c.
P
must take reasonable steps to protect secrets
d.Sue
D who agreed to abide by T/S or stole through unlawful means
Electronic
Privacy
1)Constitution
a.
Implied
right to privacy
b.4th
Amendment – Protection against unreasonable search and seizure
c.
Private
parties cannot violate Constitution
d.Only
Government can violate Constitution
2)Statutes
a.
Patchwork
of Acts
i.1974 Privacy Act
ii.Fair Credit Reporting Act
iii.Financial Privacy Act
iv.Electronic Communications Privacy Act – ECPA
v.Children’s Online Protection Privacy Act – COPPA
vi.Computer Fraud & Abuse Act (CFAA)
vii.CALEA – Easier for Gov’t to wiretap
viii.Carnivore – Gov’t interception of private e-mail
3)Common
Law
a.
Trespass
to Chattels – Reduce value of person’s personal property (leaking air out of
person’s tires)
b.Junk
e-mail – Trespass to Chattels P argument; Property Law issues
c.
Data
Mining
d.Cookies
possibly hacking?
Antitrust
& E-Commerce
1)Enforcement
of
a.
Click-Wrap
b.Shrink-Wrap
Licenses
2)Minimum
Contacts Issue
Copyright
From the Hornbook
1)Copyright
is the exclusive right of an author or other copyright owner to copy, distribute,
perform or display work (17 USC 106)
2)Copyright
is not lost when information becomes public.
3)Issue:Whether particular expressive
elements of computer programs may be copyrighted at all?
4)Protects
original works of authorship in any tangible medium of expression.
5)CONTU
– Congress’s intent to include S/W as C/R material
6)Machines
can be patented but not C/R
7)O/S
and non-literal elements enjoy C/R protection
8)Challenge:Allegedly infringing programs
containing small parts of coded instructions from the original work; or
mimicking elements without copying the original instructions literally.
9)Merger
Doctrine – Some expressive elements are copied by the user to make the idea
function properly.(ex: Henry
VIII)
10)Scene a Faire
Doctrine – A scene that must be done
11)A/F/C – Modern
Audience Test
a.
Clean
Room Defense not supported by CT.
b.Reverse
Engineering Defense may be recognized - Examination of a finished product to
determine how the product is made.
12)The fact that
the copy is only an intermediate step in the creation of a noninfringing
program does not make the copying per se lawful
13)Fair Use Defense
a.
Purpose
and Character of use – Commercial v. Educational
b.Nature
of the work
c.
Amount
and Substantiality
d.Effect
on the market
14)Stimulate artistic
creativity for the public good
15)Largely
functional works are entitled to only weak C/R protection
16)Object code may
be disassembled and an intermediate copy made for the purpose of
understanding the unprotected ideas and processes in a copyrighted work.
17)Fair use
reproductions of a computer program must not exceed what is necessary to
understand the unprotected elements of the work.
18)Digital
Millennium Copyright Act (DMCA)
a.
Limits
ISP’s liability on C/R Infringement
b.Creates
“safe harbors” for ISP’s
i.Storage and Information Location
ii.Caching
iii.Transmission and Routing
c.
No
obligation to monitor or access
1)Light
on formalities
2)Reduce
work to “fixed medium of protection”
3)Registration
not required
4)No
C/R Examiners (as opposed to Patent Examiners)
5)Constitution
a.
Article
I, Section VIII
b.Sets
policy for C/R & Patents
c.
Purpose
– “to promote the progress of science and the useful arts”
d.Rewarding
inventor is not the purpose
6)“certain
time” – time limit on C/R & Patent
7)Limits
on C/R & Patent - Cannot C/R mere idea, even if first person to write it
8)Spectrum
a.
Authors
& Writing
b.Inventors
& Discoveries
c.
Const.
gives Congress broad powers to pass such laws
d.No
requirement to pass statute
e.
Almost
exclusively Federal Issue
Proving
C/R Infringement
1)Own
C/R
2)Saw
or direct evidence of C/R
a.
D
had access to C/R & works are similar – “substantial similarity”
b.Audience
Test – Show work to jury
3)70’s
– 80’s – Issue of C/R-ability of S/W
4)Section
102(a) – Original Works of Authorship
a.
Work
of Authorship – Human
b.Fixed
& Tangible medium – Choreography?
c.
