Spot the odd one out!Wednesday, April 23, 2008
Monday, April 21, 2008
Marketing Information Masters v. The Trustees of the California State University: Court Finds Part of Copyright Act Unconstitutional
In this American decision, it was found that a section of the Copyright Remedy Clarification Act was an invalid exercise of power under the Constitution. This section states that "[a]ny State, instrumentality of a state... or employee of a State or instrumentality of a State... shall not be immune, under the Eleventh Amendment" to a suit for copyright infringement. 17 U.S.C. section 511(a).
A win I suppose for those who believe that copyright is draconian and should be replaced with a share and share alike mantra?
Here is an article which outlines the legal effect of such a decision, and here is the link to the Slashdot article.
A win I suppose for those who believe that copyright is draconian and should be replaced with a share and share alike mantra?
Here is an article which outlines the legal effect of such a decision, and here is the link to the Slashdot article.
Copyright and Intellectual Property: A look at the Facebook law suit
Many students, and others who spend their days looking for ways to procrastinate, probably have a face book account. Many may recall the spread of the news that face book is going to be shut down due to law suits stemming from Mark Zuckerberg's fellow students, Tyler Winklevoss, Cameron Winklevoss and Divya Narendra, claiming that Zuckerberg had taken code he had written for ConnectU to launch his rival site.
The background to the lawsuit is this: Mark Zuckerberg, as a student at Harvard University, joined with three classmates who were working on a new idea called ConnectU, a set of interlinked social networks for students at a single college. Zuckerberg did some work for them, but then launched his own website — what's now known as Facebook. His three former classmates than launched an action against Zuckerberg on the 2 September 2004 for the alleged theft of their idea - and argued breach of fiduciary duty, breach of contract, and fraud amongst other things. While the case appears to be settling out of court (see the New York Times article here), an obvious legal issue arises from this case: can code be considered intellectual property in the same way that other literary works are? Can it be protected by a copyright?
Now the claim that code can be protected intellectual property is not new. In the case of Computer Edge v Apple, it was held that code was a literary work and was therefore was not able to be protected by copyright under Copyright Amendment Act 1984. At the time, it was unlikely that the legislature could have envisaged computer programs when they enacted this act, however the Section 10 of the Copyright Act now states that a computer program is subject to copyright protection. It appears that a computer program (and presumably the code contained within it) are protected by copyright.
The question also arises as to what a substantial reproduction would entail: could stealing a single line of code constitute a breach of copyright? The court in Autodesk v Dyason there was a computer program of 20 000 lines long. A string of data which was 16 bytes long, which was said to be essential to the execution of the program, was taken by a competitor to create a similar program. The question for the court was whether this was substantial. They applied a but for test: but for this part of the program, would the program still exist? However, this decision was questioned in Powerflex services v Data access, where it was held that the test should look at the quality of the part; if the but for test was used this would result in rediculous outcomes as even the removal of a semi colon could be disastrous for a computer program (with the outcome that even a semi colon could be protected by copyright!).
It is arguable as to whether Zuckerberg's classmates could have gotten up on a copyright argument, as it should be recognised that these decisions were heard in Australia. It appears that they did not consider the possibility of breach of copyright (however, another line of thinking is that if they could show breach of fiduciary duty, they could be entitled to such equitable remedies as account of profits). It is interesting to note that a similar situation arose in the Apple vs Microsoft war to release an operating system, Steve Jobs showed Bill Gates his idea for a graphics based OS, which was ripped off in the release of Microsoft's own Windows (well from the portrayal in Pirates of Silicon Valley, which while written without interviews with either Jobs or Gates, was well researched by writer Martyn Burke).
However, if anything, Facebook and other such cases have shown that perhaps that copyright of code is not productive for entrepreneurial pursuits. Sharing and building on others code could be more beneficial, as shown in the Open Source community. Furthermore, what is boils down to is that Zuckerberg had a better business model that the ConnectU founders: it is questionable as to whether their site would have gone to the same heights as FaceBook. The same goes for Microsoft and Apple: it is arguable that Bill Gates had the better business model to market the graphics based operating system.
