Digital Media

An e-mail was sent on Thursday to Facebook users who were members at the time that its controversial, now-defunct Beacon advertising program was operated: it's the official notice about the proposed settlement for the class-action lawsuit against Beacon. The terms of the settlement have been public since September, but the court-ordered summary notice is the last step in the process before final approval on February 26.

"This is not a settlement in which class members file claims to receive compensation," the notice explained (possibly crushing the hopes of any Facebook members who might have got excited that this would be an easy way to make some pizza money). "Under the proposed settlement, Facebook will terminate the Beacon program. In addition, Facebook will provide $9.5 million to establish an independent nonprofit foundation that will identify and fund projects and initiatives that promote the cause of online privacy, safety, and security."

A Web site has been set up to explain the terms of the settlement for the case Lane et al. vs. Facebook Inc. et al., which was originally filed last summer.

Beacon, an advertising program that shared members' activity on participating third-party sites on their Facebook profiles without much warning or notification, was a much-hyped part of the Facebook Ads initiative that debuted in the fall of 2007. But it was, unfortunately for Facebook, a complete public relations disaster.

Pressure from privacy and activist groups resulted in notable changes to the product and member controls thereof, but image repair proved to not be enough and Facebook let Beacon fade to black.

(Credit: U.S. District Court for the Northern District of California)

Start-up Spring Design has been denied an injunction to halt Barnes & Noble from selling its Nook e-reader, according to court documents.

The company had requested the injunction, in addition to monetary damages, as part of a recent lawsuit filed in federal court in San Jose, Calif. The suit charges that the bookseller misappropriated Spring Design trade secrets in the design of its Nook, which launched October 20, the day after Spring Design announced its Alex e-book reader.

The court's decision (PDF), based on a Monday hearing, denies Spring Design's request for a preliminary injunction, but states that a halt to sales could still be appropriate if the plaintiff ultimately prevails. The court also says it will expedite the pre-trial process to accommodate Spring's request for an early hearing.

Barnes & Noble does not comment on litigation as a matter of policy, a company spokeswoman said Wednesday. CNET has contacted Spring Design for a comment and is waiting to hear back.

The Nook, like Spring Design's Alex (which has yet to be released), combines a color touch screen with an e-ink display, and both readers use the Android operating system. In its lawsuit, Spring Design said it showed its plans for the Alex to Barnes & Noble, which showed interest in the product and gave no indication it was working on a similar device.

So sales of the Nook will move forward for now, though not without hitches of a non-legal sort.

Although a judge recently ruled in favor of Apple in its copyright infringement case against Psystar, the two companies have reached a new settlement, according to Computerworld and other reports.

Details are sketchy at this point, and there's no confirmation from Apple, but Psystar claimed in a motion filed Monday that a partial settlement has been reached.

"Psystar has agreed on certain amounts to be awarded as statutory damages on Apple's copyright claims in exchange for Apple's agreement not to execute on these awards until all appeals in this matter have been concluded," noted Psystar's motion filed in federal court in San Francisco. "Moreover, Apple has agreed to voluntarily dismiss all its trademark, trade-dress, and state-law claims. This partial settlement eliminates the need for a trial and reduces the issues before this Court to the scope of any permanent injunction on Apple's copyright claims."

Psystar also seems to be looking for a loophole against any injunctions. Apple had asked the court to prevent Psystar from selling clones not just with Leopard, but also Snow Leopard, which was released after the lawsuit began. But in its filing, Psystar argued that it should be allowed to sell its Rebel EFI utility, which lets customers install Snow Leopard on clones sold by the company, thus moving the legal burden away from Psystar.

Psystar's motion also indicated that another motion with further details would be filed Tuesday with Judge William Alsup.

Apple's lawsuit against Psystar began in July 2008 after Psystar started selling Mac clones with OS X installed on them. Apple has argued that its end user license lets people install its operating system on Apple computers only.

On November 13, Alsup ruled in favor of Apple, finding that Psystar's use of OS X on its clones was not "fair use" as the company contended and further finding that Psystar violated the Digital Millennium Copyright Act (DMCA) by "circumventing Apple's protection barrier."

Since then, Apple has been keen to shut down Psystar's Mac clone business permanently, calling for an injunction against the company and potentially millions of dollars in damages, substantially more money than the clone maker has.

Alsup's findings and Apple's fervor in going after Psystar raise the question of why Apple would agree to any kind of settlement at this point. A hearing was set for December 14, with a full trial scheduled to start in January. But if the latest news from Psystar is true, then the company may be able to avoid further courtroom drama.

