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Supreme Court Poised To Move In The Right Direction On IP

December 3, 2010 ,

While Net Neutrality has grabbed the headlines this week, that doesn’t mean things have been quiet on the intellectual property front. The scales of justice have often tilted too far in imposing excessive restrictions through IP, but it appears the Supreme Court may be looking to restore some balance. This Monday the Supreme Court decided which cases it will be dealing with this year, and consumers and innovators should be encouraged by the results.

From the world of trademark we have jewelry titan Tiffany v. e-commerce goliath eBay. Tiffany & Co. sued eBay in 2004 because of the presence of counterfeit Tiffany products on the auction website. Both sides agreed that eBay promptly removed any counterfeit auctions that were brought to its attention, but that wasn’t enough for Tiffany; Tiffany wanted eBay to determine the authenticity of Tiffany jewelry before allowing user auctions to go public.

As the district court judge explained, “the heart of the dispute is not whether counterfeit Tiffany jewelry should flourish on eBay, but rather, who should bear the burden of policing Tiffany’s valuable trademarks in Internet commerce?” Tiffany lost because the judge ruled, “the law does not impose liability… on eBay for its refusal to take such preemptive steps.”

When Tiffany appealed, Public Knowledge, EFF and Public Citizen filed an amicus brief asking the Second Circuit to “reject Tiffany’s effort to rewrite trademark law to relieve mark-owners of their traditional obligation to police their own marks, online and off.” eBay was once again successful as the judge ruled that Tiffany needed to prove that eBay ignored “specific instances of actual infringement,” and the jewelry maker “failed to make such a showing.” Tiffany’s final chance to shift the responsibility of trademark enforcement was denied Monday, as the Supreme Court declined to hear an appeal.

In patent news, the Court agreed to hear Microsoft’s appeal in i4i vs. Microsoft, filed in 2007. i4i claims Microsoft’s Word 2007 willfully infringed on its patented xml editing code, which Microsoft denies. Beyond the technical and commercial details, Microsoft is seeking to change the threshold necessary to invalidate a patent. In most civil proceedings, a party wins by meeting the “preponderance of the evidence” standard, which essentially means “more likely than not.” In order to overturn a patent, however, the Federal Circuit Court of Appeals has set the standard much higher; the evidence must be “clear and convincing”. Public Knowledge and EFF believe that this practice “threatens to impede innovation and the dissemination of knowledge,” especially for Free and Open Source Software (FOSS) companies without the resources to wage costly legal battles. This why we filed an amicus brief with the Supreme Court, asking it to hear Microsoft’s appeal, and we are pleased that the Supreme Court has agreed to hear the case.

Capping off the IP trifecta with copyright, the court declined to review a $27,750 damage award levied on a music downloader who claimed to be an “innocent infringer.” The case (Whitney Harper v. Maverick Recording Company) involved a 16 year old girl who argued that she was “not aware and had no reason to believe that her acts constituted an infringement.” While the district court was persuaded by the fact that she had not encountered any copyright notices in the course of downloading the music, she was not so fortunate on appeal. The Fifth Circuit bizarrely ruled that the copyright notices included with the physical manifestations of the songs she downloaded (albums at a store) served to notify her that downloading would be infringement.

While the full court declined to look at the issue, Justice Alito took exception to this reasoning, as obviously “a person who downloads a digital music file generally does not see any material object bearing a copyright notice.” Alito wrote in his dissent that this interpretation of copyright law meant “Harper’s youth and lack of legal sophistication” were not considered. According to Alito, “there is a strong argument” that the presence of copyright notices on albums should not affect liability for downloads.

Justice Alito seems to recognize here that our copyright laws are in many cases outdated and unsuited for the digital age. Alito explains that “this provision was adopted in 1988, well before digital music files were available on the Internet.” The text of the law covers a copyright notice that “appears on the published phonorecord,” but as Alito points out we’re living in the “post-phonorecord age.” If this outdated provision was ruled not to apply, then Harper would have had a chance at obtaining “innocent infringer” status, reducing her damages from $27,500 to  $7,400.

At a time when the executive (ACTA) and legislative (COICA) branches are failing to properly balance intellectual property, perhaps this is an opportunity for the judicial branch to return some common sense to the debate. The Supreme Court’s certiorari decisions are a positive sign that someone somewhere in government is carefully considering the implications of the “post-phonorecord age.”