Tuesday, 20 March 2007

PTO: P2P threatens national security

The U.S. Patent & Trademark Office apparently thought it wasn't in the headlines enough this month. On March 5, it issued a press release announcing a November 2006 report (1.22mb) which claims that P2P networks threaten national security. The logic is, at best, bad and, at worst, intentionally deceptive.

Information Week reports:

The report, which the patent office recently forwarded to the U.S. Department of Justice, states that peer-to-peer networks could manipulate sites so children violate copyright laws more frequently than adults. That could make children the target in most copyright lawsuits and, in turn, make those protecting their material appear antagonistic, according to the report.
Conclusion: Software is to blame when record companies act without social responsibility. The article continues:
File-sharing software also could be to blame for government workers who expose sensitive data and jeopardize national security after downloading free music on the job, the report states.

"There are documented incidents of P2P file sharing where Department of Defense sensitive documents have been found on non-U.S. computers with no protection against hostile intelligence," the Patent and Trademark Office explained in a statement.

The basis for this last statement is apparently a bullet point on page 22 of the report, which quotes an unnamed and undocumented source within the Department of Homeland Security as stating: "There are documented incidents of P2P file sharing where Department of Defense (DoD) sensitive documents have been found on non-US computers with no protection against hostile intelligence services." No documentation (or even a footnote) is provided in this report, however. The PTO report does not even state who within DHS made this claim or in what context.

Email me if you're interested in the betting pool on whether this "fact" was made up by DHS or by the PTO.

Via Bruce Schneier.

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Saturday, 6 January 2007

Celebrity Patents

David Friedman has a list of celebrity patents over at Ironic Sans. The inventors range from Zeppo Marx to Michael Jackson to Abraham Lincoln. My two favorites are Samuel Clemens' (Mark Twain) self-pasting scrap book (U.S. Patent No. 140,245) and George Lucas' design patent on Yoda (U.S. Patent No. D265,754).

Via IP Funny.

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Saturday, 30 September 2006

Don't Download This Song

"Weird Al" Yankovic has been a consistent commentator on pop culture for over two decades. He struck gold with a song from his new album, Straight Outta Lynwood, called "Don't Download This Song", which he has released as an electronic postcard video. Also, I just learned that Al is on MySpace.

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Monday, 31 July 2006

Labor Saving Device

To be patented, an invention must be novel, non-obvious, and useful. Contrary to popular belief, this does not mean that someone must be capable (or willing) to use it. In 1965, George and Charlotte Blonsky patented their "Apparatus for facilitating the birth of a child by centrifugal force" — U.S. Patent No. 3,216,423.

The entire patent is worth reading, as is Mark Abrahams' column in The Guardian ("Special Delivery"). The drawings submitted with the application are an education in themselves:

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Saturday, 8 July 2006

Swedish man selling copyright infringement liability insurance

Way back in October 2003, I got in a debate with Ernest Miller about whether liability insurance for copyright infringement for P2P users is a good idea. (See 1, 2.) That debate was interesting enough for the Insurance Journal to cover it ("Individual Copyright Infringement Insurance Prompts a Lawyerly Debate").

According to a C|Net article, a Swedish man recently started selling policies that insure against fines levied under Sweden's new antipiracy law.

Providing insurance to file-sharers is [Magnus] Braath's way of protesting Sweden's restrictions on downloading movie and music files. "I can't agree with this law," said Braath, who is from Uppsala, about 50 miles from Stockholm. "I wanted to make some sort of statement."

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Tuesday, 15 March 2005

I've been trolled

In the last 24 hours I received several emails relating to my last blog post, "Piracy Phishing." A couple have informed me (one politely, one hilariously) that I have been trolled. The "email" I received from "Jack Meihoff" of LiquidGeneration is a well-executed spoof. Run to your nearest Flash-enabled browser and check out this explanation of the gag.

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Saturday, 5 March 2005

Piracy Phishing

"Phishing" is a growing problem. In a cross between spam and scam, an email designed to look like a legitimate query from eBay, your bank, or someone else you trust purports to alert you to some problem and asks you to visit a web site, type in your name and password, and verify some information. The press has spent a lot of ink on this recently.

I just got caught a phish with an interesting twist. The email I received purports to be from the Motion Picture Association of America (MPAA). It accuses me of pirating movies and demands an unspecified payment. Then it provides a link which, I am told, will tell me the exact amount I owe to settle the claims of MPAA. The email is quoted below.

Unfortunately, the MPAA has never heard of the sender, Jack Meihoff, and it also states that it does not handle piracy cases in this manner. Also, the MAC address identified in the email is ficticious, and the domain in the link it points to (saynotopiracy.org) is registered to an entity called LiquidGeneration, Inc., incorporated in Illinois. The only individual person associated with its whois entry is one Bruce Freud. He can apparently be reached at:

Bruce Freud
LiquidGeneration, Inc.
200 E. Ohio, Suite 200
Chicago IL 60611
(312) 573-0123
bruce@liquidgeneration.com

I can find no mention of Jack Meihoff, Bruce Freud, or LiquidGeneration on MPAA's web site, and Google returns no hits for searches on mpaa.org for those keywords. Very likely, LiquidGeneration wants me to click on the link (which contains a long strong of random-looking characters to verify my email address in its spam database. The email originated from db1.liquidgeneration.com (65.61.160.116). Maybe it even has a payment mechanism and would ask me to type in a credit card number. If anyone out there actually cares, you are welcome to investigate the matter further. For my part, I will shortly send an email to the Federal Trade Commission and the California Attorney General with a link to this post.

The email follows:


From: Jack Meihoff
To: [my email address]
Subject: Motion Picture Association of America
Date: Sat, 5 Mar 2005 13:45:36 -0600

Illegal Movie Downloads
Motion Picture Association of America
Encino, California
3/5/2005 1:45:36 PM
Dan Fingerman
MAC ADDRESS: 00-11-2F-41-BD-21
Case No.: IS035HY36NURS0E8

Mr. Fingerman,It has been brought to our attention by John Smythe that you have been involved in the unauthorized downloading and transferring of licensed movies.

Federal laws mandate that you immediately cease and desist all illegal activities pertaining to movie theft. Further, you are required by law to pay all incurred penalties in conjunction with Amendment 34-C, officially passed on January 30, 2005.

In accordance with state jurisdictions, your failure to pay these penalties in full within 30 days of receipt of this notice will result in a warrant for your arrest. We are also required by law to inform you that a second offense will result in a minimum jail sentence of 90 days.

