Cyberlaw Cases » Contract

“Medical Justice” promotes legally and ethically suspect doctor-patient copyright agreement

Jason — Tue, 01 Jun 2010 01:01:40 +0000

In today’s New York Times, there is an excellent article on the ongoing battle between companies and consumers over online criticism. In addition to discussing the various lawsuits that have been brought, the article also noted the following:

Recognizing that lawsuits can bring more unwanted attention, one organization has taken a different tack. The group Medical Justice, which helps protect doctors from meritless malpractice suits, advises its members to have patients sign an agreement that gives the doctor copyright over a Web posting if the patient mentions the doctor or practice.

Dr. Jeffrey Segal, chief executive of Medical Justice, said about half of the group’s 2,500 members use the agreement.

“I, like everyone else, like to hear two sides of the story,” he said. “The problem is that physicians are foreclosed from ever responding because of state and federal privacy laws. In the rare circumstance that a posting is false, fictional or fraudulent, the doctor now has the tool to get that post taken down.”

This so-called “agreement” strikes me as both legally and ethically suspect. Not only does copyright law generally require written assignments of copyright to be for some kind of payment (what is the payment here? The medical treatment? I thought that was what health insurance and co-pays were for?) but unless it is a work-for hire or some other kind of ongoing employment relationship, you generally can’t force people to assign their copyright in a web posting before it is written.

Moreover, such an agreement seems unethical under the American Medical Association Ethics Code. AMA Ethics Opinion 8.03 states:

Under no circumstances may physicians place their own financial interests above the welfare of their patients. The primary objective of the medical profession is to render service to humanity; reward or financial gain is a subordinate consideration. For a physician to unnecessarily hospitalize a patient, prescribe a drug, or conduct diagnostic tests for the physician’s financial benefit is unethical. If a conflict develops between the physician’s financial interest and the physician’s responsibilities to the patient, the conflict must be resolved to the patient’s benefit.

Since the main concern of Medical Justice appears to be preventing harm to the physician’s reputation (and thus financial interest), forcing patients to assign away their copyrights in exchange for medical care strikes me as close if not over this line. It certainly is not putting patients first. When a patient goes to see a doctor, they are often anxious, in pain, or worried and thus in a very psychologically vulnerable position, or what the law often calls a position of “duress” where they will often sign documents without giving them proper consideration. This hardly seems to me to be a fair time to demand they assign some unknown number of future copyrights to their doctor; instead it feels like a huge power grab by the physician.

Moreover, as Dr. Segal states in the article, these so-called “assignments” of copyright become a “tool” to take posts down from the Web. One can surmise that he intends for these doctors to invoke the notice-and-takedown provisions of Section 512 of the DMCA as a convenient way to censor criticism and cajole websites like Yelp! to remove the postings. However, this too strikes me as unethical and a potential abuse of the DMCA system. The DMCA takedown system was meant to allow copyright owners whose works were being posted online by others and costing them sales of copyrighted goods (e.g. movies and music) to enjoy an expedited process for stopping infringement and limiting economic harm to their content.

Here, it is clear that these web postings have no economic value as content to the physicians — rather they are, at best, potentially harmful to their reputations (note again, though, that this would likely be a violation of their ethical duty either way).

I should note that much of this is speculation on my part. I have not seen this so-called agreement and have not heard of any doctor taking things off the web based on it; but it does strike me as ironic that a group like Medical Justice, which proclaims its mission as “relentlessly protecting physicians from frivolous lawsuits” would embrace and endorse potentially frivolous, unethical, and abusive legal documents and actions to further its goals.

Court rules (again) that Vernor can sell Autodesk software

Brian — Thu, 01 Oct 2009 21:23:04 +0000

Case and Court:

Vernor v. Autodesk, Inc. (W.D. Wash.).

In this blog’s previous coverage of the “Copy Ownership Cases,” I attempted to briefly summarize three important cases where ownership of copies is critical and so did not delve into a detail relevant to this update.

