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Friday, August 5, 2011, Alert No. 2,280.
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District Court Enjoins Zediva

8/1. The U.S. District Court (CDCal) issued an order [12 pages in PDF] in Warner Bros. v. WTV Systems, titled "Order Granting Motion of Motion Picture Studio Plaintiffs for Preliminary Injunction".

The District Court concluded that the Zediva service provides an unauthorized public performance of copyrighted movies, rather that a permissible DVD rental service, and issued a preliminary injunction.

The plaintiffs (Warner Bros., Columbia, Disney, Paramount, Twentieth Century Fox, and Universal) filed a complaint on April 5, 2011, in the District Court alleging that WTV Systems' Zediva web site "streams Plaintiffs' movies on demand to paying customers over the Internet" without plaintiffs' authorization.

They alleged copyright infringement in violation of 17 U.S.C. § 501. They alleged that Zediva provides a public performance in violation of their exclusive rights of copyright, under 17 U.S.C. § 106(4).

See, stories titled "Movie Companies Sue Zediva for Copyright Infringement" and "Commentary: Zediva, Movie Streaming, and the First Sale Doctrine" in TLJ Daily E-Mail Alert No. 2,217, April 5, 2011.

The District Court opinion lists many ways that consumers can view copyrighted movies with authorization: "by going to a movie theater; by buying a copy of the Copyrighted Work on DVD or Blu-ray Disc; by renting a copy of the Copyrighted Work on DVD or Blu-ray Disc at a bricks-and-mortar store or through a mail subscription service, such as Netflix; by downloading and licensing a permanent copy of the Copyrighted Work through a service, such as; by accessing the Copyrighted Work ``on demand´´ for a fixed period of time through a cable, satellite, or internet delivered video on demand platform, such as Comcast, DirecTV, or Vudo; by viewing the Copyrighted Work through a subscription video on demand streaming service, such as Netflix; by watching the Copyrighted Work on a scheduled subscription cable television channel, such as HBO; or by watching the Copyrighted Work for free on network television."

However, the movie company plaintiffs do not authorize all distribution channels at once. Different distribution channels have different windows. In particular, the Court wrote that they "may not make that Copyrighted Work available through rental DVD mail subscription services, such as Netflix, or rental kiosks, such at Redbox, until 28 days after the initial home video release date." Also, they "may also have granted exclusive rights to a cable television channel to distribute the Copyrighted Work after the initial home video release, and, during that time, the Copyrighted Work is often not available through video on demand."

The Court explained that "Defendants provide their customers with access to DVDs purchased by Defendants containing the Copyrighted Works. To operate their service, Defendants have purchased hundreds of DVD players and installed them in cabinets at a data center they lease in Santa Clara, California. Defendants also have purchased copies of Plaintiffs’ Copyrighted Works on DVD, and place those DVDs in their DVD players, with each DVD remaining in its respective DVD player while it is transmitted to Defendants’ customers on multiple occasions. ... Defendants stream the content of the DVD to a customer ..."

As a consequence of their unauthorized streaming, the Zediva defendants "are able to offer performances of Plaintiffs' Copyrighted Works at below-market prices. While most licensed internet video on demand services currently charge between $3.99 and $5.99 to watch new releases of Plaintiffs' Copyrighted Works, Defendants charge only $1.99 per movie, or 10 movies for $10. Defendants also have an availability advantage over licensed internet video on demand services because, unlike Defendants, those services must take certain Copyrighted Works off the market during exclusivity periods that certain Plaintiffs may have granted to subscription cable television channels while Defendants can continue to offer those Copyrighted Works during the exclusivity period." (Footnote omitted.)

The District Court then listed the showings that a  plaintiff must make for a preliminary injunction: "(1) a likelihood of success on the merits; (2) a likelihood that the moving party will suffer irreparable harm absent a preliminary injunction; (3) that the balance of equities tips in the moving party’s favor; and (4) that an injunction is in the public's interest."

First, as to the merits of the claim, the District Court began with the statute, 17 U.S.C. § 106(4), which provides that "the owner of copyright under this title has the exclusive rights to do and to authorize any of the following ... (4) in the case of ... motion pictures and other audiovisual works, to perform the copyrighted work publicly".