Penalties incurred in your particular case may be reviewed on our government Web site. All cases are deemed confidential. Penalties are assessed by each individual download, charged at a nonnegotiable rate of $1,200 per infraction. Click your specific case number (Case No.: IS035HY36NURS0E8 [link]) to view the total amount due or to dispute your case.

Sincerely,
Jack Meihoff Piracy AgentMotion Picture Association of America

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Saturday, 30 October 2004

Sony BMG Music to partner with Grokster?

This morning, SiliconValley.com posted a San Jose Mercury News article ("Sony ready to join music file-sharing") claiming that Andrew Lack, President of Sony BMG Music has been negotiating quietly with Grokster "for more than a year to hammer out a distribution agreement with the file-sharing networks that have allowed millions of people to illegally download copyrighted songs." Let us hope something productive comes from this — i.e., something useful and valuable for consumers that is not overhwelmed with DRM. If so, let us also hope it does not whither in the light of day. (Via GigaLaw Daily News)

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Wednesday, 6 October 2004

Interesting Patent Collection

A few months ago, I started compiling a collection of interesting patents. By interesting I mean patents that claim foundational inventions, that have funny drawings, that were obtained to prove a point, or that otherwise catch my fancy. I have some pretty good ones, and I am looking for more. I would appreciate suggestions from readers about interesting patents from any country.

Here are a few from the collection:

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Sunday, 19 September 2004

Ancient Trademarks

I just stumbled across this month-old news item in Payvand, describing an achaeological find of ancient trademarks: "Sassanids Used Commercial Labels."

The latest excavations at the northern gate of the Takht-e Suleiman historical site show that during the reign of the Sassanid dynasty (224–642 A.D.), Iranians used special labels on goods as a way of promoting their brands.

Since late July archeologists have been conducting concerted excavations in the site northwest of Iran. "These labels served different functions. On one of them, you could see two abstract figures from the Sassanid court, indicating the goods were dedicated to the royal family," said Yussef Moradi, head of the excavation team.

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Thursday, 26 August 2004

Olympic-sized trouble

The International Olympic Committee claims that President Bush has violated its trademark rules by using Olympic trademarks in his campaign messages. I have not seen the accused TV ad, but a still image at the Minneapolis Star Tribune site clearly shows a caption visible during at least some of the commercial: "Approved by President Bush and paid for by Bush Cheney '04, Inc." Says the Tribune: "The TV ad doesn't feature the five Olympic rings -- one of the world's most recognizable images -- but an announcer tells viewers that at "this Olympics, there will be two more free nations," referring to the U.S.- led invasions of Afghanistan and Iraq."

The mainstream American press also reports that the Iraqi soccer team is furious at being made pawns. The LA Times (free reg.) headline: "Iraq Olympians Say Bush Is Not on Their Team." The team made its feelings public a few days ago in a Sports Illustrated interview. Since then, the world press has picked up this story, too. The reader comments at Al Jezeera are as interesting as the journalists' coverage.

This post would hardly be complete without an unauthorized link to the official Athens 2004 Olympics site. Oh...and a deep link to its asinine hyperlink policy, which I am trying to violate in as many ways as possible. I have not followed the press or blog coverage of this issue very closely, but I will make a brief comment anyway. Rule #1 in the policy is, "Use the term ATHENS 2004 only, and no other term as the text referent" (emphasis original). This rule seems specifically designed to avoid the type of Googlehacking that branded President Bush a "miserable failure."

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Thursday, 19 August 2004

MGM v. Grokster affirmed

Right now I have nothing to add to what is being said on the 9th Circuit's affirmation [pdf] of MGM v. Grokster — except to recommend Ernest's comments, then Derek's Leftovers and Frank's link collection.

...And then let's raise our voices with a collective WOOHOO!!!

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Topics: Civil Liberties, Cyberlaw, IP, Technology

Tuesday, 10 August 2004

CBO releases report: "Copyright Issues in Digital Media"

The Congressional Budget Office (CBO) released a report today which analyzes digital copyright issues from an economic perspective: "Copyright Issues in Digital Media." (Via C|Net)

I have not had time to read the whole thing yet. Having only skimmed the summary and the first few sections, it seems that it could provide a good starting point for debates over new legislation. It is not as heavily laden with economic or legal terms as other analyses have been.

Oh, yeah...and I like the frame it created for the debate. From the summary:

  • Property rights and other elements of a regulatory regime for creative works should be regarded as instruments for allocating creative resources. Hence, existing copyright law should not be viewed as an absolute, inviolable set of rights to which either creators or consumers are entitled.
  • Revisions to copyright law should be made without regard to the vested interests of particular business and consumer groups. Instead, they should be assessed with regard to their consequences for efficiency in markets for creative works and other products.
  • Property rights are not free. For a system of property rights to be accepted and upheld, the costs of establishing and enforcing that regime must not exceed the eventual benefits from it.

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Topics: Civil Liberties, IP, Politics, Technology

Wednesday, 4 August 2004

Quotable in the news

Rob Pegoraro, the Washington Post's "Fast Forward" columnist, has a great quote in last Sunday's column, "TiVo vs. the Broadcast Flag Wavers." Discussing the broadcast flag's unintended blurring of the copyright sphere into the patent sphere, he lamented that TiVo had to ask Uncle Fed for permission to build a feature into the next version of its flagship product. Rob writes:

Huh? Permission? Doesn't the government's involvement in consumer electronics stop with making sure that a gadget doesn't jam your neighbor's reception or electrocute you? Since when do the feds get to vote on product designs? [...] The answer is, since last November, when the FCC voted to require manufacturers to support the "broadcast flag" system by July 1 of next year..., which brings us to TiVo's vaguely Soviet predicament.

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Sunday, 1 August 2004

Jib Jab and the nature of parody

The first shots have been fired on both sides of the Jib Jab controversy. The usual suspects have already weighed in via their blogs (see, e.g., Ernest and Andrew.) I am not ready to give a full analysis, but one early remark irks me enough to respond right now.

Commenting to the EFF's letter, which outlined a fair use argument based on parody, Chris Cohen seemed to say this argument was disingenuous. The EFF's letter stated:

While your view of Guthrie's "This Land is Your Land" as being predominantly about "the beauty of the American landscape" and "the disenfranchisement of the underclass" is interesting, most Americans think of the song as an iconic expression of the ideal of national unity. Jib Jab's parody addresses, among other things, the lack of national unity that characterizes our current political climate (ending with the optimistic hope that unity might be rediscovered). In short, "This Land" explores exactly the same themes as the Guthrie original, using the parodic device of contrast and juxtaposition to comment on the original.

