Legal – Page 24 – Digital-Lifestyles

SCO Caps Legal Costs in Linux Fight

In an attempt to reassure shareholders and limit runaway legal costs, SCO has announced that it is restructuring its arrangement with Boies, Schiller & Flexner, the company’s legal firm. SCO is currently in a protracted battle with the IBM and the Linux community over claims that it owns sections of the Linux kernel source code, and claims that the GNU Public License is invalid.

SCO has now agreed to pay BSF US$31 million (€25.5 million) for the entire legal case, but but they will now receive a higher proportion of any settlement fee if SCO win the case. BSF now are now looking to get up to 30% of any damages awarded to SCO.

With things not looking too bright for the UNIX provider, 30% of nothing may not make BSF very happy. Recent developments in the case with IBM have seen SCO’s evidence based on sections of the Linux kernel code dismissed. They have even been accused for manipulating their source code to make it look more like Linux kernel by omitting lines. Some of the code put forward as evidence does not even appear in the kernel, is public domain, or is exempt because of compatibility standards.

SCO has cash and securities amounting to about US$43 million (€35.35), so even if they lose they’ll have US$12 million (€9.87) in the bank. Legal costs for SCO have been becoming increasingly expensive of late – last quarter’s bill came to US$7.3 million (€6 million), contrasted with the US$15 million (€12.33 million) the company spent in the five quarters previously.SCO’s president and CEO, Darl McBride, is still upbeat about his company’s future: “Several positive developments fell into place for us this quarter that strengthened the Company’s overall position. We successfully delivered on our strategy to restore profitability within our UNIX business which is generating positive cash flow. At the same time, we saw a nice uplift from SCOsource licensing revenue. In addition, we closed the BayStar transaction and as announced today, we implemented a Shareholder Rights Plan that will help protect the Company from any potential undervalued takeover attempt. Finally, we are pleased to have entered into a letter of intent with Boies, Schiller & Flexner that not only demonstrates their belief in SCO’s legal case but will also provide SCO with greater financial flexibility. We remain steadfastly committed to enforcing our intellectual property rights on behalf of our customers, employees and shareholders. Through the combination of the quarter’s positive developments and our current cash position, we are well-positioned to pursue our current litigation through its conclusion.”

SCO

Slashdot debates SCO’s case

French Consumer Group Takes Action Against Copy-protected CDs

Consumers in France have taken legal action against EMI and retailer Fnac, accusing them of deception, because of copy-protection techniques used on CDs. They are unhappy because the copy protection scheme employed by EMI prevents the discs being played on some car stereos, home CD players and PCs – and also stops owners from making personal copies. This contravenes legislation passed in France 1985, stating that consumers can make copies of CDs for personal use.

UFC-Que Choisir is seeking damages for consumers through the legal action, and consequently Fnac and EMI face a fine of up to €188,000 (UK£126,350), if the group is successful. They may also have to remove all copy-protected CDs from sale.

Fnac say that they are confident that they will not be fined, as they claim to have taken adequate steps to inform customers of the potential problems with copy-protected CDs.

UFC-Que Choisir have another copy-protection case going through the courts at the moment, this time concerned with consumers prevented from transferring tracks from CD to portable players.

Que Choisir

US Top of the Spam League, Canada’s Unwanted Email Output Apparently Falls

A new survey from Sophos reveals that the US is the top spam sending nation in the world, followed in distant second place by South Korea. The US sends 42.53% of all spam, South Korea 15.42%.

The UK, France, Spain and Germany all send under 1.5% of the world’s total of spam each.

South Korea’s spam output has tripled in the last year, but Canada has managed to half the amount of spam originating from its borders – though this could simply be a fact that everyone else’s has risen. Spam now accounts for more than 65% of all emails sent. Somebody, somewhere, must be buying things from these people to make this a viable business.

The US’s spam output has risen despite the Can-spam Act coming into force this year in January, allowing ISPs and government agencies to prosecute spammers – even jailing them. The Can-spam Act also requires that unsolicited emails must have an way of opting out of future emails, but everyone knows that spammers just use this to verify if your email address is active and send even more unwanted emails.

Interestingly, 40% of the world spam total is sent through zombie PCs – computers that have had their security compromised and are being used as spam relays without the owner’s knowledge or consent.

Sophos’ Dirty Dozen

MPAA Takes Action Against Chip Manufacturers

The Motion Picture Association of America has sued two chip manufacturing companies for selling integrated circuits to manufacturers that produce non-approved DVD players.

The MPAA isn’t happy that the makers of some DVD players deviate from the the agreed standards and produce appliances that do not feature the full range of DRM features. Consequently, the MPAA is suing Sigma Designs and MediaTek for distributing Content Scramble System chips to such companies, and thus breaking their original license agreement to distribute the chips only to other CSS-licensed outfits.

