Sorry for continuing an old thread. My citation makes sense because it stands for the general proposition that licenses are contracts. Your arguments about how patent licenses differ from shrinkwrap EULAs are about whether a valid contract has been formed, not whether the proper mode of analysis is contract law or some other doctrine.
In any event, here is the "on-all-fours" citation you are looking for. ProCD Inc. v. Zeidenberg, 86 F.3d 1447, 1450 (7th Cir.1996) (upholding a copyright infringement claim based on a shrinkwrap license and stating "we treat the licenses as ordinary contracts accompanying the sale of products, and therefore as governed by the common law of contracts and the Uniform Commercial Code").
"Licenses", particularly the EULA kind ("here's a slip of paper we claim you must abide by if you use this software") are not contracts. They may be enforceable, but not because they're a contractual agreement.
The US Supreme Court disagrees with your claim that licenses are not contracts. See, for example, MedImmune, Inc v Genentech, Inc, 549 US 118, 124 (2007) ("We express no opinion on whether a nonrepudiating licensee is similarly relieved of its contractual obligation during a successful challenge to a patent's validity.").
No. They will probably be able to stop paying royalties going forward once the patent is held invalid, however; most contracts state royalty payments are only owed while the patent is valid.
If they aren't selling it, they they are losing nothing when we pirate it. This in turn means that there is no damage to them, and thus no case against us.
Try this example. Blockbuster does inconvenient, per-rental in-store rentals of movies. A new company (let's call it Netflix) comes around offering more convenient, flat-fee rentals. Many people start using to Netflix and stop going to Blockbuster. This costs Blockbuster business as they (initially) do not offer a comparable service to Netflix. Can you say with a straight face that Blockbuster lost nothing when people switched to Netflix since Blockbuster wasn't offering a comparable service?
Some people pirating movies wouldn't rent or buy them even if torrents did not exist. Some (probably many) would but instead use torrents as a substitute because of convenience or cost.
They are not arguing for an interlocutory appeal. They are arguing for an appeal under the collateral order doctrine (in addition to their writ). which according to Supreme Court precedent is an appeal under 1291 (final decisions of district courts), not 1292 (interlocutory appeals). See Quackenbush v. Allstate Ins. Co., 517 US 706, 1718-19:
"[W]e must determine whether that review may be obtained by appeal under 1291. The general rule is that a party is entitled to a single appeal, to be deferred until final judgment has been entered, in which claims of district court error at any stage of the litigation may be ventilated . . . We have also recognized, however, a narrow class of collateral orders which do not meet this definition of finality, but which are nevertheless immediately appealable under 1291 (internal citations and quotations omitted).
You are also wrong about what type of writ it is according to First Circuit precedents (such as the one I cited in my prior post), but it ultimately does not matter as First Circuit precedent also treats the two as interchangeable because it is so difficult to get the proper label on extraordinary writs.
I don't want to be a jerk, either, but I want to make a couple more points now that I have looked at the RIAA brief.
First, the proper writ is mandamus, not prohibition. See, e.g., Haas v. Kent, 803 F.2d 744, 744 (1st Cir 1986). Prohibition is about jurisdiction. I think they labeled it "petition for mandamus or prohibition" because under 1st Cir precedent the two writs are treated as interchangeable; throughout the body of their brief they ask for mandamus only.
Second, they have not abandoned their appeal. They are employing a two-track strategy. Track one is to seek an appeal and hope the district court order will be stayed while that appeal is considered. Track two is to seek an extraordinary writ to make sure this pops up on the 1st Cir's radar before Jan 22 (eight days is not a lot of time to even get an appeal docketed). In their brief, they ask for the writ or in the alternative expedited consideration of their appeal under the collateral order doctrine.
I think you are wrong about (c). Federal Rule of Appellate Procedure 8(a) says the initial motion for a stay has to be directed to the District Court. A motion for stay in the appellate court is only proper if it (1) shows moving first in the district court would be impracticable or (2) state that the District Court denied the stay and the District Court's reasons for denying the stay.