Chris wrote: "Here's my beef with the parody argument though: it reeks of post hoc reasoning (after the fact) that I am inclined to think is a little over the top. What I mean is that I seriously doubt the JibJab guys were sitting around thinking this as they authored their video." Chris does not seem to understand that this is how the law works in every context, not just in copyright.

Any first year law student can recite a long list of legal conclusions are contingent upon a factual finding of what was in a person's head at a specified moment in the past. Most crimes have an intent element. Contracts are voidable if the parties were mistaken about what they agreed to. Identical actions have different legal consequences, depending on what neurons were firing. In IP, multiple damages are available if a wrongdoer acted willfully. Identical conduct, leading to identical injury, can lead to mere compensation or a jackpot windfall, if the plaintiff can "prove" — post hoc — what the defendant was thinking at a given moment in time.

Chris would have artists live inside MRI tubes on the off-chance that one of them must later prove the time and order that his neurons fired. Failing this (and a few decades' more research before we can map neuron activity to a specific articulation of intent), Chris's argument would negate the parody defense entirely.

What proof would satisfy Chris's objection? What if the Jib Jab brothers had written a letter stating their intent and mailed it to themselves before publishing their parody? Producing the unopened, postmarked envelope would solve part of this problem, but not the whole thing. (What if they lied in the letter?) Should we really require every artist to do this before writing every song? Sounds rather burdensome to me.

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Wednesday, 28 July 2004

Arlo uppercuts Jib Jab

The latest Flash cartoon floating around is a hilarious parody of the U.S. Presidential campaign. The animated creation of Jib Jab stars President Bush and John Kerry, dancing to the tune of Arlo Guthrie's classic "This Land Is Your Land" and calling each other names like "right-wing nutjob" and "liberal sissy."

Despite the dangers (see: Idiot's guide to combatting satire), the company that owns the rights to Arlo's song has sicced its lawyers on Jib Jab. (See this CNN report.) President Bush learned first-hand in the last election that nearly any attempt to suppress Internet-based satire will fail spectacularly. Even if you have forgotten the incident, you probably remember Bush's (in)famous quote: "There ought to be limits to freedom."



CORRECTION (28 Aug.): Two days after posting this, I realized that Woody Guthrie — not his son, Arlo — wrote "This Land Is Your Land." I meant to post a correction but, unfortunately, managed to leave it in "save as draft" limbo. Yesterday, a concerned neighbor of Arlo's emailed me to set me straight on the facts. She also said that Arlo was unhappy with the record company's actions and that he thought his father would be, too. Then she pointed me to this link. I appreciate it when people constructively (and politely!) point out my mistakes.

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Monday, 17 May 2004

Hasta la vista, bobble

The governor's goon squad (his film company, actually) filed suit today against Ohio Discount Merchandise, the company that created the collectible Arnold Schwarzenegger bobbing head doll. I have little time to write about this tonight, but I will predict right now that this will be this decade's landmark publicity/free speech case. I just hope Judge Kozinski has a chance to stretch before he goes to the mat.

As a bodybuilder and movie star (i.e., a member of the private sector), Arnold had a strong claim that his persona and likeness were worth millions and protectible. As a governor, however, the First Amendment demands that he relinquish most of the control he used to enjoy. The doll at issue is obviously a parody, and it is part of a series that depicts public figures — from Tom Daschle to Abraham Lincoln to Al Capone to Jesus. This lies somewhere between a Three Stooges T-shirt and Vanna White, circa 2012.

For ongoing news coverage, Google is your best bet. For the earliest round of stories, see the Business Wire, New York Times, and LA Times (editorial).

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Topics: Civil Liberties, IP, Politics

Thursday, 1 April 2004

Tossing Amazon's cookies

I just heard about Amazon's new patent (No. 6,714,926) claiming a method for using browser cookies. (Via LawGeek) A quick reading of the claims puts me close to Jason's position, thinking that there must be a ton of prior art that would invalidate it. But that is not the most amazing fact. I have not studied the prosecution history, but Jason says that the inventor cited only one reference to the patent examiner — that is, he told the examiner that he knew of only one publication before his priority date in February 1999 that described the use of cookies.

For those not familiar with PTO Rule 56, it requires patent applicants to disclose all sorts of juicy information to the examiner — but only if they have actual knowledge of that information. I find it difficult to believe that a programmer working for Amazon would not have actual knowledge of more than one paper written about browser cookies. Anyone accused of infringing this patent would have a tailor-made inequitable conduct defense.

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Thursday, 11 March 2004

Satan, meet Lucifer. Lucifer, Satan.

"Yes, Microsoft did introduce BayStar to SCO." So admits a representative of BayStar. The tech world was abuzz for a week after a leaked memo linked the two Linux enemies. After SCO denied the then-rumor, BayStar now apparently admits the link.

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Wednesday, 25 February 2004

IP practitioners and the public interest

This past month — my first as an IP attorney — has uncovered many wonderful things for me. The most wonderful has been the attitude of several attorneys that it has been my pleasure to work with. Although none of them have ever (to my knowledge) been an activist or "copyfighter," they seem genuinely concerned for the public interest in the area of IP law.

Like all good patent litigators, they avidly watch the Federal Circuit for interesting decisions. However, these folks occassionally cheer when the court limits the scope of patent law in ways that limit the rights of patent holders and expand the public domain. They cheer notwithstanding that such decisions may ultimately mean less money in their own pockets. When I described the size of statutory damges authorized by the Copyright Act, one partner refused to believe me until I showed him a copy of § 504. Even then, his reaction was, "Hmmm...what did Disney pay to get that?"

There are many good reasons why I chose to join this firm.

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Topics: Civil Liberties, IP, Politics

Thursday, 12 February 2004

Porn vs. Pirates

The New York Times ran an interesting article on Sunday that I just got around to reading today ("The Pornography Industry vs. Digital Pirates"). It compares the pornography industry's mature response to copyright infringement online (20 years in the making) to the recording industry's reactionary response.

Music executives say their campaign of lawsuits has been successful. They say they have spread the word that downloading free music infringes on copyrights and that there could be consequences for large-scale file sharers.

