U.S. District Judge Robert P. Patterson has ruled Steven Vander Ark's "Harry Potter Lexicon" website and proposed book infringe on copyrights held by author J.K. Rowling, and awarded Rowling and Warner Bros. -- a division of Time Warner (NYSE: TWX) -- $6,750 in statutory damages. Given that Rowling earned an estimated $300 million last year, it's doubtful she was in this one for the money.

While authors are generally allowed to use material from other books in reference titles, the judge ruled that this case went beyond fair use because it "appropriates too much of Rowling's creative work for its purposes as a reference guide."

Rowling had testified that the pending release of the guide had caused her great stress and interfered with her work on a new novel.

The hp-lexicon.org site has already been taken down. It's a little bit disenchanting to see Ms. Rowling suing a former school librarian for producing a work that is clearly designed to appeal to die-hard Harry Potter fans, but she's certainly within her rights.

Rowling's latest book, The Tales of Beedle the Bard, will be released on December 4.

Hasbro (NYSE: HAS) and Mattel (NYSE: MAT), which own the right to Scrabble, are none too pleased with Scrabulous, a knockoff of the game that has gained tremendous popularity as an application on Facebook.

The game-makers have sent cease and desist notices to four parties involved with the production and distribution of Scrabulous, but it isn't immediately clear who those parties are.

In a statement, Hasbro said that it hoped to reach an amicable solution, but that, "If we cannot come to one quickly, we will be forced to close down the site and its associated distribution points."

The obvious solution is to make the game a fully-licensed version of Scrabble, and give Hasbro and Mattel a cut of the ad revenue it generates. Such a move would also probably boost sales of the board game at retail stores as people realize that Scrabble is actually pretty fun.

According (subscription required) to the Wall Street Journal, "While there are authorized Scrabble games online, Scrabulous has gained popularity because it's free, easy to play with friends and easy to access on Facebook. Scrabulous listed more than 600,000 daily active users on Facebook as of Wednesday and is one of the 10 most used applications on the site. People can also play at Scrabulous.com."

I'm fascinated by the recent attempt of Australia's Virgin Mobile to apply the internet's unruly, free-for-all mindset on the real bricks and mortar world. If you missed it, Virgin used royalty-free images from Yahoo! (NASDAQ: YHOO)'s photo-hosting site Flickr in a print ad campaign, and subsequently faces some courtroom headaches.

Now comes the equally engaging inverse of that case -- a situation that could be woven only on the web. Popular technology blog TechCrunch has been threatened with litigation seeking $1.5 million, accused of misappropriating this professional photo of Ashton Kutcher, the actor and host of MTV's Punk'd.

What's the evidence? This Google search, apparently. Go ahead -- click the search. Assuming Google hasn't switched things around on us, the, uh, dreamy beefcake shot in question should show up at the top, promoting Google (NASDAQ: GOOG)'s image search (by the way, when did the great Googly Moogly start returning "Extra Large Images"? I gotta keep up).

If you click on Ashton's shiny, hairless torso, you'll be taken to this TechCrunch post, regarding the voice-over-IP gizmo Ooma (bewilderingly, Demi Moore's main man-boy is Ooma's creative director). Clicking on a Google image-search result typically takes you to the web page where you can see the picture in context.

Damning evidence? Here's where it gets interesting, at least for those of us whose job duties include ritual prayers to Google -- TechCrunch never actually used the photo. What has the photographer's agency all litigation-happy actually stems from Google's rocket science.

Apparently, a sass-talking TechCrunch reader, in responding to the Ooma post, included a link to the offending photo of Kutcher -- just a link, mind you, not the image itself. In indexing the TechCrunch post, Google's search math processed the linked image and associated it with the TechCrunch post (the ones and zeros at work are somewhat related to Google bombing -- if you're unfamiliar, here's a rundown of the most notorious incident thereof).

The photographer's agency had best walk away from this one -- it has no case. Or maybe Ashton's really Punk'ng TechCrunch, and this is all a brilliant promotion as part of his duties as Ooma's creative director. After all, had you heard about Ooma before?

UPDATE: It figures -- the Google search now links Kutcher's photo to this Yahoo! Answers page -- I guess it's their headache now. Learn more at TechCrunch's post.

Just in case you needed one more example of litigious stupidity, here it is. It seems that a Dallas family has filed suit against the Australian, Virgin Mobile communications company over the allegedly improper use of a photo gleaned from the Flikr photo sharing site, as reported by Associated Press. That's "photo sharing" as in, here's my picture to look at and use.