CSS and related DVD technologies are controlled by a technology group called the DVD Copy Control Association, and any manufacturer must agree to their contract terms before they can work with the format.

Dan Robbins, MPAA Chief Technology Counsel said: “Responsible corporate citizens honour the contracts they sign. There is no leniency for irresponsible companies that seek to circumvent the system and operate outside of the law.”

This latest action from the MPAA shows that they are keen to use a variety of techniques to protect their business – this doesn’t revolve around copyright law like previous instances, this is about contracts.

DVD Copy Control Association

P2P Networks Not Responsible for Copyright

Whilst acknowledging that copyright infringements do happen on P2P networks, the 9th Circuit Court of Appeals in San Francisco has ruled that P2P network owners and software developers can’t be held responsible for them.

Ironically, this is the same appeals court that ruled against Napster in 2001. The difference this time? Napster kept a catalogue of all available titles on a central server. The court made reference to the oft-quoted 1984 Sony Betamax case where film studios attempted to ban video recorders – the Supreme Court ruled that being potentially able to infringe copyright was not reason to ban a technology with legitimate uses.

The presiding judge, Sidney R Thomas said: “The introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through well- established distribution mechanisms. History has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karaoke machine or an MP3 player.”

He then went on to point out how well studios had done out of home video sales, demonstrating that they were now worth more than cinema ticket sales.

Michael Weiss, head of StreamCast Networks, said in a statement:”As CEO, I am proud that Morpheus has become the first American P2P company to successfully win its fight for the right to continue to develop innovative new distributed communications technologies. In today’s ruling, the 9th Circuit Court has affirmed our strong conviction from day one that developing Morpheus was not just legally our right, but morally was the right thing to do.”

The MPAA and RIAA will not be pleased – the next stop for them is Washington, and Congress.

StreamCast

EDS and BSkyB Suing Each Other

BSkyB are suing EDS over a contract for a new IT system at the broadcaster’s Livingston and Dunfermline call centres, accusing them of negligent misrepresentation and breach of contract.

BSkyB hired EDS in 2000 to supply a new customer service platform for the 6000 staff in the centres, but ran into difficulties in the first twelve months. After redefining the project requirements, the system was handed over to BSkyB a year later in 2002, and the contract ended in December that year as BSkyB felt that EDS could not deliver the system in accordance with their contract. However, EDS claim that they ended the contract, not BSkyB.

A quick rummage in a filing cabinet should end that debate, though BSkyB claim to have consulted some 50,000 documents to come to the conclusion that EDS did not deliver what they signed up for.

The system has cost BSkyB about UK£170 million since 2000, and they are expected to fork out another UK£50 million to the two Scottish call centres until 2008. The broadcaster is now looking to sue for about UK£180 million to UK£240 million to get back lost revenue and effort.

EDS aren’t doing to well lately, having lost a number of high profile government contracts, notably with the Child Support Agency, NHS and Inland Revenue.

EDS have announced that they will be countersuing, as they claimed to be expecting this sort of behaviour from BSkyB. Given the size of the two companies and the nature of corporate litigation, this one will run and run.

EDS UK

BSkyB

Pfizer Gets Hard On Viagra Spammers

Research undertaken by Pfizer has prompted the pharmaceutical company to take legal action against the hundreds of spammers selling fake or generic Viagra on the internet. A survey revealed that 25% of men thought that the emails actually came from Pfizer. If that really is the case, then I’d say that erection problems aren’t their only problem – they need to buy some clever pills too.

There is no such thing as generic Viagra (known as sildenafil citrate) because the drug has not be approved by the Food and Drug Administration in the US – makes you wonder what it is these people are buying.

Pfizer are now working with US law enforcement agencies and the FDA to track down and prosecute those illegally selling, or claiming to sell, Viagra. They already have organisations and 24 websites targeted. Alongside all of this legal activity, they have a new public awareness campaign to educate the public on the dangers of buying random, unprescribed pills off the internet.

“Pfizer is taking these steps to help raise consumer awareness about the problems posed by illegitimate online ‘pharmacies’ and to directly address the source of these problems,” said Jeff Kindler, Executive Vice President and General Counsel at Pfizer. “We want it clearly known that Pfizer does not send or support the sending of spam, which comes from websites that illegally use the Viagra name to promote and market unapproved ED products that may contain ingredients that either do not provide optimal efficacy or may pose health risks.”

Research shows that younger men are now taking Viagra recreationally as a lifestyle drug, and this coupled with the fact that some people are still stupid to buy things they read about in spam, means that there will be no quick end to impotence-related emails any time soon.

