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With Kafkaesque Flourish, the Eastern District of Texas Penalizes Parties for Following the Rules

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In the wake of the Supreme Court’s June 2014 decision in Alice v. CLS Bank, most courts have been quickly and efficiently getting rid of patents that improperly claim “abstract ideas.” In Alice, the Supreme Court held that “abstract ideas,” without more, were unpatentable under 35 U.S.C. § 101. According to one source, at least 150 patents have had claims invalidated as “abstract” since Alice. Those accused of infringing these invalid patents have regularly filed motions to dismiss at the outset of a case, having the issue heard before too much time and energy is spent. Courts have, for the large part, embraced these “Alice motions” and invalidated abstract patents as soon as practicable.

But one district court seems determined to buck this trend. Unfortunately, it is also the court where over 44% of this year’s new patent cases were filed: the Eastern District of Texas.

As we recently detailed, in the Eastern District of Texas the party accused of infringement needs permission to file an Alice motion at the beginning of the case (despite Federal Rules that say the contrary). This has the effect of delaying what could be a quick and efficient resolution of the case, causing the parties to continue with a case that may well end with an invalidated patent. For a defendant, this can mean high discovery costs that effectively force it to settle.

An Eastern District of Texas order from last week perfectly illustrates this problem. In that case, a group of pharmacies and grocery stores is being sued by a patent owner with a family of patents relating to processing discounts. These patent claims appear to be vulnerable to a challenge under Alice.

Following the Eastern District of Texas’s unconventional rules, the defendants filed a letter asking permission to file their Alice motion. Given the potential for wasted time, effort, and money, the defendants very shortly thereafter filed a motion for a stay of the case while the court decided the issue of whether the asserted patent claims are invalid under Alice. The patent owner did not oppose the motion to stay. Presumably the patent owner also recognized that it was more efficient to hear the issue at the outset, without incurring costs that may prove to be wasted if the Alice motion is granted.

The court refused to stay the case. This is the entirety of the reasoning (with emphasis added):

On August 4, 2015, Defendants filed an Unopposed Motion to Stay Discovery and Continue All Deadlines Pending Resolution of Statutory Subject Matter Issues (ECF 24). Defendants filed a letter brief on July 23, 2015, requesting permission to file a Motion for Judgment on the Pleadings for invalidity of the patents in suit under 35 U.S.C. § 101. Defendants assert that a stay of this case pending resolution of the § 101 issues will avoid unnecessary expense and resources if they are permitted to file their motion and it is granted. Notably, however, the dispositive motion has not yet been filed. Stopping the forward progress of this case before the motion is even filed or considered is counterproductive. The statutory subject matter issues Defendants seek to raise will be considered in due course.

This seems practically Kafkaesque: the parties don’t get a stay because they haven’t filed a motion that the court itself prevented them from filing.

Incredibly, later that same day the court gave the defendants permission to file their Alice motion. In summary: no stay because no Alice motion (because the defendants followed the court’s rules and filed a letter asking permission instead of a formal motion) but now there’s going to be an Alice motion but no stay.

We’re glad to see the court allowed the defendants to file their Alice motion (even though we don’t think permission is needed in the first place), but we’re disappointed the court chose to impose unnecessary costs that no party wanted. This outcome makes no sense and seems to be a product of the Eastern District of Texas’s peculiar and likely improper rules.

This was just one decision by one judge in the Eastern District of Texas. But as a recent paper explains, collectively the rules and practices of the Eastern District of Texas are a form of “forum selling” that works to disadvantage patent defendants and privilege patent trolls. Congress needs to act. We need venue reform now.  

 

 

Files:  AMS v. CVS - CVS Letter Brief Requesting Permission to File Alice Motion AMS v. CVS - Order Denying Stay Pending Alice Motion AMS v. CVS - Order Granting Permission to File Alice Motion AMS v. CVS - CVS Unopposed Motion to Stay Pending Alice MotionRelated Issues: PatentsLegislative Solutions for Patent Reform
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TVEyes Wide Shut: Ruling on Broadcast Archiving Service Undermines Fair Use

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A great decision on the fair use of radio and TV excerpts has been followed up by a troubling one that walks back some of the protections for new and innovative uses of media. Two years ago, Fox News sued a company called TVEyes, which creates a text-searchable database of broadcast content from thousands of television and radio stations in the United States and worldwide. It’s used by journalists, scholars, and political campaigns to study and monitor the national media. Last September, the court ruled that the service was for the most part engaging in fair use, but wanted to know more about certain features. Yesterday, the decision on those features came out. And it’s not good.

The court had asked for briefing on TVEyes customers’ ability to archive video clips; the ability to share links to video clips via email; the ability to download clips; and the ability to search for clips by date and time (as opposed to keywords). Although the court found the archiving feature to be a fair use, it found the other features to be “infringing.”  

The Ability to Archive

First, the court recognized that people couldn’t effectively comment on the media without the ability to archive video clips and store them over a long period of time. This is surely true. It would be impossible, for example, to comment on the evolution of a newscaster’s reporting on a topic without the ability to return to comments potentially made many years earlier.

