Politics and Law

iStockphoto, a Getty Images subsidiary that licenses photos and other content for relatively low cost, is hoping to benefit by reassuring customers concerned about violating others' intellectual property rights.

iStockphoto's Kelly Thompson

(Credit: Stephen Shankland/CNET)

Adding photographs can improve advertisements, brochures, and other content, but getting sued for inappropriately using another company's trademark or violating an individual's privacy is buzzkill. As a result, iStockphoto has now begun promoting a legal guarantee under which the company will cover up to $10,000 in legal expenses in cases involving trademark, copyright or other intellectual property rights, and privacy rights.

It's included with any file purchased from the company. For those who want more, iStockphoto will increase the coverage to $250,000 at a cost of 100 of the credits ordinarily used to purchase photos, videos, audio clips, and graphics. Presently, credits cost between 95 cents and $1.50, with lower per-credit prices when purchased in bulk.

The company essentially is trying to capitalize on the risks involved when using content that's freely downloaded from the Web or produced on one's own, eagerly pointing out that even stitching patterns on jeans can be trademarked.

"There are certainly millions of images available on the Web, but most are not cleared for commercial usage. Creative Commons images can be perfect for some projects, but there are little to no formal inspections on those files, so iStock offers a much safer and suitable alternative when using multimedia," iStockphoto Chief Operating Officer Kelly Thompson said in a statement.

SCO Group, whose 6-year-old legal case arguing Linux infringes its Unix copyright hasn't been enough to keep it from bankruptcy court, nevertheless won an important victory in its case Monday.

A skeptical federal judge earlier had ruled that Novell had retained Unix copyrights when it sold its Unix business to the Santa Cruz Operation, a company whose Unix assets SCO Group later acquired. But the appeals court overturned that decision, based in part on a close reading of the Unix asset purchase agreement, sending the matter to trial for a decision. The appeals court did uphold a ruling that SCO owed Novell royalty payments, though, according to a 55-page filing.

SCO Group Chief Executive Darl McBride, who's been demonized by the Linux faithful, was happy with the decision. "Today is not the end of the war but it certainly is a key battle that we've won," he said in a statement in the Salt Lake Tribune. "Now it's time to move on to the next series of battles with our victory in hand."

The World Wide Web Consortium is opening the possibility of pushing back against an Apple patent on software updates that Apple had refused to license royalty-free for use in a proposed Web standard.

The W3C announced June 12 that it's seeking prior art relating to Apple's patent No. 5,764,992--in other words, examples of the patent's technology in use that predate the patent itself. The patent, which Apple applied for in 1995 and was granted in 1998, involves this scenario: "a software program running on a computer automatically replaces itself with a newer version in a completely automated fashion, without interruption of its primary function, and in a manner that is completely transparent to the user of the computer."

The consortium, which oversees standards including the HTML for Web page publishing and the Portable Network Graphics (PNG) image format, is working on a draft standard called Widgets 1.0: Updates that governs how Web-based applications can update themselves. Apple in March said it wasn't willing to include the patent's 30 claims in the royalty-free licensing requirements of W3C standards.

To deal with the patent matter while continuing with development of the standard, the consortium set up a patent advisory group (PAG).

"The PAG seeks information about software update systems available before June 1995 that offer a viable solution that may apply to the use of updates in Widgets," the W3C said about the prior-art search. "Such information could suggest ways to define a specification that can achieve the working group's goals without implementers infringing on the disclosed patent."

Finding prior art could help overturn the patent, but W3C spokesman Ian Jacobs said the consortium hasn't yet concluded what measures to take.

"There are lots of options once we have more information," Jacobs said. "One possible outcome, should we find prior art, is the patent might be re-evaluated. If it turns out there is prior art, that will be fodder for the next discussion."

Apple didn't immediately respond to a request for comment.

Work on the draft specification can continue while the advisory group deals with the patent, Jacobs said, but the patent does complicate matters. "Does it cast a shadow over the specification? The answer is yes, until we have a better sense over the scope of the patent."

Via Dion Almaer

Corrected at 5:15 p.m.: This story initially misstated which standards the W3C oversees. It oversees HTML, Portable Network Graphics, and others.

SAN FRANCISCO--A federal judge sealed a courtroom on Friday after attorneys for the Motion Picture Association of America and another Hollywood group claimed that confidential information might be disclosed during testimony about DVD-encryption technology.

U.S. District Judge Marilyn Patel kicked the public out of the courtroom at around 2:30 p.m. PDT, overruling objections from CNET News and RealNetworks, which also said it opposed the unusual request.

An attorney for the DVD Copy Control Association, which is involved in a lawsuit here over DVD-backup software sold by RealNetworks, said details about the technology used to encrypt DVDs justified the request to give the public the boot during witness testimony--which, according to legal precedent, should be reserved only for rare cases.