I have already posted about (a) and (b) elsewhere and why I think you are wrong as at least trying to get the First Circuit to assert jurisdiction under the collateral order doctrine is a legitimate move and requires filing a notice of appeal in the district court; although I am confidant the First Circuit will not find that it has jurisdiction because the importance prong of the collateral order doctrine test has not been satisfied.
What about the collateral order doctrine? See Lauro Lines s.r.l. v. Chasser, et al., 490 U.S. 495, 498 (1989). Granted, I think it will fail to meet the second prong of the test (the issue is too important to be denied review), but it is worth a shot if you really do not want this hearing broadcast.
That is not the text of the appeal. That is the notice of appeal that they are required to file with the district court before their appeal can be docketed in the First Circuit. See Federal Rule of Appellate Procedure 3, 12. It has no argument because you do not present your argument when filing your notice of appeal; you file it later with your brief on the merits according to the schedule set by the First Circuit.
You are right that actual damages are hard to prove and will likely be minimal in this case if they can be proved at all, which is why statutory damages is such a great carrot to incentivize registration.
But I doubt Apple cares about recovering damages, especially from a fly-by-night operation like Pystar that is probably judgement proof in any event. What Apple really wants is a permanent injunction against PyStar, which it requests in paragraphs 30 and 39 of its complaint. They want to make sure there are no clones, not be made economically whole for the damage done to their business model by clones.
Agreed, and TFA is all about arguing that these two clauses are ambiguous when read in conjunction with each other. I agree with you that it looks based on the APA that Novell's interpretation of the contract is correct. My only point, as I said in my replies to the two other comments to my comment, is that SCO would not automatically lose based on the written transfer requirement if SCO's interpretation were accepted rather than Novell's. All a written transfer requires is
A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent. 17 USC 204
.
I am not trying to pick a fight or troll. I am just pointing out that it is the interpretation of the contract that causes SCO to lose and not that the written transfer requirement would cause SCO to lose under any interpretation of the contract.
You know more about the case than I do, conceded. I don't understand how your point #1 is supposed to rebut my original post, though. You and I agree copyright requires the transfer to be in writing. The issue is whether the APA transferred the copyright not whether the transfer was in writing. If you buy SCO's argument about how to interpret the contract, though, then the contract satisfies the written transfer requirement.
Based on SCO's activity in 2003 and the fact that I think sloppy drafters should be given an incentive not to be sloppy (if you meant for a such a basic carveout, then make the carveout explicit and unamibguous), I agree as a normative matter that you should buy Novell's interpretation not SCO's. This has nothing to do with the written transfer requirement, though.
I have not followed this case closely enough to argue its merits, but your post doesn't undercut my point. SCO didn't lose because of the doctrine that copyrights must be transferred in writing nor is it obvious as a matter of law that they should lose on that ground. If other evidence flat-out proved they did not have any claim to the copyright and that language should not be read as granting them a copyright then they lose for that reason. That doesn't mean that the written requirement requires SCO to lose.
In short, I was just trying to make a technical point about the written transfer requirement.
Whether a contract is completely integrated or not is much more complicated than you are making them out to be. For example, the presence of a strong integration clause is only a factor in determining whether the contract is completely integrated. Other factors include the completeness of the agreement (does it have all the terms you would reasonably expect to be in an agreement of this sort) and specificity (is the contract specific enough), which are used to conclude whether it is reasonable to think the parties meant the agreement to be completely integrated.
