IP in Software: When is an API Protectable?

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ImageBy Lydia Ansari

On May 9th, the Federal Circuit ruled in Oracle v. Google that some APIs, or software application programming interfaces, are subject to copyright. Unless Google can successfully assert a fair use defense on remand, Google will have to pay Oracle for its use of the Java API in Android. The ruling draws disapproval from IP advocates and software developers alike, who predict it will have a stifling impact on innovation.

If the ruling stands, software companies will be able to copyright some aspects of their APIs. The Electronic Frontier Foundation, warns that “allowing a party to assert control over APIs means that a party can determine who can make compatible and interoperable software, an idea that is anathema to those who create the software.” Many developers agree that making APIs subject to copyright law would significantly limit their ability to build compatible programs and build on top of APIs. Continue reading →

“Disappearing Forever” Too Good to be True? Snapchat Reaches Settlement with FTC

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ImageBy Chris Ferrell

On May 8th, the Federal Trade Commission (“FTC”) announced that Snapchat, a mobile application company, had agreed to settle with the FTC over several charges, including deceptive advertising, failure to maintain security features, and collecting data from application users. The FTC alleged that Snapchat deceived users by claiming that their “snaps” (which are pictures users take with their cell phones and send to other users) would “disappear forever” after being viewed. According to Snapchat, users send 400 million photos and videos per day. However, recipients of a snap can save the snap in different ways, including: taking a “screen shot” of the picture, downloading the picture as original content, or, at the extreme, hacking into different Snapchat users’ accounts and stealing their photos. We’ve previously covered the legal ramifications of taking a screenshot of snaps in the context of revenge porn.

The FTC further alleged that Snapchat’s failure to secure its “Find Friends” feature resulted in a security breach that enabled attackers to compile a database of 4.6 million Snapchat usernames and phone numbers. Snapchat also allegedly took contacts from Apple iOS users’ address books, as well as geolocation information from people using Android-based phones. Snapchat does not have to pay a fine, but, under the settlement, it is prohibited from misrepresenting the extent to which it maintains the privacy and security of users’ information. Snapchat must also implement a comprehensive privacy program that will be monitored by a third-party privacy group for the next 20 years. Although Snapchat claims to have already addressed the FTC’s concerns by “improving the wording of their privacy policy” and implementing security counter measures, is that enough to allow applications like Snapchat to continue to exist? Continue reading →

Is High-Frequency Trading The Future, Or Will It Soon Be History?

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By Stephen Anson

Equipped with some of the most powerful super-computers in the world, high-frequency traders anticipate millisecond changes in the market, allowing them to score immediate gains and affect the market index. These trading practices have been used for years, and though there are many federal rules criminalizing insider trading and securities fraud, no one has used these rules to go after high-frequency traders until recently. Whether or not these trades are illegal remains an open question. In the interim, growing public discontent will likely lead to more lawsuits and perhaps eventual securities reform.

Public interest in high-frequency trading has grown lately, spurred in part by Michael Lewis’s new book “Flash Boys.” In his book, Lewis described the market as being “rigged” by “high-frequency traders armed with fiber-optic lines and computer servers located next to, or even inside, the exchanges.” This advanced technology gives high-frequency traders an advantage over other traders. The technology provides faster access to information about the flow of the market, and the traders then use advanced algorithms to purchase as many of the “in demand” securities as possible. Their computer programs will then, nearly instantaneously, sell those same securities back out in the market, often for a nice little margin. High-frequency traders can still turn a profit, even if they are buying large volumes of stock and selling them for the same price, because they receive a liquidity rebate for each transaction from the relevant exchange. The exchanges, such as the New York Stock Exchange (“NYSE”), pay these liquidity rebates, which typically amount to a fraction of a penny per share, because it increases the overall liquidity in that marketplace.

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Loser Pays: US Supreme Court Gives District Courts Greater Discretion to Award Attorney’s Fees in Frivolous Patent Suits

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ImageBy Peter Montine

The United States Supreme Court has made it easier for district courts to award attorney’s fees in frivolous patent infringement cases. In two different cases, the Court held that the decision to award attorney’s fees to the prevailing party was within a court’s general discretion, and that a review of such a decision was analyzed under an “abuse of discretion” standard.

In the first case, Octane Fitness, LLC v. Icon Health & Fitness, Inc., Octane had been sued by ICON for infringing on ICON’s patent for adjustable elliptical machines. Octane succeeded on a summary judgment motion in district court to dismiss the suit. However, when Octane moved for attorney’s fees, the court denied the motion, following the standard set forth in Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc. That standard requires that a court find the claim to be either (1) objectively baseless or (2) brought in subjective bad faith. Finding neither of these things to be true, the court dismissed the motion for attorney’s fees. Octane appealed, but the Federal Circuit, which issued the Brooks standard, upheld the district court’s decision. Continue reading →

Taking (Away) Your TV Shows To-Go

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ImageBy Amy Wang

Last week, Hulu announced that it will extend video streaming services this summer—and disrupt already low summertime productivity—by providing free, full TV episodes and movies on mobile devices, a feature normally reserved for Hulu Plus subscribers and limited to select clips. Although this is probably a temporary, promotional stunt to boost subscribership, the announcement comes just a week after the U.S. Supreme Court considered the legal implications of a similar video streaming service.

On Tuesday, April 22, 2014, the Supreme Court heard oral arguments for American Broadcasting Company, Inc. v. Aereo, Inc—for a thorough discussion of the case, see our winter publication. The premise of the case focuses on Aereo’s business model. The company provides its subscribers (currently, limited to NYC residents) unique technology: each subscriber is assigned a small antenna located at Aereo’s facility which captures and records live TV broadcasts and re-distributes them to the subscribers’ devices over the Internet. Subscribers can then watch shows live on their mobile devices, stop, and pick up the same programming when they get home on their tablet, computer, or TV. Continue reading →