"I find that this does meet the requirements for a trade secret," Patel said. "We're going to protect what needs to be protected. I'm ordering everyone not signed off on a confidentiality agreement to leave the courtroom."

"The MPAA is trying to seal proprietary specifications," said DVD-CCA attorney Reginald Steer. He added: "This is critical to our presentation."

Steer said the trade secrets related to licensing technology and CSS, or Content Scrambling System, which is an algorithm used to encrypt DVDs. DVD-CCA once filed a lawsuit against programmer Jon Johansen, who wrote a DVD-descrambling utility that circumvented CSS--a suit that had the unintended consequence of publicizing the code widely, including on ties, T-shirts, and at least one haiku poem.

Corynne McSherry, an attorney at the Electronic Frontier Foundation who has been following this case and was in the courtroom, said Patel chose an unfortunate procedure when barring the public from the room on Friday.

"She implied that we should have filed a motion preemptively," McSherry said. "If that's true, the public shouldn't have to go to court to make the courtroom stay open...Presumably the plaintiffs had known for months that they were planning to close this hearing. This is not the right way to do it."

CNET News contacted the MPAA in advance and asked if the group would attempt to close the courtroom on Friday; the MPAA replied earlier this week it would not seek to do so.

The MPAA, the lobbying group for the six largest film studios, alleges that RealDVD violates the Digital Millennium Copyright Act (DMCA) because it bypasses the copy protection built into DVDs. The DMCA generally restricts companies from developing products that circumvent antipiracy protections, but Real says that its RealDVD product complies with the law.

When arguing for the courtroom to be cleared of anyone that was bound by a non-disclosure agreement, attorneys for the DVD-CCA acknowledged that some of its technology had been cracked and published on the Web. But, they said, that information represented only a small fraction of the keys, algorithms and other trade secrets which have never been appeared publicly.

Details about CSS and Johansen's DeCSS code --which was the subject of an injunction nine years ago by a court in New York--is widely distributed including through a online gallery published by a Carnegie Mellon University researcher. In addition, programs like the DVD-descrambling utility Handbrake are in common use.

Patel's initial response in the morning seemed skeptical. She joked that if DVD-CCA and the MPAA wanted to close the courtroom, "You should have gotten yourself a private judge. This is an open forum."

Under long-standing U.S. law, courtrooms are open by default. The 9th Circuit Court of Appeals, which is binding on Patel, has said that judges considering closing a courtroom or sealing records "must provide sufficient notice to the public and press to afford them the opportunity to object or offer alternatives. If objections are made, a hearing on the objections must be held as soon as possible."

Once that hearing is held, the courtroom can only be closed if specific conditions are met, including that there are no alternatives that are practical. Also, the judge must "make specific factual findings," and not just claim it was necessary.

A CNET News reporter objected to the courtroom closure. CNET News' publisher, CBS Interactive, is weighing its options in terms of a legal challenge. CNET intervened last year in federal court in a case pitting Facebook against ConnectU to unseal documents, a dispute that ended up before the 9th Circuit Court of Appeals.

Updated 12:55 p.m. PDT to add more background.

Updated 3 p.m. PDT to note the courtroom had been closed.

Vice President Joe Biden lauded Hollywood at a gala dinner in Washington, D.C. on Tuesday evening, assailed movie piracy, and promised film executives that the Obama administration would pick "the right person" as its copyright czar.

Just days after four Pirate Bay defendants were found guilty in Sweden, Biden warned of the harms of piracy at a private event organized by the Motion Picture Association of America in the sumptuous, newly renovated Great Hall of the National Portrait Gallery in Washington, D.C.

"It's pure theft, stolen from the artists and quite frankly from the American people as consequence of loss of jobs and as a consequence of loss of income," Biden said, according to a White House pool report.

Biden blasted China, saying its intellectual property laws remain "largely ineffective" and will end up "strangling their own creative juices," and compared it to what he described as India's more effective anti-piracy regime. He singled out Canada, a close U.S. ally, as needing stronger laws; it never signed the treaty that led to the Digital Millennium Copyright Act, and a proposal to adopt anti-circumvention restrictions was never adopted.

He also addressed President Obama's forthcoming decision about who will be named the intellectual-property enforcement coordinator, better known as the copyright czar. Copyright industry lobbyists sent a letter Monday to the president asking him to pick someone sympathetic to their concerns, while groups that would curb copyright law sent their own letter urging the opposite approach.

We "will find the right person for intellectual property czar," Biden said.

Under a law approved by the U.S. Congress last October, Obama is required to appoint someone to coordinate the administration's IP enforcement efforts and prepare annual reports.