The fact that it is an integrated agreement does not mean that extrinsic evidence cannot be used to interpret the language anyway. The purpose of completely integrated agreements is to keep parties from arguing later on that the contract included additional terms that were not included in the writing. For example, if the agreement is completely integrated SCO cannot argue "Well, Novell agreed to pay our rent for the next decade even though the written document doesn't say that." If the terms of an agreement are ambiguous, then extrinsic evidence is still permissible in interpreting the meaning of those ambiguous clauses. Don't believe me? Look at Restatement (Second) of Contracts 212: Interpretation of Integrated Agreement:
A question of interpretation of an integrated agreement is to be determined by the trier of fact if it depends on the credibility of extrinsic evidence or on a choice among reasonable inference to be drawn from extrinsic evidence. Otherwise a question of interpretation of an integrated agreement is to be determined as a question of law.
Thus if the language is ambiguous and depends on the credibility of extrinsic evidence (As TFA argues), it is a question for a trier of fact whether the agreement is integrated or not. His problem with the ruling is that he believes the judge relied on the credibility of various extrinsic evidence to interpret the agreement, but then treated his interpretation as a matter of law not of fact.
This misses the ultimate point of the article though.
Readers may have long ago wondered why I'm getting so worked up about this. After all, you may be thinking, if Kimball's ruling is really as bad as I say, won't it just get reversed on appeal? Well, that's the thing. SCO's got about $10 million in cash and it's burn rate seems to be about $1 million per quarter. It's not just fighting Novell and IBM, it's fighting the clock. Kimball's ruling could be the coup de grâce. (On Friday Judge Kimball squelched SCO's long-shot attempt to seek an immediate appeal of his August 10 ruling, so SCO will need to wait until the trial is complete before it can start the appeals process.)
SCO may not survive long enough to appeal this ruling. Now I am not going to shed too many tears of this in the particular case, but it is troubling in a broader sense that a company is going to go bankrupt because its survival was based on licensing valuable property and a judge seriously botched summary judgment.
This is not a direct reply to you, but I also do not understand why other comments are putting so much weight on the written transfer requirement. That is not what the ruling is about. The judge held that the proper interpretation of the contract was that it did not transfer the copyrights and that the contract is unambiguous on its face and completely integrated so no extrinsic evidence about the meaning of clauses needs to be taken into account. As TFA shows, there was a lot of ambiguity about the meaning of the contract and the judge looked at a lot of extrinsic evidence in deciding the contract was unambiguous. If this decision was incorrect--it looks like it was--then the case should have proceeded to jury trial. If the jury bought SCO's story over Novell's then there is no written transfer problem as the contract serves that purpose.
I have only looked at the excerpts of the contract included in TFA, but I don't see where people are getting the obvious conclusion that the copyright was not transferred in writing. The doctrine on that point is that it is an evidentiary rule like the statute of frauds and that no precise language is needed to effect the transfer. Appellate courts have also remarked that the transfer does not have to be the Magna Carta and that a simple one line document will do.
If you interpret the language from the contract that says Novell is transferring "all rights and ownership of UNIX... including source code . .., such assets to include without limitation" as including the copyright, then the written transfer requirement should be satisfied based upon this precedent.
You argument is why we have the concept of secondary considerations and commercial success, specifically, in patent law. Secondary considerations exist in patent law are there to safeguard against slipping into hindsight or other biases from clouding the PHOSITA analysis that most people think of when they think of patent obviousness analysis.
The commercial success idea is that if an idea met with commercial success, and that commercial success was substantially connected to the claimed invention, then the invention's commercial success is evidence of nonobviousness. That does not mean that if you establish commercial success the invention is ipso facto nonobvious, but it does weigh against an obviousness determination. The logic behind commercial success is that if the market really did reward the invention and it was obvious then a rational third party would have brought the invention to market sooner.
I think your rebuttal to this would have to be that the commercial success was not due to how much people loved one-click, but due to the trust people put in Amazon. You might be right.
submarine patents are actually something different. The idea used to be that you would file a patent application, then continuously file continuation applications so the patent isn't published or issued. You could then wait several decades waiting for the patent to become as valuable as possible and then let the PTO publish and grant the patent. Patents were previously valid for a set number of years after the patent was granted, not the date the application is filed. This strategy is not very effective anymore because the clock now starts from the date the original application was filed.
