Brown.

Malibu v. Doe, Memorandum, Opinion and Order of Feb 8, 2016 

The defendant in this case prevailed in summary judgement because Malibu was unable to establish that he had ever used Bittorrent or that it’s films had ended up on his hard drive. Malibu had been relying on experts from its technology vendor, but it failed to follow the rules with respect to follow the rules on disclosure of expert witnesses. (See, Fed. R. Civ. P. 26(a)(2)). Malibu also tried to add vital paragraphs containing new opinions to another witness’ original declaration in a manner not permitted by the Federal Rules of Civil Procedure.

On the surface, the loss does not appear to have broad implications for Malibu Media’s campaign against illegal file sharing; after all, it should not be too hard to avoid these particular procedural slip-ups in the future.

Maybe, maybe not?

Malibu is engaged in a litigation campaign of  unprecedented scope — last year Malibu Media alone was responsible for 39% of all copyright litigation in the US. (See  Matthew Sag, IP Litigation in United States District Courts2015 Update (January 5, 2016). Available at SSRN: http://ssrn.com/abstract=2711326.)   John Doe litigation, by Malibu Media and others, made up almost 58% of the federal copyright docket (2930 cases out of 5076) in 2015. Malibu’s recent loss in the Northern District of Illinois illustrates, yet again, how ill suited federal court litigation is to resolving what should be relatively low stakes copyright disputes.

It is time for an entirely new forum to deal with the routine infringements that occur on BitTorrent and similar networks. The Copyright Office has suggested a small claims court for copyright but we probably need something far more targeted.

Shrinking Linking? GS Media BV v Sanoma Media Netherlands

GS Media BV v Sanoma Media Netherlands BV and Others (Case C-160/15) CJEU

In 2014 the European Court of Justice took the opportunity not to break the Internet, but it left open the possibility that it might choose to do so in the future. That future has arrived.

Background

The CJEU addressed the legality of hyperlinking in 2014 in Svensson v. Retriever Sverige AB, Case C‑466/12 (13 February 2014). That case concerned a link to a newspaper article which was in itself was perfectly lawful. The article was in fact posted by the news publisher on its own website.

How could a link to a newspaper article on the newspaper’s own website amount to copyright infringement? The plaintiffs, journalist who wrote the articles and licensed them to the newspaper, argued that a link to a piece of content “communicates” that work “to the public.” Under European copyright law – see Article 3(1) of Directive 2001/29 – “communication to the public” is one of the exclusive rights that belongs to the rightsholder.

The CJEU held in Svensson that “for there to be an ‘act of communication’, it is sufficient … that a work is made available to a public in such a way that the persons forming that public may access it, irrespective of whether they avail themselves of that opportunity.” On that loose definition the provision of clickable links makes a work ‘available’ and, therefore, is an ‘act of communication’.

But not all communications are created equal. The court reasoned that the link was not a communication was not “to the public,” because the hyperlinks provided by Retriever Sverige did not communicate the articles to a “new public.” Specifically the court said that users who navigate to the original newspaper site via the link “must be deemed to be potential recipients of the initial communication”—i.e., the newspaper websites initial voluntary communication to the public— and, therefore, users who follow a link to an open site are “part of the public taken into account by the copyright holders when they authorised the initial communication.”

Svensson v. Retriever Sverige AB, Case C‑466/12 (13 February 2014) Para 26-28

 The public targeted by the initial communication consisted of all potential visitors to the site concerned, since, given that access to the works on that site was not subject to any restrictive measures, all Internet users could therefore have free access to them.

 In those circumstances, it must be held that, where all the users of another site to whom the works at issue have been communicated by means of a clickable link could access those works directly on the site on which they were initially communicated, without the involvement of the manager of that other site, the users of the site managed by the latter must be deemed to be potential recipients of the initial communication and, therefore, as being part of the public taken into account by the copyright holders when they authorised the initial communication.

Therefore, since there is no new public, the authorisation of the copyright holders is not required for a communication to the public such as that in the main proceedings.

In Svensson the European Court of Justice took the opportunity not to break the Internet, but it left open the possibility that it might choose to do so in the future. That future has arrived.