The decision in Vernor v. Autodesk from May of 2008 was a decision on Autodesk’s motion to dismiss the case. Motions to dismiss are among the first motions one might file in a federal case and occur prior to the exchange of documents or the deposition of witnesses that occurs during the discovery process. Typically once that discovery process is complete, the parties may bring motions for summary judgment in which a party will argue that, based on the undisputed facts, and resolving any disputed fact in favor of the other party, the court can simply apply the law to those facts and rule in their favor. In a grand demonstration of the ability of opposing lawyers to take on diametrically opposed world views, parties often both file such summary judgment motions, which are called “cross-motions” for summary judgment.

Such cross-motions for summary judgment were filed in Vernor v. Autodesk and the court held oral argument on the motions on Tuesday, Sep. 29, 2009. A few news outlets covered the oral argument: PC World, Zeropaid, Slashdot.

With somewhat dizzying speed, the court issued its opinion on the cross-motions for summary judgment the next day, Sep. 30, 2009. Having seventeen months to consider any new developments, the court was obviously not persuaded that anything important had changed as it reached the same conclusions for the same reasons, and directed the clerk to enter final judgment for Vernor.

The court’s opinion is, like its earlier opinion, careful, methodical, well-researched, and thorough. So many courts addressing the issue of copy ownership have dispensed with the question just by noting that software distributors claim to merely “license” and not to sell their software. The Vernor court finally cuts through this misleading way of framing the question by noting that “the use of software copies can be licensed while the copies themselves are sold.”

The court explains again why the Ninth Circuit precedent that it is bound to follow, United States v. Wise, requires the result that Vernor is the owner of the copies of the software. “Wise requires the court to look at a transaction holistically, and the court finds no basis for the conclusion that an agreement to permit perpetual possession of property can be construed as reserving ownership.” This is the key factor in copy ownership cases: perpetual possession. When a transaction results in an individual being entitled to perpetual possession of the copy, as was the case for Vernor, then courts should find that such individuals are owners of their copies, entitled to a “first sale” right to resell the copy if they so choose.

Autodesk now has to decide whether to appeal this ruling and has to do so without the benefit of Ninth Circuit guidance in UMG Recordings, Inc, v. Augusto, which has all the briefs filed but has not yet had oral argument and MDY Industries LLC v. Blizzard Entertainment, Inc., in which the briefing on appeal is still ongoing. Decisions in either of these cases could greatly clarify how things will go for Vernor and Autodesk, but the Ninth Circuit’s decisions in these cases are likely over a year away. However, the Vernor court has now, twice, provided a valuable roadmap for future courts that address the issue of copy ownership.

The Copy Ownership Cases

Brian — Mon, 31 Aug 2009 15:03:13 +0000

Cases and Courts:

UMG Recordings, Inc. v. Augusto (C.D. Cal.), appealed to (9th Cir.).
MDY Indus. LLC v. Blizzard Entm’t, Inc. (D. Ariz.), appealed to (9th Cir.).
Vernor v. Autodesk, Inc. (W.D. Wash.).

Background

The so-called “license versus sale” distinction that arises with respect to copies of software or music will confront the Ninth Circuit in three upcoming cases. In UMG Recordings, Inc. v. Augusto,¹ the district court found that, notwithstanding “not for resale” labels, the initial recipients of “promo CDs” owned them and were thus entitled to sell the CDs to others.

In MDY Indus. LLC v. Blizzard Entm’t, Inc.,² the district court held that purchasers of Blizzard’s World of Warcraft software are not owners of their copies of the software, and hence are not entitled to a Section 117 defense that would allow the owner of a copy of a computer program to make a copy of the program, provided such copy is created as an essential step in the utilization of the program.

Finally, in Vernor v. Autodesk, Inc.,³ the district court found that the transfer of Autodesk’s AutoCAD software to a third-party was a sale, and that Vernor, having acquired AutoCAD from the third-party, could invoke the first sale doctrine in order to resell his copies of AutoCAD on eBay without liability for direct or indirect copyright infringement.

These cases present the Ninth Circuit with multiple opportunities to revisit its decisions in the license versus sale context. The Vernor court wrote that these precedents are in irreconcilable conflict, which it could only resolve by following the earliest precedent.