Stupid part one is that the advertising company that created the visual advertising mechanisms which are allegedly making questionable use of a girl's photo should have a general idea about what materials they're using, where they came from and what conditions surround those materials, such as rights and restrictions. They still teach about copyright in advertising school right? Just in case they don't, Flickr has a really understandable explanation of creative commons license right there on its site. It's by the photos. Advertising guys from Australia should probably read that.

In what I see increasing as a practice, music artist Prince has started a catfight with Google, Inc.'s (NASDAQ: GOOG) YouTube service and eBay, Inc. (NASDAQ: EBAY) over copyright violations dealing with unauthorized video content on YouTube and Prince-labeled clothing and shoes on eBay.

The constant battle copyright holders continue to have with the opening of content and commerce on the global web won't be over soon -- far from it. In fact, the web can be both the biggest threat and the most lucrative distribution tool for music and video artists. Defining the line between those, however, is so blurry no corrective lenses will ever be able to see it clearly.

Prince's issue here is the constant re-posting of his videos and other content on YouTube, even after his internet policing specialist successfully worked with YouTube officials taking down content that infringed on his copyright. In true YouTube fashion, more content is immediately uploaded and the circle starts all over again.

Then come the mousepads and shoes showing up on eBay with Prince's likeness. Same deal as with YouTube -- he just wants those items to be taken down for good. In an age where users are the ones responsible for uploading and listing infringing material -- not the hosting companies like eBay and YouTube -- how far does the responsibility go for both companies? That question still has no answer, and the web will continue upending the entertainment industry little by little.

How does a company like Microsoft (NASDAQ: MSFT) keep huge numbers of people in countries like Indonesia and China from using pirated copies of its software? According to Craig Mundie, Microsoft chief research and strategy officer, for now, there is little the company can do. He told Reuters: "We are realistic in recognizing that we have to work diligently over periods, that are really a decade or two, to make real progress in a number of these environments."

That means that tens of million of copies of Windows could easily bring Redmond not a single dime. It also means that the company is relying on local officials to support anti-piracy laws. Policing such large populations really isn't possible.

But, Mundie may be acting a bit cute. In all likelihood, the answer for thwarting pirates has nothing to do with laws and police. Microsoft and other large software companies are almost certainly working diligently to make ripping and copying software much more difficult. They would at least have as a goal putting in a set of systems which would disable may of the software's features if copying were attempted.

If selling a version of Window in China yields $100 and there are, say 20 million copies of pirated versions distributed per year, it add up to real money, even for Microsoft. Odds are that the problem is solved through programming and local laws to prevent stealing be damned.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Last week Billboard reported that the Warner Music Group Corp. (NYSE: WMG) is one of many potential buyers of London-based EMI Group PLC. This is the most recent in a number of countless bids by Warner to buy EMI since 2000 and the company, as well as other companies interested in acquiring EMI have until May 23 (when EMI makes its annual financial report) to make "fully financed, formal offers."

An earlier deal offered by Warner in March was rejected by EMI as the $4.1 billion and the terms involved were considered "inadequate." Since then EMI has been at the forefront of a major change in the selling of musical products: stopping the use of Digital Rights Management (DRM) technology in their digital music files (announced in early April, blogged on BloggingStocks).

If EMI is sold, which is presumably inevitable since the company is openly taking offers, one can wonder if the changes the company has made will remain. Warner has repeatedly denied that the company is even close to dropping DRM so if it is successful in buying EMI, would Warner be forced to change to a no-DRM stance as well, or would EMI (as a new part of Warner) revert to DRM usage. Other parties involved, like the private equity firms Billboard states are interested, have made no statement about their interest anyway, so any stance on DRM is unknown.

The rumors about EMI being bought are not new, but with the DRM change any purchase brings in a number of new questions about the feasibility of the technology remaining unused or being reinstated.

When Google Inc. (NASDAQ:GOOG) purchased YouTube, a lot of people wondered if it would cause YouTube's death, as media companies who'd had content reposted on YouTube without permission would have a large cash cow to sue. And if they were successfull in getting their proprietary content off the site, would YouTube still be able to grow and thrive?

This morning Google faced the large issue head on at the Web2.0 Expo in San Francisco when CEO Eric Schmidt talked about larger media concerns about copyright protection. According to TechCheckDaily.com Google will be rolling out a "CYC," a claim your own content tool so that IP owners can worry about YouTube a lot less.

Details are sketchy right now, but it does make for an interesting twist as Google uses its coding skills to try and fix a problem media companies have used litigation for.