“Fixed”
d.“Includes”
– Not limited to
e.
S/W
is not mentioned, but a computer program is defined
5)Section
102(b) – Not C/R
a.
Ideas
– Cannot C/R idea or way expressed
b.Procedures
c.
Processes
d.Systems
e.
Method
f.Concepts
g.
Principles
h.
Laws
of Nature
Apple
Computer v. Franklin
1)Sound
decision
2)Cites
Data Processing, No. IL case stating cannot C/R ROM’s
3)Facts
a.
Franklin
makes Apple Clones
b.Admits
copying code
c.
Defense
– cannot C/R code; O/S
4)District
Court
a.
Messy
decision
b.Balancing
of hardships
5)Appeals
Court – 3rd Circuit
a.
S/W
is an expression
b.ROM
is a fixed medium
c.
Issue
1 – Can you C/R object code?
i.Franklin case – may only C/R human readable material
ii.Copyright Act of 1976 supersedes decision – can C/R even if
translated “direct or indirect” use in computer
iii.Congress’s intention was to permit C/R of programs
iv.CONTU – Committee on New Technology Uses
1.Express
approval to C/R programs
2.Backup
copies for archive purposes permitted
3.Making
copies to run program permitted
4.Suggests
S/W can be C/R’ed
5.Goes
to definition of literary work
6.Includes
expression of work in #’s or any other indicia
d.Issue
2 – ROM Chip S/W
i.TC – only medium of fixation
ii.“Gotcha” argument – fails
iii.Has not be used since
iv.C/R Analysis - See Cases
1.Whelan
v. Janslow
2.Computer
Associates
e.Holding:Cannot copy code word-for-word
6)Problem
a.
Possible
to imitate with infringing
b.J.
Learned Hand – Case on script for play – same plot
i.At what point does C/R infringement occur?
ii.Must decide at each case
c.
Hierarchy
of Abstractions
d.Audience
Test
Value
of Software
1)Describe
how it works
2)Explain
what you are trying to protect
3)Elements
a.
Modules
b.Sub-modules
c.
Control
Flow – Sequence of Interaction
d.Data
Flow
e.
Data
Sets – Data
f.Algorithms – Sets of Instructions
Whelan
v. Janslow
1)Expression
v. Idea
2)Congress
a.
Program
contains expression and not mere idea
b.Literary
work
3)Utilitarian,
Practical work
4)“Thin
Protection”
5)Methods
– limited protection
6)Court
a.
Purpose
or Function – Idea
b.Idea
– Run dental lab
c.
Consequence
– Everything not essential is expression and therefore protected
d.Is
there more than one way to run program?
e.
CT
– Won’t protect most efficient way to produce result in program
f.How do you separate the idea from the expression
7)Merger
– Idea merges with expression
8)Control
flow merges with idea
9)Problem
– CT assumes every program has only 1 idea
10)Computer
Associates Case – Program has many ideas
Fair
Use Elements – Only one element required to pass test
1)Purpose
& Character of Use – Commercial v. Non-Profit Educational
2)Nature
of the Work – Thin protection for fact-intensive works
3)Amount
and Substantiality in Relation to work as whole – How Much
4)KEY:Market Value of Item – Depriving
author of benefit of creativity
Sega
v. Accolade
1)Console
& Game Cartridge case
2)Accolade
was not Sega’s licensee
3)Sega
logo copied by Accolade
4)Accolade
a.
“Intermediate
copying”
b.Claims
exception to C/R
c.
CT
– No C/R Act exception
d.Claims
Idea not Expression
e.
CT
– No Good
f.Claims Section117 backup of S/W for Personal Use
g.
CT
– Actions amount to more than creating archive
5)Substantial
similarity not same as small bits of code
6)Fair
Use Elements
a.
Purpose
& Character of Use – Commercial à
P
b.Nature
of Work – Functional à D
c.
Total
% Copied – 100% à P
d.Market
Value
7)CT
a.
Disassembly
brings new competition to the market
b.Purpose
& Character – R/E is socially useful
c.
Ultimate
Copy - Non-infringing game containing limited amount of copied code
d.Non-infringing
– Non-protected
e.
Unprotected
Expression – Only accessed through R/E
f.C/R does not protect non-protected interfaces
g.