What’s at Stake?

In a forthcoming article that I presented at the Ninth Annual IP Scholars Conference, I argue that that the Augusto and Vernor courts reached the correct outcomes and that the Blizzard court erred. The Augusto and Vernor decisions, through a faithful adherence to precedent, also represent an interpretive breakthrough in an area of law fraught with misguided approaches. By recognizing what is right in these decisions and what has gone so wrong in other cases, we can see not only how to reach the correct result in Blizzard, but how best to resolve the recurring question of when title to a copy passes to a transferee, giving rise to first sale and § 117 rights. Those rights are an essential part of the balance Congress struck between the users of copyrighted works and copyright owners.

Copy Ownership

It is critical to understand that the question before these courts has nothing to do with ownership of the underlying copyrights. Rather, the issue is whether Augusto, Vernor, or retail purchasers of World of Warcraft are “owners of” or “have title to” the physical DVD-Roms and/or CDs that they rightfully possess. Yes, we are talking about the ownership of shiny circles of plastic.

If you are shocked to learn that it takes a federal court to sort out who owns a copy of a DVD, you should be more shocked to learn that federal courts typically cannot figure it out either. In my extensive review of these cases, I have come across between four and six different approaches to the question (depending on how you count) taken by various courts. Shouldn’t there be a single straight-forward way to answer the question of who owns a tangible thing like a CD?

I argue that the correct approach to determining copy ownership:

must be logically correct;
must respect precedent;
must respect congressional choices; and
would hopefully make sense.

That is, courts must not equivocate with respect to the word “license,” must recognize the possibility of ownership of a copy independent from ownership of the copyright, must respect Supreme Court precedent, and should seek to harmonize Circuit Court precedents. Courts should also heed the warning of the Supreme Court’s recent Quanta Computer⁴ decision, must recognize the limiting role played by §§ 107-122 and examine whether contrary contractual provisions are federally preempted, and should preserve as far as possible the national uniformity copyright law seeks.

Well-reasoned Opinions to the Rescue

To make a long story short, the Augusto and Vernor opinions were breaths of fresh air in an area of law that had succumbed to a stench of inconsistent and illogical opinions. They achieved this breakthrough by relying on, and carefully understanding, the two key precedents on copy ownership in the Ninth Circuit: United States v. Wise⁵ and Microsoft Corp. v. DAK Indus.⁶

Particularly with respect to Wise, the Augusto and Vernor courts realized that the Wise court had placed special emphasis on the critical factor of perpetual possession. Of course, this is something that every teenager that shops at a Blockbuster Video store understands too: If I have to give it back, then I don’t own it, but if I don’t have to give it back, then I do.

When looking to the critical factor of perpetual possession, the Augusto and Vernor courts found that the record companies and Autodesk had parted with possession of the tangible discs forever, leaving the rightful possessors of those discs with the ability to use and keep them forever, or if so disposed, to throw them in the trash. Individuals with such rights must also be considered “owners” of these copies for purposes of the first sale doctrine.

Why MDY Indus. LLC v. Blizzard Entm’t, Inc. should be reversed

Blizzard distributes copies of World of Warcraft (”WoW”), a multiplayer online game, at most software and video game retailers for a one-time fee. Players also pay a monthly fee for online access. MDY sold “Glider” a software program called a “bot” that automated play of WoW. WoW is
governed by a EULA and TOU that players must agree to before playing. These agreements forbid, among other things, the use of bots. Blizzard alleged that users of WoW are licensees who are permitted to copy the copyrighted game client software only in conformance with the EULA and TOU, and that when users launch WoW using Glider, they exceed the license in the EULA and TOU and create infringing copies of the game client software.

Nothing about Glider enables copying of the software that was not already possible. Instead Blizzard’s theory is that Glider users make a copy of the software in RAM when they run WoW and that RAM copy is only permissible if the EULA and TOU are followed. But, the EULA and TOU are violated by Glider users, because those agreements forbid the use of bots. Under Blizzard’s view, if the EULA/TOU are violated, then any use of WoW (that creates a RAM copy)—even by the individual that purchased it—is an unauthorized infringement.