It was called a submarine patent not because the person was quiet about their rights, but because like a submarine it was below the surface and very difficult to discover. A patent like this would not be difficult to discover. It is just the current patent rules give companies a perverse incentive not to bother looking.
The problem is not that the tech companies "are still sufficiently in control of the system that they win even more money from their own frivolous patents." Intel and many other big companies are lobbying hard for patent reform. What is holding up patent reform is that the pharmaceutical companies think the reform will be damaging to their businesses. You thus have tech and pharma lobbying in opposite directions and therefore less than the 60 votes needed to invoke cloture in the Senate.
You are right that the USPTO doesn't have any incentive to get this right, but then that is a problem with government in general. The usual response to your argument is accountability to the electoral process, but the argument is rather hollow here. No one can say with a straight face that we are going to vote out currently-elected government officials based upon patent law. It just doesn't register with the electorate.
A more practical rebuttal of your argument is based upon the resources that are poured into patent prosecution. The idea behind this system is to weed out the good patents from the bad patents--we can argue some other day about whether it actually does this job well. What would be the purpose of this expensive system if it was not given any weight by the courts and instead courts started from scratch each time litigation comes up? If you want that system, then we may as well have a patent system where you simply register your patent, you receive your patent upon filing the application, and then any challenges are handled through litigation.
Also, who says the courts have any more of an incentive to reach the correct result than the USPTO?
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Sorry for continuing an old thread. My citation makes sense because it stands for the general proposition that licenses are contracts. Your arguments about how patent licenses differ from shrinkwrap EULAs are about whether a valid contract has been formed, not whether the proper mode of analysis is contract law or some other doctrine.
In any event, here is the "on-all-fours" citation you are looking for. ProCD Inc. v. Zeidenberg, 86 F.3d 1447, 1450 (7th Cir.1996) (upholding a copyright infringement claim based on a shrinkwrap license and stating "we treat the licenses as ordinary contracts accompanying the sale of products, and therefore as governed by the common law of contracts and the Uniform Commercial Code").
"Licenses", particularly the EULA kind ("here's a slip of paper we claim you must abide by if you use this software") are not contracts. They may be enforceable, but not because they're a contractual agreement.
The US Supreme Court disagrees with your claim that licenses are not contracts. See, for example, MedImmune, Inc v Genentech, Inc, 549 US 118, 124 (2007) ("We express no opinion on whether a nonrepudiating licensee is similarly relieved of its contractual obligation during a successful challenge to a patent's validity.").
No. They will probably be able to stop paying royalties going forward once the patent is held invalid, however; most contracts state royalty payments are only owed while the patent is valid.
If they aren't selling it, they they are losing nothing when we pirate it. This in turn means that there is no damage to them, and thus no case against us.
Try this example. Blockbuster does inconvenient, per-rental in-store rentals of movies. A new company (let's call it Netflix) comes around offering more convenient, flat-fee rentals. Many people start using to Netflix and stop going to Blockbuster. This costs Blockbuster business as they (initially) do not offer a comparable service to Netflix. Can you say with a straight face that Blockbuster lost nothing when people switched to Netflix since Blockbuster wasn't offering a comparable service?
Some people pirating movies wouldn't rent or buy them even if torrents did not exist. Some (probably many) would but instead use torrents as a substitute because of convenience or cost.
You are also wrong about what type of writ it is according to First Circuit precedents (such as the one I cited in my prior post), but it ultimately does not matter as First Circuit precedent also treats the two as interchangeable because it is so difficult to get the proper label on extraordinary writs.
I don't want to be a jerk, either, but I want to make a couple more points now that I have looked at the RIAA brief.
First, the proper writ is mandamus, not prohibition. See, e.g., Haas v. Kent, 803 F.2d 744, 744 (1st Cir 1986). Prohibition is about jurisdiction. I think they labeled it "petition for mandamus or prohibition" because under 1st Cir precedent the two writs are treated as interchangeable; throughout the body of their brief they ask for mandamus only.