C/R
does not protect anti-competitive licensing strategies
Atari
v. Nintendo
1)Lock
and key software
2)Small,
deminimus code
3)Atari
took chip out of console & “peeled it”
4)Chip
was Firmware
5)Atari’s
attorney makes false statement to C/R office to get code to allegedly defend
against suit
6)CT
– False pretense gain from C/R office is NOT Fair Use
7)D
misconduct underlies & removes Fair Use Defense
Sony
v. Connectix
1)Console
emulator software
2)Requires
H/W & F/W replication
3)Sony
a.
Do
as little copying as possible
b.Argues
Connectix made multiple copies when loading S/W into RAM
4)CT
a.
Qualitative,
not Quantitative test
b.R/E
mechanics up to copier
c.
Reviews
Frequency & Use Analysis
5)Sega
Test – Nature and Purpose of Use
6)Nature
of Work à
Functionality
7)Amount
of Work Copied
8)Affect
on Market – Present, but people are not buying infringing products
9)Will
sales of infringing product cut into other’s market?
10)CT – Collateral
effect – not C/R issue
11)C/R does not
protect holders from all attacks.
12)C/R protects
holders from infringing works
Napster
1)Recording
Industry Association of America (RIAA)
2)Must
Prove
a.
Direct
b.Contributory
c.
Vicarious;
AND
d.Not
Fair Use
3)CT
a.
Direct
– Sony Betamax - Legitimate user purpose – Public Domain
b.Contributory
– Know or reason to know and contributes to use; found damaging e-mail à
piracy
c.
Vicarious
– Right and opportunity to supervise & benefit; Napster is not making
money, good D
Patent
From the Hornbook
1)Protects
systems, processes and methods of operation excluded from the C/R regime.
2)Creates
comprehensive rights against infringing inventions.
3)Must
be novel and improves upon the existing technology (prior art) in a way that would
not be obvious to the person having ordinary skill in that field.
4)Where
a computer program is part of a patentable process, the use of a computer
program in the invention will not deprive that invention of patent
protection.
5)C/R,
not Patent, should be the primary source of IP protection.
1)Protects
S/W – See State Street Bank Case recognizing Patent protection for S/W
2)Requirements
a.
Formalities
b.Cost
3)Steps
a.
Submit
b.Prosecute
c.
Scrutiny
4)Protects
against independent creation
5)Important
in technology fields
6)Statutory
Categories - Monopoly
a.
Process,
machine, material, matter
b.Process
v. Product
c.
Process
– Transition of article to a different thing
d.Matter
– 2 or more substances
7)Cannot
Patent
a.
Scientific
principles
b.Natural
phenomena
c.
Mathematical
Algorithms
8)1969
– Patents began for Computer programs
9)1972
– SC – Gottschalk v. Benson – No mathematical Algorithms can be
patented
10)High Threshold
of originality
a.
Novelty
– Not previously described
b.Utility
– Useful
c.
Non-Obviousness
– Improvement upon prior art not obvious to person unskilled in art
11)Independent
Creation not covered by Patent
12)1st
to Patent covered – Priority
13)Monopoly on
invention & sale
14)Express
authority under Article I, Section VIII; unlike T/M & T/S
15)1798 – Art
a.
Medium
– Process
b.CT
Interpretation
c.
Process
– Method of Operation
d.Product
– Machines, useful matter
e.
Compilation
of matter – 2 or more substances
Computer
Programs & Patents
1)Programs
previously considered TM & C/R
2)J.
Douglas in the Gottschalk Case
a.
Patent
– Monopoly on Algorithm
b.Expression
– Merger of idea in C/R
c.
Limits
creativity with license
d.Let
Congress decide
3)Flute
Case
a.
Algorithm
does not deny patent
b.Math
can be used in other contexts
c.
J.
Stevens Dissent
i.Against patenting programs
ii.Cites Obviousness v. Patent
4)Diamond
v. Dierhr
a.
Rubber
mold case
b.Distinguished
from prior cases – may patent certain computer programs with process
c.
Improvement
on prior art
d.Process,
therefore Patentable
e.
