Astrologist Successfully Sued for Copyright Infringement of New Card Designs – She didn’t see it coming

October 20, 2014

Astrological cards

Zur-Klein is  an astrologist. Tal Rinkov is an artist who created 37 cards for the Astrologist in accordance with an agreement between them which, inter alia, related to the copyright ownership.  (Ms Rinkov was also the kindergarten teacher of Ms Zur Klein’s daughter, which is how they met (some would say it was fate).

Ms Zur-Klein ordered 40 card designs for a payment  of 5000 Shekels.  The cards were to be mass-produced and distributed with an instruction manual and a teaching movie. The parties entered an agreement on 5 September 2014 that established several principles:

  1. The original artwork and the copyright of the artwork was to remain that of the artist.
  2. The artist would not be entitled to royalties for packs of cards and other goods itemized in the agreement
  3. The Astrologist would only be entitled to use the images on specific listed items
  4. All internet images  would be reproduced at a low resolution only
  5. All pictures would carry Ms Rinkov,’s signature, her name, website and contact details

Ms Rinkov was hospitalized in November of that year and only delivered 37 designs, and the last three were completed by another artist. (For reasons not apparent, the medium missed this eventuality). The images were transferred to a graphic artist who made various graphical changes to make the images more suitable for printing.

After various commercial entities expressed interest in the images, Ms Zur-Klein contacted Ms Rinkov to try to negotiate a transfer of copyright but due to a difference of opinion, no agreement to transfer the copyright issued.

Ms Zur-Klein  publicized the images in various internet sites including her own and other people’s, in her blog, Facebook page and elsewhere.  In all reproductions of the cards on the Internet, the artist’s signature appeared, but her name and contact details were not given. Indeed, on some websites, Ms Zur-Klein presented herself as the creator of the card (the term יוצרת הקלפים is used, which is both creator and manufacturer so the term is somewhat ambiguous). Furthermore, Ms Zur-Klein allowed other astrologists to use the designs without giving any credit to Ms Rinkov. There was also a newspaper article featuringMs Zur-Klein that was illustrated with one of the card designs that was also not credited.

On 6 June 2012, Ms Rinkov sent Ms Zur Klein a Cease & Desist letter.

The basis of the ensuing court case was the agreement signed by the parties. It is translated below:

Tal prepares for Carni 39 pictures, which together with the picture already executed, provides a set of 40 pictures for cards and other purposes – payment 5000 Shekels.

Apart from the payment for the work, there will be no other royalties for selling packs of cards, books, CDs and other astrological items depicting the images of Tal Rinkov.

The astrological products that Karni is allowed to use the pictures on are: packs of cards, books, audio CDs, video for watching, a banner for a website, business cards and other articles on authorization from the creator. Karni may not manufacture or distribute artistic works such as pictures, mugs, key-rings and the like.

All material displayed on the Internet are at low pixel count.

The name, website and contact details of Tal Rinkov will appear on all products, including future products.

The pictures on the cards and elsewhere will include the artist’s signature.

The original artwork and copyright remains the exclusive property of Tal Rinkov.

Pictures and associated artistic products (that are not astrological) will be produced and distributed exclusively by Tal Rinkov.

Any deal that Karni creates for Tal will generate a 20% commission for Karni.

When Tal sells a product (book, CD, cards and the like) she will profit 20%. Tal will receive a present of a pack of cards.

 According to the plaintiff, the defendant wrote the contract after the negotiations. The defendant claims, however, that the contract was the plaintiff’s idea, and that the plaintiff had written most of the clauses to the detriment of the defendant, such as her not getting benefit from sale of the cards. However, the defendant agreed that she had printed out the agreement.

The defendant claimed that she was entitled to the status of co-creator in the cards as although Ms Rinkov executed the artwork, it was to her, Ms Zur Klein’s specification regarding the symbolism, colors and charms. The plaintiff considered this a change of direction in the defence and objected to it on principle.  The judge ruled that the claim that the defendant hand guided the artist appears in clause 31 of the defence, but is more a factual than a legal defence and so she was willing to contemplate it. The plaintiff countered that Carni Zur-Klein had not, in fact, instructed her, but that she herself had researched the elements and colours.  Both sides supported their contentions with emails and other evidence. It does seem that the astrologer gave guidelines for the design, but these are by way of astrological knowledge rather than artistic input.

RULING

In this instance, Judge Lemelstrich  did not consider that under section 1 of the Copyright Law 2007, the two parties could be considered co-owners of a joint creation. Section 64 creates a rebuttable assumption that the artist is the creator and each card design was signed by Ms Ronkov as the artist.

Section 5 of the Copyright Law notes that the idea, way to implement and facts are not copyright protected, only the  artwork itself is. According to Section 35a of the Copyright Law, a work for hire is the property of the artist in the first instance, unless otherwise agreed implicitly or explicitly. In this instance, both the Copyright Law and the contract  support the artist as owner of the copyright.

In the packs of cards, Ms Rinkov is acknowledged as the artist and Ms Zur-Klein is credited as an astrologer.

The parties agree that Ms Zur-Klein conceived the project, but the copyright in the images remain the property of Ms Rinkov.

Ms Zur-Klein apparently sold some 80 packs at 190 Shekels a pack.

the main issue sees to be the internet reproductions which do not provide the details of Ms Zur-Klein.

The ruling now relates to various astrological websites. Since I find this subject matter morally, ethically and religiously abhorrent, I am refraining from reproducing the links.

