IBLS Speaker's Corner : Israel

Chip-per Copyright Infringement

IBLS Editor — Tue, 17 Jul 2007 18:53:00 GMT

IBLS Contributor: Attorney Odia Kagan, Tel Aviv, Israel, odia@okaganlaw.com, writes:

US Federal Court determined that the Digital Millennium Copyright Act should be used for the prevention of piracy and illegal copying and not for the prevention of the sale of programs which facilitate legitimate access and use and enable significant non-infringing commercial action.

The United States Court of Appeals for the Sixth Circuit held that the Digital Millennium Copyright Act (DMCA) cannot be used to prevent competition in the printer ink cartridge market.

In a decision issued on October 26, 2004, in the case of Lexmark International Inc. v. Static Control Components, the United States Court of Appeals held that printer maker Lexmark cannot use the DMCA in order to prevent its competitors from producing ink cartridges to be used in Lexmark printers. This decision vacated the injunction which the District Court in the State of Kentucky granted Lexmark against SCC, a company that produced chips enabling the manufacture of such cartridges.

More expensive than Chanel No. 5

A liter of ink for a Lexmark printer is more expensive than a liter of the luxury perfume Chanel No. 5 and a liter of premium whisky, according to research conducted by Gartner Group. The manufacturers of printers, who sell their printers at low prices, make most of their profits from the sale of printer cartridges. Companies like Lexmark are interested in selling as many original cartridges manufactured by them at full price. Therefore, they have an interest in decreasing the competition in this market.

To make sure that buyers of Lexmark printers only purchase licensed cartridges, that is, Lexmark cartridges, a chip is installed in the Lexmark-printer cartridges through which the printer identifies the cartridge used. Upon the insertion of the cartridge, an “electronic handshake” is performed between information in the chip, including a program called the Toner Loading Program, and the software installed in the printer, the Printer Engine Program. The program and the chip calculate a code. If the calculated code is not identical, the printer concludes that this is not a “licensed” cartridge. If this is the case, the printer sends an error report and ceases to operate.

SCC (Static Control Components Inc.), a small North Carolina company produced the Smartek chip. The chip includes the said Toner Loading Program, and thus, when it is installed in cartridges produced by Lexmark’s competitors, it enables the said authentication process successfully. SCC sells its chips to these competitors.

Who copied my software?

Lexmark filed a complaint against SCC based on three theories of liability: (1) That it violated the Federal Copyright statute in that it copied the Toner Loading Program into the chip, (2) that SCC violated the DMCA by selling the chip that circumvents access controls on the Toner Loading Program and (3) that SCC violated the DMCA by selling the chip that circumvents access controls on the Printer Engine Program.

The District Court, in a decision of March 2003, concluded that Lexmark established a likelihood of success on its copyright infringement claim for SCC’s copying of its Toner Loading Program on all three counts. Therefore the Court granted Lexmark an injunction against the production of the chips by SCC. The US Court of Appeals reversed this decision and vacated the district Court’s preliminary injunction.

Copyright Act not Competition-Prevention Act

As to the copyright infringement, the Court of Appeals held that the Toner Loading Program is a “lock out code”, allowing access to the hardware in which it is found only to licensed programs. Therefore, at least with regard to the injunction, the Toner Loading Program is not entitled to copyright protection. Whereas computer programs may be copyrightable, this defense does not apply when the idea embodied in the program may be expressed in only one way. In such case, the idea and the expression effectively merge and the program constitutes a lock out code for competitors and thus is not entitled to copyright protection. In this manner, others are not denied the opportunity to use the idea.

The Court added that the “originality” component has not been sufficiently proven with regard to the Toner Loading Program, and remanded to the District court the question of whether the Federal Copyright Statute had been violated. The Court concluded further that even if the production of the Smartek chip constitutes copyright infringement, SCC enjoyed the fair use defense. When SCC copied the Toner Loading Program, it did not do so to use it for the original purpose for which it had been written (i.e. the calculation of the amount of ink), but rather it did so to successfully pass the authentication process, which causes the printer to function. Thus, SCC may sell the chips to competitors and they, in turn, would be able to sell their printer cartridges for use with Lexmark Printers.

With regard to the violation of the DMCA, the Court accepted the defense argument presented by SCC in the District Court whereunder the program it wrote is a technological means the sole purpose of which is to enable the interoperability of an independent program with other programs.

Judge Merrit concurred with the majority opinion and noted that the Court “should make clear that in the future companies like Lexmark cannot use the DMCA in conjunction with copyright law to create monopolies of manufactured goods for themselves just by tweaking the facts of this case.”

Judge Feikens added that the DMCA must be used for the purposes for which it was legislated, that is, for the prevention of piracy and the manufacturing of programs which facilitate legitimate use and access and enable commercially significant non-infringing use.