The background to the lawsuit is this: Mark Zuckerberg, as a student at Harvard University, joined with three classmates who were working on a new idea called ConnectU, a set of interlinked social networks for students at a single college. Zuckerberg did some work for them, but then launched his own website — what's now known as Facebook. His three former classmates than launched an action against Zuckerberg on the 2 September 2004 for the alleged theft of their idea - and argued breach of fiduciary duty, breach of contract, and fraud amongst other things. While the case appears to be settling out of court (see the New York Times article here), an obvious legal issue arises from this case: can code be considered intellectual property in the same way that other literary works are? Can it be protected by a copyright?
Now the claim that code can be protected intellectual property is not new. In the case of Computer Edge v Apple, it was held that code was a literary work and was therefore was not able to be protected by copyright under Copyright Amendment Act 1984. At the time, it was unlikely that the legislature could have envisaged computer programs when they enacted this act, however the Section 10 of the Copyright Act now states that a computer program is subject to copyright protection. It appears that a computer program (and presumably the code contained within it) are protected by copyright.
The question also arises as to what a substantial reproduction would entail: could stealing a single line of code constitute a breach of copyright? The court in Autodesk v Dyason there was a computer program of 20 000 lines long. A string of data which was 16 bytes long, which was said to be essential to the execution of the program, was taken by a competitor to create a similar program. The question for the court was whether this was substantial. They applied a but for test: but for this part of the program, would the program still exist? However, this decision was questioned in Powerflex services v Data access, where it was held that the test should look at the quality of the part; if the but for test was used this would result in rediculous outcomes as even the removal of a semi colon could be disastrous for a computer program (with the outcome that even a semi colon could be protected by copyright!).
It is arguable as to whether Zuckerberg's classmates could have gotten up on a copyright argument, as it should be recognised that these decisions were heard in Australia. It appears that they did not consider the possibility of breach of copyright (however, another line of thinking is that if they could show breach of fiduciary duty, they could be entitled to such equitable remedies as account of profits). It is interesting to note that a similar situation arose in the Apple vs Microsoft war to release an operating system, Steve Jobs showed Bill Gates his idea for a graphics based OS, which was ripped off in the release of Microsoft's own Windows (well from the portrayal in Pirates of Silicon Valley, which while written without interviews with either Jobs or Gates, was well researched by writer Martyn Burke).
However, if anything, Facebook and other such cases have shown that perhaps that copyright of code is not productive for entrepreneurial pursuits. Sharing and building on others code could be more beneficial, as shown in the Open Source community. Furthermore, what is boils down to is that Zuckerberg had a better business model that the ConnectU founders: it is questionable as to whether their site would have gone to the same heights as FaceBook. The same goes for Microsoft and Apple: it is arguable that Bill Gates had the better business model to market the graphics based operating system.
Saturday, April 5, 2008
Ebay - Peter Smyth v Vincent Thomas
I have purchased many things on ebay, and I am sure that a substantial amount of the population have done the same. But what happens when things go wrong, is there a binding contract on which to rely on? Is Ebay liable if an item doesn't turn up?
In the 2007 case of Peter Smythe v Vincent Thomas, the Defendant Thomas listed a Wirrawau Australian Warbird aircraft for sale, with a starting bid of $150,000.00, even though Thomas thought the aircraft was probably worth around $200K to $250K. With 20 seconds remaining, Smythe made a bid on the aircraft, in accordance with Ebay rules, and 'won' the aircraft (which is a peculiar way of buying something in my opinion, as you still have to pay for it at the end: I mean you don't go into Woolworths to buy a bottle of milk, and at the counter they tell you have won a bottle of milk... but you still have to pay for it....). Both parties were registered users of ebay, and both were aware of how ebay worked. Smythe then claimed that as a result, a contract for the sale of goods had been entered into, and there was now a binding contract between himself and Thomas. Thomas claimed that the ebay entry was simply an invitation to treat or in other words a request for expressions of interest. Thomas said that it was rediculous that a contract for the sale of a plane could occur, as Smythe had never inspected the plane, and he said that his intention was to advertise the plane, then discuss the terms later on. He also had another offer for the plane for $220,000.00, so this might have also been a factor as to why he was so keen to ensure this contract was not binding. Thomas also claimed that he did not know that he would be committed to sell the plane.