GS Media BV v Sanoma Media Netherlands BV and Others (Case C-160/15)

GS Media BV v Sanoma turns on some fairly simple facts. Playboy magazine in Europe had arranged to take photos of a popular Dutch TV personality. Before the photos appeared in the magazine (in December 2011) they were illegally leaked online. The defendant was not the leaker, it did not host the infringing material, it simply linked to that material. Thus the main question in the case is

GS Media BV v Sanoma Media Netherlands BV and Others (Case C-160/15)

Questions referred. 1(a)   If anyone other than the copyright holder refers by means of a hyperlink on a website controlled by him to a website which is managed by a third party and is accessible to the general internet public, on which the work has been made available without the consent of the rightholder, does that constitute a ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29

Depending on the court’s decision, the legality of linking in the European Union may be under threat. It is not that all linking would be illegal or require permission, but a broad ruling in favor of the plaintiff in this case would mean that every link is potential source of copyright infringement unless you know for certain that the material you are linking to is authorized (by the copyright owner) for general public communication.

For additional comments and links, see Matt Schruers And Jakob Kucharczyk, “EU’S Highest Court To Weigh Whether Hyperlinking Will Remain Legal In Europe” Feb. 2, 2016 (Disruptive Competition Project (DisCo))

Patent Reform is Working, Everywhere but the Eastern District of Texas?

Is the American Invents Act working?

Taking a look at the longterm trends in case filings and the number of unique defendants in each suit, it appears that the America Invents Act (“AIA”) corresponds with a significant reduction in the real rate of patent litigation and a leveling off of the nominal rate of patent litigation.

Patent Cases Filed and Estimated Number of Defendants, 1994—2015

Figure 5

However it is worth desegregating the data to compare the Eastern District of Texas to the rest of the United States. If you believe that most what takes place in Eastern District is patent trolling, then it looks like the AIA has not put a serious dent in that activity. The figure below compares the Eastern District of Texas to the rest of the United States in terms of the number of patent lawsuits filed per year (the bars) and also the estimated number of defendants per year (the scatterplot).

Patent Litigation in Eastern District of Texas, All Other Districts Source: Bloomberg Law, 1994–2015.

comparingtexas

Bar chart depicts cases filed. Scatterplot depicts estimated number of defendants. Linear fit lines from 1994 to 2011 and 2011 to 2015.

Prior to 2011, the whole country witnessed a significant upward trend in patent suits and patent defendants. The rate of increase was much greater in the Eastern District of Texas, but the trendlines were pointed in the same direction for the district and the rest of the US. The period from 2011 to 2015 saw a marked divergence between the Eastern District of Texas and the rest of the country. In the Eastern District, the number of cases filed increased sharply and the trend (albeit with significant variation) was for the number of defendants to increase as well. In the rest of the US, the trendline for the number of defendants is significantly downward and there also appears to be a decreasing trend in terms of the number of suits filed.

These initial numbers might suggest that the patent reform measures introduced in the AIA have had a significant impact on the extent of patent litigation everywhere but the Eastern District of Texas. Another way to read these figures is as confirmation that the Eastern District of Texas’s concerted efforts at forum selling are continuing to be successful. These explanations are not mutually exlusive. The Eastern District of Texas accounted for just 7.33% of all patent cases filed between 2002 and 2010, but 26% from 2011 to 2015. It accounted for 16.39% of all patent defendants between 2002 and 2010, rising to 28.36% in the 2011-2015 period.

According to this superficial data (no attempt to control for marco-economic factors), etc, it looks like the AIA is having an effect, just not in the Eastern District of Texas.

For an extended discussion of the data used in this post, see my forthcoming article, IP Litigation in United States District Courts: 1994 to 2014 (Iowa Law Review, forthcoming 2016). You can download the underlying data on my website (under the publications+/data sets tab).

My 2015 IP Litigation data is now available for replication

Most IP academics agree that their data should be available for replication, but we don’t always follow through in a timely fashion (or at all!). Yesterday I published some analysis of the latest filing data on copyright, patent and trademark litigation in US district courts. Today I published the underlying data on my website (under the publications+/data sets tab). There are two datasets, one derived from Pacer (excel) (stata) and one derived from Bloomberg (excel)(stata).

This data is an UPDATE to the data in my forthcoming article, IP Litigation in United States District Courts: 1994 to 2014 (Iowa Law Review, forthcoming 2016). The updated analysis is summarized in Matthew Sag, IP Litigation in United States District Courts2015 Update (January 5, 2016). Available at SSRN: http://ssrn.com/abstract=2711326.