Senators attending the MPAA gala included Richard Durban (D-Illinois); Sheldon Whitehouse (D-R.I.); Frank Lautenberg (D-N.J.), Judd Gregg (R-N.H.); Amy Klobuchar (D-Minnesota); Patrick Leahy (D-Vermont); Roger Wicker (R-Mississipi); and Ben Nelson (D-Nebraska).

An unspoken reason for the MPAA event--which included a symposium earlier in the day with remarks from top House Democrats and Commerce Secretary Gary Locke--was the loss of $246 million in tax breaks when the Senate revised the economic stimulus bill earlier this year. An MPAA report released Tuesday appears designed to avoid a repeat of that setback, listing the number of movies being filmed in each state.

Earlier in the day, Locke also talked up more government action against peer-to-peer piracy. "The recent revelation that an illegal copy of the upcoming movie "Wolverine" had been posted on the Internet prior to its theatrical release underscores the problem the industry faces...As a former prosecutor, I believe in the full and impartial enforcement of the law," he said.

On copyright, President Obama has signaled a more pro-industry approach than his predecessor, which has alarmed advocates of less restrictive laws.

The president chose as top Justice Department officials the music industry attorney who pulled the plug on Grokster and another longtime Recording Industry Association of America ligitator. The Obama administration recently sided with the RIAA in a file-sharing suit, and Biden was a staunch RIAA and MPAA ally as a U.S. senator.

"I think sometimes you underestimate the impact you have, and not just entertaining but uplifting," Biden told the audience at the MPAA event. "I wish I could inspire the way you do."

IEEE, a professional organization for the advancement of tech, is announcing on Monday a collaboration with Via Licensing to foster the development of patent pools based on IEEE standards.

San Francisco-based Via administers licensing programs for intellectual property owners.

The two-year pilot program is the first of its kind between a standards developer and a licensing administrator, said Via and IEEE.

The collaboration will encourage intellectual property holders to establish joint licensing programs through which they can offer streamlined royalty rates and licenses for all of the patents in the pool.

"What it means if you're an implementer is you have a one-stop shop to get all the licenses you need to develop a product," said Edward Rashba, director of new business ventures for IEEE, which stands for the Institute of Electrical and Electronics Engineers.

The IEEE entered the agreement with the goal of getting more products based on its standards into the market, Rashba said. Via, for its part, will apply its regular administration fees to any patent pools arranged with the IEEE. The specific terms of the deal are confidential, though both entities will take on some costs of the project, and a small percentage of Via's returns will flow back to IEEE.

"What we've been hearing from our members is the need to...help implement standards on the marketplace...and getting these pools together will be a very powerful approach to make these products more successful," Rashba said. "We feel we have the opportunity to address some of the key challenges facing the technology industry."

Those challenges include navigating overlapping IP rights, dealing with multiple IP holders and different prices, and facing the increased risk of costly patent lawsuits. The uncertainties surrounding licensing can delay products from going to market.

Jason Johnson, vice president at Via Licensing

These problems have spurred varying solutions, like the "defensive patent aggregator" business model adopted by RPX, a new company that buys up patents with the intent of providing them to its member companies, which pay an annual fee anywhere from $35,000 to $4.9 million for RPX's services.

Patent pooling is not a very common way around the maze of licensing complications. There are only about a dozen high-profile patent pools, eight of which are administered by Via, according to Jason Johnson, Via's vice president of marketing and business development.

Via, a subsidiary of Dolby Laboratories, is currently developing an Ultra-High Frequency Radio Frequency ID patent pool for members of the RFID Consortium.

While Via will facilitate negotiations with participating companies, the IEEE's role is "building awareness," Rashba said. The organization is likely to suggest the patents, for which standards were recently developed, that may be appropriate to include in patent pools.

Johnson said it is hard to anticipate how successful the program will be because developing a patent pool can take one to two years.

"If we get one formed at the end of two years, I think everyone will be excited," Rashba said.

Updated at 12:45 p.m. PDT with quotes.

President Bush on Monday signed into law an intellectual-property enforcement bill that would consolidate federal efforts to combat copyright infringement under a new White House cabinet position.

The Prioritizing Resources and Organization for Intellectual Property Act establishes within the executive branch the position of intellectual property enforcement coordinator, who will be appointed by the president.

The law also steepens penalties for intellectual-property infringement, and increases resources for the Department of Justice to coordinate for federal and state efforts against counterfeiting and piracy. The so-called Pro-IP Act passed unanimously in the Senate last month and received strong bipartisan support in the House.

The Bush administration initially expressed its opposition to the legislation, but one of its more contentious provisions, which would have allowed the Justice Department to pursue civil litigation against copyright infringers, was removed.

The law has received wide-ranging support from within the business community, including from the Recording Industry Association of America, the U.S. Chamber of Commerce, and copyright holders such as NBC Universal. Labor groups such as the AFL-CIO have also expressed their support for the new law. Business and labor groups have said strong intellectual-property enforcement is critical for the development of the U.S. economy.