Program
does not render process unpatentable
f.Proposed Test
i.Is there an algorithm?
ii.Is the remaining element(s) statutory Subject Matter
Jurisdiction?
iii.Then apply
1.Utility
2.Novelty
3.Non-Obviousness
State
Street Bank v. Signature Financial
1)Program
pools assets of Partnership
2)State
Street seeks license from Signature for S/W – Fails
3)Sues
to overturn Patent
4)TC
– Machine Claim
5)Why
is this Patentable?
a.
Mathematical
Algorithm – Narrowed
b.Business
Method Exception – Not Permitted
Trademarks
From the Hornbook
1)Names,
symbols, and other devices used to distinguish products from others.
2)Elements
a.
Distinctive
b.No
likelihood of confusion
3)Vicarious
liability for those who lack actual knowledge of infringing activity, but who
have the right and ability to supervise the activity of the infringer, and
who have a direct financial interest in that activity.(Bookstore owners, dance hall
operators)
1)Not
mentioned in Constitution
2)Mostly
state issue until Lanham Act
3)Based
on Commerce Clause
4)Creates
Federal Rights
5)Presumption
of Nationwide Notice
6)Prevents
Geographic disputes
7)Federal
Question
8)Requirements
a.
Distinctiveness
b.No
Likelihood of confusion
9)Distinctiveness
a.
Identical
Goods
b.Generic
Marks – Non-distinctive
c.
Ex)
Car, toaster, VCR – Categories of goods
10)Descriptive
Marks
a.
Describes
product
b.Ex)
Portable typewrite – not portable unless secondary meaning
11)Suggestive,
Arbitrary or Fanciful Marks
a.
Purely
Distinctive
b.Does
not describe product
c.
Examples
i.Kodak – Arbitrary Term
ii.Apple Computer – Fanciful
iii.Playboy - Suggestive
d.Suggestive
words cannot be TM’ed
e.
Must
protect TM or else lose right to use.
12)Trademarks are
not a big issue in Computer Law
13)Not part of Constitution
14)Must be used in
commerce, otherwise can be considered abandoned
15)Registration
permits Federal Court action, otherwise may have to prove diversity
16)CT
Considerations
a.
Market
Place Factors
i.Similarities of Marks
ii.Similarities of Goods & Services connected to marks
1)TC
– Preliminary injunction against D; likely to prevail on the merits
2)“Hi
Res” game S/W
3)Descriptive
v. Generic Term
4)Descriptive
with secondary meaning
5)D
– Fair Use Doctrine
6)After
5 years, descriptive meaning may be used in fair way
Apple
v. Formula International
1)TM
and C/R infringement case
2)D
admits substitute similarity
3)Substitute
creates likelihood of confusion
4)Similar
marks
5)Similar
products
6)Intention
to expand to assembled computers
Domain
Names
1)Bad
Faith
2)No
legitimate use
3)Confusingly
similar
Exam
Issues
1)S/W
2)C/R
3)Patent
4)Infringement
5)User
Interface
6)Structure
7)TM
8)Trade
Secret
9)Key
Cases
a.Engineering
Dynamics
b.Lotus
10)See old
exams
11)Read
Hornbook
Privacy
& Data Protection
1)Sources
of Protection
a.
Constitution
- good when no statutory remedy found
b.Statutes
c.
C/L
2)Griswold
v. Connecticut
a.
Right
to Privacy
b.Contraception
and Marital Relationship
c.
J.
Douglas
i.State interferes with private relationship
ii.Privacy – Protected relationship
iii.“Emanations & Penumbras”
d.Implied
right of Privacy in relationships and marriages
3)Right
of Privacy only applies to Gov’t actions
4)Mostly
statutory protection
5)4th
Amendment
a.
Protection
of Informational Privacy
b.Procedural
and Specific
c.
Warrants
issued upon probable cause
d.Supported
by oath or affirmation
e.
Describe
place or person to be searched or seized
f.No “fishing expeditions” permitted
6)Katz
– 4th Amendment
a.
Reasonable
expectation of privacy – J. Harlan
b.Zone
of privacy
c.
Subjective
Test – “Reasonable” Expectation of Privacy
d.Objective
Test – People know Telco has access to records
e.
Recording
device violated the privacy upon which P justifiably relied while using the
telephone booth
7)Smith
v. Maryland
a.
Informational
Privacy – 4th Amendment issue
b.Pen
Register – records all numbers dialed out
c.