In addition, the Court emphasized that the chip did not circumvent the Toner Loading Program, but rather replaced it altogether.

Lexmark’s Loss is the Consumers’ Gain

Consumer organizations are praising this decision as a significant victory for the consumer and state that “the court ruled in favor of competition”. The Court ruled that the DMCA may not be used for the prevention of competition by a blanket prohibition of reverse engineering and such technique must be permitted when its sole purpose is to enable the interoperability of different programs. The Court recognized that reverse engineering is often the key for new developments.

The Court’s decision permits the production of printer cartridges which compete with printer cartridges produced by Lexmark. This will increase the competition in this market and is expected to result in a price reduction and in the improvement of the technology. In addition, the Court expressed its objection to frivolous claims under the DMCA, intended to prevent competition rather than to protect copyright.

**Reprinted with permission from the Israel Bar Association Website (www.israelbar.org.il) where it was published on December 29, 2004 (http://www.israelbar.org.il/english_inner.asp?pgId=16712&catId=246). Originally published in Hebrew on NFC (www.nfc.co.il) on November 11, 2004 (http://www.nfc.co.il/archive/003-D-8030-00.html?tag=11-02-05).

Ms. Kagan specializes in Internet and IT law. Her articles on these subjects are published regularly in professional publications of the American Bar Association and the New York State Bar Association, as well as in national Israeli websites. Ms. Kagan authored the Israeli Chapter in the book “Cybercrime and Security” published worldwide by Oceana Publications, a division of Oxford University Press. A graduate of the Law Faculty of Tel Aviv University, Ms. Kagan is a member of the Israel and New York Bars, is qualified as a Solicitor in England & Wales and is also admitted as legal practitioner in New South Wales, Australia.

Not For Your Eyes Only: Israel Adopts Rules on Online Anonymity

IBLS Editor — Fri, 11 May 2007 11:27:00 GMT

IBLS Contributor: Odia Kagan, Partner, Shavit Bar-On Gal-On Tzin Nov Yagur Law Offices – Tel Aviv, Israel, odia.kagan@gmail.com, writes:

VCM (Haifa) 850/06 Rami Mor v. Yediot Internet, the YNET website editorial board – the forum board (District Court of Haifa, Hon. Yitzhak Amit)

In the first case of its kind to reach the District courts in Israel, the District Court of Haifa sets clear guidelines for disclosing the identity of anonymous writers of defamatory materials online.

Rami Mor, a holistic therapist, filed two motions with the Magistrates Courts to disclose the identities behind several replies posted in Israeli medical online forums. The publications included one who stated that she “was treated by him …and was deeply disappointed”; others stating that Mr. Mor is a “charlatan” and a “thief”; people should “watch out” and more.

Both motions were denied by the Courts which relied on a previous Magistrates Court ruling holding that the identity of an anonymous writer would be exposed only if the content amounts to a criminal offense. Mr. Mor appealed the decisions to the District Court.

The Law and the Internet – Not a ‘Buggy Without a Horse’

The District Court commenced by discussing the relationship between the law and the Internet, stating that when dealing with the Internet the Court must be aware of its unique characteristics. “As a car is not ‘a buggy without a horse’ and the radio is not ‘a telegraph without strings’ so is the Internet much more than an ‘electronic newspaper’”. Since the Internet allows for dynamic, diverse, interactive and hypertextual discussion, it has become a constitutive factor in democratic countries and must be advanced and protected.

Having established the framework, the Court proceeds to discuss the issue at hand – disclosure of identity in libel cases.

There’s no specific law, but…

First, the court holds that the tort of libel applies to the Internet, stating that “libel is libel” whether it is published in a newspaper or online”.

The Court notes that even though there is no law in Israel dealing with the issue of disclosing the identity of anonymous writers, the Court can draw on the Electronic Commerce Bill 2005 (which has not yet been signed into law). The bill states that the Court will order the ISP to disclose if there is a “real suspicion that a tort or a crime has been committed”.

Anonymous Speech Prohibited

The Court then goes to discuss anonymity. Does anonymity change the situation? The Court holds that whereas anonymity advances democracy by providing everyone with equal ground and standing devoid of class and status, it also promotes anarchy, giving people freedom from their inhibitions.

However, for all its benefits, anonymity does not alter the character of the speech. If speech is libelous, or racist, it does not become less so because it was made anonymously.

Therefore, speech constituting a civil tort (of libel or invasion of privacy) would give reason for the Court to order the disclosure of the writer’s identity. However, in order to ensure a better balance of freedom of speech with the right to privacy and to prevent a “chilling effect” on speech, for such order to be given an additional element should be present.