However, this argument falls apart if Blizzard users are owners of their copies of WoW, because Congress already gave owners of copies of software the right to make RAM copies in § 117 and no license from Blizzard is required. The district court held (without a serious discussion of the Wise or DAK Indus. precedents) that WoW purchasers were not owners of their DVD-ROMs. This was an error.

Purchasers of Blizzard’s WoW pay a single amount up front for the client software and nothing in Blizzard’s EULA or TOU reflect a requirement that WoW purchasers return the software to Blizzard after any specified period. It is theirs to keep, destroy, or give away for as long as they like. Under the approach demanded by controlling Ninth Circuit precedent, this leads to the conclusion that WoW purchasers are owners of their copies. As owners of copies, they are entitled, under § 117(a)(1), to make another copy of WoW, provided that such a new copy is created as an essential step in the utilization of WoW in conjunction with a machine and that it is used in no other manner. When an owner of a copy of WoW runs WoW in conjunction with Glider, a RAM copy of WoW is created as an essential step in the utilization of WoW in conjunction with their computer and that RAM copy is used in no other manner. The creation of the RAM copy is an essential step in the utilization of WoW in conjunction with their computer, because the creation of RAM copies is an automated process that necessarily occurs in the utilization of any program. WoW simply could not be utilized at all in conjunction with a computer without the creation of a RAM copy, thus the creation of RAM copies are an “essential step” in the utilization of WoW in conjunction with a computer. The RAM copy is used in “no other manner” because using the RAM copy is the only way to use WoW in any manner in conjunction with a computer. The “no other manner” requirement seems motivated by an interest in preventing the creation of infringing copies and Glider is not a cracking or copying tool that enables infringement.

Thus, if WoW users were entitled to make RAM copies of WoW under § 117, then even if such users breached their agreement with Blizzard with respect to using bots, they were not direct infringers of Blizzard’s copyright, and hence MDY Indus. is not liable for secondary infringement. This result is reasonable because it is profoundly odd that assisting someone to break the rules of a game would constitute secondary copyright infringement. No one likes cheaters, but that doesn’t mean they are copyright infringers.

Conclusion

The Augusto and Vernor opinions are such an improvement over other cases in this space that it will be truly disheartening if the Ninth Circuit disturbs the progress made in these cases. They should affirm these decisions and direct future courts to look to the critical factor of perpetual possession when asked to determine copy ownership. The Blizzard case is complex, and I actually will be surprised if the Ninth Circuit is able to cut through the numerous issues and see that the fatal error in the district court’s opinion was in its resolution of copy ownership. But, I’ll have my fingers crossed.

Intermediate Copying to Extract Information

Jason — Mon, 31 Aug 2009 15:01:42 +0000

Case and Court:

Facebook, Inc. v. Power Ventures, Inc. (N.D. Cal.)

Background:

This lawsuit involves Power.com, a third-party platform allegedly “scraping” content for and from users on different social network sites into a single user interface. Facebook sued Power, claiming violations of copyright, anti-circumvention regulations, CAN-SPAM, and the Computer Fraud and Abuse Act. More on the case can be found here.

Upon a motion to dismiss the case, Judge Fogel upheld the complaint, primarily addressing the copyright and circumvention claims and whether to dismiss any of the claims outright because they were based on invalid legal theories. He refused to do so based on two cases that have troubled many copyright and internet scholars: MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993) and Ticketmaster LLC v. RMG Techs., Inc., 507 F. Supp. 2d 1096 (C.D. Cal. 2007).

Fogel’s reasoning, under these cases, is that any scraping of a webpage involves copying that webpage into a computer’s memory in order to extract the underlying information contained therein. Even though this “copying” is ephemeral and momentary, he held that it is enough to constitute a “copy” under Section 106 of the Copyright Act and therefore what we lawyers call a prima facie (or “on its face”) case of infringement. Since Facebook’s Terms of Service prohibit scraping (and thus, Facebook has not given any license to third parties or users to do so), the copying happens without permission.

