The Looming Liability of ISPs

Internet service providers (ISPs) are traditionally protected under the Digital Millennium Copyright Act’s (DMCA) section 230 safe harbor for most copyright infringements committed by a user of their service. There are several stipulations that ISPs have to follow in order to get the safe harbor, one of which is to have a “repeat infringer” policy. This policy encourages ISPs to terminate services to users who use the services to repeatedly infringe another’s copyright. The statute lacks a definition of “repeat infringer,” and it is unclear exactly who decides when services should be terminated. BMG v. Cox Communications, decided in November 2014, dealt with this issue. BMG, through their third party RightsCorp, sent millions of notifications to Cox informing it that users were using its service to illegally download BMG’s music. Cox ignored the notifications and did not terminate its users’ Internet services. The judge found this was enough to push Cox out of the safe harbor, and a federal jury found Cox liable for $25 million in damages. Cox’s appeal is currently up in front of the 4th Circuit, and its decision could have a major impact on the way ISPs and rights holders interact. Cox (and supporters like the Electronic Frontier Foundation) are arguing that the decision is an unprecedented shift of power to rights holders like BMG. Not only can BMG charge a user individually for copyright infringement, but it can also force an ISP to terminate the user’s Internet connection. With the ever growing importance of the Internet, termination is a very serious consequence, one that should not be taking lightly. ISPs will have to work...

Can the FTC Protect Us From Fake News?

In September 2016, the Second Circuit handed down its decision in FTC v. LeadClick Media, LLC, holding the operator of an affiliate-marketing network liable for the fake news published by its affiliates. This case could serve as a tool in combatting fake news stories that have plagued social media and caused real-world problems (like Pizzagate) in recent years. While this Second Circuit decision is unlikely to solve the problem of fake news stories on social media, it is a step in that direction. The Case In the case, a generator of fake news was denied protection of the Communications Decency Act. The CDA protects Internet service providers from being held liable as publishers of material posted on their sites by third parties. Until 2011, LeadClick operated an affiliate-marketing network to provide advertising to online businesses. The affiliates advertised in various ways, including by creating advertising websites. In August 2010, LeanSpa, a company that sold purported weight-loss and colon-cleanse products over the Internet, hired LeadClick to provide advertising through its affiliate network. Some of these affiliates created what the court called “fake news sites,” which looked like genuine news sites with reporters discussing, what they claimed to be, their own experiences and comments from satisfied users. However, all of the content on these websites was fabricated. The court held that LeadClick was not entitled to immunity under CDA §230(c)(1) because CDA had helped develop the deceptive content and was not merely a publisher of third party content. Without CDA immunity, LeadClick could be held liable for its affiliates’ false and deceptive advertising practices. Our Salvation? Hardly. By denying LeadClick CDA immunity, the...

How the SEC Really Feels About High Frequency Trading

For fans of Michael Lewis’s Flash Boys, the SEC would like you to know that things are going splendidly on the high frequency crackdown front. In January 2015 alone, the agency brought three high frequency trading (HFT) suits against different sharks in the securities market. One such shark is high frequency trader Aleksandr Milrud. Milrud layered trades for approximately two years starting in January 2013. Around the globe, Milrud’s recruits used HFT to fraudulently inflate and deflate stock prices to profit upon buying and selling at the altered price. To clear up any lingering confusion on the part of the SEC’s confidential broker informant, Milrud actually referred to the artificial price pressure as “the dirty work.” Milrud further explained that he usually wired his illicit profits to an offshore bank account and later met with an individual who would give him a suitcase full of cash. The SEC’s complaint confirms that the agency believes “Milrud’s layering scheme was very lucrative. In the course of soliciting the [confidential informant’s] participation in his scheme, Milrud stated that one of his trading groups generated profits of approximately one million dollars per month.” Indeed, the complaint later outlines two examples of Milrud’s profiteering activities: Exhibit 1 involved an order that resulted in a $72.28 profit for the trader. Exhibit 2 clocked in a bit more conservatively at $60.74 worth of illegal profits. Milrud even “directed a wire transfer of $5,000 to a bank account located in New Jersey. The purpose of the transfer was to fund a trading account . . . so that Milrud’s traders could use the account to engage in layering.”...