But the pornography industry has been dealing with Internet copyright issues since the 1980's. By comparison, the movie and music businesses are relative newcomers. [Tom Hymes, the editor of AVNOnline, a business magazine for the industry] said companies in his industry had come to realize that suing consumers and promoting "draconian laws" were not the answer. "No law written can stem the tide," he said. And so, he said, companies are seeking ways to live with the technologies that threaten them and are trying to turn them to their advantage.

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Topics: IP

Monday, 2 February 2004

Superhero craziness

Jason over at LawGeek takes a critical look at trademark co-ownership: "Marvel & DC Claim "Superhero" as Trademark." As usual, he hits the nail on the head.

This post gives me an opportunity to ask a question I have had rolling around in my head for a while. When, in the history of copyrights, trademarks, trade secrets, patents, and the like, did people begin to think of these things as a unified whole — as intellectual property? When did these intangible things cease to be limited monopolies and start to be monetizable assets? Jason points out that Marvel and DC are the two major competitors in the field of comic book publishing, and the letter they apparently sent (together) to the author of "Super Hero Happy Hour" makes it obvious that they think of their trademarks as revenue sources — not a means by which they can differentiate themselves from one another. The trademark itself is an asset, not the goodwill associated with it.

I have studied IP seriously for around five years now, and I have become increasingly frustrated by my lack of knowledge of the economic history of the field. My studies have focused on the economic theories underlying IP in general, the current state of the law, and the history of major amendments to the law. What I never got in school was the economic history of intangible assets. I would sincerely appreciate a pointer to a good book (or group of books) that covers this topic.

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Saturday, 31 January 2004

The Eagle is Grounded

What does intellectual property law have to do with shipping? Read "The Eagle is Grounded" in this month's Wired Magazine to find out. (Via Furdlog)

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Monday, 26 January 2004

NYT on IP politics & culture

Last Sunday's New York Times Magazine had an interesting article on the politics and culture surrounding IP: "The Tyranny of Copyright?." Here is a taste of the article (links added):

Siva Vaidhyanathan, a media scholar at New York University, calls anecdotes like [the Diebold/electronic civil disobedience affair] "copyright horror stories," and there have been a growing number of them over the past few years. Once a dry and seemingly mechanical area of the American legal system, intellectual property law can now be found at the center of major disputes in the arts, sciences and — as in the Diebold case — politics. Recent cases have involved everything from attempts to force the Girl Scouts to pay royalties for singing songs around campfires to the infringement suit brought by the estate of Margaret Mitchell against the publishers of Alice Randall's book "The Wind Done Gone" (which tells the story of Mitchell's "Gone With the Wind" from a slave's perspective) to corporations like Celera Genomics filing for patents for human genes. The most publicized development came in September, when the Recording Industry Association of America began suing music downloaders for copyright infringement, reaching out-of-court settlements for thousands of dollars with defendants as young as 12. And in November, a group of independent film producers went to court to fight a ban, imposed this year by the Motion Picture Association of America, on sending DVD's to those who vote for annual film awards.

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Topics: IP

Wednesday, 21 January 2004

Microsoft apologizes for Mikerowesoft row

C|Net reported yesterday that Microsoft apologized for threatening 18-year old Canuck Mike Rowe with a lawsuit ("Microsoft: We took MikeRoweSoft too seriously"). The young entrepreneur was using the domain Mikerowesoft.com in his part-time web design business. A company spokesman said, "We appreciate that Mike Rowe is a young entrepreneur who came up with a creative domain name. We take our trademark seriously, but maybe a little too seriously in this case."

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Topics: IP

Tuesday, 6 January 2004

Diebold/DMCA summary & analysis

Mary Bridges of the Berkman Center has published "Diebold v. the Bloggers." The essay is a nice summary and analysis of the DMCA's darkest days to date. (Via A Copyfighter's Musings)

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Monday, 5 January 2004

Mattel v. Walking Mountain Productions as a teaching case

This morning I finally got a chance to read the 9th Circuit's decision in Mattel v. Walking Mountain Productions [pdf], handed down last week. The decision affirms a District Court's grant of summary judgment to Tom Forsythe, the man selling photos of nude Barbie dolls being attacked by kitchen appliances. I think the 9th Circuit's opinion will make an excellent teaching tool in law school courses.

When I took courses on Copyright and Trademarks & Unfair Competition, my casebooks included a few cases that discussed the First Amendment, but I never felt like any case tied up all the loose ends for me. I think Mattel does this. The court did a nice job explaining the intersections between copyright, trademark, trade dress, the First Amendment, and fair use. However, it does not seem to have assumed that many laymen would read its opinion, so it did not spend an excessive amount of ink reasoning from first principles.

Despite its sympathy for free expression interests (which ultimately won the day), the court was not unmindful of the business realities in this case. It began its analysis where Mattel's real interest lay — the market value of its Barbie brand and the potential future value of Barbie dolls and authorized derivative works. However, after detailing the small income that Forsythe realized from his parodic photographs, the court gave us this gem: "Purchases by Mattel investigators comprised at least half of Forsythe's total sales." (page 5, note 3)

The court sprinkled its opinion with language that strongly reinforced the freedom of expression concerns at stake in a case like this. For example, on Mattel's copyright claim:

However one may feel about [Forsythe's] message — whether he is wrong or right, whether his methods are powerful or banal — his photographs parody Barbie and everything Mattel's doll has come to signify. Undoubtedly, one could make similar statements through other means about society, gender roles, sexuality, and perhaps even social class. But Barbie, and all the associations she has acquired through Mattel's impressive marketing success, conveys these messages in a particular way that is ripe for social comment. (page 15)
This was immediately followed by footnote 7:
Mattel strongly argues that Forsythe's work is not parody because he could have made his statements about consumerism, gender roles, and sexuality without using Barbie. Acceptance of this argument would severely and unacceptably limit the definition of parody. We do not make judgments about what objects an artist should choose for their art. For example, in [Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994)], the Supreme Court found that hip-hop band 2-Live Crew's rendition of "Pretty Woman" was a parody because it targeted the original song and commented "on the naivete of the original of an earlier day, as a rejection of its sentiment that ignores the ugliness of street life and the debasement that it signifies." [Campbell,] 510 U.S. at 583. No doubt, 2-Live Crew could have chosen another song to make such a statement. Parody only requires that "the plaintiff's copyrighted work is at least in part the target of the defendant's satire," not that the plaintiff's work be the irreplaceable object for its form of social commentary. [Dr. Suess Enters., L.P. v. Penguin Books USA, Inc., 109 F.3d 1394, 1400 (9th Cir. 1997).]