Trap
& Trace – Records incoming calls
d.AC
– No reasonable expectation of privacy
e.
SC
– Concurs with AC
f.D has subjective expectation of privacy, but society does
not need to treat that expectation as reasonable.
g.
Pen
register does not violate a reasonable expectation of privacy and is not a
search under the 4th Amendment
h.
ECPA
Chapter 206, Section 3121(a) – No person may install or use a pen register or
trap and trace device without first obtaining a court order.
8)Waylon
v. Roe – See Hornbook
a.
Right
to informational privacy
b.Sue
Gov’t for accessing stored information
9)USAF
v. Maxwell
a.
FBI
warrant to search
i.AOL
ii.Kiddie Porn
iii.Adult Chats
b.Charged
under Federal Obscenity Statutes
i.Child Pornography
ii.Conduct Unbecoming an Air Force Officer
c.
D
claims 4th Amendment right to Privacy
d.TC
i.Warrant not required
ii.No reasonable expectation of privacy
iii.Good Faith Exception
e.
AC
i.Warrant required
ii.Reasonable expectation of Privacy
iii.No good faith exception unless warrant defective
iv.Finds warrant defective because AOL conducted search, not
FBI
v.Warrantless Searches
1.Plain
View
2.Inevitable
Discovery
f.Outcome
i.All fruits of search suppressed; but
ii.Child Porn grounds for dismissal from Service
g.
Users
of e-mail have a reasonable expectation of privacy for messages stored with
their ISP’s.
10)Merriker
v. W.D. Cressman
a.
Right
of Privacy
b.Insidious
violation on right of privacy
c.
8th
Grader – Critical Period Intervention Program
d.Invasive
Questions
e.
CT
– Violates Right of Privacy based on Gov’t interfaces with relationships
f.Requires knowing and intentional waiver to overcome issue
g.
No
waiver granted by damaged party
h.
Related
Themes
i.Confidentiality
ii.Data Protection
Information
Privacy
1)Covers
Electronic and Data Protection/Privacy
2)Statutes
– See Hornbook
a.
ECPA
b.COPPA
c.
CFAA
3)Sectoral
Approach – Different rules for different businesses
4)C/L
Approach – Weak and difficult to prove
a.
Trespass
to Chattels
b.Invasion
of Privacy
Electronic
Communications Privacy Act (ECPA) – Always on EXAM
Process
1)Read
Offense
2)Read
Description of the Offense
3)Read
Definition of the Offense
4)See
Katz case – Oral Communications Definition
5)Oral
– No Storage
6)Wire
– telephone, cell phone, permanent storage
7)Electronic
– e-mail, no storage
8)Warrant
a.
Harder
for wire or oral
b.Easier
for electronic
1)Chapter
119 – Wiretap Statute
2)Chapter
121 – Unauthorized Access
1)Chapter
119 Wiretap
a.
Covers
i.Bug
ii.Tape
iii.Storage
iv.Unlawful Access
v.Unauthorized access (Chapter 121)
b.Review
Substance of Offenses – Sect 2511
i.Numerous Exceptions
ii.Intentional Intercept
c.
Each
word is carefully defined
d.Intercept
– Aural (as opposed to oral) – Human voice at any point
e.
Electronic,
mechanical or other device
f.Ordinary course of business
i.Customer service taping
ii.Phone extension exception
g.
Wire
Communications - Anything containing human voice over wire
h.
Cell
Phones 1981
i.Initially not wired communications
ii.Not initially covered in ECPA
iii.1986 Act – Wires found in switching stations
iv.Cell phones now covered under ECPA
i.Oral Communications – Based on Katz reasonable expectation
of privacy
i.Lecturer does not have a reasonable expectation of privacy
ii.At home, you do have a reasonable expectation of privacy
j.Electronic Communications
i.Broad spectrum including e-mail
ii.Numerous exceptions
iii.May intercept
1.Pager
information
2.Wire/oral
Comms
3.EFT
Information – but may be covered under right to financial privacy
k.Law
Enforcement Exception – Easier for oral warrant than electronic warrant
l.Motions
i.Wiretap
1.Periodic
reports to CT
2.Justify
need for continuing Wiretap
ii.Warrant
1.1
time showing of need
2.Probable
Cause
m.Intercept
required for any federal offense
n.