Obama Administration to Weigh in on Google v. Oracle Java Dispute

Last month, the Supreme Court invited input from the Department of Justice regarding the ongoing Java dispute between Google and Oracle, asking for advice on whether the Court should hear the case. According to the Court’s memo, U.S. Solicitor General Donald Verrilli, Jr. “is invited to file a brief in this case expressing the views of the United States.” Technology Analyst Al Hilwa calls this a “true 2015 nail-biter for the industry” because “[t]his is a judgment on what might constitute fair use in the context of software.” The dispute between Google and Oracle began in 2010, when Oracle sued Google seeking $1 billion in damages on the claim that Google had used Oracle Java software to design the operating system for the Android smartphone. Google wrote its own version of Java when it implemented the Android OS, but in order to allow software developers to write their own programs for Android, Google relied on Java Application Programming Interfaces (“APIs”). These APIs are “specifications that allow programs to communicate with each other,” even though they may be written by different people. Oracle alleged that Google copied 37 packages of prewritten Java programs when it should have licensed them or written entirely new code. Google responded with the argument that such code is not copyrightable under §102(b) of the Copyright Act, which withholds copyright protection from “any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in [an original work of authorship].” Google also argued that the copied elements were “a key part of allowing...

CVSG Filed in Commil: Is This Yet Another “Fundamental Misunderstanding” of Patent Law by the Federal Circuit?

On June 2nd, the Supreme Court unanimously reversed the Federal Circuit’s decision in Limelight Networks, Inc. v. Akamai Technologies, Inc. The Court found a defendant could not be held liable for induced infringement of a patent under 35 U.S.C. §271(b) where there has been no infringement under §271(a). In the opinion, the Court had some harsh words for the Federal Circuit. The Court was uncertain why, despite the “simple truth” that liability for inducement must be predicated on direct infringement (to which all parties and the Federal Circuit agreed), the Federal Circuit nonetheless continued its analysis. Ultimately, the Court felt that “the Federal Circuit’s analysis fundamentally misunderstands” method patent infringement.  The amicus brief filed by the Government on October 16th in Cisco Systems, Inc. v. Commil USA, LLC suggests that if and when the Court considers the case, it might reject the Federal Circuit’s decision with comparable vigor. Commil alleged that Cisco both directly infringed and induced infringement of its method patent for hand-offs of mobile devices between base stations in a wireless network system. During the district court trial (the second, the first being reversed after an attempt to unfairly prejudice the jury by counsel for Cisco), the jury found for Commil on both issues and awarded $63.7 million in damages (with an additional $10.3 million awarded by the court for prejudgment interest and costs). On appeal, Cisco argued that the jury instruction on the claim of induced infringement used the language of negligence as opposed to instructing the jury on the higher scienter requirement the Court has adopted for induced infringement cases. Of greater importance, the Federal...

Appellate Review of Markman Hearings

In Markman, the Supreme Court declared that determining the meaning of patent claims, i.e. “claim construction,” is a question to be decided by the court; the Seventh Amendment right to a jury trial does not apply. Markman v. Westview Instruments, Inc., 517 U.S. 370, 372 (1996). Shortly thereafter, in Cybor, the Court of Appeals for the Federal Circuit held that de novo review applied when results from these newly-created ‘Markman hearings’ are appealed. Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448, 1451 (Fed. Cir. 1998) (en banc).   Earlier this year, the Federal Circuit granted a rehearing en banc to determine if Cybor should be overruled, and what, if any, deference should be given to a District Court’s claim construction. Lighting Ballast Control LLC v. Philips Electronics N. Am. Corp., ___F.3d___, WL 667499 (Fed. Cir. Feb. 21, 2014) (en banc). The court considered three options: (1) reaffirm Cybor and maintain de novo review, (2) overrule Cybor and declare claim construction a question of fact, or (3) adopt a “hybrid” standard of review that affords deference to the District Court’s factual determinations but preserves de novo review of the “ultimate” conclusion. Amici from industrial and technological companies advocated reaffirming Cybor. Academics and practitioners generally favored either the hybrid approach or the overruling of Cybor. Relying on stare decisis, a 6-4 majority reaffirmed Cybor.   The majority pointed out that since Cybor was decided, Congress has not acted to overturn it while enacting other patent legislation during that time. They further explained that predictability and consistency favor maintaining the status quo. Consistency is a concern particularly relevant in patent law...