The key legal issue in this case is whether what Zediva does constitutes performing the copyrighted work publicly -- that is, a public performance. The Court applied the definitions from Section 101 of the Copyright Act, and examined the legislative history of the relevant definitions, and concluded that Zediva provides public performances. Hence, the plaintiffs are likely to prevail on the merits.

Second, as to irreparable harm, the District Court concluded that the Zediva defendants are interfering with the movie company plaintiffs' ability to negotiate contracts, "because potential licensees will not be willing to pay a premium for a non-exclusive period". In addition, the plaintiffs are not receiving normal licensing fees, the continued existence of the authorized licensees is threatened, and "the development of a successful and lawful video on demand market" is threatened.

The District Court concluded also, with little discussion, that the third and fourth elements, balance of equities or hardships, and public interest, weigh in favor of the plaintiffs. Therefore, it granted the motion for preliminary injunction.

The Motion Picture Association of America's (MPAA) Dan Robbins stated in release that this "decision is a great victory for the more than two million American men and women whose livelihoods depend on a thriving film and television industry. Judge Walter rejected Zediva's argument that it was `renting´ movies to its users, and ruled, by contrast, that Zediva violated the studios' exclusive rights to publicly perform their movies, such as through authorized video-on-demand services."

"Movie fans today have more on-demand options than ever for watching films at home, from iTunes to Netflix to Amazon to Vudu to Hulu to the VOD offerings from cable and satellite operators. All these legitimate companies have obtained licenses from the copyright owners. The court found Zediva's service threatened the development of these lawful VOD and Internet-based services."

This case is Warner Bros. Entertainment Inc., et al. v. WTV Systems, Inc., U.S. District Court for the Central District of California, D.C. No. CV 11-2817-JFW (Ex), Judge John Walter presiding.

Sen. Franken Writes FCC Regarding Bloomberg's Complaint Against Comcast

8/4. Sen. Al Franken (D-MN) sent a letter to the Department of Justice's (DOJ) Antitrust Division and the Federal Communications Commission (FCC) regarding Bloomberg's complaint to the FCC about Comcast's compliance with merger conditions imposed by the FCC when it approved the Comcast NBCU transaction in January.

Sen. Al FrankenSen. Franken (at right) wrote that "It is now six months since this deal was approved, and a complaint has already been filed by Bloomberg, L.P. regarding Comcast's refusal to place Bloomberg's financial news channel in the same ``neighborhood´´ as other cable news networks, including Comcast's CNBC and MSNBC."

He wrote that "At the time the Commission adopted this condition, it recognized that Bloomberg was a close competitor of CNBC and that Comcast would have an incentive to disadvantage this network to gain advertising revenue and subscribers."

The FCC issued its Memorandum Opinion & Order (MOO) [279 pages in PDF] approving the merger, subject to conditions, on January 20, 2011. It is FCC 11-4 in MB Docket No. 10-56.

That MOO, in Appendix A, at page 121, sets forth the following condition: "If Comcast now or in the future carries news and/or business news channels in a neighborhood, defined as placing a significant number or percentage of news and/or business news channels substantially adjacent to one another in a system's channel lineup, Comcast must carry all independent news and business news channels in that neighborhood."

Bloomberg filed a complaint with the FCC on June 13, 2011, in which it wrote that "Despite a clear requirement in the FCC Order that Comcast include independent news channels, such as Bloomberg Television ("BTV"), in Comcast's existing news neighborhoods, Comcast refuses to implement the Commission's express direction."

Bloomberg continued that it "has asked Comcast to place BTV in Comcast's existing news neighborhoods on all Comcast systems in the 35 most populous DMAs. Comcast, however, has refused, claiming that it does not currently have any news neighborhoods and, in any event, that the Commission's news neighborhooding condition applies only to neighborhoods that will be created in the future. Neither of these assertions has any merit."

Comcast filed an answer [206 pages in PDF] with the FCC on July 27, 2011. It wrote that Bloomberg is attempting to "extract preferential channel placement on Comcast's cable systems through regulatory gamesmanship", that it has not violated the MOO, and that the complaint should be denied.

