Advanced Copyright Issues on the Internet - Fenwick & West LLP

This provision seems to have been drafted to apply to the paradigm situation, discussedabove, in which the original sale of a work via transmission in digital format results in acomplete copy of the work residing in permanent storage at the purchaser’s site. So long as theoriginal purchaser erases his or her copy at substantially the same time, new subsection (f)permits the purchaser to transmit that copy to a third party without liability (including anyreproductions, displays or performances that are attendant thereto).The applicability of this provision to the case of on-demand transmissions forsimultaneous viewing or other usage by the original purchaser (such as movies or online games)is not clear. In those instances, as discussed above, it is unclear whether the purchaser should betreated as the “owner of a particular copy or phonorecord in a digital format” by virtue of theinitial on-demand download of the work in order to trigger application of the new subsection (f).In any event, this provision was not adopted in the DMCA.The European <strong>Copyright</strong> Directive appears to take the position that obtaining a copy of acopyrighted work through an online service does not exhaust the copyright owner’s rights in away that would allow resale or retransmission of such copy. Specifically, paragraph 29 of therecitals to the Directive states the following:“The question of exhaustion does not arise in the case of services and on-lineservices in particular. This also applies with regard to a material copy of a workor other subject-matter made by a user of such a service with the consent of therightholder. Therefore, the same applies to rental and lending of the original andcopies of works or other subject-matter which are services by nature. Unlike CD-ROM or CD-I, where the intellectual property is incorporated in a materialmedium, namely an item of goods, every on-line service is in fact an act whichshould be subject to authorization where the copyright or related right soprovides.”G. Pop-Up Advertising1. The Gator LitigationsIn June of 2002, a number of publishing companies and other entities operating their ownweb sites sued Gator Corporation for copyright infringement, trademark infringement, unfaircompetition and other causes of action based on Gator’s causing unauthorized pop-upadvertising to appear on the sites of the plaintiffs. Gator widely distributed a softwareapplication called “Gator” that acted as a digital wallet to provide users with a mechanism forstoring personal information about themselves, passwords, user identification numbers andnames and other data that consumers routinely need to input on electronic forms when shoppingon the Internet. Gator bundled with the digital wallet software another program called“OfferCompanion,” which, once installed, would automatically launch whenever a user initiateda browser-based Internet connection, observe the sites visited by the user, and whenever the user- 501 -