Laws of .com

Volume VII, Issue 17: November 19, 2009

Bilski Matter Heard by U.S. Supreme Court

Woman Sues Blockbuster and Facebook for Violating Privacy

U.S. Commission Slaps Import Ban on Samsung LCD Products

Copyright Sovereignty on the Table at ACTA Talks

Investor Protection Act to Set New Limitations on Internet Service Providers

Online Gaming Executive Sentenced to 4+ Years in Prison

AT&T Sues Verizon over Wireless Coverage Map

Bilski Matter Heard by U.S. Supreme Court

On November 9, 2009, the U.S. Supreme Court began hearing arguments in Bilski v. Kappos, a patent dispute that has already (at the Court of Appeal level) changed the U.S. laws of patentability. This is a final appeal from refusals of the patent board and lower courts to grant Bernard Bilski and Rand Warsaw a patent for their method of hedging risk in energy transactions. The Court of Appeal overturned the long standing test from the State Street decision, which permitted business method patents for “useful, concrete and tangible” results, and replaced it with a so-called “machine-or-transformation” test. This new test may restrict the patentability of software-related inventions, as a process will only be patentable if it is "tied to a particular machine or apparatus" or if it "transforms a particular article into a different state or thing." There is a risk that by affirming this new test, the U.S. Supreme Court may limit the patentability of innovation in the fields of medical research and software. The patent community is eagerly awaiting what is expected to be a landmark decision, to be rendered sometime in 2010.

For additional information, visit:
http://www.reuters.com/article/ousivMolt/idUSTRE5A857L20091109
http://www.siliconvalley.com/news/ci_13737324?nclick_check=1.

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Woman Sues Blockbuster and Facebook for Violating Privacy

A 25-year old woman from Dallas County, Texas, has filed two lawsuits, one against Blockbuster Inc. (“Blockbuster”), the Texas-based movie and video game-rental company, and the other against Facebook, the global social networking website. Together, the lawsuits allege a partnership between the two companies which allowed Blockbuster to send the woman’s movie rental information to Facebook, without giving her a reasonable opportunity to opt-out. Such information was then displayed on her Facebook profile, showing her full name and the name of the rented movie.

The Texas lawsuits focus on Facebook’s “Beacon” system, an advertising-based tracking technology that records the online activities of Facebook users. Such a system facilitates user interaction on Facebook, but also provides advertisers with useful information. Although the Beacon system uses an opt-in approach, the lawsuits allege that such a system still violates the U.S. Video Privacy Protection Act, which makes it illegal for a company to disclose information about a customer’s rental habits without their knowledge. Although the Beacon system may not display customer information, it facilitates its disclosure.

Notably, Facebook is currently settling a similar lawsuit in California in which it has agreed to discontinue use of the Beacon system there. The final outcome of the California lawsuit may determine if a class-action lawsuit in Texas will continue.

For additional information, visit:
http://tiny.cc/t4FBR

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U.S. Commission Slaps Import Ban on Samsung LCD Products

The U.S. International Trade Commission recently upheld the decision of the Commission’s administrative law judge, finding Samsung Electronics Co. Ltd. and two of its U.S. subsidiaries guilty of patent infringement for importing and selling certain liquid crystal display (LCD) products.

In a notice issued November 9, 2009, the Commission terminated its investigation after agreeing with the Commission’s administrative law judge that the Samsung parties violated section 337 of the U.S. Tariff Act. The judge ruled that the Samsung parties imported, sold and marketed certain LCD devices which infringed on four of Sharp Corporation’s patents. Sharp’s patented technology improves picture quality when viewed from an acute angle and the speed with which the screen can change the image.

The Commission also issued orders banning entry into the U.S. of Samsung’s infringing LCD products and prohibiting Samsung’s U.S. affiliates from importing, selling, marketing and distributing the products. The Commission, however, allowed their temporary importation during a further review by the executive branch on the condition that Samsung posts a 100% bond of the entered value of the covered products.