The New South Wales Supreme Court found it surprising that Thomas was not aware that he would be committed to sell, as he had bought vintage car parts previously, and knew how ebay worked. In the view of Rein AJ, by listing the plane for sale on ebay, with a disclosed reserve of $150,000.00, he offered to sell the plane to a bidder who bid before the end of the auction, with a bid for $150,000.00, and was the highest bidder at the end of the auction. However, it should be noted that ebay is actually not an auction site, it only provides an auction like format for users to sell their items. Therefore, the rules of a traditional auction did not apply. It was held that there was a binding contract formed between the parties, and it should therefore be specifically enforced. All the essential terms of the Contract were listed on ebay, such as the price, and that Thomas had never stated that the sale was subject to an inspection or further discussion of the terms of the sale.
One has to wonder though, what would happen if Smythe then purchases the plane, but finds it is poor repair? Would he have a further action? Could Ebay be liable? Further could Ebay be liable should an item not turn up, and the Seller had absconded with the purchase money? In Eva Gora v Ebay, a person in Victoria bought a computer from someone in the Middle East. It never turn up, and the person who sold it disappeared. They contacted the police, who refused to investigate. They then decided to take ebay to court. Ebay argued that they were not a party to the contract, only a forum for users, but that she could claim $270 insurance. However, Ebay said on its website ‘safest place to do your shopping’. Under the fair trading legislation, the question was were they inducing people to rely on their message that ebay was safe to use? It was held that they were bound to this statement. The court found that ebay had conducted itself that it was safe to use, and was for all cases automatically insured. They failed to disclose that their insurance was small. They were therefore held liable under TPA.
In the 2007 case of Peter Smythe v Vincent Thomas, the Defendant Thomas listed a Wirrawau Australian Warbird aircraft for sale, with a starting bid of $150,000.00, even though Thomas thought the aircraft was probably worth around $200K to $250K. With 20 seconds remaining, Smythe made a bid on the aircraft, in accordance with Ebay rules, and 'won' the aircraft (which is a peculiar way of buying something in my opinion, as you still have to pay for it at the end: I mean you don't go into Woolworths to buy a bottle of milk, and at the counter they tell you have won a bottle of milk... but you still have to pay for it....). Both parties were registered users of ebay, and both were aware of how ebay worked. Smythe then claimed that as a result, a contract for the sale of goods had been entered into, and there was now a binding contract between himself and Thomas. Thomas claimed that the ebay entry was simply an invitation to treat or in other words a request for expressions of interest. Thomas said that it was rediculous that a contract for the sale of a plane could occur, as Smythe had never inspected the plane, and he said that his intention was to advertise the plane, then discuss the terms later on. He also had another offer for the plane for $220,000.00, so this might have also been a factor as to why he was so keen to ensure this contract was not binding. Thomas also claimed that he did not know that he would be committed to sell the plane.
The New South Wales Supreme Court found it surprising that Thomas was not aware that he would be committed to sell, as he had bought vintage car parts previously, and knew how ebay worked. In the view of Rein AJ, by listing the plane for sale on ebay, with a disclosed reserve of $150,000.00, he offered to sell the plane to a bidder who bid before the end of the auction, with a bid for $150,000.00, and was the highest bidder at the end of the auction. However, it should be noted that ebay is actually not an auction site, it only provides an auction like format for users to sell their items. Therefore, the rules of a traditional auction did not apply. It was held that there was a binding contract formed between the parties, and it should therefore be specifically enforced. All the essential terms of the Contract were listed on ebay, such as the price, and that Thomas had never stated that the sale was subject to an inspection or further discussion of the terms of the sale.