On the trademark infringement claim:

As we recently recognized in [Mattel, Inc. v. MCA Records, Inc. [pdf], 296 F.3d 894 (9th Cir. 2002), cert. denied, 123 S. Ct. 993 (2003)], however, when marks transcend their identifying purpose and enter public discourse and become an integral part of our vocabulary, they assume a role outside the bounds of trademark law. Where a mark assumes such cultural significance, First Amendment protections come into play. In these situations, the trademark owner does not have the right to control public discourse whenever the public imbues his mark with a meaning beyond its source-identifying function. [Internal quotation marks and citations ommitted.]

The court spent nearly a page distinguishing fair use from its First Amendment analysis on the trade dress claim (following the 2d Circuit's precedent in Rogers v. Grimaldi [pdf], 875 F.2d 994 (2d Cir. 1989)), in a long footnote (#14) on pages 20-21. I have never seen a court spend that much time on the fair use/First Amendment distinction. It was especially helpful in this case, after the court had analyzed the issues in light of Rogers:
The Rogers balancing test requires courts to construe the Lanham Act "to apply to artistic works only where the public interest in avoiding consumer confusion outweighs the public interest in free expression." Rogers, 875 F.2d at 999 (emphasis added [by the Mattel court]). Accordingly, the Rogers test prohibits application of the Lanham Act to titles of artistic works unless the title "has no artistic relevance to the underlying work whatsoever or, if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work." [Some internal citations omitted]

The court did a simiarly good job explaining the trademark dilution and trade dress infringement issues. I will not belabor my point here; the examples above show how good a teaching case this would be. The only issues that the court treated summarily were Mattel's state law claims, dismissing them on First Amendment grounds for the reasons it stated in other sections.

The major downside to using this case as a teaching tool is its length — forty pages. Fortunately, the last seven pages deal with procedural issues and attorney fees under the copyright and Lanham acts. These sections could easily be separated from the rest when discussing free expression issues.

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Norweigan authorities drop DeCSS case

Mary of bIPlog reports that the Norweigan prosecutors on the DVD Jon case have decided not to appeal his second acquittal. This is wonderful news.

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Sunday, 4 January 2004

Obituary: Steven Bazerman, IP lawyer

The New York Times reports sad passing of Steven Bazerman — the erstwhile IP lawyer whose work pioneered many aspects of the law concerning trade dress and secondary meaning. Among his accomplishments:

Companies today understand the value of such details as the shape of a bottle or the position of a label on a pair of pants. But the idea that these details could be protected under trademark law was largely untested until Mr. Bazerman began taking product imitators to court in the 1980's.

His legal work helped to build a body of case law around "secondary meaning," which Mr. Bazerman said could include the unwritten, unspoken signals about a product's origin that are given off by its appearance.
[…]
Mr. Bazerman [used] consumer surveys to his advantage in…lawsuits, most notably in a case in which LeSportsac sued Kmart in the Southern District of New York for selling a line of bags that looked like LeSportsac's highly successful ripstop nylon luggage and handbags. The Kmart bags did not have labels suggesting they came from LeSportsac, but consumer surveys by both companies showed that many people could not distinguish the origin of either bag. … Today some consider the LeSportsac case the primary case in the development of "trade dress protection" under the Lanham Act.

Via Furdlog

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Friday, 2 January 2004

Trademarks & memory

How well does a well-marketed brand "stick" in the minds of consumers? Monochrom, an Austrian group describing itself as "an art-technology-philosophy group of basket weaving enthusiasts and theory do-it-yourselfers," did an experiment. Twenty-five people were asked to draw, from memory, a dozen logos for popular brands. The results are, if nothing else, entertaining.

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Wednesday, 24 December 2003

Commence lobbying

Evan Hansen writes on C|Net: "Will DVD acquittal mean tougher copyright laws?" His answer is yes.

Even before [Norway's prosecution of DVD-Jon] was filed, however, entertainment industry lobbyists had been pressing lawmakers in that country and elsewhere to enact tougher copyright laws, modeled on controversial U.S. legislation that makes it easier for authorities to win prison terms for people who crack encryption schemes or distribute cracking tools. If enacted, proposed legislation in Europe, Canada, Australia and Central and South America would soon hand entertainment companies similar weapons against people caught tinkering with anticopying software.
[…]
In some ways, the Johansen ruling offers a simple reminder that different countries have different laws, and companies can't rely on protections established in one region to protect them elsewhere. But the case also points to an aggressive drive in the entertainment industry to win greater global conformity in copyright law, modeled on the DMCA.
[…]
As Norway illustrates, however, the process can move slowly, leaving the entertainment industry exposed to weaker copyright rules in regions where DMCA-like laws have not yet been passed.
Via Furdlog.

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Monday, 22 December 2003

DVD-Jon acquitted — again!

The Norweigan newspaper Aftenposten reports that Jon Johansen has been acquitted — again ("DVD-Jon wins new legal victory"). He was being tried for copyright infringement a second time (by an appellate court, this time) for his role in creating DeCSS. The power brokers in the movie industry are, of course, "disappointed."

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Friday, 19 December 2003

Dutch high court: Kazaa not liable

The Dutch supreme court has ruled that the makers of Kazaa are not liable for illegal use of the software by users. Reuters UK reports ("Dutch Court Throws Out Attempt to Control Kazaa"):

The decision by the Dutch court, the highest European body yet to rule on file-sharing software, means that the developers of the software cannot be held liable for how individuals use it. It does not address issues over individuals' use of such networks. […] The Supreme Court rejected demands by Buma Stemra, the Dutch royalties collection society, that distribution of Kazaa cease and that future versions be modified so that copyrighted materials cannot be exchanged over the network, lawyers representing Kazaa said.
It looks like Matt Oppenheim, a senior vice president of RIAA, has to eat his words from March 2002. Describing the Dutch appeals court action underlying yesterday's supreme court decision, he said: "I don't think this summary decision…will have any more impact than it would have from any other country that doesn't enforce copyright law consistent with the United States." Matt, perhaps you can tell me if I spelled "jingo" correctly.

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Wednesday, 17 December 2003

Canadian FUD

The last five days have brought big copyright news from the Great White North — allegedly also known as "Canada." First, the Canadian Copyright Board issued a decision levying fees on many new media and interpreting Canadian law to permit downloading (but not uploading) of copyrighted works via P2P networks. Then the National Post reported that the Canadian Recording Industry Association (CRIA) might soon begin suing file sharers, ala RIAA.

