Digital Creations Like Music Tracks, Albums, and Videos are Products Under §271(g).
Recent decisions acknowledge that digital creations qualify as products under section 271(g). Accordingly, Destiny’s heavy reliance on Bayer AG v. Housey Pharmaceuticals, Inc., 340 F.3d 1367 (Fed. Cir. 2003), and NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005), is misplaced. The Bayer court determined that “research data” produced using a method of identifying substances could not be a product under section 271(g) because the research data were “information in the abstract.” 340 F.3d at 1376-77. NTP, in turn – relying on Bayer – held that emails were “information” and, therefore, not products. 418 F.3d 1282.
As recognized by two recent cases, neither Bayer nor NTP precludes digital creations and content from constituting “products” under section 271(g). In CNET Networks, Inc. v. Etilize, Inc., 528 F. Supp. 2d 985 (N.D. Cal. 2007), the court found a defendant liable for importing over the internet an electronic catalog created in Pakistan using the patented process. The defendant argued that an electronic catalog was not a “product” under § 271(g) but instead was more like the “production of information” or “transmission of information” held in other cases not to be “products” under the statute. Id. at 994. The defendant also argued that it merely offered a service allowing access to and transmission of catalogue information. In rejecting these arguments, the court held:
- the electronic catalogue in this case, far from being abstract information or knowledge [as in Bayer], is a physical article no different from a product catalog manufactured and assembled on paper bound with stitching, glue or staples.
Id. at 995. Moreover, the CNET court distinguished the case from NTP:
- While email messages are not products that are bought and sold, a catalog – whether its physical form is etchings on a CD-ROM, magnetic fields in a server, or ink on paper – is a product that is bought and sold.
Id. Similarly, music catalogs, music tracks, albums, and videos are products that are bought and sold no matter whether the form is paper, vinyl, CD, DVD, or fields in a server.
Relying on CNET, the court in Ormco v. Align, 609 F. Supp. 2d 1057 (C.D. Cal. 2009) held that a digital 3D model of teeth is a product for purposes of section 271(g), notwithstanding its digital-only form. Notably, the court recognized that Bayer does not hold “that anything contained in electronic format will not be a ‘product made’ by patented methods.” Id. at 1076. Rejecting the defendant’s argument that a digital model is “information” under Bayer, the court held: “the 3D digital image is not a mere package of information, but a ‘creation’ produced by ‘practicing each step’ of a patented process.” Id. at 1076.
CNET and Ormco apply with equal force to this case. The Destiny Play MPE system creates an encrypted music track, album, catalog, or video that is a direct cognate of a CD or DVD. The tracks, albums, and videos are neither “information in the abstract” as in Bayer nor a “package of information” as in NTP. Rather, they are creations produced by practicing each step of Yangaroo’s patented method.
Destiny Imports, Sells, and Offers for Sale in the United States a Product Made by Practicing the Steps of Yangaroo’s Patented Method.
Destiny’s motion studiously ignores the true nature of what the Play MPE system delivers to end users in the United States. The encrypted music tracks, albums, videos, and catalogs fall squarely into the analytical framework of CNET and Ormco. The fact that the works are digital, rather than etched onto a CD or stamped onto vinyl, is not material to the issue of whether they are products under section §271(g).
Both Destiny and Yangaroo promote the encrypted digital music created and sent by their systems as a replacement for CDs and DVDs. PPMF 23, 28. As an example, one Destiny ad reads, in part:
PPMF 24. Destiny’s website, www.dsny.com, also notes that “The main competition for Play MPE® is the traditional manufacture and mailing of CD's.” PPMF 25. The encrypted digital music content created and sent using Yangaroo’s patented method is as much a product as the CDs and DVDs the digital content is intended to replace.
Destiny also offers on its website a series of promotional video clips modeled closely after the famous Apple vs. PC ads. PPMF 27. Each clip features two actors, one in black casual clothing, and one wearing a khaki-colored blazer. The opening line for each is “I’m a Play MPE single [spoken by the actor in black]. And, I’m a CD single [spoken by the actor in the khaki blazer].” PPMF 27. The clips promote different benefits of using Play MPE instead of a CD to send music releases to radio stations. The clips’ titles identify each benefit Destiny touts: (1) No Shipping Hassles; (2) CDs Scratch; (3) No Theft; (4) Go Green, Go Play; and (5) No Ripping Delays. These promotional materials make crystal clear that the encrypted music created using the Play MPE system is a product. PPMF 27.
Similarly, Yangaroo advertises digital music as a replacement for traditional CDs. For example, it uses the following graphic to illustrate “the evolution of music delivery”:
PPMF 28. First came vinyl records, then tapes, then CDs, and now digital music. Each example constitutes a product.
Moreover, Destiny boasts about several benefits of the Play MPE system, including the ability to download, stream, burn, and export “broadcast quality singles/albums/videos.” PPMF 22. Destiny has also advertised that “The Beatles Remastered Catalogue [is] now available on Play MPE.” PPMF 26. Given the holding in CNET, one cannot reasonably contend that such content is not a product.
Consistent with Destiny’s own advertising, Dr. Vijay Madisetti, Yangaroo’s expert, opined that the encrypted digital music tracks and albums are directly analogous to their predecessors like CDs and DVDs. PPMF 34.
Destiny’s expert, Bruce McNair, also confirms that digital content can be a product. As an expert in a previous patent suit, Dr. McNair agreed that a streaming digital video was a “video product” as recited in the patent at issue in the case. PPMF 31. That video product, according to Dr. McNair, “was the digital representation of video information that was distributed.” PPMF 32. Likewise, Dr. McNair testified, the Destiny system transmits “a [digital] representation of musical information” – in other words, a musical product. PPMF 32. Destiny’s contention that the encrypted music is not a product is simply disingenuous in light of this testimony.
Common knowledge in our digital era – confirmed by Dr. McNair – tells us that books, x-rays, pictures, video, and music can take on a digital, rather than tangible, form. PPMF 33. Software programs, such as TurboTax®, are available in CD format or as a file downloadable directly from the internet. Destiny’s position would, untenably, identify the CD format as a product, but the identical program in digital format mere “information.” That runs directly contrary to common sense, as well as Destiny’s admission on its website that its Play MPE software, available only via download from the internet, is a “product” despite the absence of a tangible item:
- MPE® enables the secure download of content to a local computer. It is similar to buying a CD or DVD where the recipient “possesses” the content. Play MPE® is the largest product in this line and is revolutionizing the way the record industry distributes its promotional music.
Schill Decl., Ex. H, p. 1. Notably, Destiny also admits in this excerpt that the encrypted content is possessed by the end user and is similar to a CD or DVD.
Destiny’s contention that the encrypted music is not a product because it does not have a tangible form ignores Destiny’s own advertising and admissions, and the testimony of both parties’ experts. Indeed, the notion that content readily accepted as “products” in paper or CD form are no longer products in digital form simply strains credulity.