What’s at stake:

While there are many reasons to be concerned with this preliminary ruling and with the MAI/RMG line of cases in general, this case is worth watching for many reasons. For one, it combines several of the most controversial U.S. cyberlaw statutes – Section 1201 of the DMCA, the CFAA, and CAN-SPAM. It also has significant implications for the doctrines of both fair use and copyright misuse, as detailed below.

Fair Use

In his order, Judge Fogel does not discuss fair use directly. In fact, it’s unclear whether or not Power even raised the issue. Perhaps it is waiting for a later stage in the case, such as summary judgment. However, Fogel does discuss the core of what would be at issue in the fair use argument. When discussing the copying that is alleged, he states:

Defendants correctly assert that Facebook does not have a copyright on user content, which ultimately is the information that Defendants’ software seeks to extract. However, if Defendants first have to make a copy of a user’s entire Facebook profile page in order to collect that user content, such action may violate Facebook’s proprietary rights.¹

In other words, Fogel held that intermediate or temporary copying of FB content in order to extract non-FB content may violate FB’s copyrights. This type of argument, however, has been rejected by most courts. Intermediate copying, even extensively, of another’s copyrighted works in order to extract non-proprietary information has been found to be fair use in numerous cases, including several in the Ninth Circuit Court of Appeals, the jurisdiction where Judge Fogel resides. See, e.g., Sega v. Accolade, 977 F.2d 1510 (9th Cir. 1992) and Sony v. Connectix, 203 F.3d 596 (9th Cir. 2000).

In both of these cases, direct competitors used intermediate copying of proprietary content in order to create alternative ways of using technology and accessing information. In Sega, it was to create brand new games that worked on Sega’s Gensis console. In Connectix, it was to create a Playstation emulator for PCs so that PC users could play PS games. In finding these actions fair use, the courts emphasized that the ultimate end product of the process did not infringe any copyrights in the original copied works and that the purpose was pro-competitive — the creation of other products and platforms for users to take advantage of technology and information products. In this case, Judge Fogel will likely decide whether these cases apply to aggregation sites, with huge implications for almost all Web 2.0 companies.

Copyright Misuse

The case also raises serious copyright misuse issues. Copyright misuse is a judge-created doctrine used to curb abuse of copyright licenses. For example, in one case,² an attempt to restrict copyright licensees from creating competitive computer-aided design programs for 99 years was found to be abusive (in part because copyright only lasted 75 years at the time). The court found that the copyright owner was trying to effectively extend the term and scope of its copyright beyond what copyright law permitted, and that would prevent people from legitimately developing competitive software. The penalty was a loss of the ability to enforce the copyright.

Here, FB claims a violation of its copyrights to access user information on its website but yet concedes that they have no proprietary rights in user information. This is clearly in tension with the appearance that users, who do own whatever rights exist to the information sought, have expressly given power permission to gather this info. Again, a decision on this issue will have a significant impact on data sharing between social media sites like Facebook and others.

Anti-Circumvention Claims

The anti-circumvention claims are a bit more complicated and were less developed in the Complaint, however they seem to raise serious issues regarding the right to reverse engineer and create interoperability under Section 1201 of the Copyright Act. Moreover, as the court recognized, if there is no underlying copyright infringement, the case for a violation of the anti-circumvention laws is much weaker. See Chamberlain v. Skylink, 381 F.3d 1178, 1203 (Fed. Cir. 2004). This issue is a bit of a lurker at this point, but still one to watch.

Cyberlaw Cases » Contract

“Medical Justice” promotes legally and ethically suspect doctor-patient copyright agreement

Court rules (again) that Vernor can sell Autodesk software

Case and Court:

See Also:

The Copy Ownership Cases

Cases and Courts:

Background

What’s at Stake?

Copy Ownership

Well-reasoned Opinions to the Rescue

Why MDY Indus. LLC v. Blizzard Entm’t, Inc. should be reversed

Conclusion

See also:

Footnotes

Intermediate Copying to Extract Information

Case and Court:

Background:

What’s at stake:

Fair Use

Copyright Misuse

Anti-Circumvention Claims

See also:

Footnotes