Tech Law Prof Blog

Yahoo! Pressed by House Committee Over Dissident Testimony

Congressman Tom Lantos, Chair of the House Foreign Affairs Committee has asked Yahoo! Chief Executive Officer Jerry Yang and Senior Vice President and General Counsel Michael Callaghan to testify at a November 6 hearing concerning jailed Chinese activist Shi Tao.  The Committee believes that Yahoo! representatives lied at an earlier hearing in 2006 when it claimed that it didn't know why the Chinese government wanted the information on Shi Tao.  The Committee is in possession of a Chinese government document that refutes that statement.

Committee member Chris Smith (R-NJ) is quoted in the Committee press release as saying “U.S. companies must hold the line and not work hand in glove with the secret police."  I wonder if he feels the same way about AT&T, Verizon, et al. and their alleged illegal cooperation with the NSA?

Another iPhone Lawsuit In The Wings

The latest round of lawsuits against Apple over the iPhone comes from the Center for Environmental Health.  That organization believes the iPhone violates the California Safe Drinking Water and Toxic Enforcement Act of 1986.  The violation concerns levels of phthalates in the iPhone.  The suit hasn't been filed yet, but likely will be depending on Apple's response.  This comes on top of Greenpeace complaining about other toxins in the iPhone.  Apple responded that it meets Restrictions of Hazardous Substances standards which did not impress Greenpeace at all.  They're all miffed because out of all phone manufacturers, Apple does not voluntarily disclose the chemical make-up of its phone.  If Apple had disclosed the chemical content, would it have really changed anything?  They'd probably still sell a million or more.

See stories in Wired and TechNewsWorld for more details.

Google Tests Video Fingerprint System for YouTube

Google's video fingerprint technology designed to flag copyrighted material at the upload stage is making it's debut, at least in testing form.  Google's being really sly about this.  Copyright owners need to upload copies of materials they want to protect to a database so that Google can create the fingerprint.  In essence, Google sits on top of a database of audio and video that essentially becomes an non-public archive of inventory for the biggest entertainment companies.  Once that archive reaches mass, could there be a deal somewhere to let that material loose, like a fully stocked Google video store?

The other part of the plan is to let the copyright owner decide whether to let the upload continue.  Then Google places an ad before the video and both share the revenues.  Viacom sued Google over what the company essential described as rampant copyright violation on YouTube.  Google's defense has always been that it has always complied with provisions of the DMCA.  Now it can keep that defense and say it's doing more than required.  Talk about making lemonade out of lemons.

Apple Lowers Price of DRM-Free Tracks to 99 Cents

Apple is dropping the price of DRM free tracks on the iTunes store from $1.29 to 99 cents.  This is a response to the Amazon music store as a credible competitor.  If the unprecedented price drop of the iPhone rankled customers, how is this going to play with consumers who bought or upgraded their music collections at the recently introduced higher price?

Read about it in the Wall Street Journal.

Scotus Declines MS, Best Buy Appeal on Cross Promotion

The Supreme Court has refused to hear an appeal of a 9th Circuit case allowing a class action to proceed against Microsoft and Best Buy.  The opinion at issue is Odom v. Microsoft, 486 F3d 541 (CA 9 2007).  The denial of certiorari is at 2007 WL 2982493 .  The case involves RICO and other claims against the two corporations for conspiring to sign customers up to the MSN Internet service without those customers' permission.  The case was dismissed by the trial court but reinstated by the 9th Circuit after an en banc hearing.

The facts as stated in the 9th Circiut:

Named plaintiff James Odom-then the only plaintiff-filed the first complaint in this action in the Northern District of California, alleging that defendants Microsoft and Best Buy had violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1962(c) and (d). Odom alleged that in April 2000 defendants entered into an agreement under which “Microsoft invested $200 million in Best Buy and agreed to promote Best Buy's online store through its MSN service.” MSN is a division of Microsoft offering Internet access services. In return, “Best Buy agreed to promote MSN service and other Microsoft products in its stores and advertising.” Odom alleged that pursuant to their agreement, Best Buy employees distributed different Microsoft compact discs (“Trial CDs”) depending on what the customer purchased. For example, a customer who purchased a computer would receive a Trial CD providing a free six-month subscription to MSN. A customer who purchased a cell phone would receive a Trial CD providing a free thirty-day subscription.

Odom alleged that if the customer was paying by debit or credit card the Best Buy employee would scan the Trial CD. If asked why the Trial CD had been scanned, the Best Buy employee would claim it was for “inventory control or otherwise misrepresent[ ] the purpose of the scanning.” Odom alleged that what this scanning actually did was send the information to Microsoft. Microsoft would then, without the customer's knowledge or permission, activate an MSN account in the customer's name. If the customer did not cancel the account before the expiration of the free trial period, Microsoft would start billing the debit or credit card number. Odom further alleged that when customers called to dispute these charges, Microsoft directed some of them to “seek relief from their debit or credit card issuers.”

Odom alleged that the “policies and practices by Best Buy and its employees relating to distribution of the Trial CDs-including but not limited to the deliberate failure to make disclosures and making of misrepresentations-have been formulated and implemented by Best Buy jointly with Microsoft, by agreement with Microsoft, and/or with Microsoft's knowledge and approval for the benefit of both Best Buy and Microsoft.” Odom alleged that no affected customer had been fully compensated for his or her losses, defined as (1) a full refund of the unauthorized charges; (2) a full refund of the accrued finance charges; (3) payment of interest on the money during the time it was held by Microsoft; and (4) compensation for the “time, effort, and expense” incurred in cancelling MSN accounts and seeking refunds. Odom alleged that these losses resulted from defendants' actions taken pursuant to their agreement.

The 9th Circuit heard arguments that this type of arrangement was not the type of conspiracy that Congress intended to fall under the RICO statute.  The Court rejected that position by stating that the language of the statute was broad.  Congress could make changes to the language of the statute, not the courts, citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985).  Now Microsoft and Best Buy will have to defend themselves over the alleged conduct.  This case may be better off settled as far as the defendants are concerned.  We'll see.

Red Hat and Novell Sued Over Alleged Linux Patent Violations

Red Hat and Novell were sued by IP Innovations over patents used in their Linux products.  These are the first suits against open source software involving patents.  Microsoft has always threatened legal action against Linux, and Red Hat in particular.  Steve Ballmer claims Linux violates 235 Microsoft patents but declines to identify them.  Ballmer makes so many bombastic statements that one hardly wonders what is the real truth.  Still, he must be looking fondly at this suit to see how it turns out before unleashing the legal dogs at Microsoft. Groklaw has an interesting take on the litigation which highlights a potential Microsoft connection to the plaintiffs.