The important thing is that Judge Lemelstrich considers that the artist’s moral and financial rights were compromised in numerous infringements in various websites and internet campaigns. That said, the pictures on the Internet were not reproduced at a quality to enable them to be printed and used as playing quality cards.

The changes to the designs for subsequent printing by a graphic artist under the direction of Ms Zur-Klein were minor. These were considered insufficient to create a change to the copyright, in that the original work could not be considered defaced or the artist’s moral rights compromised. Nor did the amendments constitute a copyright protectable creation.

Ms Rinkov claimed 100,000 Shekels in statutory damages for copyright infringement and a further 100,000 Shekels for moral rights infringement, particularly noting the long and arduous legal proceedings and the multiple infringements.

Judge Lemelstrich noted that despite entering a clear contractual relationship to the contrary, Ms Zur-Klein acted as if the creations were hers to do what she liked with. She ruled 35,000 Shekels damages for infringing the moral rights, 15000 Shekels for infringing the material rights and a further 5000 Shekels for an article published after the Cease and Desist letter.

Judge Lemelstrich of the Haifa District Court ruled a permanent injunction against Ms Zur-Klein, her delegates, substitutes and others from performing any action that violates the September 2011 agreement or other rights as per the statement of case.

Ms Zur Klein will compensate Ms Rinkov 55,000 Shekels for copyright infringement, an also will pay 15000 Shekels legal fees. The money will be paid within 30 days.

Civil Ruling 15824-10-12 Tal Rinkov vs. Carni Zur-Klein, Haifa Court before Judge R. Lemelstrich, Ruling 13 October 2014

 

 


Walla Sued for Not Acknowledging Photographer of Iconic Image of Peretz

October 14, 2014
Amir Peretz views military exercise (c) Ephraim Shrir

Amir Peretz views military exercise
(c) Ephraim Shrir

Ephraim Shrir was the photographer who captured then Defense Minister Cluseau Amir Peretz watching a military exercise in the Golan through a pair of military binoculars with the dust caps on.

On 12 July 2011 and five years after the Second Israel-Lebanon War, Tiltul Communications who run the Walla news and current affairs site showed an image from the Lebanese newspaper El Akhbar which showed the photo under the headline “In Lebanon they are scoffing at Peretz, Halutz and Olmert ” (then Minister of Defense, then Chief of Staff and then Prime Minister respectively). The Israel news-site showed a screen capture of the Lebanese newspaper which prominently featured Shrir’s well-known photograph.  Neither the Lebanese paper nor Walla received permission to show the image, nor did they credit the photographer.

Shrir requested that the picture be taken down from the Walla site which it was, but Walla rejected all claims against them, and subsequently Shrir sued for 50,000 Shekels statutory damages for both his financial copyright and moral rights under the Israel Copyright Act of 2007.

Martians and anyone else not familiar with the photo in question can view it by googling Amir Peretz or by following this link. http://www.nbcnews.com/id/17294091/ns/world_news-mideast_n_africa/t/israeli-defense-chief-makes-lens-cap-gaffe/#.VDuMuxtxmUk

PLAINTIFF’S ARGUMENTS

The plaintiff claimed that the reproduction of the image on Walla was of a commercial nature and infringed his copyright and legal rights in the photograph. Since Tiltul ran a commercial news site they should have known or at least inquired into the owner of the picture. The picture was made available to the public over a two year period on the website and via smart-phone applications. Since the damages claimed were statutory, there was no need to show any actual damage from the infringement. Furthermore, Shrir claimed that the fair-use doctrine was irrelevant here since clearly the Lebanese newspaper had no possibility of having obtained the photograph directly since there is a state of war between the two countries and so the photographer had to be an Israeli and Walla were obliged to ascertain who owned  copyright in the image.

According to the plaintiff, the fair use defence may have been good when the story was hot-news, but four years later, in 2011, that was not the case. Furthermore, due to the centrality of the image, the defendant could not fairly claim that they were copying the newspaper and the image was incidental to the article.

DEFENDANT’S CLAIMS

The defendant countered that they reproduced a Lebanese newspaper article that included the photo, and gave credit to the Lebanese paper, and thus neither infringed the copyright of moral rights of the photographer. Under Section 22 of the Israel Copyright Act, this should be considered incidental use since their article related to and quoted from the Lebanese article and did not relate to the picture itself.

The defendant also claimed that since they were reviewing another newspaper article, they were within the ambit of the fair use defence under Section 19a of the Copyright Law, and that this was a hot news item that was allowed under Section 19b. The photograph was incidental since the story in question related to how Lebanon saw Israel and not to the photograph in question (which presumably related to how then Defence Minister saw Lebanon? MF). There was no intention to profit from the photograph, merely to inform the Israeli public about its use. Furthermore, the defendant argued that the use of the picture neither increased income to the website nor decreased the value of the picture and that there was actually no competition between the website and commercial sales of the photograph and that the case-law considered these arguments critical when assessing damages.

Finally, journalistic norms required referencing the journal and not the individual photographer or journalist which would require unnecessary work for the journalist (and probably be unduly tiresome for the reader-MF).

The defendant argued that the claim of statutory damages should be thrown out since it was not in the original charges brought. Also the demand for the photograph was steady, both before and after Walla’s article, showing that the value of the image had not been affected.

THE RULING

The parties accepted that the dispute was legal and not factual, and authorized the judge to rule on the basis of the evidence without requiring sessions to prove their cases. Thus, both parties accepted that the photographer had absolute copyright and moral rights in the image. Additionally, there was no argument that the Lebanese article with the photograph was reproduced without the photographer’s permission.