On August 3 the FCC granted Bloomberg's request that the deadline for its reply be extended to August 30. The FCC's proceeding on this complaint is MM Docket No. 11-104.

Sen. Franken, who opposed the merger, wrote in his letter that "I fear that Comcast's alleged attempt to maneuver around the neighborhooding condition in the merger order is only the beginning of a series of lengthy and expensive battles over conditions, and I urge the Commission to act promptly if Comcast is in violation of this or any other conditions in its merger order."

He added that "I am concerned that small online video distributors and independent channels may not have the resources to file a relevant complaint, and there may be no known constituencies or public interest groups with sufficient resources to police Comcast's efforts to wiggle around the Commission and DOl's carefully crafted conditions".

He concluded that "We have seen a trend over the last two decades of FCC and DOJ acquiescence to large media/telecommunications mergers. Many of these mergers have been sold to the public based on the strength and number of conditions that are imposed on the transaction. But conditions mean absolutely nothing if the corporation cannot be trusted to implement them in a full and transparent manner and if there is minimal enforcement of the corporation's efforts to skirt the requirements of the deal."

In This Issue
This issue contains the following items:
 • District Court Enjoins Zediva
 • Sen. Franken Writes FCC Regarding Bloomberg's Complaint Against Comcast
 • Google Says Patents Attack Android
 • Biden to Visit PRC and Japan
Google Says Patents Attack Android

8/3. Google's Chief Legal Officer David Drummond wrote a short piece in the Google web site titled "When Patents Attack Android". He argued that there is "a hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents".

He offered this explanation. "They're doing this by banding together to acquire Novell’s old patents (the “CPTN” group including Microsoft and Apple) and Nortel's old patents (the ``Rockstar´´ group including Microsoft and Apple), to make sure Google didn’t get them; seeking $15 licensing fees for every Android device; attempting to make it more expensive for phone manufacturers to license Android (which we provide free of charge) than Windows Phone 7; and even suing Barnes & Noble, HTC, Motorola, and Samsung. Patents were meant to encourage innovation, but lately they are being used as a weapon to stop it."

He wrote that "A smartphone might involve as many as 250,000 (largely questionable) patent claims, and our competitors want to impose a ``tax´´ for these dubious patents that makes Android devices more expensive for consumers. They want to make it harder for manufacturers to sell Android devices. Instead of competing by building new features or devices, they are fighting through litigation."

This is "anti-competitive" and "likely to draw regulatory scrutiny", Drummond asserted.

He added that "We're encouraged that the Department of Justice forced the group I mentioned earlier to license the former Novell patents on fair terms, and that it’s looking into whether Microsoft and Apple acquired the Nortel patents for anti-competitive means. We're also looking at other ways to reduce the anti-competitive threats against Android by strengthening our own patent portfolio."

See also, stories titled "Update on Apple Microsoft RIM Sony Ericsson Acquisition of Nortel Patents" in TLJ Daily E-Mail Alert No. 2,260, July 16, 2011, and "AAI Urges DOJ to Investigate Acquisition of Nortel Patent Portfolio" in TLJ Daily E-Mail Alert No. 2,255, July 11, 2011.

Biden to Visit PRC and Japan

8/4. The White House news office stated in a release that Vice President Joe Biden will travel to the People's Republic of China (PRC), Mongolia and Japan.

Joe BidenIt states that in the PRC Biden (at left) "will meet with Vice President Xi and other Chinese leaders, including President Hu and Premier Wen Jiabao, to consult on a broad range of bilateral, regional, and global issues."

This release adds that VP Biden will visit the southwestern city of Chengdu. It is a major center of information and communications technology manufacturing, services and research. Many U.S. companies have operations there.

See, Microsoft's web page titled "Chengdu Cloud Computing Center", IBM's web page titled "IBM to Build Chengdu into a Smart City", Intel's web page regarding its assembly testing facility in Chengdu, and Cisco's release titled "Cisco Collaborates with Chengdu to Support the Development of Local Information Society and Sustainability Initiatives".

