Sunday, September 25, 2011

Copyright Protection for Software: More Money

I've mentioned before that you should be seriously considering copyright protection for your software either in addition to patent protection, or as an alternative if you don't already have patent protection. Again, you get copyright protection automatically, without the exorbitant expense and delay associated with patent protection. Also, there is the possibility for greater money damages in a copyright suit.
Orace estimates $950 Million in copyright damages
Case in point: Oracle has sued Google for patent and copyright infringement. Basically, Oracle says that Google infringed the copyrights and patents owned by Oracle on the JAVA technology. Actually, Oracle owns those rights because they purchased Sun Microsystems a couple of years ago.
In that suit, Oracle recently submitted its damages estimate. Oracle claims that Google owes roughly $200 million in patent damages, but about $950 million in damages for the copyright infringement. Couple that with the lower standard for recovering attorneys fees in the copyright case versus the patent case, and Oracle stands to gain a substantially greater recovery for its copyright claim than its patent claim. Again, copyright law is proving to be the legal mechanism of choice for protecting software. So if you are considering legal action to protect your software, you should definitely be evaluating whether you have a copyright claim as well. If not, you could be leaving the lion's share of your recovery on the table.

Wednesday, September 21, 2011

Copyright Infringement Damages: Why Is Sony Really Suing Joel Tenenbaum?

Joel Tenenbaum is a student pursuing a PhD. He does what lots of students do, listens to music. Apparently Joel also downloads some of that music off the Internet without paying. Sony (and others) found out and sued him. Joel chose to fight the suit and enlisted the help of law professor Charles Nesson. Apparently that didn't go so well, and a jury returned a verdict against Joel of $675,000 for downloading about 30 songs. Wow.
The trial judge (correctly) decided that was way too much money. The trial judge said the award was so excessive that it was unconstitutional, so the trial judge reduced the amount by a factor of 10 to $67,500. Sony appealed because they wanted the whole excessive amount.
Last week, the appellate court overturned the trial judge's reduction of the award. The appellate court agreed that Joel was liable, and sort of agreed that the award was excessive, they just disagreed with how the trial judge decided to reduce the amount. Basically, the appellate court said the trial judge should have given Sony the choice between a new trial or the lower amount.
Here is a really good article written by a second year law student who has an interesting perspective on the case. What makes it interesting is the author asks the question: Why is Sony pursuing such an excessive damages award when it is costing Sony so much to do so? In other words, what does Sony really have to gain by pushing to re-instate the original $675,000 award? The case just went back to the same trial judge who is likely to come down the same way, only this time he will offer Sony the option of a new trial instead of the lower damages amount. Either way, does Sony really think it will recover $675,000 from a student? Really?
Good business sense should dictate that a company should make good business decisions. Here, Sony and its gang are pushing forward to reinstate a damages award that it could never recover even if it was reinstated, or to get a new trial that won't do anything for Sony either. All they could possibly hope to get is another excessive, noncollectable verdict. Sony is spending a ton of money fighting this case with very little, if any, chance of actually recovering anything.
Here's what's really happening. The economy is still very soft. Law firms are still laying off lawyers and struggling to get work. So here is the story that its law firm sold to Sony (and many other big companies). "You have to push this case to set an example." "If you don't fight hard then others will do the same thing." "It's OK if you lose lots of money on this case because you will make it up later." That is all a crock of poop.
Have all these lawsuits seriously impacted online piracy? No! Students still download just as many songs online as ever. They also buy a lot more songs than ever too. In fact, the only thing that has happened is these lawsuits have spawned an entire cottage industry of online piracy lawsuits. These companies are even suing dead people now. If death isn't a deterrent to online piracy, a lawsuit certainly isn't.
Sony and their ilk are not making money on these cases. The RIAA is not making money on these cases. The only people making money on these cases are the lawyers. As a copyright lawyer myself, I realize the inconsistency with which I make that statement because I am not philosophically opposed to people making money. However, in situations where the only people making money are the lawyers, is that really justice?