Second, they have not abandoned their appeal. They are employing a two-track strategy. Track one is to seek an appeal and hope the district court order will be stayed while that appeal is considered. Track two is to seek an extraordinary writ to make sure this pops up on the 1st Cir's radar before Jan 22 (eight days is not a lot of time to even get an appeal docketed). In their brief, they ask for the writ or in the alternative expedited consideration of their appeal under the collateral order doctrine.
I think you are wrong about (c). Federal Rule of Appellate Procedure 8(a) says the initial motion for a stay has to be directed to the District Court. A motion for stay in the appellate court is only proper if it (1) shows moving first in the district court would be impracticable or (2) state that the District Court denied the stay and the District Court's reasons for denying the stay.
I have already posted about (a) and (b) elsewhere and why I think you are wrong as at least trying to get the First Circuit to assert jurisdiction under the collateral order doctrine is a legitimate move and requires filing a notice of appeal in the district court; although I am confidant the First Circuit will not find that it has jurisdiction because the importance prong of the collateral order doctrine test has not been satisfied.
What about the collateral order doctrine? See Lauro Lines s.r.l. v. Chasser, et al., 490 U.S. 495, 498 (1989). Granted, I think it will fail to meet the second prong of the test (the issue is too important to be denied review), but it is worth a shot if you really do not want this hearing broadcast.
That is not the text of the appeal. That is the notice of appeal that they are required to file with the district court before their appeal can be docketed in the First Circuit. See Federal Rule of Appellate Procedure 3, 12. It has no argument because you do not present your argument when filing your notice of appeal; you file it later with your brief on the merits according to the schedule set by the First Circuit.
You are right that actual damages are hard to prove and will likely be minimal in this case if they can be proved at all, which is why statutory damages is such a great carrot to incentivize registration. But I doubt Apple cares about recovering damages, especially from a fly-by-night operation like Pystar that is probably judgement proof in any event. What Apple really wants is a permanent injunction against PyStar, which it requests in paragraphs 30 and 39 of its complaint. They want to make sure there are no clones, not be made economically whole for the damage done to their business model by clones.
You know more about the case than I do, conceded. I don't understand how your point #1 is supposed to rebut my original post, though. You and I agree copyright requires the transfer to be in writing. The issue is whether the APA transferred the copyright not whether the transfer was in writing. If you buy SCO's argument about how to interpret the contract, though, then the contract satisfies the written transfer requirement.
Based on SCO's activity in 2003 and the fact that I think sloppy drafters should be given an incentive not to be sloppy (if you meant for a such a basic carveout, then make the carveout explicit and unamibguous), I agree as a normative matter that you should buy Novell's interpretation not SCO's. This has nothing to do with the written transfer requirement, though.
I have not followed this case closely enough to argue its merits, but your post doesn't undercut my point. SCO didn't lose because of the doctrine that copyrights must be transferred in writing nor is it obvious as a matter of law that they should lose on that ground. If other evidence flat-out proved they did not have any claim to the copyright and that language should not be read as granting them a copyright then they lose for that reason. That doesn't mean that the written requirement requires SCO to lose.
In short, I was just trying to make a technical point about the written transfer requirement.
The fact that it is an integrated agreement does not mean that extrinsic evidence cannot be used to interpret the language anyway. The purpose of completely integrated agreements is to keep parties from arguing later on that the contract included additional terms that were not included in the writing. For example, if the agreement is completely integrated SCO cannot argue "Well, Novell agreed to pay our rent for the next decade even though the written document doesn't say that." If the terms of an agreement are ambiguous, then extrinsic evidence is still permissible in interpreting the meaning of those ambiguous clauses. Don't believe me? Look at Restatement (Second) of Contracts 212: Interpretation of Integrated Agreement:Thus if the language is ambiguous and depends on the credibility of extrinsic evidence (As TFA argues), it is a question for a trier of fact whether the agreement is integrated or not. His problem with the ruling is that he believes the judge relied on the credibility of various extrinsic evidence to interpret the agreement, but then treated his interpretation as a matter of law not of fact.