"What the Congress recognized and the president has ratified is the critical importance of innovation, technical invention, and creativity to the U.S. economy," said Rick Cotton, executive vice president and general counsel of NBC Universal. "This law will dramatically move the priority of IP enforcement up the agenda in critical ways."

Intellectual property in the U.S. is worth more than $5 trillion, according to the U.S. Chamber of Commerce, and accounts for more than half of all U.S. exports.

"By becoming law, the Pro-IP Act sends the message to IP criminals everywhere that the U.S. will go the extra mile to protect American innovation," said Tom Donohue, president and CEO of the U.S. Chamber of Commerce.

The legislation saw opposition from some public-advocacy groups, including the American Library Association, Public Knowledge, and the Electronic Frontier Foundation.

"It would've been nice to have something to benefit the public and artists instead of big media companies," Public Knowledge Communications Director Art Brodsky said, noting that Congress and the president could give more consideration to the public on matters of intellectual property, with further action on the issue of "orphan works," copyrighted material for which the owner cannot be found.

The Senate in September passed a bill limiting civil actions in copyright infringement cases involving orphan works.

The intellectual property enforcement bill Congress passed over the weekend has won strong bipartisan support and wide-ranging approval from the business community. It remains to be seen, however, whether the president will sign into law the Prioritizing Resources and Organization for Intellectual Property Act, or Pro-IP Act.

The bill is likely to be sent to the White House within a week, giving the president 10 days to sign or veto it. It would likely survive a veto, unless the president vetoed or ignored the bill while Congress is out of session. Congress intended to adjourn this week ahead of the November elections, but the financial bailout bill has kept it in session.

The bill's major stumbling block is a provision calling for the president to appoint a Senate-confirmed Intellectual Property Enforcement Coordinator. The creation of a new cabinet position is a significant--and perhaps most controversial--part of the bill. What exactly would the IP coordinator do, and why does it matter? Here's a look at some of those concerns.

What exactly would the IP enforcement coordinator do?
The IPEC would provide guidance to other federal departments and agencies in their efforts to combat IP infringement. The IPEC would mainly achieve this by chairing an IP enforcement advisory committee, made up of the Office of Management and Budget, the Justice Department, the Commerce Department, the Office of the United States Trade Representative, the State Department, Homeland Security, Health and Human Services, the Agriculture Department, and the U.S. Copyright Office.

The IPEC cannot control how these agencies investigate or prosecute IP infringement cases--but he or she will guide the development of a "Joint Strategic Plan" the advisory committee is charged to create to combat counterfeiting and infringement. The aim of the strategic plan is to disrupt counterfeiting and IP infringement both in the U.S. and abroad, ensure that enforcement efforts aren't duplicated by the various agencies, establish a protocol for consulting with private industry, establish international standards for IP enforcement, and help other countries improve their IP enforcement efforts.

The chances of President Bush appointing an IPEC seem slim. The bill calls for the advisory committee to submit its strategic plan to Congress no later than 12 months after its enactment, so filling the cabinet position and putting the committee together could be left for the next administration.

The creation of the IPEC and the advisory committee would essentially replace the National Intellectual Property Law Enforcement Coordination Council, an interagency group that implemented the Strategy for Targeting Organized Piracy Initiative.

Is there opposition to the creation of this position?
In a letter from the Commerce Department and the Justice Department, the Bush administration voiced its opposition to two components of the Pro-IP bill, one being the creation of the IPEC. Requiring the president to appoint an IPEC, the letter said, was objectionable on constitutional separation of powers grounds. It would "improperly micro-manage the internal organization of the executive branch" and create "unnecessary bureaucracy."

The added bureaucracy could create an undue burden for taxpayers, others argue. Julie Jennings, a trademark attorney with the St. Louis law firm Senniger Powers, said it might be premature to create the IPEC position.

"I'm wondering if the same thing could take place by revising copyright laws without creating this entirely new cabinet position and all of the secondary positions that are going to fall underneath that," she said.

The House of Representatives on Sunday cleared the intellectual property enforcement bill that would create an "IP coordinator" position in the White House.

The legislation, formally known as the Prioritizing Resources and Organization for Intellectual Property Act, or Pro-IP, passed unanimously in the Senate on Friday.

The Bush administration last week sent a letter to Congress stating its opposition to certain measures, including the creation of an IP coordinator. It is unclear whether the administration supports the bill as it was passed.

The bipartisan legislation passed in the House 341-41, with dissenters on both sides of the aisle. The measure has received wide support from the business community, including from groups like the Recording Industry Association of America and the AFL-CIO, but it is opposed by public interest groups like the Electronic Frontier Foundation and Public Knowledge.