Thursday, September 8, 2011

Perfect your Copyright: Register Your Photographs!

I have mentioned before that registering your copyright before infringement occurs gains you some very significant benefits. If you are a photographer in the digital age, that lesson should be especially dear. If you don't want to believe me, then take the advice of Jeremy Nicholl, a British photographer based in Moscow who specializes in capturing images of the former Soviet Union. He tells a very interesting tale about one of his photographs that was misappropriated and used by a U.S. media company. Thankfully, he began registering his images in the U.S. Copyright Office some time ago, even though he is based in Moscow, so he was able to secure a very handsome settlement with the perpetrator in fairly short order.
That article is an interesting read both for his story of enforcing his rights from afar, and for his valuable advice concerning the importance of and ease with which photographers can perfect their copyrights by registering them with the U.S. Copyright Office, regardless of where you live and work. After all, you never know where the copyright infringement will occur. Just ask Jeremy Nicholl.

Tuesday, September 6, 2011

Contingent Fee Copyright Lawyers: In Defense of Alternative Billing

Unlike most lawyers, we take the majority of our cases on a contingent-fee basis. To be fair, we are not alone and lots of lawyers work on contingency, although not that many in intellectual property infringement cases. We are frequently attacked as ambulance chasers and worse. But the reality is that the contingent-fee lawyer is the only lawyer who really has your best interests in mind. Invariably, the arguments against contingent-fee lawyers come from hourly-billing lawyers who are perfectly willing to fight your case to your last dime, regardless of how unlikely you are to win.

I'd like to take this opportunity to debunk several myths about contingent fee copyright lawyers that keep getting persisted.
Myth 1: Contingent Fee Lawyers File Frivolous Lawsuits
Reality: Say an employer came to you and said: I'll give you a job selling my product, and your compensation will be tied to how well my product sells. Would you take that job without even considering how well the product will sell? Or would your desire to take the job turn mostly on whether you think the product will sell? Contingent fee lawyers don't make any money unless they win. It makes no sense for a contingent fee lawyer to take a case that has no merit. Contrast that reality with hourly-based lawyers who get paid regardless of whether their client's case has any merit.
Myth 2: Contingent Fee Lawyers Are All Ambulance Chasers
Reality: Contingent fee lawyers do not need to chase cases. Believe it or not, there are quite a lot of people with legal disputes who want a lawyer who doesn't charge by the hour. You should also not be surprised that most lawyers are unwilling to invest upwards of a million dollars (sometimes even more) of their time with the possibility of never getting paid. It's simple supply and demand. There are way more contingent fee cases than there are lawyers to take them.  So contingent fee lawyers can typically be very selective with the cases they take. Why take a dog case when there are ten more people begging you for "free" legal representation?
Myth 3: You Have To Fight Contingent Fee Lawyers Or They Swarm Like Piranhas
This one is my favorite. This is the one that counsel for big companies like to tell their clients.  If your big company gets sued, your in-house counsel will invariably get an immediate notice from outside counsel offering to take on the case right away.  If the lawyers who brought the suit are contingent fee lawyers, that notice will invariably come with the "you have to fight these trolls" mantra.  Note that I didn't mention any actual substantive analysis in that notice.  There is never any substantive analysis in that first notice.  That's because the big firm has to strike quickly; they must offer to take the case immediately before some other big firm beats them to it.  There's just no time to analyze the actual case, only to attack the plaintiff's lawyers. 

After outside counsel gets assigned, the next battle cry is that if you settle this case, your company will just keep getting sued; you will be better off fighting this case so that these contingent fee lawyers will think twice about suing your company again.  Sounds reasonable on its face.  The problem is go back to Myth No. 1 and Myth No. 2.  Contingent fee lawyers rarely file cases they can't win.  Why would they? Suing your company again has nothing to do with whether your company fights back; it has everything to do with whether your company loses when it does. And I can assure you, companies that fight cases they should settle end up losing way more than they should. Just consider this shoe company that refused to settle an infringement case over 9 pictures of shoes, and ended up with a $1.3 Million judgment against them.