One has to wonder though, what would happen if Smythe then purchases the plane, but finds it is poor repair? Would he have a further action? Could Ebay be liable? Further could Ebay be liable should an item not turn up, and the Seller had absconded with the purchase money? In Eva Gora v Ebay, a person in Victoria bought a computer from someone in the Middle East. It never turn up, and the person who sold it disappeared. They contacted the police, who refused to investigate. They then decided to take ebay to court. Ebay argued that they were not a party to the contract, only a forum for users, but that she could claim $270 insurance. However, Ebay said on its website ‘safest place to do your shopping’. Under the fair trading legislation, the question was were they inducing people to rely on their message that ebay was safe to use? It was held that they were bound to this statement. The court found that ebay had conducted itself that it was safe to use, and was for all cases automatically insured. They failed to disclose that their insurance was small. They were therefore held liable under TPA.
Electronic Contracting - the legal effect of EULA's
Electronic contracting - almost everyone who has access to the computer has probably at some point entered into an online contract. The most common is the End User Licensing Agreement (EULA), which is often seen when installing a piece of software. But by scrolling down to the bottom and clicking "I agree", even when you don't have the slightest idea as to what you agreed to, are you legally bound to the terms of the EULA? In Hotmail Corporation v Van Money Pie Inc and Steven J Caspi v Microsoft, the US courts have said yes, as long as there is unambiguous assent to the terms and conditions (which included scrolling through the terms and conditions and clicking an "I agree" button to continue with the installation, however the browsewrap cases where the user has to click up the conditions seperately is a bit more ambiguous as to whether it is binding or not). Furthermore, in the case of L'Estrange, it was held that someone who signs a contract without reading it, is still bound by the contract as they are presumed to have read it (of course, this is subject to defenses such as non est factum, duress, unconscionability etc). So it does appear that they are binding (unless a software developer is in the business of sending out representatives to hold you at gun point unless you sign, but considering the general public don't even bother to read it and click "I agree" of their own free will, I think they figured it was probably a poor investment).
So keeping this in mind, it appears that many companies have failed to read their own EULA's! Recently, Adobe have released Photoshop Express, which is a free web based photo editing, organising and sharing service. In its EULA, it states that Adobe is free to do what it likes with any photos uploaded for use on this service eg. using a photo for its own advertising, without royalties or credit for the image. It is possible that they copy and pasted this EULA, and simply forgot to change it to suit their own needs. According to Adobe:
We've heard your concerns about the terms of service for Photoshop Express beta. We reviewed the terms in context of your comments - and we agree that it currently implies things we would never do with the content. Therefore, our legal team is making it a priority to post revised terms that are more appropriate for Photoshop Express users. We will alert you once we have posted new terms. Thank you for your feedback on Photoshop Express beta and we appreciate your input. - quoted from Ars Technica article.
According to the same article, Apple also doesn't appear to have read their own EULA for Safari, in stating that it is only to be run on Apple machines, when it has been released for other Operating Systems for non-Apple machines for almost a year now!
So keeping this in mind, it appears that many companies have failed to read their own EULA's! Recently, Adobe have released Photoshop Express, which is a free web based photo editing, organising and sharing service. In its EULA, it states that Adobe is free to do what it likes with any photos uploaded for use on this service eg. using a photo for its own advertising, without royalties or credit for the image. It is possible that they copy and pasted this EULA, and simply forgot to change it to suit their own needs. According to Adobe:
We've heard your concerns about the terms of service for Photoshop Express beta. We reviewed the terms in context of your comments - and we agree that it currently implies things we would never do with the content. Therefore, our legal team is making it a priority to post revised terms that are more appropriate for Photoshop Express users. We will alert you once we have posted new terms. Thank you for your feedback on Photoshop Express beta and we appreciate your input. - quoted from Ars Technica article.
According to the same article, Apple also doesn't appear to have read their own EULA for Safari, in stating that it is only to be run on Apple machines, when it has been released for other Operating Systems for non-Apple machines for almost a year now!
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