Worryingly, Pfizer have just lost patent protection for Viagra in China, so look forward to a sudden flood of legal sildenafil spam coming from there.

Pfizer

Apple Settles EU Online Music Patent

E-Data and Apple have settled a patent case over selling music online in Europe. E-Data’s “Freeny” patent was established in 1985 and covers the transmission of information to a remote point-of-sale location, where the information is then transferred to a physical object. Basically, if you have a music service that allows tunes to be dropped onto any physical medium – CD, iPod, robot dog – then you’ll be hearing from E-Data.

You can bet that the person who thought the patent up back when Phil Collins was in the charts with Sussidoo was probably only dimly aware of ARPANET, if at all. Since MP3 didn’t exist then either, no doubt they dreamed of the 150 hour wait it would take for one of these new, exciting “CD” things to come down a high-technology 14k modem line.

E-Data have also settled with Microsoft in the past and, buoyed by these successes have launched no less than 14 more infringement suits against companies including Amazon and the New York Times. E-Data don’t actually make a product or operate their own music service.

E-Data Chairman Bert Brodsky said: “This settlement with Apple marks another important milestone, as we aggressively pursue companies that are infringing upon our intellectual property. We have identified additional companies that are infringing upon our intellectual property, both in the U.S. and abroad, and will seek the necessary legal actions to ensure that our rights are enforced worldwide.”

Tantalisingly, none of the financial details of E-Data’s settlement deals have been made public – we’d like to know how much they’re charging.

E-Data

321 Studios Closes

321 Studios has closed down after a series of court decisions that ruled that its key product, DVD X Copy, was illegal to distribute.

The software had been marketed as a tool that allowed consumers to exercise their legal right to make backups of legally purchased products. Whilst consumers do have this right, they must defeat the copy protection present on disks in order to do so. Defeating a copy protection system is illegal in a number of countries, including the US and Europe.

Since copy protection systems are seen to interfere with consumers’ fair-use rights, groups like the EFF believe that revisions to the law to make it fairer for customers are not far off.

321 Studios, based in St. Louis, had faced several court cases this year from industry leaders such as Vivendi Universal Games and Atari, and had even revised their product to remove the DVD descrambling component, CSS.

At the high of its business, 321 Studios employed nearly 400 staff and expect make US$200 million (€166 million) in sales in 2004.

The injunction only applies to 321 Studios – it is not illegal to own or even operate the software itself.

321 Studios

SunnComm Upgrade MediaMax, Provide Carrot

SunnComm have upgraded their MediaMax copy protection system to make it harder to circumvent, and have even added extra features to bring some benefits to CD users.

MediaMax was controversial from the outset – putting a CD protected by the system into your PC automatically installed a driver to protect the content of the disk. Unless you held down the shift key, as Windows does not let CDs auto-run when the shift key is held down. Also, if you put a protected disk in your Mac, you basically had to send it back to Apple for repair. Oh, and MediaMax didn’t work in all home CD players, and worked in even fewer car stereos.

Circumventing a copy protection system is against the law in the US and Europe, so this made holding that shift key down a bit of a legal grey area. Mind you, installing software on a system without the owners permission is also illegal – and so is breaking someone’s Mac – so labels avoided SunnComm in droves.

MediaMax is back now, somewhat reinvented – security has been enhanced, and the disks are 100% compatible in consumer players.

The new iteration still requires software to be installed on your PC before it’ll read the protected optical medium. I hesitate in calling these CDs, because they are encoded to a different schema from CDs and are no longer compliant with the Red Book standard.

SunnComm, a company so paranoid you have to click a disclaimer before even viewing their homepage, seem to be learning a valuable lesson: the consumer is the one who is paying for the product, and so it is their rights that are important. As SunnComm’s president, Peter H. Jacobs, said: “Everyone at SunnComm believes that the best digital security technology should be ever mindful of the consumer experience.”

To provide the carrot for consumers, MediaMax can provide special features for consumers –videos, song lyrics and picture galleries.

Unlike DVDs, where special features come on a second disk and space is generally less tight, these little extras, plus the drivers, plus the software, and the video use up space that consumers might prefer to see spent on storing some nice, clear audio. Which is why they bought the disk in the first place, right? MediaMax might be a good option for disposable pop, but will never be acceptable to audiophiles, who need all of that 650mb for the music.

Finally, will I be able to play a 2004 vintage MediaMax disk in my PC fifteen years from now? Probably not – who is going to make sure that there’ll be a driver available for Windows 2020? You know how difficult it is to get your old DOS games working now, don’t you?

SunnComm