The 2nd Circuit Court of Appeals ruled against cyberlocker pioneer MP3tunes Tuesday on appeals from Sony, Universal Music Group and former MP3tunes owner Michael Robertson of a 2014 U.S. District Court jury verdict in New York saying Robertson and his firm were liable for secondary, contributory and vicarious infringement. The jury originally awarded Sony and UMG, owners of elements of original plaintiff EMI, $48 million in damages. Judge William Pauley slashed the damages award to $12 million in 2015 because he said Robertson was mostly immune from infringement liability because of the safe harbors included in Digital Millennium Copyright Act Section 512. The 2nd Circuit vacated the portion of Pauley's verdict that said Robertson had partial immunity under Section 512. Pauley “applied too narrow a definition of 'repeat infringer'” under the statute, Judge Raymond Lohier wrote, joined by José Cabranes and Chester Straub. The 2nd Circuit reversed the district court's ruling dismissing claims that MP3tunes and Robertson were liable for permitting pre-2007 infringement of EMI's catalog and Beatles songs “because there was sufficient evidence to allow a reasonable jury to conclude that MP3tunes had red-flag knowledge of, or was willfully blind to, infringing activity” related to the songs. The 2nd Circuit remanded the case to Pauley's court for a new decision on damages. Robertson’s own appeal of the case was struck down, with the 2nd Circuit saying the “evidence showed that Robertson acted in a manner intended to promote infringement.” Sony and UMG didn’t comment. Robertson’s lawyer declined comment.

The Copyright Office confirmed Tuesday that ousted Register of Copyrights Maria Pallante resigned from the Library of Congress entirely. Librarian of Congress Carla Hayden removed Pallante as head of the CO Friday, reassigning her as LOC adviser for digital strategy. Stakeholders quickly questioned the circumstances of Pallante’s ouster and how the move would affect the CO’s policy advisory role (see 1610210061 and 1610240052). Pallante said she will leave the LOC effective Saturday, noting in a copy of her resignation letter we obtained that “I do not accept the reassignment to work on Library matters that was announced on Friday.” Pallante appeared to confirm in the letter earlier reports that her access to the CO’s IT system had been cut Friday after learning of her ouster. “I would be grateful for your accommodation as I say goodbye to colleagues and collect personal items this week, and would appreciate the reinstatement of access to my computer and email so that I may appropriately archive records and remove photos of my family,” she said in the letter. Hayden didn’t detail her reasoning for Pallante’s “reassignment” in a memo obtained by us, but noted that she and Law Librarian of Congress David Mao would closely supervise Pallante’s activities. “If you need research assistance, contact [Mao] or me before tasking anyone,” Hayden said in the memo. “I do not anticipate that this assignment will require any communications with Members of Congress or congressional staff.” The CO didn't comment. Sen. Orrin Hatch, R-Utah, a backer of greater CO autonomy, noted his concerns Tuesday about Pallante’s removal. The move “underscores the longstanding challenges associated with housing the Copyright Office in the Library of Congress,” Hatch said in a statement. “Ultimately the Register’s primary duty is to our nation’s copyright system, including providing expert opinion to Congress. In the coming months, I look forward to exploring this relationship and considering possible legislative actions to ensure the viability of our copyright system.” Lobbyists across the copyright spectrum pointed Monday to Pallante’s backing of CO independence as a major factor in her removal as register. Pallante’s “service as Register has laid the groundwork for important modernization efforts in the Copyright Office, which I intend to pursue working in close collaboration with Congress and stakeholders,” Hayden said in a CO statement. Future of Music National Organizing Director Kevin Erickson echoed other content-side copyright stakeholders in a blog post Tuesday in raising concerns about Pallante’s ouster, but cautioned against speculating whether the move reflects Hayden’s copyright policy stance.