During this time, I have been reading up on CRIA's chief, Brian Robertson. While he is reluctant to discuss CRIA's lawsuit plans, he loves to talk about the number 30. That is the percentage of revenue he claims the Canadian recording industry has lost due to file sharing. As far as I can tell, he has never cited any source for this figure, and the next-highest estimate is 23% — and many estimates are even lower. Sources: CRIA press release, Globe & Mail, National Post, LA Times. Additionally, CRIA (like RIAA) fails to acknowledge that the recent recession might have had a negative effect on music sales equal or greater to the effect of file sharing.

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Tuesday, 16 December 2003

DTM :<| Gets Creative

Creative Commons LicenseI am now offering DTM :<| under a Creative Commons license! Which one? Attribution, noncommercial use, and share alike.

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Microsoft would prevent customers from considering OS options

Australian IT reports Microsoft's vehement opposition to a new Australian Capital Territory statute ("Microsoft steams over open source Bill").

Microsoft labelled the legislation "anti-competitive", and warned that it could damage the Australian software industry. … "The ACT decision is of concern because it affects all software companies," [a spokeswoman for Microsoft] said. "Any legislation that seeks to mandate preferences for one platform over another can limit choice and can be anti-competitive and bad for the Australian software industry as a whole."
The irony? The law merely "calls for government to 'consider' the purchase of open source software in procurement plans. The original version of the Bill would have required the ACT to 'prefer' open source software." I suppose that if you are Microsoft, even admitting the existence of open source alternatives can be bad.

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CRIA Follows Big Brother's Lead

Both Big Brothers, actually. The National Post reports ("Music sharers to face lawsuits"):

The millions of Canadians who share music files on the Internet should be prepared for the possibility of facing a lawsuit early in the new year, the head of the Canadian Recording Industry Association said yesterday. … [Brian] Robertson would not specify how many lawsuits would be filed, but he did say the legal action would be similar to the lawsuits filed in the United States. For some time, CRIA has been using software that tracks and identifies users involved in trading free music files. "Users should be aware that using file-sharing services is a very public process," Mr. Robertson said.
Since Canada has no analog to the Digital Millennium Copyright Act (DMCA), it will be interesting to see whether CRIA's tracking software is anywhere near as effective as RIAA's subpoenas. Neither one, it cannot be pointed out often enough, has any judicial oversight. And both are ripe for abuse.

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Network Effects of Creative Commoning

Jason Schultz over at LawGeek has an excellent piece on Creative Commons licensing: "The Network Effects of Creative Commoning: Why Silver Will Eventually Be More Valuable Than Gold."

Enter the brilliance of the CC sampling license. Say you're an up-and-coming artist looking for a backbeat track to sample for your new song. You see two options: (1) a massive library of historically copyrighted works (All Rights Reserved) and (2) a much smaller but growing library of CC licensed works (Some Rights Reserved But Always Ok To Sample). […] Option 1 is like a pot of gold with scorpions in it. Option 2 is like a pot of silver.

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Sunday, 7 December 2003

Borland on P2P

John Borland of C|Net wrote an interesting column last Thursday, asking whether RIAA's lawsuits against P2P users were having the desired deterrant effect ("RIAA lawsuits yield mixed results"). "At the core of the RIAA's strategy has been the attempt to persuade as many people as possible to stop trading copyrighted files online. This appears to be working in at least some groups, but the evidence is mixed at best." That same day, he also wrote a good summary of the compulsory licensing discussion in Canada: "Should ISP subscribers pay for P2P?"

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Friday, 5 December 2003

SCO's open letter on copyrights

Yesterday, SCO President & CEO Darl McBride released an Open Letter on Copyrights to defend his company's position in ongoing litigation to the public. Pamela Jones over at GrokLaw called it "Darl McBride's 'Greed is Good' and it's constitutional too manifesto."

He goes to great lengths to portray the Free Software Foundation and others as cranks:

[T]here is a group of software developers in the United States, and other parts of the world, that do not believe in the approach to copyright protection mandated by Congress. In the past 20 years, the Free Software Foundation and others in the Open Source software movement have set out to actively and intentionally undermine the U.S. and European systems of copyrights and patents. Leaders of the FSF have spent great efforts, written numerous articles and sometimes enforced the provisions of the GPL as part of a deeply held belief in the need to undermine or eliminate software patent and copyright laws.
Then he introduces SCO's view:
At SCO we take the opposite position. SCO believes that copyright and patent laws adopted by the United States Congress and the European Union are critical to the further growth and development of the $186 billion global software industry, and to the technology business in general.
McBride fails to realize that the GNU Public License depends on copyright law for its very existence. Lawrence Lessig had perhaps the most concise response to this point (and the rest of his response is worth reading, too):
Despite RMS's aversion to the term, the GPL trades on a property right that the laws of the US and EU grant "authors" for their creative work. A property right means that the owner of the right has the right to do with his property whatever he wishes, consistent with the laws of the land. If he chooses to give his property away, that does not make it any less a property right. If he chooses to sell it for $1,000,000, that doesn't make it any less a property right. And if he chooses to license it on the condition that source code be made free, that doesn't make it any less a property right.

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Google files DJ action against American Blind

I love it when companies are willing to spend money to clarify the law in areas where it is murky. Playboy used to be great in this area, filing many suits that pushed copyright and trademark law into the digital age at a time when the Internet had barely entered the popular lexicon. Many of those cases went all the way to judgment and appeal — which gave something back to the public, in exchange for the judicial resources that Playboy consumed.

Now Google has started. Last week the search company filed a declaratory judgment action against American Blind & Wallpaper Factory, asking the U.S. District Court in San José to clarify its rights. American Blind (among many others) has complained recently to Google about Google's sale of keywords to its advertisers. Google has been fairly responsive about such trademark requests, but AB and others frequently claim to have rights in words and phrases that do not precisely match their registered or common law trademarks. They do have some trademark-like rights in such terms, but it is often difficult to discern exactly what they are. This case should help.

Thanks go to GrepLaw for the heads up.

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Monday, 1 December 2003

Summary of Assessment Technologies v. WIREdata

Elisabeth Rader has a summary of the 7th Circuit's decision in Assessment Technologies v. WIREdata. I will not get a chance to read the full text of the decision until next weekend, but it promises to be quite interesting. (Thanks go to Donna at Copyfight for the link.)