Exclusionary
rule for wire/oral interception
o.Other
exceptions
i.ISP’s
ii.Operators of switchboards
iii.BBS Hosts
p.Party
Consent
i.1 Party Consent in most states
ii.2 Party consent in MD & 8 other states – Linda Tripp
case
q.Penalty
Provisions
i.Civil
ii.Criminal
iii.Default – 5 years for felonies
2)Chapter
121 – Stored and Electronic Communications
a.
Targets
e-mail, remote communications
b.Electronic
communications service – wire or electronic
i.Telco
ii.ISP
c.
Remote
computing services – Sharing data remotely
d.Only
electronic communications
e.
Section
2701
i.Intentional Access
ii.Access without or exceeding authorization
iii.Wire or electronic communications
iv.Must be communications
f.Section 2702
i.Telco cannot disclose contents of communications without
warrant
ii.Geared towards needs of Direct Marketing Association
g.
Section
2704 – Background Presence – Gov’t must give reasonable notice
Steve
Jackson Games Case
1)D&D
company
2)Stored
e-mail – Stored at ISP, not retrieved by D
3)Sent,
but not retrieved
4)Not
considered intercept
5)Warrant
6)Unauthorized
access to stored information – Interception
7)CT
a.
Police
did not acquire contents through use of device
b.Privacy
challenge overturned
c.
Criticizes
ECPA
Computer
Fraud and Abuse Act (CFAA)
1)Any
computer used in Interstate Commerce
2)Any
Internet-connected computer
3)18
USCS 1030
4)Knowingly
Access
a.
Interstate
or foreign communications
b.Intent
to defraud or extort
5)Access
and acquisition of information
6)ECPA
– Covers Service Providers
7)CFAA
– Any Computer
Children’s
Online Privacy Protection Act (COPPA)
1)Requires
verifiable parental consent
2)Consent
– Disclosure
3)Internal
use of data permits light application
4)Outside
use of data requires stronger consent
5)Directed
at children under 13
6)Only
applies to commercial sites
Exam
1)Determine
what statute to apply, if any
2)121
ECPA
a.Electronic
Communications Services – Telco
b.Remote
Computing Services – ISP’s
c.If
no ECS or RCS, then use 119 ECPA
3)119
ECPA
a.Interstate
Commerce Computer
b.Linked
to any other computer
4)Voluntary
release of Information to Comms 3rd party
5)Protection
of Personal Information
Antitrust
From the Hornbook
1)Principles
of Antitrust Enforcement
a.
Improve
customer welfare by protecting the competitive process
b.Protecting
competition rather than competitors based on an unreasonable restraint on
competition
2)Tying
– Seller’s exploitation of control forcing a buyer into purchasing a tied
product that the buyer did not want, or might have preferred to purchase
elsewhere on different terms.
3)Tying
Elements
a.
D
had market power to tie products
b.Tied
products are separate; and
c.
D
used market power to force customers to accept tying arrangement.P must show there are 2 distinct
products.
4)Market
Power – Ability to raise price or limit output in a relevant market for some
meaningful period of time.Generally inferred by identifying a relevant market and finding
structural evidence that the market is not competitive.
1)Sherman
Antitrust Act
a.
Short
Act
b.Lots
of case law
c.
Protects
competition, not competitors
d.Protects
consumers
e.
Discourages
monopolies, price fixing
2)Section
1 – See Hornbook
a.
Joint
Action – 2 or more people
b.Per
Se
c.
No
legal business purpose
d.Price
Fixing
e.
Allocation
of Territories – Construction
f.Group Boycotts
3)Section
2 – Monopolies
a.
Keeping
once having
b.Attempt
c.
Conspiracy
d.Generally
single firm offense
4)Computer
Industry
a.
Tie-in
Offense
b.Monopoly
in one market
c.
Used
to leverage advantage in another market
d.Ex)
Xerox copier requiring Xerox brand paper
e.
Leasing
affects tying arrangements
f.Microsoft – Must buy OS license for every computer shipped
g.
Do
people expect the product to be there?
i.Tires for cars – Yes
ii.Extended warranties for cars – No
h.
Keys
to tie-ins
i.Perception
ii.Timing
Proving
Antitrust
Monopoly – Ability to raise prices in a market
above a competitive limit for a period of time
1)Relevant
Market
a.