Such effect may be derived from the following considerations:

The claimant filed the claim in good faith.
The claimant’s chances to prevail in the claim are good. (The ability to prevail in a motion for summary dismissal is not sufficient.)
The type of protected speech – More protection would be given to political speech, less to commercial speech and the least to private speech.
The claimant is a public figure and the public has a right to know
The severity of the speech and its negative effect
Is it a one-time or repeated and systematic expression?
The nature of the website (Is it a griping website or a professional forum?)
Did the reasonable reader attribute weight to the publication?
Will the disclosure of the writer’s identity cause more harm than good?

In addition, the Court proposes that a claimant take several steps before filing a claim:

Exhaust all alternatives for the disclosure of the anonymous writer’s identity.
Do all that he can to inform the writer of his intention in order to enable him to defend against the motion for disclosure. This includes publishing the fact of filing the claim on the website where the hurtful publication was made and informing the writer that he has a right to defend himself in Court.
The Claimant will bear all court expenses.
The disclosure of identity will be made in stages. The proceeding will be carried out as a John Doe proceeding. A motion will be filed for a Court disclosure order simultaneously with a primary claim. Thus, the identity will be disclosed first to the Court only, which may hold the hearing in the defendant’s absence.

Applying the criteria to the publications in this case, the Court held that some of the publications meet with the said criteria and should be disclosed. However, as the Court recognizes that its decision narrows the test (of content which amounts to criminal libel); it decides to deny the motion for the disclosure of the writer’s identity in this case.

This judgment comes after a heated discussion in Israel on this matter which culminated in a bill proposing to require by law the identification of writers of posts and replies online. In light of this fact, the case constitutes a significant development in Israeli law. Relying, in large part on US case law on the subject including Dentrite International Inc. v. John Doe (342 NJ Super 134, 75 A 2d) and John Doe v. Patrick Cahill the Court sets forth an organized, didactic analysis of the question and proposes clear, reasoned guidelines for the disclosure of the anonymous writers’ identity. The Court also provides an official stamp of approval for the “John Doe” proceedings which are not yet prevalent in Israel.

Though the guidelines are vague and leave much room for judgment, they provide the courts and the writers with tools to help them decided how to proceed and thus constitute a first step toward a serious, well though-out analysis and treatment of this question, which it did not previously receive.

* The Article was also published in Ms. Kagan's blawg “e-legal” at www.odiakagan.typepad.com

Ms. Kagan specializes in Internet and IT law. Her articles on these subjects are published regularly in professional publications of the American Bar Association and the New York State Bar Association as well as in national Israeli websites. Ms. Kagan authored the Israeli Chapter in the book “Cybercrime and Security” published worldwide by Oceana Publications, a division of Oxford University Press. A graduate of the Law Faculty of Tel Aviv University, Ms. Kagan is a member of the Israel and New York Bars, is qualified as a Solicitor in England & Wales and is also admitted as legal practitioner in New South Wales, Australia.

E-mail Wiretap is Permissible…For now

IBLS Editor — Wed, 02 May 2007 12:22:00 GMT

IBLS Contributor: Odia Kagan, Partner, Shavit Bar-On Gal-On Tzin Nov Yagur Law Offices – Tel Aviv, Israel, okagan@sbilaw.com, writes:

An amendment to the Australian Telecommunications (Interception) Act makes it easier for the police and state authorities to read citizens’ e-mails and text messages.

On December 8, 2004, the Australian House of Representatives passed the Telecommunications (Interception) Amendment (Stored Communications) Act 2004 which amends the Australian Telecommunications (Interception) Act of 1979, with regard to electronic messages (e-mail) and text messages (SMS).

Telephone conversations – Yes; Recorded Messages – No

This law, the Australian government’s third attempt to amend the said Telecommunications (Interception) Act, enables the police, several Federal and State authorities, private investigators, Internet service providers and other business owners – to access e-mail messages, SMS messages, and voice messages which are temporarily stored during transfer – without a telecommunications interception warrant, even in cases the suspected offence is not grave in nature.

The amendment to the act classifies the interception of these messages, which are found in temporary storage, as an exception to the general prohibition of the interception of telecommunications which is set forth in the Telecommunications (Interception) Act. Under the amendment to the act, unlike the legal situation which preceded it, access to such information would be granted to any entity with legal access to the equipment in which the information is stored. It would no longer be necessary to acquire a warrant for the interception of the messages. Rather a simple search warrant would suffice.

Despite the current legislative trend, this amendment is not “technologically neutral” as it awards different treatment to the interception of telephone conversations and other “live” conversations, including a facsimile transmission, with regard to which a separate telecommunications interception warrant would still be required.