The issue is one of whether the copyright and moral rights were infringed and whether the statutory defences applied.

Judge Zoabi ruled that the picture was copyright protected. Both sides agreed that the Lebanese newspaper had infringed the photographer’s rights, but disputed whether reproducing the article with its illustration infringed the photographer’s rights, and this should be addressed with reference to the content and appearance of the Lebanese article.

As to whether the picture was incidental or not, the court quoted from the Israel article “the picture that appears at the head of the article is that of the Defence Minister during the war, Amir Peretz, looking forwards via closed binoculars”. Further on, the article states “And what about Peretz? The author of the article mocks the former Defence Minister and tries, in his words, to hunt down all passers-by that cross his path, to persuade them to vote for him as the head of the Labour Party. “Peretz tries against to lead the collapsing Labour Party and tries to recruit all passers-by to vote for him is stingingly written about the campaign that the leader had been running in recent months to recruit voters”.

The Israel article is not only a review of the Lebanese one but also of the picture itself that was central to both articles. The Lebanese article featured the picture centrally and not incidentally-illustratively, since the picture is worth a thousand words. The court dismissed claims that the Israeli article merely reported on the Lebanese one. It argued that the article was about Peretz and the other political leaders at the time of the Lebanon War and that the Lebanese article was selected to illustrate the article primarily because of the picture. Indeed, were it not for the picture, the Lebanese newspaper article would not have been used to illustrate the Israeli article. Consequently, the Court considered that the picture was not incidental and thus copyright was infringed.

As to common practice, the court accepted that the Lebanese article was fully credited by the Walla article, but did not consider that Walla has satisfied the court that this was sufficient. Citing District Court ruling 1549-08-07 Maariv vs. Business Net , the court noted that to establish a norm, a party has to show that everyone continues to act the same way and that there is an understanding that this is the correct way to behave. In Maariv vs. Business Net the court rejected the concept that the norm was binding. Also in Danon PR Communications  vs Yachimovich the issue of binding norms was similarly addressed.

Critically, in the present case, unlike other cases brought as evidence by the defendant, the referenced (Lebanese) newspaper article did not credit the photographer. Furthermore the court noted that there was a trend to see copies of copies as infringing and the fact that the original picture was not copied is insufficient to have the case thrown out. In other words, there is no doctrine of exhaustion of copyright in this instance.

As to moral rights under Section 46, it is clear that the name of the photographer wasn’t referenced, and this is a right enshrined in Section 46, so the moral rights was infringed as well.

FAIR USE

Section 19a includes newspaper reports as a fair use exception. Shrir claimed that the case-law establishes that fair use requires acknowledging the photographer or author. The court accepted that this was generally the case, but noted exceptions where even though the photographer was not identified the fair use defence was accepted.

In this case, Judge Zoabi felt that the defendant could not claim equitable behaviour in reporting the Lebanese article since the photo was central to the article, this was not hot news. They should have assumed the photographer was Israeli, could easily have identified the photographer with minimal research on the Internet and should have credited him.

The court dismissed the defence that this was a review of other media since although the Lebanese article was paraphrased, the photo was reproduced in its entirety.

However, the court accepted that the report of the Lebanese article was hot news and that the Defences of Section 19a applied. Nevertheless, the picture was well known and from an earlier period and was reproduced in a large format and Walla is a commercial website.

Even if it is allowable to reproduce the image, the photographer should have been credited as fair use does not abrogate moral rights.

Claims that the photograph was incidentally included were likewise rejected.

The court upheld the charges of copyright infringement and moral right infringement, but considered the scope of the infringement to be minor. Interestingly, the court reasoned that it would be wrong to grant double statutory damages for both copyright and moral rights.

After considering that the real damages were negligible, the court ruled statutory damages of 6000 Shekels and that both parties should cover their own legal costs.

Civil Case 4384-12-13 Ephraim Shrir vs. Tiltul Telecommunications LTD. by Rajid Zoabi of Bet Shaan District Court 28 September 2014.

COMMENT

The legal issues here seem straight-forward. The ruling seems well reasoned. Although the damages awarded are low compared to those awarded in other cases, I think this is a good thing.

Shrir was in the right place at the right time, but the resulting photo could be described as iconic. Although the inquiry focused on the lack of preparedness of the military, this photo captures the Israeli feelings regarding the Second Lebanon War.  Furthermore, unlike Sharon with the photogenic head bandage, in this instance, the image is more authentic. I mean Peretz is an idiot, but I don’t think he did this intentionally. Still the moustache is impressive.

I have absolutely no sympathy with Amir Peretz’ politics. I think it was irresponsible to appoint him Minister of Defence merely because it was irresponsible to appoint a Trotskyite to the Finance Ministry. That said, I can’t help feel sorry him for getting photographed like this, despite the real damage it did to Israel’s deterrence against Hizb’Allah and indeed to Hamas.

I am an avid bird watcher but on more than one occasion have forgotten to take the dust caps of my binoculars. So long as one notices that something is wrong and looks for the problem, the mistake is understandable. Where one looks with interest and makes observations, it is a little reminiscent of a Hans Christian Anderson fable. In this case, according to the photographer, Peretz gazed through the capped binoculars three times, nodding as Ashkenazi explained what he was looking at.


Israel Supreme Court Overturns Ruling Concerning Unjust Enrichment

September 16, 2014
Reversed Challa Cover!

Reversed Challa Cover!