Librarian of Congress Carla Hayden removed Maria Pallante as register of copyrights Friday and appointed her to a new role as senior adviser for digital strategy. Associate Register of Copyrights Karyn Temple Claggett will be acting register pending a national search for a permanent replacement, the LOC said. Pallante had led the Copyright Office since 2011. Pallante will advise Hayden on LOC’s digital strategy, digital materials preservation and digital content partnerships with third parties, LOC said. “I want to move aggressively toward making our collections as widely accessible as possible," Hayden said in a news release. "I need focused expertise in the areas of copyright and licensing to ensure we execute these plans in full consideration of copyright protections. This is an opportunity not only to expand collections access, but to integrate education about the nation’s copyright system into that process.” Pallante's job switch is the first major personnel move AT loc since Hayden was sworn in last month (see 1609140053). Hayden succeeded longtime Librarian of Congress James Billington, who faced criticism for not modernizing critical LOC IT systems (see 1503310046).

No court previously addressed the particular copyright issues involving a conduit ISP that came up in BMG v. Cox Communications, so there "was nothing objectively unreasonable" about the cable operator's staking out a position adhering to the Copyright Act, the ISP said in an opposition (in Pacer) Monday to the plaintiff's motion for $10.48 million in attorney's fees and $2.92 million in expenses (see 1610030005). The Supreme Court's decision earlier this year in Kirtsaeng v. John Wiley & Sons made clear that awarding fees in a case that meaningfully clarifies the law doesn't serve the Copyright Act, Cox said. The company said that in seeking the award, BMG is ignoring the novelty of the legal issues and instead "attempt[ing] to re-litigate virtually every skirmish, disagreement and discovery dispute, wrongly portraying Cox as wearing the black hat in every instance." Cox said the $25 million jury award given the music company includes compensation and deterrence, but even if the court wanted to award fees, BMG is seeking far too much, given the jury's split decision and the few remedies BMG sought -- such as its unsuccessful vicarious liability claim and permanent injunction -- that it achieved. BMG didn't comment Tuesday.

The International Trade Commission last week began a Tariff Act Section 337 investigation into allegations that imports of integrated circuits with voltage regulators made by Intel and incorporated into products from Dell, HP Inc. and Hewlett Packard Enterprise infringe patents held by R2 Semiconductor, the ITC said. In a complaint filed Sept. 12, R2 said Intel’s microprocessors with Fully Integrated Voltage Regulator voltage spike protection copy its patented technologies and are being manufactured and imported without a license. The ITC will decide whether to issue a limited exclusion order and cease and desist orders banning import and sale of infringing microprocessors, plus downstream products that include them. Dell, HP, HP Enterprise and Intel didn't comment Monday.

The Library of Congress plans to launch an electronic filing system next year for all Copyright Royalty Board proceedings, the CRB said Monday. The LOC plans to complete work on the e-filing system by spring, with the system then set to “go live later in the year,” the CRB emailed stakeholders. The CRB is aiming to “create a system that is both user-friendly and technologically effective,” the board said. The contractor developing the system is seeking input from CRB stakeholders “about the best and the least valuable aspects of electronic filing systems with which they have experience,” the board said. “Many attorneys who represent parties to [CRB] proceedings may have relevant experience with federal and state court electronic filing systems they may wish to share. Or parties who routinely filed documents with the CRB or appear at hearings may wish to comment on features and processes they would like to see in the system.” The CRB said it plans to make the e-filing system mandatory for “most filers” after an “appropriate” transition period, and will issue an NPRM on such a rule change.

