ActiveVideo Seeks FiOS Shutdown: Verizon Inactive Video?

  • Verizon FiOS customers could potentially lose service due to ongoing litigation between Verizon and ActiveVideo Networks, a company that builds interactive TV applications.
  • A U.S. District Court in Virginia awarded ActiveVideo Networks $115 million based on patent infringement involving interactive applications and VOD elements. Now ActiveVideo is also seeking to shut down the entire FiOS network.
  • Based on the nature of the specific patents, Verizon could possibly shut down a portion of its services while finding a practical workaround. Verizon also plans to appeal the verdict.
  • “The ActiveVideo CloudTV platform is currently being utilized by one of Verizon’s competitors, Cablevision,” reports Digital Trends. “ActiveVideo was an early developer of video-on-demand technology over the last two decades and has turned to developing platforms for interactive applications as of late.”

UK Intends to Make Legal Personal Copying of CDs and DVDs

  • The British Parliament signaled today that it intends to legalize the copying of CDs and DVDs onto digital devices for personal use. The new law will not allow people to share content over the Internet without permission of the copyright holder.
  • The move will update Britain’s 300-year-old copyright laws, making them comparable to laws adopted in other European nations.
  • The change was recommended by a government-requested report, carried out by a professor of digital economy at he Cardiff School of Journalism.
  • The report also recommended the creation of a central digital copyright exchange where rights could be bought and sold, but the government has not signaled its intention to act on that recommendation.

Rovi Claims Hulu Infringes on Electronic Program Guide Patent

  • Rovi Corporation filed suit against Hulu last week, claiming that the video site infringes on its patents for electronic program guides.
  • Santa Clara, California-based Rovi provides technology that powers streaming services from Blockbuster On Demand and Best Buy’s CinemaNow. The company also licenses its technology to others such as Apple, Microsoft and Comcast.
  • The digital entertainment solutions provider claims that Hulu’s infringement “presents significant and ongoing damages to Rovi’s business.” The company is seeking compensation for lost license revenue and treble damages.
  • As previously reported by ETCentric, Hulu has been offered for sale by its owners (Disney, News Corp., NBC Universal and Providence Equity).

iOS Developers Unite Against Lodsys and Patent Trolls

  • Renowned iOS developer Mike Lee announced on Monday a new venture called Appsterdam Legal Defense Team that will band together the small developers to fight against patent trolls.
  • Ars Technica reports: “The goal, aside from the obvious one of being free from frivolous patent lawsuits, is to become ‘the ants of East Texas, minding their business until someone invades their anthill.'”
  • Apple has licensed patents from Lodsys, which it says covers third party developers — but the infringement claims against iOS developers are continuing.
  • The result is uncertainty that could imperil these smaller developers and the developer community generally, not only for Apple but for Android and other platforms.
  • “This is bigger than just Apple platforms,” explains Lee. “Apple has the luxury and history of moving very slowly — they accepted a 60 day discovery, for example. Dozens of app makers could be destroyed by then. There is also good chance Apple can’t actually sue Lodsys, since Apple is under contract by Intellectual Ventures and IV probably snuck indemnity in there.”
  • “We’re going after Lodsys for sure, but understand the ultimate target is Intellectual Ventures,” Lee added. “They are the Mordor to these trolls.”

Google Rolls Out Ambitious Plan to Acquire Patents

  • Google has purchased more than 1,000 patents from IBM, its most recent step in what the Los Angeles Times describes as “an arms race for patents.”
  • The acquisition is part of an effort to strengthen its intellectual-property portfolio and avoid legal assault.
  • It may also bolster the legal buffer surrounding its Android mobile OS court showdown with Oracle set for October.
  • Google has some 700 patents (mostly for search engine technology) while its competitors, especially those in the mobile industry, have thousands.
  • “Patents are instruments of war. Companies are acquiring patents to both defend their market share and to countersue competitors,” suggests technology patent valuation specialist Alexander Poltorak, chief executive of General Patent Corp. “Google neglected patents for many years because it did not realize that they were essential business tools. It can no longer neglect them.”