(4/4) 2015 Data on the geographic distribution of US IP litigation

2015 Update

This is the fourth and final post in a series discussing the 2015 Update to the data in my forthcoming article, IP Litigation in United States District Courts: 1994 to 2014 (Iowa Law Review, forthcoming 2016). You can read the 2015 Update in serial form in the posts that follow, or you can download the entire update as a pdf file from ssrn.com. See Suggested citation, Matthew Sag, IP Litigation in United States District Courts2015 Update (January 5, 2016). Available at SSRN: http://ssrn.com/abstract=2711326.

The previous post discussed recent trends in patent litigation and the true nature of the patent litigation explosion. This post concludes with an update to the data concerning the geographic distribution of copyright, patent and trademark litigation in US district courts.

4. The geographic distribution of copyright, patent and trademark litigation

In  IP Litigation in United States District Courts: 1994 to 2014, I discussed at length the geographic distribution of copyright, patent and trademark litigation. I have updated the key figures and tables from that discussion below. Figure 6 (below) illustrates how the copyright, patent and trademark litigation rankings of selected districts have varied from 1994 to 2015.

Figure 6 Copyright, Patent and Trademark Litigation Rankings by District 1994—2014

Spagetti Districts Combined

Source: Administrative Office of the U.S. Courts, PACER records, 1994—2015.

The associated tables are not particularly easy to read in this format, but I have included them for completeness. They are available in text form in the pdf version of this Update, see Matthew Sag, IP Litigation in United States District Courts2015 Update (January 5, 2016)(http://ssrn.com/abstract=2711326).

Screen Shot 2016-01-05 at 11.27.51 AM

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End of post

(3/4) 2015 Data on Patent Litigation in the US

2015 Update

This is the third  in a series of posts discussing the 2015 Update to the data in my forthcoming article, IP Litigation in United States District Courts: 1994 to 2014 (Iowa Law Review, forthcoming 2016). You can read the 2015 Update in serial form in the posts that follow, or you can download the entire update as a pdf file from ssrn.com. See Suggested citation, Matthew Sag, IP Litigation in United States District Courts2015 Update (January 5, 2016). Available at SSRN: http://ssrn.com/abstract=2711326.

The previous post discussed new data on copyright litigation and the John Doe phenomenon, this post examines recent trends in patent litigation and the true nature of the patent litigation explosion.

3. Patent Litigation

As I explained in IP Litigation in United States District Courts: 1994 to 2014, the filing data gives a misleading impression of the true extent of patent litigation because the rules relating to joinder changed in 2011 with the passage of the America Invents Act. At first glance, it looks as though there was an enormous spike in patent litigation between 2010 and 2012; however, this spike is at least partly attributable to an important procedural change brought about by the AIA. Prior to the AIA, it was common for patent plaintiffs to join multiple unrelated defendants in a single lawsuit based on a commonly-asserted patent or patents. The AIA ended this ruse and resulted in a nominal explosion of patent infringement lawsuits. Figure 4 (below) shows the number of cases filed in each year from 1994 2015 (see the gray bars) but it also shows the estimated number of defendants for each year. Essentially, prior to the America Invents Act of 2011, the true extent of litigation was disguised through permissive joinder of unrelated (or tenuously related) parties. This practice was particularly common in the Eastern District of Texas, the patent troll’s favorite hunting ground (see Figure 5 (below)). Note that although the trend in patent case filings is more or less flat between 2012 and 2015, the number of patent defendants has sharply declined over the same period.

Figure 4 Patent Cases Filed and Estimated Number of Defendants, 1994—2015

Figure 5

Source: Bloomberg Law, 1994–2015. Bar chart depicts cases filed. Scatterplot depicts estimated number of defendants. Quadratic fit lines from 1994 to 2010 and 2012 to 2015 are drawn for illustrative purposes.

The data underlying Figure 4 is also presented in tabular form below.

Table 4 Patent Defendants 1994—2015

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Figure 5 Average Number of Patent Defendants per Filing 1994–2015

figure 6

Source: Bloomberg Law, 1994–2015.

Figure 5 (above) shows the estimated number of defendants per suit for the nine most popular federal districts from 1994 to 2015 and also for an aggregation of all other districts. The vertical dashed line is set to 2011 to mark the passage of the AIA. It is starkly apparent that the trend toward more defendants was driven by the Eastern District of Texas. The estimated number of defendants in Eastern District of Texas climbed steeply from 1.66 in 1994 to 12.37 in 2010 and then dropped precipitously down to 1.99 in 2014. It has fallen further in 2015, to 1.90 defendants per suit.

End of post.