The Ability to Share Links

The court then considered the ability for users to share links to TVEyes videos. The court found that although sharing links in some circumstances was okay (for example, a Congressional staffer showing the clip to their boss), it found that there was “potential for abuse” in that the link could also be shared with a friend. Therefore, the court concluded that the link-sharing feature was not fair use.

But this doesn’t make sense under current copyright law. That a TVEyes user might use a link in a way that the court thinks would lead to infringement doesn’t eliminate TVEyes’ own claim to fair use.

Sharing a link, in and of itself, is not an infringement, because it’s not a reproduction, distribution, or performance of any work. If anything, the ability to share a link might be seen as either (1) contributory infringement or (2) inducement of infringement, if someone later used that link to make a non-fair, unlicensed use of the video. Fox didn’t even raise a claim for contributory infringement or inducement, much less prove one.

It is clear why, as there are obvious “substantial non-infringing uses” of the link—the court itself recognized that—so linking falls squarely into the Supreme Court’s Sony Betamax doctrine, making any claim for contributory infringement a non-starter. The rule that creating a tool with substantial non-infringing uses doesn’t give rise to contributory infringement has been a bedrock of innovation. Besides the videocassette recorder that was the subject of the Sony Betamax case, it’s quite likely that the iPod, the digital video recorder, and many vital Internet applications would not have been brought to market without it. That’s why ignoring the Sony Betamax rule in this case is very concerning.

As to inducement, the court pointed to nothing that would meet the high standard of MGM Studios v. Grokster. In Grokster, the Supreme Court held that in order to be liable for inducing infringement, there has to be intent to infringe, shown through purposeful conduct such as affirmatively encouraging others to engage in infringing, non-fair uses. Nothing in the TVEyes decision comes close to a finding of intent to infringe.

Alarmingly, the court seemed to think that if TVEyes could stop certain uses the court viewed as infringing, the court would view the ability to share links as a permissible feature. This is a dangerous ruling, and it’s not what the law says. TVEyes should not be forced to become copyright cop solely because someone else may use a link in a way the court doesn’t like. Moreover, technology cannot discriminate between fair and infringing uses, so the court’s prescription would require TVEyes to do the impossible.

The Ability to Download

Continuing, the court looked at the ability for users to download clips. It found this functionality was impermissible, because even though TVEyes’ use of copyrighted content was transformative in allowing users to search and monitor news, and even archive that news, downloading was not essential to carrying out those fair uses. Specifically, the court held that because the Internet exists, there is no need to download (the user can always return to the site). This doesn’t make sense. There are many instances where the Internet is not available (one only needs to travel to see that’s true) or where services hosting content go out of business.

Regardless of whether the Internet is in fact truly ubiquitous, archiving on TVEyes’ servers isn’t materially different from archiving on users’ own machines if the purposes for which TVEyes (and its users) engage in viewing is fair. Of course, a new copy is being made when a user downloads that work. But if TVEyes’ original capture and storage of the video is fair use (as the court already found), and the downloaded copy is being used for exactly what the court considered to be fair, namely reporting and commenting on the news, the fact that some users may use that function to engage in acts that would infringe copyright cannot change TVEyes’ fair use into an infringement.

To illustrate the absurdity of this, under the court’s reasoning, it would seem that any webpage that relies on fair use is potentially nonetheless liable for infringement, given that web browsers allow for pages to be saved for offline reading and cannot technologically restrict users from using copyrighted portions of a page in infringing ways.

Again, this determination seems contrary to the Supreme Court’s decision in Sony Betamax. The district court viewed downloading by users as potentially violating copyright because those users might “distribute freely.” Not only did the court ignore the substantial non-infringing uses of the downloading features, it ignored a central factual determination in Sony Betamax. In that case, the Supreme Court found that the ability of users to record shows on a videocassette recorder to watch later was a fair use, even though some users may be recording shows in a way that could violate copyright law.

The Ability to Search by Date and Time

Finally, the court considered the ability for users to search clips by date and time, rather than keywords, to be impermissible. The court found that because date and time search is a “content delivery tool for users who already know what they seek,” the use is not “transformational” as the user can merely “procure the desired clip from Fox News.” In reality, we doubt Fox News is in the habit of selling clips to those who intend to criticize it. In fact, the court itself noted that licensees of Fox clips must promise not to cast Fox in a negative light.

More importantly, it is immaterial that date and time searching allows users to find what they already know exists. Knowing something exists and using a tool like TVEyes to access it does not change the underlying purpose of criticizing and analyzing the media. The court’s decision is akin to outlawing a card catalog at the library organized by author and title because the patron could just go to the rightsholder and buy a copy of the work.

Furthermore, searching by date and time can be extremely important. News stories evolve over time, and the ability to analyze that evolvement is critical to being able to analyze the media. Historical events happen at particular times. A search for the news reports about the attacks of September 11, 2001 on that date is much different than news reports from 10 years later.