Yahoo wants billboards and other public advertising to be “smart.” In patent application 14/675,004 filed at the Patent and Trademark Office Oct. 6, based on a March 2015 filing, Yahoo said it’s looking at ways to pull data from consumers’ devices to make messaging more efficient. The patent describes ways that advertising channels in public spaces can be configured to deliver “adaptive and targeted advertising in real time.” It refers to “sensor data” collected from user devices employed to monitor consumer engagement with ads. Unlike online advertising that’s personalized to individual users, the patent covers what Yahoo calls "grouplization," where advertising content is chosen based on an “aggregate representation” of the target audience that’s derived from real-time information. A billboard could be equipped with digital cameras that capture images or video of vehicles approaching the billboard. Using image recognition, information about the makes and models of the vehicles on the road could be used “to further inform the selection of advertisements” based on demographic characteristics. Sensor data could include “keywords spoken” by consumers near the billboard, the speed of the vehicle they’re traveling in or video data indicating whether any individuals looked directly at the advertising content using image recognition or eye-tracking techniques. Where an advertising display includes a touch screen, direct user interaction could be measured. Advertisers could compete for placement through bids based on aggregate audience profiles. Ad content intended for a digital billboard “might need to comply with traffic safety regulations that prohibit video content from being displayed,” it said.

The Electronic Frontier Foundation said it supports liquid sweetener company Heartland Food Products Group's petition to the Supreme Court for a writ of certiorari seeking a review of 28 U.S.C. Section 1400(b), which requires a plaintiff to bring a patent infringement lawsuit only in a U.S. District Court where the defendant resides or where the defendant has an “established place of business.” Heartland is seeking a high court review of an April Federal Circuit Court of Appeals ruling in Heartland v. Kraft Foods Group Brands against Heartland's push for stronger limits on patent suit venues. The Federal Circuit since 1990 has said Section 1400 “means that companies that sold products nationwide can be sued in any federal court in the country on charges of patent infringement, regardless of how tenuous the connection to that court,” said EFF Staff Attorney Vera Ranieri in a Thursday blog post. Ranieri said the FTC report on its study of the business practices of patent assertion entities found 53 percent of lawsuits by entities in the study occurred in the U.S. District Court based out of Tyler, Texas (see 1610060045). Unbridled venue rules have “led to a remarkable situation of forum shopping in patent cases,” EFF and Public Knowledge said in a joint amicus brief. “Even more remarkably, evidence suggests that this arrangement may be drawing courts into competition to attract patent owners -- the ones with unilateral choice over forum -- by adopting practices and procedures favorable to patent owners.” Forum shopping “has tangible, substantive effects on outcomes, a result contrary to principles of law and contrary to the very existence of the Court of Appeals for the Federal Circuit, an institution designed to eliminate a perceived problem with forum shopping for favorable substantive patent law,” EFF and PK said. HP, Oracle and 30 other companies also are jointly backing Heartland's petition to the Supreme Court.

The Gospel stage play Scissors shares no substantial similarities with the Barbershop movie franchise and the Showtime TV series based on it, said WB Studio Enterprises, MGM Studios and Showtime Networks in a motion to dismiss (in Pacer) filed Tuesday in U.S. District Court in Manhattan. Scissors revolves around issues of faith and modern societal issues, but "Barbershop, in stark contrast, has nothing to do with religion at all and it does not address any of the issues threading each of Scissors' plotlines," WB and the others said. Plaintiff playwright Ronald Dickerson "cannot claim an exclusive monopoly on creative works set in a barbershop," they said, saying minus that setting the only remaining similarities are stock plot devices and character elements, which themselves don't warrant protection under copyright law. Dickerson, in his copyright infringement complaint (in Pacer) filed earlier this year, said the films contained numerous instances that "seem to be lifted directly from events in Scissors" and sought $20 million in damages.

Needham Insights said the music industry’s future is at risk, though streaming services like Pandora and Spotify “have saved the music business from extinction.” Recorded music revenue stayed “essentially flat” at an annual $15 billion globally since 2010, with streaming services now growing substantially as a share of the market while retail sales continue to shrink, Needham said in a report Monday. Pandora and Spotify are continuing to operate at a loss, so “until their financial futures are secure, a meaningful proportion of music industry revenue is dependent on public and private investors’ willingness to continue to fund their losses,” Needham said. “Any 'Black Swan' event (like 9/11) that closes capital market access could disrupt the entire music industry virtually overnight.” Black Swan theory events are “unexpected events of large magnitude and consequence and their dominant role in history,” Needham said.