May
be entire case
b.All
products or services for each other
c.
P
– Claim not substitute in market
d.D
– Claim are substitutes in the market
e.
Cross-Elasticity
of demand
f.Market
i.Product
ii.Geographic
2)Does
D have power in the market?
a.
Could
D get away with charging above market prices?
b.Evaluate
barriers to entry
c.
Demand
– Substitutability
d.Supply
– Substitutability
e.
HHI
Index
i.Sum of the shares of market, squared
ii.If total exceeds 1,800 à
Monopoly
iii.Highly Concentrated Market
Exam
1)Apply
Microsoft Analysis
2)Use
Basic Checklist
Tying
Allegations in Microsoft Case
1)Some
legal
2)Some
illegal
3)One
of many allegations v. Microsoft
4)Similar
Allegations
a.
IBM
and Punchcards
b.IBM
Mainframes & S/W
c.
Car
& Parts
5)Requirements
a.
Proof
of Market Power
b.Separate
in Market
c.
Beyond
normal market practices – coercion
6)Tying
v. Leveraging
a.
Leveraging
is Okay
b.Tying
may not be okay
7)Market
Power
a.
Monopoly
b.Maintained
in Predatory Ways
8)Identify
a.
Relevant
Product Market
b.Relevant
Geographic Market – Substitutes
9)Monopoly
– Ability to raise prices above a certain amount at a give length of time
a.
Keys
i.Supply Substitutability – Speed to market for others
1.Short
Term – Quick ramp up
2.Long
Term – Speed to Market
ii.Demand Substitutability – Long Distance Tel rates
b.Applications
Barriers to Entry – Key in Microsoft Case
i.HHI – Index for Monopolies
ii.Additional evidence
iii.Used to determine when to approve a merger
c.
Proposed
findings of Fact
d.Parties
comment
e.
Market
Power for Discussion
i.Relevant Market
ii.All Intel Computers licensed – worldwide
iii.Server O/S – Too large of a market
iv.Non-Intel computers
1.No
difference with market share issue
2.No
evidence of pricing behavior influencing Mac market
3.Information
Appliances – Substitutes, not purchased in lieu of PC’s
4.Network
Computers – Substitutes also
10)Middleware –
Heart of case
a.
Browser
runs on top of O/S
b.Theoretically
people can write S/W for browser & multiple O/S
c.
API
– Applications Programming Interface
d.Interacts
with Application Program (browser)
e.
Applications
barrier to entry
f.Most programmers write for major O/S
g.
Network
effect
i.Value of product rose with the number of people using it
ii.Chicken & Egg Effect
iii.Phone(s)
1.1
phone user = Nothing
2.Multiple
phone users = Market
11)Tipping Effect
a.
VHS
v. Betamax
b.CD’s
v. Albums
c.
Point
at which market tips into one competitor
12)Substitutability
of Supply
a.
Can
new suppliers readily enter market?
b.If
Microsoft raises Win95 prices, will new suppliers enter market?No
c.
Microsoft
Market share – 92% - 95%
13)Monopoly
a.
Unlawful
acquisition claim fails
b.Acquisition
through Network Effect & Tipping
c.
No
violation of Antitrust laws
14)Issue:Has Microsoft done something to
maintain a monopoly advantage?
15)After the Fact
a.
What
is unlawful?
b.Any
behavior to use monopoly against anyone else
16)Holding:Microsoft gave itself advantage in
the browser market and uses its leverage over other firms
17)Alleged Actions
– Coerce Netscape to redesign product
18)CT
a.
Monopolist
is not required to share information with competitors
b.Maintaining
Monopoly Power, preserves barrier to entry
c.
Creates
competing browser to drive Netscape out of Market
d.Gives
IE away for free
e.
Excluding
another from the market without good reason = Anticompetitive
f.IE bundled (tied) with Win95 – Section 1 violation
g.
OEM’s
cannot delete IE icon from desktop
Exam
Review
1)Show
a.Relevant
Market
b.Structure
of Market
c.Abuse
of Market Power
2)Analyze
- Key
3)Discern
Facts
4)Hard
to Identify Outcome
Analysis
1)Identify
relevant market
a.
Product
b.Scope
– Worldwide for most S/W
c.
Rage
of product to replace D product
d.Where
else can consumer go for similar product?
e.