Overall, the court’s opinion misses the mark in its analysis. EFF, along with New York University’s Technology Law and Policy Clinic, filed a fried-of-the-court brief relating to this decision on behalf of the Nation’s Eric Alterman, Columbia University’s Victor Navasky, the media watchdog Fairness and Accuracy in Reporting (FAIR), and the production company Brave New Films. We’re disappointed that the court ruled the way it did, and we hope the court’s analysis is reversed by the appeals court.

 

Files:  Fox News v TVEyes - Order on Cross Motions for Summary JudgmentRelated Issues: Fair Use and Intellectual Property: Defending the Balance
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Concerning Containers' Connections: on Docker Networking

LXer -

Containers can be considered the third wave in service provision afterphysical boxes (the first wave) and virtual machines (the secondwave). Instead of working with complete servers(hardware or virtual), youhave virtual operating systems, which are far more lightweight.

Senators Looking to Add Bad CFAA Amendments to Bad Cybersecurity Bill

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Sometimes bad things get even worse. 

The news out of Washington is that when Congress comes back into session in September, Senator Sheldon Whitehouse will try to add some bad Computer Fraud and Abuse Act (CFAA) amendments onto the already awful cybersecurity bill.

EFF has long been critical of the CFAA, especially after the horribly misguided prosecution of our friend Aaron Swartz. EFF proposed common sense changes to the law and many of them were included in “Aaron's law,” recently reintroduced. We had hoped that Congress would embrace Aaron’s law as a first step to stem the ongoing problem of overzealous prosecutors misusing the current CFAA. There is increasing recognition across the political spectrum that the endless ratcheting up of criminal penalties is highly problematic, especially for nonviolent offenses such as those created by the CFAA. These overburden our taxpayer-supported prison system and lead to prosecutors pressuring people into accepting unfair plea agreements. President Obama has joined with Senate Republicans in calling for reconsideration of this approach and the CFAA should be high on the list of statutes that should have penalty schemes reconsidered and reduced.

Unfortunately, it seems that the spate of recent data and security breaches that put the Cybersecurity Information Sharing Act (CISA) on a political fast track has encouraged Congress to ignore CFAA reform and instead consider dangerous and unnecessary CFAA expansion. The Whitehouse amendment that may be introduced in September is less sweeping than an earlier proposal from Whitehouse and Senator Lindsey Graham, but it’s still bad.

First, the amendment would add an entirely new provision that increases criminal penalties by 20 years for persons convicted of existing CFAA felonies that cause or would result in ''aggravated damage to a critical infrastructure computer." This "aggravated damage" provision is appallingly vague, because it’s unclear what counts as “critical infrastructure” in the first place. The statutory definition at 42 U.S.C. § 5195c(e) could be read to include almost any system: “the term ‘critical infrastructure’ means systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters.” People subject to this vague provision are also ineligible for probation.

Second, the amendment changes the mental state required for trafficking in passwords or similar information through which a computer may be “accessed without authorization”—an already controversial and problematic phrase under (a)(6) of the CFAA. It also removes this charge from the one-year penalty limit for first offenders, meaning that one violation can bring the hammer down. Under Senator Whitehouse’s amendment the mental state required is reduced from “knowingly and with intent to defraud”  to merely whether the person knew “such conduct to be wrongful.” Whatever that means (and we don’t), it’s obviously broader than the requirement that someone have intent to defraud. We’re told that this is intended to stop trafficking in botnets, but whatever its intention, it’s going to make it easier to prosecute anyone and increase the penalties they face. The new provision would also require that the person had “reason to know” that a protected computer would be accessed or damaged “without authorization” in violation of the CFAA by such trafficking, but that doesn’t really add anything to the standard.

We cannot stress enough that these changes will not help us against actual cybercrime. They won’t harden our computer systems or protect Americans from truly malicious actors. Instead, it will just give prosecutors more power to threaten more people with more prison time under the already vague underlying law. Senator Whitehouse should take this time during the recess to check out Aaron's law and the work EFF and others have done. The CFAA must be reformed, but not in the way he proposes.

Related Issues: Computer Fraud And Abuse Act ReformRelated Cases: United States v. David NosalOregon v. Nascimento
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"Sensationalized Cruelty": FCC Complaints Regarding Game of Thrones

Slashdot -

v3rgEz writes: As a cable channel, the FCC has little to no jurisdiction over HBO's content. That doesn't stop people from complaining to them about them, however, and after a FOIA request, the FCC released numerous complaints regarding the network's Game of Thrones. While there were the usual and expected lamentations about 'open homosexual sex acts,' other users saw Game of Thrones as a flashpoint in the war of Net Neutrality.

Read more of this story at Slashdot.

Next-gen Asus Zenbook UX305 to feature Core M Skylake CPU

Liliputing -

The Asus Zenbook UX305 made a bit of a splash when it launched earlier this year thanks to the thin-and-light laptop’s combination of a low price tag and surprisingly strong specs. Now it looks like Asus is getting ready to launch an updated model featuring Intel’s next-gen Core M processor based on “Skylake” architecture. Like […]

Next-gen Asus Zenbook UX305 to feature Core M Skylake CPU is a post from: Liliputing

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