Hollywood Studios Win Preliminary Injunction Against Zediva

  • A U.S. District judge in Los Angeles issued a preliminary injunction against Zediva, favoring the Motion Picture Association of America in its copyright infringement lawsuit.
  • Dan Robbins, senior VP for the MPAA, calls the decision a great victory for workers in the film and television industry.
  • Zediva streams recently released DVDs to customers and claims it is no different than a brick-and-mortar rental service but operates over the Internet.
  • Judge John Walter concluded that Zediva violates the “transmit” clause of the Copyright Act. Zediva will appeal the decision.

Media Industry Groups Announce New Anti-Piracy Coalition

  • A collection of Hollywood studios and guilds this week announced the formation of “Creative America,” a non-profit grassroots organization intended to fight piracy that threatens creative jobs.
  • Creative America intends to provide a unified voice for some 2 million Americans who work in film, television, and other creative fields and believe, “that halting the looting of America’s creative works and protecting jobs must be a national priority.”
  • Members of the coalition include: AFTRA, CBS, DGA, IATSE International, NBC Universal, SAG, Sony Pictures Entertainment, Twentieth Century Fox, Viacom, Disney and Warner Bros.
  • The coalition supports a new bill before the U.S. Senate, which would allow the Department of Justice to pursue pirates overseas.
  • The group aims to provide IP protection and related information through its website and social networking entities such as Facebook and Twitter.

Law Professors Argue that Protect IP Act is Unconstitutional

  • Some 90 law professors have signed a joint letter opposing the Protect IP Act which is intended to deal with copyright infringement. The Act is currently being reviewed by Congress.
  • The letter contends that the Act’s domain-blocking provisions can be viewed as Internet censorship, which is barred by the First Amendment.
  • “The Act would allow courts to order any Internet service to stop recognizing [a] site even on a temporary restraining order… issued the same day the complaint is filed” without allowing for an adversary proceeding, which has been required by the Supreme Court.
  • Moreover, blocking an entire domain when infringing material exists in a subdomain is equivalent to “burning the house to roast the pig.”

3D Printing Technology Opens Potentially Thorny Legal Issues

  • Paramount Pictures recently issued a cease and desist order to a 3D replicator of “Super 8” cubes.
  • Todd Blatt, an engineer from Baltimore, replicates interesting devices and props he sees in movies (such as the cubes from Paramount’s “Super 8”), sends the digital models to 3D printer Shapeways, and then sometimes sells the resulting metal or plastic models to fans online.
  • New fronts in copyright law are developing as digital tools increasingly encroach on the physical world. Emergence of low-cost 3D printers and software will continue to push these issues.
  • From a copyright viewpoint, this case illustrates how 3D printers will possibly impact product licensing the way the MP3 codec impacted the music industry.
  • This may raise some interesting near future questions regarding how film props will need to be legally classified (especially in terms of patent, copyright and fair use laws).

Cloud Music Services Continue to Face Legal Questions

  • The legal debate continues regarding the divergent approaches to cloud-based music lockers proposed by Amazon, Google and Apple.
  • The 2008 Cablevision decision in the Second Circuit U.S. Court of Appeals allowed for a remote DVR feature (when done at the direction of users and separate copies were stored for each user as would be done for an in-home DVR). The decision is the strongest legal case for a music locker service.
  • EMI’s current suit against MP3tunes.com will also impact the situation. EMI asserts that music locker services must remove material if they become “aware of facts or circumstances from which infringing activity is apparent.”
  • While Apple has signed agreements with the major labels, it has not yet done so with smaller labels.
  • According to Ars Technica: “Either Apple wasted millions of dollars on licenses it doesn’t need, or Amazon and Google are vulnerable to massive copyright lawsuits.”
  • Google and Amazon will assert their rights under DMCA Safe Harbor and the Cablevision case. In addition, they may have some protection under rights they have to sell music through their online stores.

Gaming Industry Wins in Supreme Court Battle over Violent Content

  • In a 7-2 ruling, the Supreme Court ruled that a controversial 2005 California law, which would have made it a crime to sell extremely violent or inappropriate video games to minors, is unconstitutional.
  • The decision ends a court battle that has gone on for more than six years, while similar proposed laws have been struck down in other states.
  • Justice Antonin Scalia explained the law does not conform with the First Amendment: “The basic principles of freedom of speech…do not vary with a new and different communication medium.”