Back in January 2012, then Jerusalem District Court Judge Yaakov Shapira issued a permanent injunction against a Merkaz Matanot 2006, a competitor and former client of the plaintiff, Karshi, prohibiting them from importing, exporting or otherwise trading in ceremonial ritual challah cloths that had a similar general design to those that produced and distributed by Karshi. Their client, Ami Motzrei Noi LTD and their owner were also injuncted and they were See here for more details.

Essentially Judge Shapira who is now the State Comptroller ruled that there was Unjust Enrichment, breach of contract and passing off. I was very critical of the decision, and particularly that Shapira gave a world-wide injunction which seemed to have been beyond his judicial competence.

I am pleased to announce that the Israel Supreme Court has now reversed the ruling.

Essentially, Karshi ordered these ritual cloths having the words ‘שבת קודש’ – ‘Holy Shabbat’ in a fairly standard font embroidered on a piece of chiffon with a more solid fabric border from China.

Judge Chayot ruled that since Merkaz HaMatanot labeled their cloths with a tag stating that the supplier was Merkaz HaMatanot, there was no case of passing off. Merkaz HaMatanot was a retail customer of Karshi as wholesaler and not an agent of theirs, there was no contractual relationship and thus no breach of contract.

Karshi made no attempt to register the design and there was no additional consideration to imply that Karshi had rights in the design. There was no case of inequitable behaviour to answer for so there was no grounds for sanctions under the Law of Unjust Enrichment.

Case: Civil Appeal 1898/12 Merkaz Matanot 2006 LTD vs. Karshi Intenrational LTD. before Judges Solberg, Natyot and Chayot.  Hearing 25/6/2013, decision, August 2014.

COMMENTS

It seems that A.Sh.I.R. is still good case-law, but the judges want some real indication beyond competition to rule Unjust Enrichment.

The cloths in question were variations on a well-known theme. It is suprising how many of these are sold. I suspect that a lot of ritual Judaica (probably including mezuzot and tefilin) are made in China. Being an importer does not create a monopoly. The original decision was wrong (as were decisions by Shapira concerning the Hallel wine trademark and concerning alleged copyright infringement by Naomi Ragen. I am pleased he no longer rules on IP issues. Whether or not he will be a good state comptroller is beyond the scope of this blog, and beyond my competence to comment on.

 


Invitation to the PCTea Party!

September 4, 2014

PC TeabagssewProfessor Phillips at a PCTea Party at the British Houses of Parliamentcinema city

To celebrate 10 years as an owner or partner in my own firm (including the partnership JMB, Factor & Co. circ a 2008-2011), and, a decade of this blog, the readers of IP Factor are cordially invited to toast in the Jewish New Year at a PCTea Party to be held in Cinema City Glilot, Ramat HaSharon. In addition to food, there will be food for thought provided by the preeminent Professor Jeremy Phillips, who will provide some insights on recent world-wide IP Developments, taking his title from Kohelet (Ecclesiastes):

“A time to sow and a time to reap”.

The event will be a party, not a sales pitch. We won’t be giving out literature (and request that competitors don’t either). I won’t even blow my own trombone.

When? 4 PM – 6 PM on October 1, 2014,

Where? Cinema City, Glilot

Academics and associates, competitors, colleagues, commissioners and clients, friends and family, lawyers and litigators, examiners and judges are all welcome.  However, we do need an idea of numbers, both for refreshment quantities and so that we select the appropriate cinema theatre (movie theater for those requiring translation), so we do request that people register here.


Fair Use

July 9, 2014

Shelley-Yachimovich-Labor-Party

Shelly Yachimovich is a member of the Knesset. She used to be a journalist, and during the incidents in question, was the Head of Israel’s Labour Party.

Danon PR Communications publishes a local newspaper in Modiin –  an Israeli city.

On 6 October 2011, the local paper published an interview of a worker in Yachimovich’ headquarters, that was written by Channa Stern. Yachimovich posted this on her website, and the paper asked for it to be removed and for 40,000 Shekels compensation for copyright infringement. When this tactic didn’t work, the paper sued Yachimovich under Sections 11 and 34 of the 2007 Israel Copyright Act and under Section 1 of the Law Against Unjust Enrichment, claiming statutory damages of 100,000 Shekels and legal costs.

Yachimovich claimed that the article was posted under a section of the website devoted to newspaper articles and that the source was clearly marked. The article was posted by a volunteer, and, on the newspaper complaining, it was removed. Nevertheless, no guilt was admitted.

In her defense, Yachimovich claimed that the interview was in a question & answer format, and thus the copyright belonged to the interviewee and not to the interviewer. Furthermore, she claimed fair use under Section 19 of the Copyright Act. She argued that the article had no inherent value, no potential for resale and no way of monetizing, and that the reposting on her website only gave further coverage to the article and to the local paper to a fresh audience who would otherwise not have been aware of it.

Finally, the paper had used a publicity photo of Yachimovich without her permission. Although this was a PR picture, it had cost money. This raised equal and opposite copyright issues. To the extent that there were grounds for copyright compensation in the publication of the article, Yachimovich was entitled to equal compensation in use of her picture and the two payments should be offset. Attempts to reach a compromise failed, and the court was authorized to rule on the basis of the evidence submitted without cross-examination.

The first issue that the court grappled with was whether an interview is considered copyright of the interviewer, or if it is a list of answers attributed to the interviewee?