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Friday, 28 November 2003

P2P & anonymity

Four years ago I wrote my senior thesis at Yale, The Futures of e-Politics, in which I complimented several Congressmen and Senators for having done well to educate themselves on digital communications technologies in a relatively short time. Today I may recant that compliment.

I just got around to reading C|Net's coverage of a letter sent last week from several Senators to the executives of several P2P companies. The lawmakers asked the companies to regulate themselves — i.e., to censor their networks for pornography and copyrighted material. C|Net reports (Senators ask P2P companies to police themselves) a quote from Senator Lindsey Graham (R-N.C.) that I did not see reported elsewhere. In a "statement" accompanying the letter, he said (emphasis added):

Purveyors of peer-to-peer technology have a legal and moral obligation to conform to copyright laws, and end the pornographic trade over these networks. These programs expose our children to sexually explicit materials and provide an anonymous venue for child pornographers to hide behind the veil of technology.
If we have learned anything from RIAA this year, it is that P2P activity is not anonymous. If you are going to make national policy, or at least pretend to, it is not unreasonable to ask that you pay attention.

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Thursday, 27 November 2003

Worm infects Diebold ATMs

Diebold, the very same company being raked over hot coals for its authoritarian response to criticism, now has the ignoble honor of being the first ATM manufacturer to have its machines infected with a worm. (New Scientist: "Cash machines infected with worm")

The controversy over Diebold's electronic voting machines is no longer theoretical (if it ever was). This is a real-world, already-happened, no-excuses problem affecting a Diebold product very similar to its voting machines. How could this happen? Simple — Diebold's ATMs run Windows XP.

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Diebold backs down

Diebold filed court papers on Monday, stating that it would not file copyright infringement suits against people who hosted and linked to the infamous cache of damaging documents. Kudos go to the Stanford Cyberlaw Clinic, which represented two Swarthmore students in their lawsuit against the voting machine manufacturer. Too bad Rule 11 does not apply to DMCA notice-and-takedown letters. You have my best wishes if you sue Diebold under anti-SLAPP laws and for intentional infliction of emotional distress.

It has been a busy week for me, and the press has shamefully ignored this development for several days, so I almost missed it. Big thanks go to Siva for mentioning it on Tuesday.

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Monday, 17 November 2003

File sharing zeitgeist

The Contra Costa Times ran an interesting, yet unsurprising, AP story on Saturday (Music industry mines data from downloads). In a nutshell: "Despite their legal blitzkrieg to stop online song-swapping, many music labels are benefiting from — and paying for — intelligence on the latest trends in Internet trading." That is right, P2P networks are the best tool yet-invented for gathering realtime data on music consumer tastes. By tracking the number of downloads for particular artists and particular songs and the rough geographical distribution of those downloads, the industry can better target its marketing and products.

I would accuse RIAA of batting both ways (like I did H&R Block this morning), but this phenomenon raises an issue more important than copyright law. For the first time in the history of human social interaction, we have the technology to gather realtime information on the thoughts of a cross-section of a nation. P2P file sharing is a specific example, and the Google Zeitgeist is a more general one.

Zeitgeist means "the general intellectual, moral, and cultural climate of an era," according to Webster's Dictionary.

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Sunday, 16 November 2003

Cheap tricks & Primer on PC Audio

Ever since the copyright industry first made noise about the dangers of digital distribution and the need for DRM, pundits have pointed out that "downstream" copying (capturing sound in an analog state, en route from its storage medium to a computer's speakers) could eviscerate any DRM scheme. Today I got curious about just how easy and cheap downstream really is. High Criteria's product, Total Recorder, comes highly recommended for this task, and it costs a mere $11.95. That's it — twelve bucks to foil a multimillion-dollar DRM regime. I also found the company's excellent Primer on PC Audio. This is a good introduction for anyone interested in digital audio technology but without a lot of technical knowledge.

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Saturday, 15 November 2003

When tangible is intangible

I just learned of a fascinating post in Julian Dibbell's blog, Play Money. (Article: On the Nature of the Intangible: A Dialogue) Thanks go to Donna Wentworth of Copyfight for mentioning it in her coverage of The State of Play conference.

The article contains the transcript of a brief phone call the author placed to PayPal to inquire about his rights under that company's Seller Protection Policy. The policy apparently covers only tangible items — which, in PayPal's reasoning, the seller can prove that he has shipped to a buyer by providing PayPal with a tracking number. The policy does not cover intangible items because no such proof can be provided.

The author was asking about a virtual item from an online game. PayPal told him that virtual items are not covered because they cannot be shipped. Tickets to a football game, on the other hand, would be covered. The tickets, PayPal reasons, are a physical item that can be shipped. The company fails to apply the same logic if the seller writes down the password to an online account on a piece of paper and ships that paper to the buyer in the same manner that he would ship the football tickets. The assets underlying both sales are equally intangible — the right to be admitted to the football game and the right to be admitted to a secured computer. PayPal, unfortunately, cannot see the parallel. One wonders what PayPal would do if the seller advertised the sale of a piece of paper with several characters written on it and offered — as a free gift, with purchase — to transfer all rights to an online account.

Read the full transcript here.

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Sunday, 9 November 2003

Update: Dictionaries as social commentary

A few minutes after publishing my last piece, I saw this article in today's New York Times: Assisted Living to Viagra: A Dictionary Nod to Aging. It bolsters my argument about dictionaries being a lagging bellwether of commentary and social trends. The article quotes John M. Morse, the president and publisher of Merriam-Webster:

The words being added to the dictionary are a fascinating barometer of what's going on in our society. … When I read the tea leaves in the new dictionary, what I see is, yes, the Internet is the biggest thing in the world. But aging baby boomers may be the second-biggest thing. … What's in the dictionary is important beyond just looking up words. It's a sign — or warning — for advertisers and even politicians who have to appeal to the public. Significant changes in society create significant changes in the lexicon. And a dictionary is telling us where change is taking place.

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McJam over McJob

James Grimmelmann reports on LawMeme that McDonald's is in a tiff over Merriam-Webster's (MW) inclusion of McJobs in the new edition of its Collegiate Dictionary. (Article: Tales of Trademark Abuse: McDonald's Goes After the Dictionary?) The Associated Press (via MSNBC) reports MW's definition: "low paying and dead-end work." (Article: McDonald’s balks at 'McJob' entry) AP writes, "In an open letter to Merriam-Webster, McDonald’s CEO Jim Cantalupo said the term is 'an inaccurate description of restaurant employment' and 'a slap in the face to the 12 million men and women' who work in the restaurant industry." The company's lawyers also noticed the similarity between McJob and McJobs — the trademarked name of McDonald's training program for mentally- and physically-challenged people. James comments, "McDonald's wants to censor the dictionary in order to protect their brand, and they'll use trademarks to do it." He is right, of course, but I am not sure it matters.

