While California Governor Arnold Schwarzenegger initially signed the Act in 2005, it has yet to be enforced.  In a lawsuit challenging the constitutionality of the law brought by the Video Software Dealers Association and Entertainment Software Association the , the United States District Court for the Northern District of California in August 2007 granted plaintiffs’ motion for  summary judgment and permanently enjoined enforcement of the Act.  We have previously written about that decision.

On February 20, 2009, the U.S. Court of Appeals for the Ninth Circuit affirmed the District Court’s decision.  The Court of Appeals held that the Act violates rights protected by the First Amendment because California failed to demonstrate a compelling interest supporting its regulation of protected speech, and even if it had a compelling interest did not narrowly tailor the restriction to that alleged interest.  Furthermore, less-restrictive alternatives exist that would further the State’s interests.  Finally, the Court held that because the Act is unconstitutional, the labeling requirement is also unconstitutional as the required labels would not disclose purely factual information but rather the State’s content-based opinion. 

The State of California  petitioned the United States Supreme Court for a writ of certiorari, which the Supreme Court granted on April 26.  The State filed its brief on the merits on July 12.  On July 19, eleven states filed an amicus brief in support of the California law, as did a number of other organizations.  The Respondents’ brief is due on September 10.  The Firm’s amicus brief on behalf of the ECA is due by September 17; several other organizations (including the Motion Picture Associaiton of America (MPAA), the National Cable & Telecommunications Association (NCTA), National Association of Broadcasters, the National Association of Theater Owners and the ACLU) have expressed their intent to file amicus briefs in opposition. 

The ECA is a non-profit membership organization that represents consumers of interactive entertainment in the US and Canada.  The primary policy of the ECA is to oppose legislative efforts that unconstitutionally restrict access to interactive entertainment. 

Bill Stein, Dan Weiner and Dan Doeschner of the Firm are representing the ECA.

The transaction received prominent media coverage, including pieces in The Deal, American Lawyer and The New York Times.

Dan will be part of a panel entitled “Global Perspective – Changing Rules for P2P and Cloud Computing”, which will discuss the key laws and regulations that P2P and cloud computing software developers and distributors need to comply with, the changes taking place in the regulatory environment affecting P2P and cloud-computing technologies, the impact of recent actions and rulings and other issues in the legal and policy arenas that might foster investment and commercial development of P2P and cloud computing. More information on registration is available on the DCIA’s website.

On a related note, the video from the DCIA’s March 9 conference has been posted.  At that conference, Dan participated in a  panel discussing the various business models utilized by P2P and cloud computing providers, including ad-supported, subscription, paid download and other innovative strategies.

• Methodologies to authenticate subscribers and the technological burdens of implementing such authentication methodologies;
• Protection of personally identifiable information (PII) of subscribers and controlling access to such subscriber PII;
• Impact of the FCC’s proposed “net neutrality” rules on TV Everywhere initiatives; and
• Potential business models and revenue opportunities for stakeholders, including revenue streams from enhanced subscription fees, premium advertising fees, etc.

The one-hour Webinar will also feature “live chat” functionality to enable viewers to ask questions and comment on the presentation in real-time. Presentation materials will be available for download.

The Webinar will be held on Thursday, March 11th, 2010 from 12:30 p.m. to 1:30 p.m. EST. To register, click here.

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• Structuring relationships between developers and publishers and the ownership issues that arise in development agreements, including work-for-hire, joint ownership and cross-licensing issues;
• Protecting against developer default or insolvency, including the pros and cons of source code escrow arrangements and the applicability of Section 365(n) of the Bankruptcy Code;
• How clearances and consents have become critically important with the increased incorporation in games of real world elements (cities, buildings, people, etc.) and third party IP (e.g. music, video clips, characters, logos, etc.), with an examination of recent case law (Kirby v. Sega and Grand Theft Auto/Pig Pen); and
• Strategies to maximize revenues from online and mobile games, including sponsored exclusive features and content, “in-game” ads, syndicated games, and tiered subscriptions.

The one-hour Webinar will also feature “live chat” functionality to enable viewers to ask questions and comment on the presentation in real-time.  Presentation materials will be available for download.