Neither Psystar nor Apple has responded to requests for comment. We'll provide further details of this latest development as court documents become available.

eBay is criticizing a French court's ruling that orders the company to pay a $2.55 million fine to European conglomerate LVMH.

The auction giant and its European unit were fined 1.7 million euros on Monday by the Commercial Court of Paris, which ruled that the company violated a 2008 court order by not preventing the sale of legitimate LVMH perfumes and cosmetics. LVMH's brands include Christian Dior, Guerlain, and Givenchy perfumes.

In June 2008, the Commercial Court fined eBay $61 million in a lawsuit filed by the conglomerate, which is officially known as LVMH Moet Hennessy Louis Vuitton. LVMH had asserted that eBay had not done enough to stamp out the sale of fake LVMH goods on its site. The court went a step further, ruling that eBay-traded LVMH products--even authentic ones--were not being sold by an authorized reseller. As a result, eBay was ordered to remove all listings of these products.

eBay criticized the ruling then, saying it was an attempt by LVMH to "protect uncompetitive commercial practices." eBay likewise condemned the new ruling.

"Today's outcome hurts consumers by preventing them from buying and selling authentic items online," Alex von Schirmeister, general manager of eBay in France, said in a statement. "The injunction is an abuse of 'selective distribution.' It effectively enforces restrictive distribution contracts, which is anti-competitive."

Despite its objections, eBay argued that it has complied with the 2008 court order. The company said it has used state-of-the-art filtering software to check millions of listings each day, making thousands of authentic LVMH products invisible or inaccessible to French eBay users.

eBay also discounted the proof brought against it, claiming that LVMH offered details on only 1,341 listings out of 200 million posted on the auction site each day. eBay believes those listings were deliberately posted by people to sneak past the filters. In 1,091 of the listings targeted by LVMH, the seller did not accurately describe the item, using misspelled brand names, no brand names at all, or only pictures to describe the product.

As a result, eBay asserts that both the fine and ruling are unjustified. The fine itself is disproportionate given that eBay complied with the injunction," said von Schirmeister. "It is out of step with our legal victories in France, U.K., Germany, Belgium and the U.S."

eBay plans to appeal the new ruling and two other cases tied to LVMH. "We believe that the higher courts will overturn this ruling and ensure that e-commerce companies such as eBay will continue to provide a platform for buyers and sellers to trade authentic goods," said von Schirmeister.

eBay has been in and out of U.S. and European courtrooms for years, sued by companies trying to clamp down on the sale of fake versions of their legitimate products. It's faced courtroom battles with several European powerhouses, winning cases against L'Oreal and Tiffany, but losing suits filed by LVMH.

Although several artists have been depicted in music games like Guitar Hero in the past, Gwen Stefani's No Doubt is having some trouble with its own likeness in the newly released Band Hero game from Activision.

According to a court filing obtained by the Los Angeles Times, the band sued Activision over a feature in the title that provides gamers with the opportunity to have band members perform another artist's songs.

The lawsuit specifically takes issue with the ability for gamers to have No Doubt lead singer Gwen Stefani perform the Rolling Stones' Honky Tonk Women. The suit claims that it "results in an unauthorized performance by the Gwen Stefani avatar in a male voice boasting about having sex with prostitutes," the LA Times is reporting, citing documents filed in the Los Angeles Superior Court on Wednesday. The suit also claims that No Doubt objected to the "Character Manipulation Feature," but Activision refused to remove it.

For its part, Activision says that it's not at fault. The company wrote in a statement cited in several publications, that it has a "written agreement" with No Doubt that justifies the use of its likeness in various features in the game.

"Activision has a written agreement to use No Doubt in Band Hero--an agreement signed by No Doubt after extensive negotiations with its representatives, who collectively have decades of experience in the entertainment industry," the company said in a statement. "Pursuant to that agreement, Activision worked with No Doubt and the band's management in developing Band Hero. As a result, Activision believes it is within its legal rights with respect to the use and portrayal of the band members in the game and that this lawsuit is without merit.

"Activision is exploring its own legal options with respect to No Doubt's obligations under the agreement."

No Doubt is asking for unspecified damages, as well as "a preliminary injunction and a permanent injunction against distribution of the game and for Activision to recall existing copies," the Times is reporting.