The court accepted that there was copyright in interviews if there was at least a minimum of creativity in the wording of the questions or their arrangement and editing. There was a cute reference to Peah 1: 1 which discusses minimum standards for various Biblical commandments, including visiting the Temple on pilgrim holidays, where the term for sighting the Temple, is identical to the term for interview.

The amount of creativity was at least that of tables and anthologies, and on the basis of the work-product definition, there was copyright in the publication.

Posting the article on the internet website, where some 20% of the interview was posted was considered republication.

The interviewer is more than merely a technician and has rights in the interview. The question of joint ownership of interviewer and interviewee is discussed at length, and the understanding developed is that of use of jointly owned real estate by one party.

Fair Use

Various decisions relating to summaries of newspapers has established that merely relating to copyright materials as being a review is not sufficient to create a fair use presumption. One paper cannot simply quote large chunks of another and claim fair use. On the other hand, there are no simple tests of quantity or quality, and the issue is one of context. In this instance, Yachimovich has created an anthology of newspaper articles and source was accredited. The use is non-commercial. There was no compelling reason for reproduction under the public’s right to know, but review purposes are also considered fair use. The article was not reproduced in its totality, but rather a selection was made. The reproduction neither damaged the circulation of the original paper, nor boosted Yachimovich’s website’s circulation. Yachimovich claimed that reproducing such articles was common practice, but didn’t provide evidence of this. Nevertheless, the claim of fair use was upheld.

Moral Rights

Although moral rights create separate grounds for claiming damages, in this instance, the source was attributed, so moral rights were not compromised.

Unjust Enrichment

Since Yachimovich did nothing underhand, did not profit herself, or prevent the plaintiff from profiting from the publication, it was considered unfitting to consider unjust enrichment beyond the copyright issue.

Statutory damages

Having established fair use, the question of statutory damages was moot. Nevertheless, the judge saw fit to expand a little.

The plaintiff claimed that Yachimovich had made “Political Gains” and since she was an ex-journalist herself and a Member of the Knesset, she should be an example to the public. The plaintiff further argued that with statutory damages, there was no requirement to estimate the actual damages. However the defendant argued that 100,000 Shekels was exaggerated and baseless in this case.

The court accepted that the plaintiff could save themselves the trouble of estimating and proving exact damages, but the court had the prerogative to rule less than maximum damages if it saw fit. In this case, the defendant had immediately removed the offending article, there was no damages and no claims of inequitable behaviour.

Shamgar from 592/88 Sagi vs. the Estate of Abraham Ninio (2) 254, 265 (1992), was cited and Judge Michal Agmon-Gonen in Zoom p. 601 was referred to, noting that when ruling damages one has to look at the damages caused and the warning effect.

In this instance, the case was taken down quickly. The creative piece was an interview of low inherent worth, and the plaintiff had no suffered any damages as the website was not a competitor to the local paper. The defendant’s profit was indirect and minor. The article was posted by a junior and there was nothing inequitable in the defendant’s behaviour. The bottom line is that there is copyright infringement. It is covered by the fair use exception and the damages are zero.

Regarding usage of the photo of Shelly Yachimovich, the copyright claim was only made by way of offset and not in its own right, so once the damages to be offset are zero, the issue is moot. Nevertheless, the picture is a PR photo that is supplied for use by papers. It is a creative work and is owned by Ms Yachimovich as it was work for hire, created for her. The paper, despite claiming to be a local non-profit publication had intentionally used this creative work.

The picture was used to add colour to the article and this is generally accepted use of publicity photos. Although the paper is given away free, it is a profit generating paper that lives off advertisements. Nevertheless, the article had newsworthiness and furthers free speech and other values leading to a conclusion of fair use. The photo was attributed to “Yachimovich PR” which indicates that there was no attempt to profit by it. The photo was a PR photo that was used for PR purposes, and this is fair use. Thus there was no grounds to grant damages to Yachimovich for using this photograph in this manner.

Since the defendant had raised counter claims, both parties had conducted themselves fairly, and related to the issues raised, the judge did not see fit to rule costs.

Civil Ruling 57588-05-12 Danon PR Telecommunications vs. Shelly Yachimovich, before Judge Ronit FinShuk Alt, 3 July 2014 

COMMENT

This seems to be a good decision. It is a timely one as well. Plaintiffs are too quick to sue claiming copyright infringement. There is and should be a robust fair use doctrine.


Franchisee for Sports Broadcasting Fails to Uphold Rights Against Restaurant Screening Matches

June 25, 2014

Football on TV

Charlton LTD claims to be the franchisee with exclusive rights to license the broadcasting of sporting events and sports channels to satellite and cable distributors in Israel. E.M.T. Gormet LTD is a restaurant that screened sports events for benefit of their patrons. Charlton sued the restaurant and its owners for Copyright Infringement, claiming 85,000 Shekels in statutory damages.

Judge Hadassah Assif of the Hadeira Magistrate’s Court threw the case out and ruled costs of 1500 Shekels against the plaintiff.

The Ruling

Citing Appeal to Supreme Court 2173/94 Tele-Event vs. Golden Channels 55 (5) 529, Judge Hadassah Assif  accepted that there was copyright in sports events. Such copyright belongs to the producers or to licensees. In this case, Charlton was not the producer, but claimed to be a licensee. However, Charlton did not provide evidence of having any contract with producers covering the period of alleged infringement.  Thus despite proving that the restaurant had shown sporting events, Charlton could not prove that they had rights to the copyright. Claims of Unjust Enrichment were similarly dismissed.

As to the owners of the company, the court ruled that companies always have owners and actions of companies are generally performed by people. However, company law distances the owners from actions by the company, and one has to show good reason for raising the mask provided by the company as a legal entity.