Andrew Struthers, an individual who spent a great deal of time and effort to record a million hit wonder YouTube sensation had his video Spiders on Drugs stolen and repurposed by another YouTube user (and even sold to Ebaum's world when that person didn't even own the rights to it) instead of that person just linking it or embedding it. You can read his story and imagine that someone like him might have enjoyed having a Google CYC system he could have used, as the Andrew Struthers of the world can't afford million dollar lawyers with bevies of takedown notices working for them.

It seems that Viacom Inc. (NYSE:VIA) has had it. After the media conglomerate had asked Google Inc. (NASDAQ:GOOG) -- very nicely too -- to remove some 100,000 clips from its recently purchased video-sharing site YouTube, it is now saying: no more!

As Beth Gaston Moon mentioned, Viacom is now suing Google for more than $1 billion in damages over these unauthorized clips and the use of its programming online. Viacom also seeks an injunction to prevent future and further violations.

Many have worried that with Google's deep pockets, this is exactly what would happen once the company purchased YouTube. While some saw dollar signs from potential advertising revenue on the popular video-sharing site, others were concerned with the blatant copyright infringements.

The original number of 100,000 clips Viacom claimed in the past it asked Google to remove is now in the neighborhood of 160,000. These were viewed more than 1.5 million times.

Google is used to providing everything for free. In fact, this is its business model -- offer free products, increase traffic and then benefit from the advertising. This model is fine as long as Google offers its own products for free. Once it offers others', it becomes a different -- and potentially hazardous -- story.

GOOG shares are down over 2% to $445.53, while VIA shares are up nearly 1.2% to $40.03. It seems investors have already decided which way this one goes.

U.S. stock markets are poised to open higher today following a rebound in Asia. Dow Industrials, S&P 500 and Nasdaq 100 index futures all advanced.

But investors' re-minted optimism may not last long.

Later today, the U.S. Labor Department is expected to revise its fourth-quarter productivity growth rate downward, while a U.S. Commerce Department report is expected to show a decline in January factory orders, according to the Associated Press. The National Association of Realtors also is due to report January pending home sales figures.

These are confusing times. Even I can't remember the right date for this post.

Forget about Bill O'Reilly, you are about the enter the real no-spin zone.

With an apparent straight face, DaimlerChrylser AG (NYSE:DCX) Chief Executive Dieter Zetsche said that his company's willingness to dump -- I mean sell -- Chrysler isn't the result of pressure from either shareholders or his advisory board. In an interview with the Wall Street Journal (subscription required), the lovable Dr. Z calls it "proactive development, not a reactive development." How do you say BS in German?

U.S. Treasury Secretary Hank Paulson, who apparently has been working with Dr. Z's PR consultants, told an audience in Japan that rising defaults among subrpime lenders won't spread to less risky creditors, according to Blooomberg News. Time to start snapping up shares of New Century Financial Corp. (NYSE:NEW).

Those boy scouts at Microsoft Corp. (NASDAQ:MSFT) are apparently ready to say mean things about Google Inc. (NASDAQ:GOOG) cavalier attitude toward copyrights. When asked to comment, Google asked if "copyright" was some new Web 2.0 application or a new jam band. No seriously, Google chief counsel David Drummond repeated the company's line that it complies with existing laws. Then he started doing an impression of Aretha Franklin much to the horror of everyone.

But the gold star for excellence in public relations has to go to AAA Travel Group spokesman Geoff Sundstrum for this insightful analysis about the 12.2 cent rise in gasoline prices last week. "Certainly, no one wants to pay a high price for gasoline. But if you're feeling good about your job and your income, you're much more willing to do that than if you're concerned as to whether you'll be working a month or two from now," he told USA Today.

Interesting. I didn't realize that people with steady jobs are less worried about spending than those without them.

Late Friday, YouTube announced a partnership with BBC. According to the press release, the partnership will "create branded BBC 'Channels' on YouTube operating under separate BBC and BBC Worldwide agreements." The three channels would be the BBC, the BBC Worldwide, and the BBC World. This partnership allows BBC to "bring new audiences to the proposed BBC iPlayer service, and to secure commercial revenue via BBC Worldwide," according to the release on YouTube's website.

This partnership is important because it shows that YouTube is continually interested in working with content-owners to keep interesting material on YouTube. These partnerships are typically the result of discussions between companies and YouTube due to the copyright disputes with which YouTube must frequently deal. Companies (rightfully so, in my opinion) are cracking down on YouTube for allowing users to post copyrighted material on the website. YouTube is dealing with this problem the right way -- by creating solutions that make sense for both YouTube and the content-owning company.