Last week, a music site called BlueBeat made headlines by offering Beatles songs as free streams and 25 cent downloads. The Beatles are known for not making their songs legally available on iTunes or any other online forum, so observers rightly asked "how are they doing this legally?"

EMI, the record label that owns The Beatles' recordings, has a simple response: they're not doing this legally. But here's where the story gets very strange.

The legal reasoning in this case is straight out of "Alice in Wonderland."

(Credit: Wikimedia Commons (public domain illustration))

BlueBeat is owned by a company called Media Rights Technologies, which specializes in digital rights management technology. DRM is supposed to be used to prevent copyright infringement. But according to a 2007 blog post on HuffingtonPost.com by the company's founder, Hank Risan, MRT backed into this business after being--get this--targeted by the RIAA for copyright infringement.

As Risan explains in his post, he and a partner had posted a bunch of streaming-audio files to a Web site about the history of music. The RIAA issued a takedown notice, and the site took the streams down.

The streams had been protected by Windows Media DRM, but according to Risan, an update to the Media Player broke the DRM. In response to this flaw, Risan created MRT and built his own DRM system, which he claimed would be far more robust than the systems on the market at that time. Then, in 2007, MRT sent cease-and-desist letters to Microsoft, Apple, Adobe, and RealNetworks, ordering them to use MRT's DRM technology instead of their own, on threat of legal action.

The legal reasoning was twisted--basically, MRT argued that the Digital Millennium Copyright Act should force these companies to use the most robust DRM technology available, even if that technology was created by somebody else. Predictably, nothing ever came of this demand.

MRT's legal reasoning is equally funny this time around, as Ars Technica reports. According to the report, MRT claims that it didn't post the exact Beatles recordings. Instead, it posted "psychoacoustic simulations," then added simple video content to them. This constitutes a new audiovisual work, and isn't covered by the existing copyrights, MRT argues. In fact, MRT even went so far as to apply for copyrights on the "new" works!

Perhaps this is all some kind of metacommentary on the frustrating inconsistency of U.S. copyright law, but I predict that MRT is going to be laughed out of court. In the meantime, if you want your Beatles music online, it's still available on BlueBeat as of the time I posted this. I didn't want to give the company a credit card to test the whether the downloads work, but the streams sound pretty close to perfect...especially considering that they're only psychoacoustic simulations.

Update: 5:42 p.m. PT: To include information about a witness being compensated by EMI.

The copyright lawsuit filed by major recording company EMI against Michael Robertson, founder of MP3tunes.com, took an unexpected turn on Friday.

A U.S. District judge will allow EMI to file suit against Robertson personally--not just his company, MP3tunes, according to a copy of the judge's decision. Besides accusing MP3tunes of violating its copyright in a suit filed in November 2007, EMI also named Robertson as a defendant.

A year ago, a judge in the case threw out the copyright-infringing charges against Robertson, but on Friday, Judge William Pauley, for the U.S. District Court of the Southern District of New York, decided to let EMI once again name Robertson as a defendant.

Michael Robertson, founder of MP3tunes.com

(Credit: James Martin/CNET)

The reason for the switch was the new evidence provided by MP3tunes' former president. In April of 2008, Emily Richards gave a deposition. In July of this year, 10 months after she left the company, she gave another one. In the latter testimony, Richards said Robertson was making a lot of the decisions for the company and that Robertson handled "technical, product decision, and legal matters without her involvement." This, argues EMI, shows that Robertson exercised control over MP3tunes and this should allow it to bring a suit against him personally.

MP3tunes, which allows users to store their songs in a digital locker and access them from any Web-enabled device, argued that this statement was consistent with Richards' earlier testimony. The judge didn't buy it.

"From the court's review of both depositions, it is clear that Richards provided new testimony," Pauley wrote.

Robertson said on Monday afternoon that the difference between Richards first deposition and her last was that EMI paid her $10,000. An EMI spokeswoman could not be reached for comment.

In Pauley's decision, he notes that EMI agreed to compensate Richards for "documented legal fees and costs up to $10,000" as well as pay expenses for her lawyer. The judge apparently saw nothing wrong with the arrangement. Pauley however noted that Richard testified that she left the company at Robertson's request, a fact that "bears on her credibility."

The good news for Robertson, who also founded MP3.com (now owned by CNET publisher CBS Interactive) and Linspire, is that Pauley threw out one of EMI's copyright claims. EMI's other claims, however, will be allowed to proceed.

Robertson, who in the past has called EMI's attempts to sue him personally "despicable," said that EMI's attempts to go after his personal assets is the music label's newest way of discouraging technologists from developing businesses that use their content in ways they don't like.