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Copyright Sovereignty on the Table at ACTA Talks

Canadian trade officials are quietly negotiating the multilateral Anti-Counterfeiting Trade Agreement (ACTA) with a focus on the protection and enforcement of intellectual property rights. Critics say the proposed agreement will move Canadian Internet and copyright laws toward U.S. practices without the full scrutiny of Canadian legislative reform. The latest round of trade talks concluded on November 6th in South Korea. Further talks are scheduled for Mexico in January 2010 with the aim of concluding the agreement as soon as possible in 2010.

Though the negotiations are generally closed and draft text is unavailable, leaks suggest that U.S.-style, third party liability, notice and take down and anti-circumvention (digital rights management) terms are in discussion. Internet Service Providers (ISPs) could be required to police and filter out pirated material, hand over user names believed to be infringing copyright and restrict the use of identity-blocking software. Under ACTA proposals, people suspected of regularly downloading pirated works could have their Internet connection severed for up to a year and be liable to pay a fine. Parties to the negotiations include Australia, the European Union, Japan, South Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland and the United States.

Copyright reform in Canada has generated significant public comment and recent proposed legislative changes failed to be enacted prior to the last federal election.

For additional information, visit:
http://trade.ec.europa.eu/doclib/docs/2009/november/tradoc_145271.pdf
http://tinyurl.com/OttCitizen-ACTA
http://www.michaelgeist.ca/content/view/4510/125/

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Investor Protection Act to Set New Limitations on Internet Service Providers

On November 4, 2009, the U.S. House Financial Services Committee approved the Investor Protection Act (U.S. House of Representatives Bill) by a vote of 41-28 in an attempt to prevent Internet scam artists from posing as legitimate brokerage firms and falsely claiming that they are members of the Securities Investor Protection Corporation (“SIPC”). The SIPC is a government-linked corporation that restores funds to investors with assets in the accounts of bankrupt or otherwise financially troubled brokerage firms. Only investor accounts opened with members of the SIPC qualify for protection. The Bill proposes to create a positive duty on Internet Service Providers (“ISPs”) to block Internet access to websites that contain such misrepresentations and to further hold ISPs liable for not taking appropriate measures to block such websites.

Critics of the Bill question its efficacy as “most Internet providers simply don’t have a good way to block access to any electronic ‘material’ containing fake SIPC data.” ISPs run the risk of facing civil penalties and injunctions notwithstanding the fact that blocking access to such websites may not be technically feasible. The Representative who introduced the Bill, Rep. Paul Kanjorski, declared that he was open to modifying the language of the Bill to reflect industry concerns.

For additional information, visit:
http://news.cnet.com/8301-13578_3-10390779-38.html

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Online Gaming Executive Sentenced to 4+ Years in Prison

Gary Kaplan, founder of the online gambling site, BetOnSports.com, was sentenced on November 4 to more than four years in prison and forced to forfeit nearly $43.7 million in illegally obtained revenue. The sentence was part of a plea agreement announced in August. Prosecutors alleged that BetOnSports.com falsely advertised that its gambling operations were legal under U.S. law, and misled gamblers into believing that money transferred to BetOnSports was freely available for withdrawal. In 2006, BetOnSports ceased operations and prosecutors allege that customers lost more than $16 million. Kaplan told the Court that he initially believed that his foreign activities were legal, but from 2000 realized that this was not the case. Despite receiving a legal opinion that BetOnSports.com operations, licensed in the Caribbean, violated U.S. law, his firm continued to solicit business from U.S. gamblers.

For additional information, visit:
http://tech.yahoo.com/news/ap/20091102/ap_on_hi_te/us_internet_gambling_kaplan

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AT&T Sues Verizon over Wireless Coverage Map

This week a U.S. court in Atlanta will rule on whether Verizon, a U.S. wireless provider, will be allowed to continue its use of a map of its competitor AT&T’s wireless coverage area in advertisements. AT&T claims that the Verizon ads are misleading because they use white space in depictions of AT&T’s 3G network coverage areas to indicate that AT&T customers are “out of touch” in vast parts of the country, despite the fact that a slower 2G network is available in most of those areas. Verizon argues that its ads are true, and that the lawsuit by AT&T is a ploy intended to gain a tactical advantage in attracting more holiday consumers.

For additional information, visit:
http://online.wsj.com/article/BT-CO-20091103-715399.html

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