It was considered insufficient to merely show court rulings and a licensing agreement from a period three years before the alleged infringement and to claim that the legal circumstances were the same. No evidence to the effect that the existing agreement was automatically renewed was produced.  In the absence of a contract clause or a general principle of law, Charlton failed to establish that they had rights in the sporting event.


Copyright in Software vs. Antitrust

April 29, 2014

copyright in software

Dan-el Advanced Software Solutions launched a software product 15 years ago called Danel 2000 that manages securities and other financial products. The defendant, Gal Snapir developed a competing product in 2009 that plaintiff alleged was a copy of Danel 2000. Dan-el obtained a temporary injunction, and the current ruling relates to an attempt to obtain a permanent injunction and compensation for copyright infringement, theft of trade secrets and unjust enrichment. The defendant claimed that the functionality largely dictates form, and so to prevent unfair monopolies, it should be allowed to copy certain elements of a product.

The present case is interesting, since it relates to the balance between the conflicting interests of unfair and fair competition, monopolies, copyright and trade-secrets. If the source code is not copied, is it legitimate to copy the interface of an established product to facilitate market penetration by making a product familiar and easy to use by users?

Michal Agmon Gonen ruled that despite being functional, the software was a creative work and protected by Copyright Law. Since the software sold by Snapir was significantly similar to that of Dan-el and that he had access to Dan-el’s software, the onus was on him to prove that he had not copied the software. Since he was unable to do so, she found in favour of the plaintiff. The damages awarded were large but not maximum statutory for one (ongoing) case of infringement, and not for each and every installation of the software. Since there were no profits, there was no unjust enrichment, and since she found copyright infringement, she found the additional claim of using trade-secrets unnecessary, particularly as there were no grounds to award damages twice.

Whilst believing that copyright in software should generally be interpreted narrowly, and that the arrangement of material and functionality cannot be protected, Ms Agmon-Gonen noted that there were other competing systems and that the similarities between that sold be defendant and by the plaintiff were significant.

The decision cites a large number of Hebrew research papers, Shlomit Yanitzky-Ravid’s new book, and the related laws. Academics at ONO, Hebrew University, Tel Aviv and Haifa are all cited. There is also extensive reference to case-law. In all, a scholarly but laborious decision.

Background

Dan-el is a lead player in the Israel financial management market with some 40 employees. Banks, insurance companies, funds and investment companies use their software. Danel 2000 is the result of 150 man years at a cost of 12 – 13 million dollars. Gil Snapir is a systems engineer who established a software house 20 years ago that provides dedicated solutions to clients that include health funds, banks, high-tech companies and personnel companies. Until now, software products were provided to order, and Snapir did not provide off-the-shelf software packages. At the end of 2009, Snapir offered Dan-El’s clients a copycat product with same functionality and interfaces, for ease of use. Dan-el sued for compyright infringement, theft of trade secrets and unjust enrichment.

After Dan-El received a temporary injunction, Snapir responded claiming to have independently developed a program with similar functionality that was not to be considered a copy. On 5 January 2010, at a hearing before Judge Zefet, the sides agreed to appointment of an expert who would review the two programs and submit an opinion to the court. Attorney Gad Oppenheimer was appointed as the expert.

On 24 January 2010, Oppenheimer reported that:

  • The two systems are written in totally different programming languages and thus the code is not copied.
  • The interfaces are virtually identical, apart from one program titling a column Client’s Details, and the other Account Details.
  • Identical in every aspect, including number of files, names of fields (except the single example above), and names of variables
  • I found that the source code was not copied. The interface was copied. The database was copied. Snapir’s program copies large chunks of Dan-El’s program, including the interface and the database. These elements are significant parts of Dan-El’s program, and have an accumulative effect when considering whether they were copied, and so I conclude these were copied from Dan-El’s program into Sapir’s.

On the basis of the above report, Judge Zefet decided to implement a temporary injunction.

Request Under Contempt of Court Ordinance

On 11 October 2010, Dan-EL sued that during May 2010 the defendant continued to sell Snapir’s software and to offer it for sale, possibly with minor variations, in contempt of the Court injunction.  The Defendant responded that the New Financier was independent, with a different interface and was not influenced by Dan-El’s program beyond the fact that it provided a complete solution to the managing security portfolios.

On having the case transferred to her, On 21 February 2011, Judge Agmon-Gonen requested that Adv. Oppenheimer review the interface and database of the new version.

On 2 June 2011, Adv. Oppenheimer concluded that the interface of the revised version of the New Financier program had several differences and could not be considered as copied from that of Dan-el but was functionally equivalent. He went on to conclude that the similarities in the “how” were significant, in that the New Financier could not be considered an independent creation, but was significantly influenced by Dan-el’s program and tries to emulate Dan-el’s program, perhaps to enable ease of transfer of users from one system to another, maybe for some other reason.

As far as the database was concerned, Snapir had changed column order and column length and names of fields in the individual tables, but the functions of each table remained the same. He felt that the database could no longer be considered “copied”, but the similarities were too many for it to be considered an independent piece of work. On a scale of 1-10, the similarities, were, he felt 6-7.

Following the report, On 4 January 2012, Ms Agmon-Gonen rejected the Contempt of Court allegations, considering the changes significant enough that there was no prima facie basis to conclude that the temporary injunction was ignored. She noted however, that although her ruling would relate to the original earlier version of Financier, it would have ramifications and relevance to the new version which could be considered a sibling program.