"We want to argue the merits of the case," Robertson said. "They want to drag it out...people should be able to store their music online."

The case is scheduled to go to trial in March.

Lawyers working on a $1 billion copyright lawsuit filed by Viacom against Google's YouTube may have uncovered evidence that employees of the video site were among those who uploaded unauthorized content to YouTube.

In addition, internal YouTube e-mails indicate that YouTube managers knew and discussed the existence of unauthorized content on the site with employees but chose not to remove the material, three sources with knowledge of the case told CNET.

The e-mails, according to the sources who asked for anonymity because of the ongoing litigation, surfaced during an exchange of information between the two sides of the legal dispute. They are one of the cornerstones of Viacom's case, as well as that of a separate class action lawsuit filed against Google and YouTube by a group of content owners, the sources said. The group includes a European soccer league and a music-publishing company.

Such evidence could be a major blow to YouTube's defense. If managers possessed "actual knowledge" of copyright infringement on the site and did not quickly remove it, the company may not be entitled to protection under the Digital Millennium Copyright Act's safe-harbor provision, according to legal experts.

"The facts you described could very well be the smoking gun that puts a hole through Google's case," Roger Goff, an entertainment attorney not involved in the case, told CNET News. "(If the facts are accurate), Google will have a very difficult time claiming that (its staff members) don't undermine its protection."

The provision, established in 1998, was designed to give online services a measure of protection from liability for infringing materials uploaded to their sites--as long as they meet a certain criteria, including:

• (A)(i) The services don't have actual knowledge that the material, or an activity using the material on the system or network, is infringing.
• (ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or
• (iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material.

The entertainment industry has been skeptical about YouTube's claims that it did not have knowledge of the once-plentiful amounts of infringing content available on the site. Clips from popular TV shows, feature films, or sports events would often bubble up in YouTube's Most Viewed or Most Discussed sections.

It should be noted that the correspondence described by sources likely make up only a sliver of the material exchanged, and there's no way to know the full spectrum of internal discussions regarding copyright at YouTube.

"The characterizations of the supposed evidence, made in violation of a court order, are wrong, misleading, or lack important context and notably come on the heels of a series of significant setbacks for the plaintiffs," Aaron Zamost, a YouTube spokesman, said Monday evening. "The evidence will show that we go above and beyond our legal obligations to protect the rights of content owners."

Any questions about what YouTube employees may or may not have uploaded to YouTube must also be asked of Viacom's employees. Court documents show that on August 25, Viacom agreed to turn over records that shed light on "Viacom's decisions to upload or authorize the uploading of videos to YouTube" and on the company's policies "for allowing videos to remain on YouTube for marketing promotional or other business reasons."

This suggests that Viacom employees also uploaded clips to the site. A company representative declined to comment.

Viacom has long acknowledged that it was one of the first to promote shows online by posting clips to YouTube. But the conglomerate has also said the uploading of clips does not undermine or diminish its copyright claim.

YouTube's counterargument has always been, how is the company supposed to know the difference between pirated and legally uploaded clips when companies like Viacom are among those uploading material?

Google acquired YouTube for $1.65 billion in October 2006, a price tag that set the bar for Web 2.0 acquisitions. Long before that, many in the film and television industries claimed that YouTube was building a big audience by enabling people to pirate professionally produced television shows and films.

Since Viacom first filed its suit in March 2007, accusing Google and YouTube of encouraging users to commit intellectual-property theft, many online services and entertainment companies have closely watched the case because of its broad implications. What the YouTube-Viacom suit could help settle, to some degree, is who is responsible for policing and initiating the removal of pirated materials--the copyright owners or the operators of online services?

But should the case ever go to trial, the outcome may be less significant than legal experts once predicted. While the lawsuit has meandered in the courts for 30 months, other legal battles featuring companies with less marquee value have already gone a long way toward determining Web services' key issues surrounding copyright.

Two weeks ago, U.S. District Judge A. Howard Matz issued a decision saying video site Veoh was not responsible for copyright violations committed by users because it was entitled to protection under the DMCA. Universal Music Group, the world's largest record company, had filed a copyright suit against Veoh that experts said was very similar to the YouTube-Viacom case. Matz's decision appeared to set an important precedent that would help YouTube and Google argue against Viacom, the parent company of MTV Networks and Paramount Pictures.

"The issue is whether Veoh takes appropriate steps to deal with copyright infringement," Matz wrote. He concluded that it had.