Test this theory.  If you work in a big company, and your company gets sued, and your outside counsel says "we have to fight these darn contingent fee lawyers" do this:  Demand that your own lawyer represent you based on the outcome.  In other words, make your lawyer agree to represent you for free if they don't win the case.  See how quickly they take that deal.

Friday, September 2, 2011

Copyright Is The New Patent: How to Protect Your Software, Again

Back in the day (the early '90s), copyright law was viewed as the best way to protect software from piracy. There was a ton of cases that tried to establish some rules, rooted in copyright law, to protect the “look and feel” of software.* The purpose was to extend copyright protection to more than just someone’s source code and to provide meaningful protection for the labors of software developers.
The big push toward stronger software copyright protection was sidelined around 1995 when patent law gained acceptance as the superior protection mechanism. In re Beauregard is often cited as the case that started it all. Then, for about the next decade, patent law was the software protection king, resulting in countless patent infringement lawsuits.
But today, there seems to be a strong push back towards copyright law. More and more, companies are relying on copyrights instead of patents to protect their software. Recently, Oracle secured a HUGE ($1.3 Billion) verdict against SAP for copyright infringement of their software. Sure, it was just reduced to $272 Million, but still. Some say that's big money. Not surprisingly, Oracle has also begun protecting its APIs using copyright law.
There are, I believe, quite a few compelling reasons for preferring copyright law over patent law for protecting software. Here are just a few of them.
Copyright Protection Is Easier To Get
Unlike patent protection, copyright protection springs naturally from your work without having to do anything else. Whereas a software patent usually costs $20,000 or more to get, if you can even get it, copyright protection is automatic and can cost as little as $60. Plus you can always file your copyright registration, regardless of how long you've been selling your software or how many people you've told about it.
Copyright Protection Is Faster
In a world where last-year's software is old news, the typical three to five year delay to get a patent means that as soon as the software patent issues it has probably already been obsolete for a couple of years. Again, copyright protection exists the moment you write your code. There is nothing else you must do, although it is a very good idea to go ahead and spend that $60 and register your software.
Copyright Infringement Is Easier To Prove
To prove copyright infringement, you basically just put the protected software beside the accused software and take a look. Does the accused software look like a copy? If so, then infringement. That's an oversimplification, but the proof really is almost that simple. Contrast that with patent law, where litigants must often spend millions of dollars on claim charts, claim interpretation, expert reports, and on and on.
There May Be More Money If You Have To Sue
The copyright owner always has the potential of getting the profits of the infringer. Not so with software patents. Also, copyright statutory damages are often significantly higher than any other measure of damages. Patent law has no statutory damages. Throw in the much higher likelihood of also recovering attorneys fees in the copyright case, and the numbers just keep adding up.
Copyright Law Is Still Strong
The copyright laws are still very strong. Copyrights are not routinely stricken down as being "un-copyrightable." Actually, that almost never happens. That's probably because there is just something viscerally wrong about someone else making money by copying your work. Contrast that with patent law, where judicial activism has eroded the strength of patent protection to the point where many question whether patents are even worth what it costs to get them any more. My personal (admittedly unscientific) research suggests that a small company has a better chance of being struck by lightning on the same day it wins the lottery than having a significant damages award upheld against a large company in a patent case.
There are other reasons copyright law is fast becoming the legal theory of choice for protecting software, but these are some good ones. If you are a small software company with a successful product, know that you will have to protect it soon. That, unfortunately, is just the way business is conducted these days. So when that day comes, seriously consider your copyright options.

* If you want to read more about early copyright protection on software, here's a link to an article about many of those "look and feel" cases, including the seminal Lotus v. Borland case that went to the Supreme Court.