A Russian court today threw out a criminal case against a school principal accused of installing pirated Microsoft Corp. (NASDAQ:MSFT) software in school computers. The prosecutors, you're going to love this, called the prosecution's case "trivial."

The school teacher wasn't exactly found 'not guilty' as installing pirated software is indeed illegal, but he definitely wasn't found guilty either. The court seems to have said that there are far more important things in life than the small change a big corporation loses through a few pirated copies.

President Vladimir Putin called the trial "utter nonsense" and former Soviet leader Mikhail Gorbachev appealed in a letter to Bill Gates not to press criminal charges against the teacher. Everybody, industry experts included, agree that manufacturers of pirated goods should be the ones targeted, not consumers.

To be fair, Microsoft had nothing to do with the charges the authorities brought and didn't even press a a civil action suit against the teacher. Microsoft issued a fine statement, saying all the right things.

Yet, one is hard pressed not to notice the cultural differences between America and Russia (and other countries as well). This isn't to say one is better than the other, only to say the differences exist.

This post is written as part of AOL Money & Finance's Best & Worst of 2006. Vote for YouTube as the up and comer of 2006, or check out the other nominees in the category.

My six year old and I share a fascination for YouTube, the viral video-sharing site that Google Inc. (NASDAQ:GOOG) recently acquired for $1.65 billion. I got interested in the site last April after I read an article in Slate about the lip-syncing phenomenon on YouTube and then shared a few videos mentioned with my daughter.

We quickly became fans of the Two Chinese Boys and then went on to look at other Chinese music videos (this is a really catchy tune). I've been able to introduce her to Elvis in all his Las Vegas glory, early R.E.M., and just today, Donny and Marie. That reminds me, I bet there are some Captain and Tennille videos I should dig up to show her as well ...

Just in writing this post, we've ended up yet again as a family gathering around the computer viewing choice items found on YouTube. My husband just walked away frustrated once more that we wouldn't spend more time searching out game-winning shots from famous basketball games from the 1970s.

In what I consider to be an "initial barb" at social sites like MySpace, Facebook and YouTube, Vivendi-owned Universal Music Group has filed a suit against MySpace.com. The suit claims that the Web property allows copyrighted material to be posted on user pages within the News Corp.'s (NYSE:NWS) MySpace website.

If you recall, Google, Inc. (NASDAQ:GOOG) even set aside $200 million in its stock last week to prepare for similar copyright infringement cases against its newly acquired YouTube. These lawsuits are sure to come soon as the Internet search giant propels YouTube to the forefront of its online video business. Google might also be considering integrating YouTube with its flagging Google Video, which indeed saw quite a bit of fanfare upon launch (and re-launch), but has fizzled to catch online leader iTunes and other online video websites since.

With MySpace being the first social sharing website to be sued, it will not be the last by any stretch. Universal's suit was filed just hours after MySpace stated that it would offer an enhanced copyright protection tool to make it easier for content owners to remove unauthorized material. What perfect timing Universal had -- although the music company saw MySpace's announcement as perfectly timed to coincide with its lawsuit. Perhaps.

Universal Music claims that MySpace had not only allowed users to upload videos illegally but had also taken part in the infringement by re-formatting the videos for users to play back and to send on to others. Strike one. Let's pay attention to the rest of this game as old media continues to not understand that its business has changed *forever* -- the playing field from 1980 and 1990 is gone for good.

This week, at the Web 2.0 conference, a high-profile executive at Google, Inc. (NASDAQ:GOOG), Marissa Mayer, talked about the key to success for YouTube. That is, the popular web site essentially made it very easy for users to post videos. (hey, isn't speed and ease-of-use a key value propositions of the Google search engine, as well?).

However, I think this is half right. After all, there are many sites that are basically YouTube look-alikes. Rather, another key reason for the huge success of YouTube is that it allowed easy uploading of copyrighted content. In other words, why wouldn't people want to view this stuff for free?

Now, with Google's ownership, the company realizes it needs to deal with potential copyright litigation. In fact, in the company's latest quarterly report, there is this eerie statement: "Adverse results in these lawsuits may include awards of damages and may also result in, or even compel, a change in our business practices, which could result in a loss of revenue for us or otherwise harm our business."

To deal with this, YouTube has cut deals with several media companies. However, there is no indication of what YouTube is paying for this.

Also, YouTube has been taking down videos. The problem then is: Doesn't the site get less attractive if there is not as much content?

With the extremely bright programmers at Google, it seems like the company could have built a super-fast video site. But, of course, Google decided to pay $1.65 billion for YouTube.

I think investors should get better explanation for the deal -- other than YouTube was a fast site.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Financial Statements.