YouTube supporters cheered Matz's ruling, believing that it would apply to YouTube's situation because the Web's largest video site had long established and enforced a "takedown policy," whereby the company removed infringing content, once notified by a copyright owner. And later, the video site took steps not required by the DMCA by establishing a state-of-the-art filtering process that helps block material from being uploaded to the site.

But attorneys for Viacom and members of the class action are expected to argue that YouTube's filtering system is a gaping hole in YouTube's defense. One of the major complaints that content owners had about YouTube was that before the company launched its filtering technology, they were forced to file takedown notices for every instance of infringement. In some cases, an entertainment company could remove a popular clip, only to see someone else upload it again seconds later.

Lawyers for Viacom and the class action group are expected to argue that if YouTube was notified that a specific clip was pirated, and had the power to prevent copies from going up but did not act to remove them, the company violated the DMCA.

The plaintiffs use as evidence a paraphrased statement from Chad Hurley, YouTube's CEO, and one of its three co-founders, which appeared in The New York Times in February 2007, the sources said.

"(Hurley) said the company was still working on its filtering technology," the Times wrote. "He said it had agreed to use it to identify and possibly remove copyrighted material from Warner Music, and it would discuss a similar arrangement with Viacom as part of a broader deal."

A Viacom representative said at the time, "They are saying we will only protect your content if you do a deal with us--if not, we will steal it."

The YouTube-Viacom suit is unlikely to go to trial before next year. Certainly, with YouTube wooing entertainment companies as it attempts to battle Hulu, Netflix, Crackle, iTunes, and other digital-video outlets, there exists the possibility that YouTube and Viacom will come to some kind of settlement.

A settlement might be anticlimatic, but could be the best for all concerned.

A legal complaint seeking class action status filed in Houston on Friday accuses social-publishing site Scribd of egregious copyright infringement.

Joe Sibley (left) and law partner Kiwi Camara.

(Credit: Camara & Sibley law firm)

Scribd managers have "built a technology that's broken barriers to copyright infringement on a global scale and in the process have also built one of the largest readerships in the world," the attorneys representing the class wrote in the complaint. "The company shamelessly profits from the stolen copyrighted works of innumerable authors."

While this may sound like a generic copyright case, there's one interesting side note. The attorneys that filed the lawsuit are at the head of Camara & Sibley, the Houston-based firm defending Jammie Thomas-Rasset against copyright claims made by the music industry.

Joe Sibley and Kiwi Camara have made names for themselves largely by representing Thomas-Rasset, the Minnesota woman accused by the music industry of copyright violations. In June, a jury found her liable for willful copyright infringement and ordered her to pay $1.9 million in damages. Thomas-Rasset has asked for a new trial.

In an interview for a story published in July, Sibley said he and Camara could see themselves working for copyright owners, if they believed in the issue. He told me that they weren't locked into any legal dogma and would take cases based on their merits. It's not unusual for lawyers to argue both sides of copyright issues.

In their complaint, filed in U.S. District Court for the Southern District of Texas, the lawyers wrote that plaintiff Elaine Scott, a book author, found on Scribd in July an unauthorized copy of one of her titles, "Stocks and Bonds: Profits and Losses, A Quick Look at Financial Markets." They claim that the book had been downloaded more than 100 times from Scribd, which her attorneys called the "YouTube for documents."

Neither Scott nor Scribd representatives were immediately available for comment.

The class purports to represent "every author who owns a valid registered copyright in a work infringed by Scribd." Camara & Sibley said the number of infringing material on Scribd was known only to that company but predicted that the size of the class could be huge.

They did note that Scribd has said it would remove infringing documents when notified by a copyright owner, as is required by the Digital Millennium Copyright Act. San Francisco-based Scribd also has created an automated filtering system designed to prevent the publishing on its system of unauthorized works, once identified, from being uploaded again.

Camara & Sibley say very clearly what they think of Scribd's business model.

"Under the aegis of self-promoting misinterpretations of federal statutes," the lawyers wrote in their complaint, "the West Coast technology industry has produced a number of start-up firms premised on the notion that commercial copyright infringement is not illegal, unless and until the injured party discovers and complains of the infringing activity, and (the) infringer fails to respond to such complaints."

Camara & Sibley added to the complaint, "Apparently (the West Coast start-ups) believe any business may misappropriate and then publish intellectual property, as long as it ceases to use a stolen work when an author complains...Many millions of dollars have been invested in this business plan."