The release states that "In Japan, the Vice President will express steadfast U.S. support for its close ally in the wake of the recent earthquake, tsunami, and nuclear emergency. The Vice President will thank U.S. civilian and military personnel for their assistance in responding to the disaster, as well as highlight Japan's resilience during the recovery and rebuilding process."

Washington Tech Calendar
New items are highlighted in red.
Friday, August 5

The House will not meet. It is in recess until 2:00 PM on September 7.

The Senate will meet in pro forma session at 10:00 AM.

POSTPONED. 10:00 AM. The Senate Finance Committee (SFC) will hold a hearing on the nominations of Michael Punke (to be Deputy U.S. Trade Representative), Paul Piquado (to be Assistant Secretary of Commerce), and David Johanson (to be a member of the U.S. International Trade Commission). See, notice. Location: Room 215, Dirksen Building.

EXTENDED FROM JULY 8. Deadline to submit comments to the Federal Trade Commission (FTC) in connection with June 21 event titled "Patent Standards Workshop". See, notice in the Federal Register, Vol. 76, No. 93, Friday, May 13, 2011, at Pages 28036-28038, and FTC release of May 9, 2011. See also, story titled "FTC to Hold Workshop on Standard Setting and Patents" in TLJ Daily E-Mail Alert No. 2,242, May 16, 2011. See, FTC's June 29, 2011, extension notice.

Monday, August 8

The Senate will not meet. It is in recess until 2:00 PM on September 6. However, it will hold pro forma sessions twice per week until then.

EXTENDED TO AUGUST 15. Deadline to submit comments to the Federal Trade Commission (FTC) in response to its notice in the Federal Register regarding the proposed self-regulatory guidelines submitted to the FTC by Aristotle International, Inc. under the safe harbor provision of the Children's Online Privacy Protection Act (COPPA) Rule. See, Federal Register, Vol. 76, No. 123, Monday, June 27, 2011, at Pages 37290-37291. See, notice of extension.

Tuesday, August 9

The Senate will meet in pro forma session at 11:00 AM.

10:30 AM. The Federal Communications Commission (FCC) will hold an event titled "open meeting". See, tentative agenda, and story titled "FCC Releases Tentative Agenda for August 9 Meeting" in TLJ Daily e-Mail Alert No. 2,264, July 20, 2011. Location: FCC, Commission Meeting Room, 445 12th St., SW.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking (NPRM) [17 pages in PDF] regarding Terrestrial Trunked Radio, or TETRA, technology. The FCC adopted this item on April 18, 2011, and released the text on April 26, 2011. It is FCC 11-63 in WT Docket No. 11-69 and ET Docket No. 09-234. See, notice in the Federal Register, Vol. 76, No. 91, Wednesday, May 11, 2011, at Pages 27296-27300.

Wednesday, August 10

Deadline set by Rep. Ed Markey (D-MA) and Rep. Joe Barton (R-TX) for Groupon to respond the interrogatories propounded in their July 26 letter regarding the July 11 article in the Washington Post titled "Groupon changes privacy policy to collect, share more information". See also, Rep. Markey's release.

Thursday, August 11

10:00 AM. The Department of Commerce's (DOC) Bureau of Industry and Security's (BIS) Materials Technical Advisory Committee will hold a partially closed meeting. See, notice in the Federal Register, Vol. 76, No. 146, Friday, July 29, 2011, at Page 45508. Location: DOC, Hoover Building, Room 3884, 14th Street between Constitution & Pennsylvania Avenues, NW.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking (NPRM) [15 pages in PDF] regarding whether to make the grandfathered providers permanently eligible for universal service subsidies under the FCC's rural health care program. The FCC adopted this NPRM on June 20, 2011, and released the text on June 21, 2011. It is FCC 11-101 in WC Docket No. 02-60. See, notice in the Federal Register, Vol. 76, No. 123, Monday, June 27, 2011, at Pages 37307-37309.

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its draft SP 800-56 C [17 pages in PDF] titled "Recommendation for Key Derivation through Extraction-then-Expansion".

Friday, August 12

The Senate will meet in pro forma session at 12:00 NOON.

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