Plaintiff:

The plaintiff alleged that since the interface, database, program structure, system analysis and documents generated by Financier were copied from Dan’el’s program, he was entitled to statutory damages of 100,000 Shekels for every installation of the program at every third-partycomputer.

The plaintiff went on to charge that cracking their source code was achieved with illegitimate means and was to be considered a breach of their trade secret. They requested 100,000 Shekels for this infringement. Furthermore, all profit from this was to be considered unjust enrichment and should be surrendered to the plaintiff.

Defendant:

The defendant argued that the desire to prevent monopolies must allow competing programs to emulate the functionality of market leading software and to have a similar general look and feel so that users could be wooed away.

The defender acknowledged using the plaintiff’s concept, but claimed to have separately and differently implemented it. He claimed to have invested over a million dollars and 13,000 hours in programming in a different language. The interface was graphically similar to that of the plaintiff at the customers’ request and due to functional considerations. The similar purpose of the two programs requires functionality which causes similarities in layout.

Furthermore, if the court finds that there was infringement, it should be considered as a single continuous infringement and not as separate instances for each installation. Snapir denied making any profits, and claimed that the program had been installed on beta sites for testing purposes for a brief period and had no sales.

Snapir claimed that the database was open to users and thus it should be considered “open” and public domain. Judge Agmon-Gonen accepted that this could not be considered a trade-secret, but any assumed license was for clients and not competitors, and Snapir never purchased a single license.

Legal Issues

In here analysis, Judge Agmon-Gonen ruled that one has to first establish copyright and determine its infringement or not, and then address the limits of copyright protection in cases of monopolies and for public interest and the like.

Agmon-Gonen went on to rule that since the alleged copying took place in 2009, the relevant Law was the Copyright Law 2007 and not the older copyright ordinance.

Both sides accept that software is protected by copyright, and both sides accept that underlying concepts are not protected by copyright law. The question is therefore one of acceptable influence of an earlier product to enable market penetration or one of copying of significant elements.

The second issue is one of public interest and in the event of copyright infringement, whether the defendant can claim that fair competition allows a certain degree of copying.

Theoretical background – General

Although copyright covers creative works, it includes software, See Yanitzky-Ravid page 30, 2013. Citing Yanitzky-Ravid page 39, Agmon-Gonen goes into a little aside about utilitarianism and personal development and Economics of the Law. She quotes Yanitzky-Ravid’s conclusion that copyright provides an incentive and a temporary monopoly is acceptable since it results in an increase in the number and range of creative works and enriches mankind.

Agmon-Gonen also cited Guy Pesach as showing that the Supreme Court considers copyright as being utilitarian and as an incentive to create, but notes that creative works are easy to copy and must also be considered as personal to the creator and must be protected.

She noted Orit Fishman Afori’s allegations that copyright was passé in the modern digital era but noted that neither the Israel Courts nor other systems implement this view by cancelling the relevant laws, but that it should be taken into account when applying the law.

Whilst accepting that copyright solved a market failure (that it was easy to copy someone else’s labour) it must be realized that copyright creates other market failures and that it should be interpreted narrowly.

Agmon-Gonen considers that the requirement of originality is a limitation on copyright. She goes on to cite Interlego (copyright in shape of lego bricks – rejected by Israel Court), Geva (copyright in Donald Duck), Tele-event (copyright in sports broadcasting), and Professors Birnhack and Tony Greenman.

Theoretical background – Software in computer programs

According to Judge Agmon-Gonen, software was first recognized as copyright protected in 84/3021 Apple Computers vs. New Cube technologies P.P. 397, 1984. In 1988 the old Copyright Ordinance 1924 was amended to reflect that computer code have all the economic protection of creative works.

Following TRIPS, copyright law was revised to clarify that not only the source code but also the object code in binary format were copyright protected.

Copying does not have to consist of copying code, but may consist of copying the schematics and plans (Melz in Harpaz, with concurrence of Judges Barak and Levin). It may subsist in the program structure and in artwork user inputs, organization and sequence. In Harpaz, the Israeli Court largely followed the US ruling in Whelan Associates vs. Jaslow Dental (1986).

Whelan essentially rueld that everything beyond the purpose of the program was copyright protected. However, in later years, the US courts reduced the application of copyright to elements beyond the code with an understanding that it could limit technology development. In Ashraz and Har-Oz, the Israel courts made similar limitations.

According to Agmon-Gonen, nowadays there are different schools of thought regarding the appropriate scope of copyright protection for structure and the like.

The narrow approach would tend to allow substantial influence of a main program on competing products, particularly if there is a monopolistic situation. This may include the general structure, the arrangement and the look & feel to facilitate market penetration.

Judge Agmon-Gonen acknowledges that for a particular application, the expression of the program is heavily influenced by its functionality and purpose.

Copyright and competition

Judge Agmon-Gonen introduces this section by acknowledging that a creator is entitled to control and rights to his/her creation and that this is supposed to be an incentive to create. On the other hand, Competition Law is designed to enable free market competition and to prevent monopolistic market abuses.

Defendant maintains that both original and improved versions of Financier have similar interfaces to enable market penetration in a market dominated by a market leader. The argument implies that in addition to functional similarities required to achieve the purpose of a program, the consumer requires a similar look and feel to the existing product in order to consider a substitute, and substitute products are a good thing.

The idea is to interpret copyright in a minimalist manner to allow competition. She referred to Herbert Hovenkamp, Mark D. Janis, Mark A. Lamely & Christopher R. Leslie, IP and Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law, ch. 3 (2ed. Ed., 2009, last updated 2013), and Elkin-Coren and Shor-Afori.