Substitutes
f.Microsoft attempted to broaden the relevant market to
include:
i.Servers
ii.Macs
iii.PDA’s
g.
Gov’t
– Not readily substitutes
h.
CT
i.Mac not substitute for MS Windows 95
ii.Mac only has 10% of market share of desktop computers
2)Structure
of the Market
a.
Supply
b.Demand
c.
Substitutability
d.Likelihood
of consumer to find another supplier
e.
Demand
Substitutability
i.How quickly can competitor enter market?
ii.How fast can supplier change prices?
3)Abuse
of Market Power
a.
Misuse
of Monopoly Power
b.Exclusionary
c.
No
rational business justification except to extend monopoly
d.Market
power based on market share
e.
Rebuttable
presumption
f.Contested Markets
g.Is
this abuse of monopoly power?
h.Is
this something monopolies do?
i.Businesses are expected to push every advantage
j.Case
i.Netscape Negotiations
ii.Promise in exchange for non-compete agreement
k.Bundling
i.IE with Windows 95
ii.IAP/ISP Chain
iii.OEM’s
iv.ICP Providers
l.Leverage v. Tying
i.Leverage – Antitrust Term of Art
ii.Tying Win95 with IE
m.CT
i.Maintaining Monopoly
ii.Tying – OEM Market
ProCD
v. Zeidenberg
1)Online
Contract
2)Contractual
Sale, leasing, S/W
3)Mass
Market Transactions
a.
Adhesion
Contract
b.Unconscionable
Terms
c.
No
Negotiation
4)Consumer
Transactions
a.
Electronic
Signatures
b.Electronic
Transactions
5)License
a.
Form
of Contract
b.Property
Interest
6)K
allows right granted not available in trade secrets or C/R Law
7)May
relinquish some C/R rights with license
8)May
create rights with license
9)CT
– May use data without violating other C/R license issues
10)TC
a.
Pro
Consumer Judge
b.Does
not bind consumer to unread contract
c.
C/R
Law & Statute – If there is no other way to use except for making a copy,
then it is not a C/R violation
d.TC
Accepts complete defense
e.
Limits
License
11)AC
a.
Pro
Contract Judge
b.Upholds
Contract & License
c.
Contract
v. License (Not relevant to Enforcement)
i.Contract – 1 time payment
ii.License – Recurring payment
d.Adhesion
Contract – Take it or leave it
12)Plaintiff Argues
a.
C/R
on search S/W
b.Download
of search software = C/R violation
c.
Hornbook
– Any loading = Copy
13)Defendant Argues
a.
Adhesion
Contract
b.Unconscionable
Terms
c.
Outrages
and offends the sense of justice
14)1st
Sale Rule – When you buy a copy of a book, you own the copy, not the original
work.
15)In some
licenses, owners own copy and license permits copies to me made.
16)Statutes
a.
UCC
– Sale of Goods; S/W Sales
b.GATT
– Goods v. Services
c.
UCITA
– Only ratified in VA & MD
17)Realistic
expectations in contract upheld
18)Unrealistic
expectations not permitted
19)C/R Act Preemption
provisions – D claims license creates rights preempted
20)IP Law -
Balances inventor’s rights with society’s rights to create new works
21)Federal law
trumps over State law in C/R, but not in Contract Law
UCITA
1)Electronic
document has parity with paper document
2)Electronic
signature has parity with paper document
E-Sign
Act – S. 761
1)Court
will not deny validity for electronic signature
2)May
present evidence to show fraud
3)Geared
towards mass market consumer transactions
4)Consumer
must give consent for electronic signature use
5)Makes
it harder on businesses, must maintain consent database
6)Permits
states to create additional protections
Contract
Formation/Licensing
1)Issue:How do you form a contract in a mass
market?
2)CT
– Non-negotiated Contract; no opportunity to read
3)Adhesion
– Take it or leave it
4)Unconscionibility
– UCC
a.
Something
shocking
b.Offends
sense of fair play
5)Cal.
– Reasonable Expectations
a.
Business
Context/Market
b.Normal
Expectations
c.
Industry
Standards
d.If
outside envelope, may not enforce
e.
Discretionary
6)UCC
Article 2(b) - Shrink/Click wraps may be enforceable if not unconscionable