Thus, the interception of a telephone conversation, data communications (such as: GPRS) and e-mail messages in the course of being transferred – requires a separate telecommunications interception warrant. However, the interception of recorded voice messages, and SMS or MMS (video/picture) messages which are saved in the memory of the cellular telephone, as well as stored e-mail messages – does not require a separate warrant.

National Security v. the Privacy of the Citizens – National Security Prevails

Those who oppose the Amendment argue that it disrupts the appropriate balance between the right of citizens to privacy and the needs of the law enforcement authorities. The objection is mainly to the permission granted to the authorities to read e-mail messages which had not yet reached their intended recipient and had not yet been read by them. The argument is that the usage of a regular search warrant is not fitting for this purpose because a search warrant was intended to enable the receipt of physical evidence, not to grant access to personal communications.

Irene Graham, executive director of Electronic Frontiers Australia, an organization which promotes civil liberties in the electronic age, does not understand the need for this amendment. Her view, as quoted in Sam Varghese’s article published in the Sydney Morning Herald on December 10, 2004 is that “if a warrant was needed it would take just 20 minutes over the phone to obtain one, then why are these additional powers needed?”

The supporters of the amendment justify the need for it with the state of national security which changed after September 11. In the discussions of the bill, the representatives of the police emphasized the need which exists, in the electronic age, to acquire fast access to stored electronic information, in order to prevent its deletion. An additional advantage of this law, stated Attorney General Phillip Ruddock, in an interview for a Findlaw Australia article published on December 7, 2004, is that it will enable network administrators to review stored communications for viruses and other inappropriate content.

An e-mail during transmission – is not “stored communications”

In a previous article, I discussed the controversial Councilman case which was handed by a US Federal Court. In this case, a business owner, who was also an Internet Service Provider, intercepted his customers’ e-mail message in order to make a commercial gain from the information found in the message. The US Court of Appeals for the First Circuit decided that this case did not constitute a violation of the Federal Wiretap Act because an e-mail message in “temporary storage”, conducted in the process of its transfer to its destination is “stored communication” and thus a separate interception warrant is not necessary in order to intercept it. This decision was widely criticized and it was vacated by the Court pending a re-hearing of the case.

The Australian law treats the temporary storage of an e-mail message during transmission as “live communication” for which a separate telecommunications interception warrant is required. In the explanation for the bill it was stated that storage of an e-mail message during transmission, which is highly transitory in nature and constitutes an integral part of the technology used for the transmission of the message – is not sufficient for making the message “stored communications” which are not protected by the act.

We shall meet again in a year

In the discussions which preceded the legislation of the amendment, different opinions were voiced and true concerns were expressed with regard to the amendment’s possible effect. Therefore, and especially as this is an innovative field which had not been regulated previously, the Australian Parliament decided that after one year from the date the amendment goes into affect (upon the receipt of the Royal Assent) an inquiry and review of the Act’s provisions will be conducted and the need to amend them will be examined based on the experience which had accumulated during the first year since the legislation of the Act

**Reprinted with permission from the Israel Bar Association Website (www.israelbar.org.il) where it was published on February 13, 2005. This article was originally published in Hebrew in NFC (www.nfc.co.il) on January 4, 2005 (http://www.nfc.co.il/archive/003-D-8550-00.html?tag=14-59-59 )

Ms. Kagan specializes in Internet and IT law. Her articles on these subjects are published regularly in professional publications of the American Bar Association and the New York State Bar Association as well as in national Israeli websites. Ms. Kagan authored the Israeli Chapter in the book “Cybercrime and Security” published worldwide by Oceana Publications, a division of Oxford University Press. A graduate of the Law Faculty of Tel Aviv University, Ms. Kagan is a member of the Israel and New York Bars, is qualified as a Solicitor in England & Wales and is also admitted as legal practitioner in New South Wales, Australia.

Wi-Fi*, My Learned Friend

IBLS Editor — Tue, 24 Apr 2007 16:58:00 GMT

IBLS Contributor: Odia Kagan, Partner, Shavit Bar-On Gal-On Tzin Nov Yagur Law Offices – Tel Aviv, Israel, okagan@sbilaw.com

Connecting the Court system with a wireless communication network enables journalists and lawyers to maintain a continuous contact with the world outside the courtroom and changes the rules of the game.

Stop! Private Information Ahead

IBLS Editor — Tue, 17 Apr 2007 16:46:00 GMT

IBLS Contributor: Odia Kagan, Partner, Shavit Bar-On Gal-On Tzin Nov Yagur Law Offices – Tel Aviv, Israel, okagan@sbilaw.com

California initiates a far-reaching change in the protection of online privacy. It is expected that this law will have far-reaching implications as it applies to the owners of certain commercial websites or to providers of online services worldwide.