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Legal update 2007: where the lawsuits are.

Lawsuits are a fact of life for most major corporations, organizations, and agencies. These groups may find themselves involved in dozens of lawsuits over a variety of issues during the course of a typical year. Customers and users sue over products or services. Employers sue over workplace issues. Suppliers sue---or get sued---over contract issues. Or lawsuits are initiated to protect their products, services, employers, or suppliers. Lawsuits are a fairly routine cost of doing business.

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However, some lawsuits have an impact that is far beyond the routine. They may start quietly or with a splash of headlines, but the results may impact the life or bottom line of a company; its products, services, or practices; or the industry as a whole. Some companies survive such lawsuits, as Microsoft did after the Justice Department's antitrust lawsuits in the 1990s. Other companies, such as the original Napster, don't.

Google

As one of the largest and most influential information companies, Google has been involved in a number of lawsuits, both routine and potentially industry shaking. This year is no exception; at least four cases could have significant impact on the database and search industry.

Earlier this year, an appeals court found that Google's use of thumbnail images was a fair use of the copyrighted images of others, overruling a lower court's finding that those small-scale thumbnail images had commercial value. This decision is largely seen as clarifying the industry practice of using thumbnail images as well as providing some strength to the fair use doctrine.

But a more complex fair use question looms for Google in its ongoing defense of the Google Book Search project. The project scans books and other resources into a huge database. Searchers encounter "snippets" of a book's content in response to a query and, if applicable, links to vendors who sell the book. Some of these materials are in the public domain, and others are scanned with permission of the copyright holder. However, many materials are scanned from libraries without express permission.

Book Search Case in 2009

In late 2005, The Authors Guild, McGraw-Hill and other publishers, and individual authors sued Google for copyright infringement. The lawsuit attracted extensive attention from the media, bloggers, and commentators. As the case started its long process through the courts, some of that attention dissipated, although it did not disappear. After a burst of initial activity, the matter is now in the slow, tedious discovery process of gathering documents, taking depositions, and preparing motions. These events have slowed the case's proposed schedule by nearly a year, and it is not expected to be resolved until the first half of 2009 at the earliest.

It is not known from the court record what, if anything, may be going on behind the scenes. Google does not appear to have added more libraries to its library project since the suit was filed, although it continues to add materials from the public domain or for which it has permission to use. Some commentators have also wondered whether Google's success in the thumbnail case will improve its position through a strengthened fair use doctrine. Its position could be weakened by highlighting the differences between thumbnail portions of a work, provided by the third party and of minimal commercial value, and full textbooks scanned by Google and having significant commercial value.

Viacom Versus YouTube

Google is on the receiving end of another pair of lawsuits attacking the copyright practices of its YouTube subsidiary. In March, Viacom, the media conglomerate, filed a copyright infringement suit against YouTube. The complaint alleges that the "vast amount" of YouTube content consists of infringing copies of copyrighted works, including music videos, television shows, and movie clips.

Viacom also alleges that YouTube manipulates the notice and takedown provisions of the Digital Millennium Copyright Act (DMCA) by requiring proper notice from the copyright owner while profiting from the infringing work's presence until the takedown occurs. It also alleges that if another user posts the same infringing work, even hours later, he or she must go through the entire cycle again. Google's defense is largely based on the DMCA safe harbor provisions, fair use, and licenses granted by copyright holders.

A related case received less publicity, but it still may have greater impact: the lawsuit filed against Google/YouTube by the Football Association Premier League of English soccer clubs. The allegations are similar to Viacom's, but the football association case was filed as a class action of all copyright owners whose content has appeared without permission on YouTube. If that class is accepted and the allegations are proved, the resulting damages or injunctions could be crippling. Both cases are in the early stages of discovery with trials expected in 2009 at the earliest.

VA Laptop Theft

Lawsuits involving the loss or theft of personal data continue to plague companies that collect, store, and use personal information. Last year's theft of a Department of Veterans Affairs (VA) laptop computer that contained personal information on more than 26 million people resulted in several lawsuits. Those suits have been consolidated into a single proceeding based in Washington, D.C. Earlier this year, the VA moved to dismiss the case on the grounds that the VA did not intentionally or willfully fail to safeguard the information, and that because the laptop's hard drive showed no signs of being accessed, there was no actual harm. The plaintiffs have responded that the VA was intentionally and willfully negligent and that the victims did suffer harm through emotional distress, time and money spent on credit monitoring, or both.

The court could rule on the VA's motion to dismiss at any time. If the motion is granted, an appeal is very likely. If the motion is denied, the discovery process will begin.

Mixed Results

Lawsuits over data breaches have received mixed results in the courts. The TJX Cos., Inc., a retailer that owns T.J. Maxx and other chains, was sued in April for a data breach that exposed 46 million credit card records. The suits were settled 5 months later; TJX agreed to provide credit monitoring as well as reimbursement for any direct costs for replacing identity cards. By contrast, a suit filed by students at Ohio University over the exposure of 173,000 records was dismissed when the victims were not able to show that they had suffered actual damages. A third suit involving a data breach at Fidelity National Information Services is still pending in a California federal court.

The consolidation of the information industry has led to occasional lawsuits for unfair or monopolistic behavior in violation of federal antitrust laws. In particular, Microsoft has been on the receiving end of many such cases. Most of them were settled with Microsoft agreeing to pay damages and/or change its business practices. In early October, Microsoft's longtime rival Apple, Inc. was sued for violating federal and state antitrust laws in its handling of the highly anticipated iPhone.

iPhone Lawsuits

The suits charge that Apple and AT&T, the exclusive cellular provider for the iPhone, have engaged in illegal practices by using hardware and software built into the iPhone to prevent consumer choice in selecting cell phone service. When third parties began providing solutions for consumers to "unlock" their iPhones (legal under a recent interpretation of the DMCA), Apple issued a press release that indicated these solutions may result in the iPhone being damaged, inoperable, or disabled, and these solutions would void the iPhone warranty. The suit alleges that Apple illegally created barriers to consumers' lawful use of their iPhones.

As of this writing, Apple has not yet filed its response to these complaints. Interestingly, the federal court claim was assigned to a special alternative dispute resolution (ADR) procedure. This procedure is designed to encourage the prompt resolution of disputes through nonjudicial procedures such as mediation, arbitration, or the appointment of a neutral third party to evaluate the case and recommend a fair resolution.

NSLs, RIAA, and Others

Other cases are now pending that may affect the information industry. In September, a federal court declared provisions of the USAPATRIOT Act's National Security Letter (NSL) procedures unconstitutional. (See the related NewsBreak: "Federal Judge Overturns PATRIOT Act NSLProvisions" at http://newsbreaks.info today.com/nbReader.asp?ArticleId=39555.) An appeal has not been filed as of this writing, but it is likely. Later that same month, a separate federal court invalidated some of the act's warrantless search provisions. That case has also been appealed.

The RIAA(Recording Industry Association of America) continues to press lawsuits against peer-to-peer downloaders. A court victory and $250,000 damages awarded in October gave the association fresh ammunition. However, statistics show that peer-to-peer downloading is as strong as ever.

Each year many cases begin, many are resolved, and many continue to meander through the courts. With the information industry still in a great deal of flux, even the wealth of impact lawsuits seems to be a bit routine.

George H. Pike is director of the Barco Law Library and assistant professor of law at the University of Pittsburgh School of Law. His email address is gpike@pitt.edu. Send your comments about this column to itletters@infotoday.com.
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Author:Pike, George H.
Publication:Information Today
Date:Nov 1, 2007
Words:1530
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