This is not a direct reply to you, but I also do not understand why other comments are putting so much weight on the written transfer requirement. That is not what the ruling is about. The judge held that the proper interpretation of the contract was that it did not transfer the copyrights and that the contract is unambiguous on its face and completely integrated so no extrinsic evidence about the meaning of clauses needs to be taken into account. As TFA shows, there was a lot of ambiguity about the meaning of the contract and the judge looked at a lot of extrinsic evidence in deciding the contract was unambiguous. If this decision was incorrect--it looks like it was--then the case should have proceeded to jury trial. If the jury bought SCO's story over Novell's then there is no written transfer problem as the contract serves that purpose.
I have only looked at the excerpts of the contract included in TFA, but I don't see where people are getting the obvious conclusion that the copyright was not transferred in writing. The doctrine on that point is that it is an evidentiary rule like the statute of frauds and that no precise language is needed to effect the transfer. Appellate courts have also remarked that the transfer does not have to be the Magna Carta and that a simple one line document will do.
... including source code . . ., such assets to include without limitation" as including the copyright, then the written transfer requirement should be satisfied based upon this precedent.
If you interpret the language from the contract that says Novell is transferring "all rights and ownership of UNIX
You argument is why we have the concept of secondary considerations and commercial success, specifically, in patent law. Secondary considerations exist in patent law are there to safeguard against slipping into hindsight or other biases from clouding the PHOSITA analysis that most people think of when they think of patent obviousness analysis.
The commercial success idea is that if an idea met with commercial success, and that commercial success was substantially connected to the claimed invention, then the invention's commercial success is evidence of nonobviousness. That does not mean that if you establish commercial success the invention is ipso facto nonobvious, but it does weigh against an obviousness determination. The logic behind commercial success is that if the market really did reward the invention and it was obvious then a rational third party would have brought the invention to market sooner.
I think your rebuttal to this would have to be that the commercial success was not due to how much people loved one-click, but due to the trust people put in Amazon. You might be right.
submarine patents are actually something different. The idea used to be that you would file a patent application, then continuously file continuation applications so the patent isn't published or issued. You could then wait several decades waiting for the patent to become as valuable as possible and then let the PTO publish and grant the patent. Patents were previously valid for a set number of years after the patent was granted, not the date the application is filed. This strategy is not very effective anymore because the clock now starts from the date the original application was filed.
It was called a submarine patent not because the person was quiet about their rights, but because like a submarine it was below the surface and very difficult to discover. A patent like this would not be difficult to discover. It is just the current patent rules give companies a perverse incentive not to bother looking.
The problem is not that the tech companies "are still sufficiently in control of the system that they win even more money from their own frivolous patents." Intel and many other big companies are lobbying hard for patent reform. What is holding up patent reform is that the pharmaceutical companies think the reform will be damaging to their businesses. You thus have tech and pharma lobbying in opposite directions and therefore less than the 60 votes needed to invoke cloture in the Senate.
You are right that the USPTO doesn't have any incentive to get this right, but then that is a problem with government in general. The usual response to your argument is accountability to the electoral process, but the argument is rather hollow here. No one can say with a straight face that we are going to vote out currently-elected government officials based upon patent law. It just doesn't register with the electorate. A more practical rebuttal of your argument is based upon the resources that are poured into patent prosecution. The idea behind this system is to weed out the good patents from the bad patents--we can argue some other day about whether it actually does this job well. What would be the purpose of this expensive system if it was not given any weight by the courts and instead courts started from scratch each time litigation comes up? If you want that system, then we may as well have a patent system where you simply register your patent, you receive your patent upon filing the application, and then any challenges are handled through litigation. Also, who says the courts have any more of an incentive to reach the correct result than the USPTO?