The 9th Circuit gets it right this time.

Here is the simplistic explanation of the important aspect of this decision:

1. The Digital Millennium Copyright Act (DMCA) protects "Internet Service Providers" (including most blogging websites)from liability for various material posted by third parties. For instance, if a third-party commenter were to post a defamatory comment on this site, neither myself, nor the site's operators would be legally liable for the other person's comment, since we wouldn't be considered the authors of it. It prevents our liability for 'republication' of the third-party comment, even though it appears on this site.

2. However, the DMCA does not extend its liability protections to intellectual property (IP) claims. For instance, if somebody alleges that a thrid-party posted a copyrighted video to this site, we would still be legally obligated to take it down - provided that we were given notice and the video posting doesn't otherwise comport with fair use.

Why did the DMCA carve out an explicit exception for IP in its liability protections? The usual reasons - Big media lobbied Congress to include that provision in order to protect its turf. There is no such thing as an organized political lobby for those who might be libeled in the future. (As a result of the IP exception under the DMCA, the development of the Internet still has been unfortunately slowed...but that is obviously a much bigger debate and discussion for other posts on this site and elsewhere.)

So the vital question then becomes: What is 'intellectual property' for purposes of interpreting the DMCA? Some states have a mutant form of IP protection called the 'right of publicity'. They also have other laws under the rubric of 'unfair competition' or 'trade secret' laws that also serve as a mutant (and broader) form of IP protections. Then there are also state 'common law' forms of copyright and trademark protections that you may read about from time to time.

So in other words, state concepts of IP are often defined far more broadly than federal forms of IP. If you were to accept the broader state notions of IP, and then allow those notions to dictate the meaning of the DMCA, that would mean that the DMCA offers less and less liability protections to Internet Service Providers. States would eventually be able to define "IP" so broadly that the DMCA would effectively become a meaningless hollow shell - offering no real protections for anybody.

Fortunately, the 9th Circuit saw through the nonsense, and said that the DMCA still offers liability protections for all forms of state IP claims. The only exceptions to the protection for websites under the DMCA will be for IP that is recognized under federal law.

Well done 9th Circuit! There is still plenty wrong with federal IP and the DMCA, but at least they have seen fit to minimize the damage in this particular instance.

If that fart doll that you wanted to buy happens to be more expensive this year, you can thank the 7th Circuit Court of Appeals based on its decision today in JCW Investments Inc. v. Novelty Inc. (Note how the court is careful enough to include the ® trademark sign in its decision when it refers to "Pull My Finger Fred". Do they do the same if they mention the Academy Award Oscars® in a decision?):

Meet Pull My Finger® Fred. He is a white, middle-aged, overweight man with black hair and a receding hairline, sitting in an armchair wearing a white tank top and blue pants. Fred is a plush doll and when one squeezes Fred's extended finger on his right hand, he farts. He also makes somewhat crude, somewhat funny statements about the bodily noises he emits, such as “Did somebody step on a duck?” or “Silent but deadly.”

Fartman could be Fred's twin. Fartman, also a plush doll, is a white, middle-aged, overweight man with black hair and a receding hairline, sitting in an armchair wearing a white tank top and blue pants. Fartman (as his name suggests) also farts when one squeezes his extended finger; he too cracks jokes about the bodily function. Two of Fartman's seven jokes are the same as two of the 10 spoken by Fred. Needless to say, Tekky Toys, which manufactures Fred, was not happy when Novelty, Inc., began producing Fartman, nor about Novelty's production of a farting Santa doll sold under the name Pull-My- Finger Santa.

Tekky sued for copyright infringement, trademark infringement, and unfair competition and eventually won on all claims. The district court awarded $116,000 based on lost profits resulting from the copyright infringement, $125,000 in lost profits attributable to trademark infringement, and $50,000 in punitive damages based on state unfair competition law. The district court then awarded Tekky $575,099.82 in attorneys' fees. On appeal, Novelty offers a number of arguments for why it should not be held liable for copyright infringement, argues that Illinois's punitive damages remedy for unfair competition is preempted by federal law, and contends that the attorneys' fees awarded by the district court should have been capped according to Tekky's contingent-fee arrangement with its attorneys. For the reasons set forth below, we affirm.

Somewhat to our surprise, it turns out that there is a niche market for farting dolls, and it is quite lucrative…

[Hat-tip: Decision of the Day Blog]