Agmon-Gonen noted that the smart phone wars and the Microsoft case in the US show the dangers of unbridled IP protection. She considers the clauses preventing patent abuse and the court’s discretion in awarding copyright damages are there to counteract IP rights and she suggests that US vs. Microsoft Corp. and the Israel case concerning Teva show that limiting business monopolies are required to protect the consumer and to enable free competition.

Judge Agmon-Gonen posits that both IP laws and Anti-trust legislation are complimentary approaches to create competition to spur innovation and progress.

Quoting Ward Bowman Jr., Patent and Antitrust Law: A Legal and Economic Apprisal (1973):

“Both Antitrust Law and Patent Law have a common central economic goal: to maximize wealth by producing what consumers want at the lowest cost…The goal of both antitrust law and patent law is to maximize allocative efficiency (making what consumers want) and productive efficiency (making these goods with the fewest scarce resources).”

And

“The two laws (IP and Antitrust) are not in conflict at all. Rather, they are complementary efforts to promote an efficient marketplace and long-run, dynamic competition through innovation”

Quoting Michal S. Gal, Competition Policy for Small Market Economy 11 (Harvard U. Press, 2003) and with a nod towards Niva Elkin-Coren, Judge Agmon-Gonen realizes that IP rights provide limited monopolies and disrupt free market forces but she does not consider that all IP rights undermine free market economics.

Quoting Ward Bowman Jr., Patent and Antitrust Law: A Legal and Economic Apprisal (1973) again:

“Intellectual property rights do not ‘ipso facto’ confer monopoly power. While they do permit product differentiation, and sometimes give the owner power over price, there is a vast difference between an exclusive right and the sort of economic monopoly that is the concern of antitrust law…”

and

“The intellectual property laws do not purport to confer any monopoly, however, but only the right to exclude others from producing the goods, expression or symbol covered by the intellectual property interest…Patent grant creates an antitrust “monopoly” only if it succeeds in giving me the exclusive right to make something for which there are not adequate market alternatives and for which consumers would be willing to pay a monopoly price.”

“In sum then, the intellectual property grant is a power to exclude…The power to exclude contributes greatly to the value of any property right, but it hardly entails that the thing covered by the right is a “monopoly”. That question must be answered by looking at the range of substitutes that are available”

Getting back to the subject, Judge Agmon-Gonen notes that copyright does not prevent someone independently creating a competing software product for trading securities. She references Elementary and Persistant Errors in the Economic Analysis of Intellectual Property”, 53 V and. L. Rev. 1727 (2000) and also Mark A. Lemley, “The Economics of Improvement in Intellectual Property Law, 75 Tex L. Rev. 989 (1996-97).

In one of her more interesting insights, Judge Agmon-Gonen notes that the incentive was prior to developing the software program, but that the antitrust considerations apply when a single player obtains monopolistic control of a market.

Citing Elkin-Coren again, she notes that software copyright can be abused to prevent competition.

Judge Agmon-Gonen then went on to note that package deals forcing customers to buy up a number of films from one producer and the like can be an abuse (this is interesting and of relevance to releasing songs in albums and forcing students to purchase a text book for one chapter of interest but is totally off the point).

Correctly, Judge Agmon-Gonen notes that the issue of unfair competition has to be proven and not merely alleged. It is necessary in the present case to show that copying the interface was required to prevent unfair competition. Since there were other software packages and the defense was alleged but unsubstantiated, Judge Agmon-Gonen rejected the defense.

In conclusion, Judge Agmon-Gonen considered the seven beta sites of a pilot as being a single infringement with, and found it fit to award a single payment of 90,000 Shekels for copyright infringement to the plaintiff without proof of damages.  She also awarded a permanent injunction against the defendant directly or indirectly selling or maintaining the competing software product. Since she had ruled copyright damages, she felt that there was no grounds to award additional damages for trade secret infringement.  For some reason the bottom line damages becomes 80,000 Shekels instead of 90,000 Shekels (one is presumably a typo, but which?) and 35000 Shekels legal costs.

T.A. 38918-12-09 Dan-el Advanced Software Solutions vs. Snapir, Judge Agmon-Gonen,  9 April 2014.

COMMENTS

I note that somewhat oddly, the programming expert is a lawyer. I’d have expected that he relates to similarities and differences and leaves the conclusions of copying to the judge. I refer readers to Judge Binyamini’s comments on the scope of expert opinions for the court.

The overall background section is a nice overview of copyright statements in the Hebrew Language, that totally ignores rabbinic sources, such as those summarized by Professor Rakover, and also makes little use of the valuable scholarship by non-Israeli scholars writing in English, beyond those quoted in previous Israeli rulings. It is fairly unnecessary and provides little that is new other than a book review of Shlomit Yanitsky-Ravid’s new book.

On the other hand, after her disastrous ruling concerning football broadcasting that was overturned by the Supreme Court (here),  Ms Agmon-Gonen may be reviewing everything to demonstrate that she is aware of what is actually happening in Copyright Law, or is educating herself in what other scholars think. Perhaps I am being unfair, and this ruling reflects a serious attempt to understand copyright. it is a good ruling.

Either way, this decision is rather better than some of her previous ones in that she is confirming to norms and trying to change things by evolutionary rather than revolutionary means. I think that eventually Agmon-Gonen may reach the Supreme Court and this decision shows a maturing of her approach.


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