Media Piracy is Big Business for Organized Crime

Businessweek reports that the entertainment studios lose more than $6 billion a year to movie piracy (according to a report by the Institute for Policy Innovation) — and that media piracy has become big business for organized crime. For example, the Los Zetas drug cartel of Mexico earns a reported $1.8 million a month through its “side” business of pirated music and DVDs. Some groups — including Los Zetas — even stamp their products with gang logos before distributing them to public markets.

The article cites an array of international drug smugglers and crime rings based in Russia, Mexico, China and Ireland that have made trafficking counterfeit entertainment media products a highly lucrative enterprise.

In an effort to address these international concerns, the MPAA is employing former law enforcement officers in Russia, Singapore, Britain, and Malaysia, to work with local police. The impact of piracy has been so severe in South Korea that “major studios have closed their regional home-entertainment offices because sales aren’t high enough to support the operations.”

The MPAA explains that some of these criminal elements have found significant success with online efforts, creating rogue websites that look so professional they’ve been bold enough to sell advertising on them. In these cases, pirated movies are streamed from the sites for free while the criminals earn revenue from the advertising. The MPAA is reportedly lobbying for passage of new U.S. legislation to combat such enterprises.

Zediva: Simple Rental Solution or Copyright Violation?

David Pogue of the New York Times writes that we are in a fascinating transitional period from physical media to streaming services, but that accessing streaming movies from our TVs, laptops and phones comes with a price. For example, we are missing some of the DVD features including subtitles, multiple languages and director’s commentary. We are also restricted regarding when we have access to some streaming content and how long our subscription or per-title fee allows us to view a specific title.

In response to these concerns, Pogue mentions a new streaming service named Zediva.com that provides subtitle, language and commentary options in addition to some surprising (and perhaps disturbing, for the content creators and distributors) business model features. Rented movies are available for two weeks instead of 24 hours, current titles are available the same day as DVD releases, and there are no hardware or subscription fees — simply a rental charge of $2 per movie.

The process is simple. Zediva has set up hundreds of DVD players in its California data center; the company purchases dozens of copies of current releases and makes them available to consumers. As Pogue writes: “The DVD is simply sending you the audio and video signals, as if it were connected to your home with a really, really long cable.”

Of course, content creators and distributors may have issue with this approach. In related news, the MPAA has filed a lawsuit against Zediva (since Pogue’s article), claiming that the company is violating copyright law by streaming DVDs. While the company bills itself as a movie-rental service, comparing its service with companies like Netflix that purchase hundreds of copies of popular movies and then mailing them to renters, the MPAA’s lawyers argue the service is a form of “public performance” that would require a license.

Related Wall Street Journal article: “Hollywood Studios Sue Start-Up Zediva” (4/4/11)

Is Piracy is a Product of Market Failure?

Internet law columnist Michael Geist, writing for the Toronto Star, comments on a new global study on piracy backed by Canada’s International Development Research Centre that suggests “piracy is chiefly a product of a market failure, not a legal one.”

The media piracy study — in an effort to analyze infringements regarding music, movies, and software — was launched five years ago by the Social Science Research Council. Institutions in South Africa, Russia, Brazil, Mexico, Bolivia, and India were identified to better understand the international media market and related piracy issues. The resulting 440-page report is the most thorough analysis of media piracy to date.

The report sets the record straight on several popular piracy myths. For example, it states there are no links between piracy and organized crime, there is no evidence indicating that anti-piracy education programs have any impact on consumer behavior, and tougher legal penalties do not necessarily provide a deterrent to piracy.

The report also suggests that piracy is primarily a result of market failure, not legal failure. Geist writes: “In many developing countries, there are few meaningful legal distribution channels for media products. The report notes ‘the pirate market cannot be said to compete with legal sales or generate losses for industry. At the low end of the socioeconomic ladder where such distribution gaps are common, piracy often simply is the market.’”

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