The Webinar will be held on September 16, 2009 from 1:00 pm to 2:00 pm EDT.  To register, click here.

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• Late last week,  Judge Louis Stanton of the US District Court for the Southern District of New York ruled that plaintiffs in the high-profile copyright class action case against YouTube could not seek statutory damages for videos that are not registered under US copyright law.   Judge Stanton also dismissed plaintiffs’ punitive damages claim, but did permit claims based on live broadcast footage, which were brought by the English Premier Football League, the lead plaintiff in the case, to proceed. 
• After a lengthy battle, record labels and online radio stations reached an agreement on new royalty rates for music streaming.  The new agreement treats web sites differently based on their size and model.  It only applies to sites making most of their money from streaming music, excluding webcasters that run online music services as a small portion of their total business.  Pure-play internet radio providers will have to pay the greater of 25 percent of revenue or a fee each time a listener hears a song.  The new per stream fees start at .08 cent for each song streamed in 2006 and increases to .14 cent in 2015.  Smaller sites will pay 12 to 14 percent of revenue in royalties.  The new agreement replaces a 2007 royalty rate decision. 
• Rosetta Stone, maker of the popular foreign language software programs, filed a trademark infringement suit against Google alleging that its AdWords program, which lets companies buy advertisements that show up as “sponsored links” next to search results, results in consumer confusion.  The complaint alleges that Google is letting companies attach their ads to trademarked words they do not own, as well as allowing companies to use those trademarked terms in the headlines of their ads.  As a result, a search for a trademarked company name may bring up that company, but it may also bring up results for the trademarked company’s competitors.  In recent years Google has been facing other similar lawsuits over its AdWords program but in April, the 2nd Circuit provided trademark owners with some clarity when it held that Google’s use of the trademarks were “acts of commerce”, reversing a trial court’s ruling and permitting trademark owners to proceed with their suits. 

• The Performance Rights Act, which was approved by the House Judiciary Committee on May 13th, would levy fees on broadcasters for airing artists’ recordings. An indication of the heat generated by the debate over the PRA emerged this week when the musicFIRST Coalition, however, filed a complaint asking the FCC to investigate whether radio stations have been boycotting artists that support the PRA. The coalition’s filing accuses broadcasters of airing deceptive spots by portraying the proposed royalty as a “tax” and not airing musicFIRST’s own paid ad endorsements. While musicFIRST did not identify any specific station or broadcaster withholding airplay, the coalition alleged that several stations have refused to play an artist’s music based on his or her remarks or affiliation with endorsing the legislation. Spokesman Marty Machowsky said it would only identify specifics if the FCC initiates the proceeding and agrees to keep the information confidential.
• Facebook is now allowing users to select plain-language domain names for profile pages, which up until now, has been delineated by a string of letters and numbers. Facebook plans on allowing trademark holders to protect their marks and mediating all disputes internally. This, however, may not be enough to prevent lawsuits from occurring. Tim Cole, chief register liaison from the Internet Corporation for Assigned Names and Numbers, said that even careful mediation processes will not prevent skirmishes from breaking out. ICANN has been involved in quarrels over coveted web site names for more than a decade. We will be looking into this issue in depth in the coming week.
• The AACS Licensing Authority, which licenses AACS content protection scheme (DRM) used in high-definition Blu-ray discs, has included a provision in its Final Adopter Agreement which will lead to the eventual phase out of analog video output from hi-def discs. The goal of phasing out analog is to plug the “analog hole,” where digital content can be copied. The change, however, will not stop direct digital ripping. The efforts are being made in attempts to block means of casual copying, but may not be effective in thwarting commercial pirates.
• The second World Copyright Summit met in Washington, DC last week.  The conference agenda of four main points: New visions for creative industries, Challenges for creators and rights-owners in the digital era, Weather forecast on copyright climate, and Valuing the creative eco-system. Most of the concern was regarding copyright infringements on the Internet. The copyright owners and attendees also discussed the ongoing threat of internet privacy.

We would like to thank Jenny Liang, a summer associate with the Firm, who assisted in preparing this round-up.