Federal trademark law is governed by the Lanham Act. What part of the law might MW have violated? Section 43 of the Act (codified in 15 U.S.C. § 1125) is the chief provision establishing civil liability in the trademark context. While McDonald's arguments in this area may rise above the Rule 11 bar, they are probably not winners in court.

Section 43(a) prohibits one from using a word or other mark "in commerce" in a manner that constitutes a "false designation of origin…or [a] false or misleading representation of fact." This false or misleading usage must be "likely to cause confusion" as to the origin of a product or as to some connection to a third party. Using a mark in "commercial advertising" that misrepresents the nature or characteristics of a product can also trigger civil liability. This is known as the infringement section of the Lanham Act, and it is most often applied where Competitor 1 sells a product under a mark that is confusingly similar to Competitor 2's mark. See Polaroid Corp. v. Polarad Elect. Corp., 287 F.2d 492 (2d Cir. 1961). This tort is known as trademark infringement, and § 43(a) provides both a cause of action and a right of action for the owner of the mark (Competitor 2, in my example) to bring an action in federal court.

Did MW commit trademark infringement? There has been no suggestion that MW used the word McJob in any advertisement, to designate the origin of its dictionary, or to make any representation about the dictionary's contents. Can any reasonable argument be made that MW's inclusion of McJob in the dictionary suggests any kind of association, sponsorship, or approval by McDonald's? If so, I would love to hear it. First, the word is only one of approximately ten thousand new words added in the new edition — in addition to the tens of thousands of words already there from prior editions. It might be different if MW had added only a handful of new terms or placed McJob on the dust jacket, as a pithy excerpt designed to market the book. Second, MW's dictionaries contain a host of words that match registered trademarks precisely, such as Xerox, Teflon, and Polaroid. All of these entries mention the relevant trademarks, then define these words in generic terms — the antithesis of what a trademark owner would want. Xerox Corp., for example, is famous for buying advertisements and sending letters by the bushel, urging people to use its famous mark only as a modifier for its brand, not as a generic word. Meanwhile, McDonald's is objecting to a word that is merely similar and not identical to its trademark. The owners of any of those other marks could make a stronger argument than McDonald's can.

However, none of the companies owning these marks are complaining about their inclusion in the dictionary. Trademark law recognizes that some types of speech and writing are socially useful — especially expression that is at the heart of the First Amendment, such as commentary and satire. Dictionaries fall in this category because they disseminate knowledge more than any other type of reference work, and they provide us with the means of communicating intelligibly. Without dictionaries, there would be no standardization in language, and the volume of core First-Amendment activity would be reduced. Such important uses of language are given a wide berth in trademark law.

The other major provision of § 43 is subsection (c), entitled "Remedies for dilution of famous marks." The principal function of trademarks is to designate the origin of products in commerce, so marks become more valuable as they become more well-known. Additionally, the more "distinctive" a mark is, the more it does to distinguish the products to which it is attached from competing products. Therefore, it makes sense that the law would accord more protection to marks that are both famous and distinctive than to marks that are only one or neither. Section 43(c) therefore requires a trademark to be "famous" and that someone use the mark in a manner that "causes dilution of [the mark's] distinctive quality." When these conditions are satisified, the person using the mark without permission (Competitor 1, in my example above) would be liable for trademark dilution.

Few trademarks are more famous than McDonald's McX family of marks, where X can be replaced by many different words. The company has spent enormous sums on marketing over several decades to gain that recognition. The marks are so famous that appending "Mc" to nearly any word connotes the qualities that we generally attribute to McDonald's restaurants. The association between McX and the homogenization of culture and commerce is firmly embedded in the American zeitgeist. McHouses fill cookie-cutter subdivisions typified by Levittown. McMusic is the predictable tunes played by the "boy bands" of the late 1990s.

Thus, McDonald's can establish the "famous" element of a trademark dilution claim. Ironically, however, that fame works against the company because of the equally-famous association between McX and homogenization — notwithstanding that such usage is without McDonald's consent. The public has, over many years, infused McX with a meaning entirely unrelated to the offerings on a restaurant menu. Many acts of dilution by millions of people over many years have impaired McX's ability to differentiate McDonald's entrees from those of, say, Burger King. MW's inclusion of McJob in its new dictionary causes, if anything, only an infinitesimal amount of marginal dilution. As a lexicographer, MW merely reports dilution that has already occurred in American English.

As a side note, I should note that McDonald's might also make an argument about the "tarnishment" of its trademark. MW's definition of McJob is unflattering, and it suggests that McDonald's restaurants' employees are miserable. The law of large numbers suggests that this cannot be true for each of McDonald's 400,000+ employees. However, the tarnishment argument falls to the same rebuttal as the dilution argument. MW is a lexicographer and merely reports any tarnishment that may have occurred over time, as millions of people have spoken or written McJob with the reported definition. Furthermore, the definition is not libelous of McDonald's as a company, nor of any particular employee (because no particular employee is identifiable in the definition). Rather, the definition remains a form of reporting on a public controversy and therefore embodies several activities at the core of First-Amendment protection.

The definition "low paying and dead-end work" shows the commentary-laden meaning that the public has already attached to McX. Unfortunately for McDonald's, that meaning is wrapped up in the controversial economics and politics of globalization. The First Amendment protects political speech more zealously than any other type of speech, and strong trademarks must often yield to free-speech interests in the realm of public debate. As James Grimmelmann noted, McDonald's is trying to remove a word from the dictionary and is using trademark law as its tool. The company may have created a family of words, but that does not give it the right to control its development in perpetuity. The public must have the right to discuss political and social issues.

Posted at 11:18:04 AM | Permalink

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Topics: Civil Liberties, IP

Thursday, 6 November 2003

Penn State lends credibility to Napster 2.0

Pennsylvania State University announced today that it would offer its students a chance to partake in Napster 2.0. The original incarnation of Napster — once synonymous with wanton copyright violation — shut down two years ago, under the crushing weight of a legal assault from the Recording Industry Association of America (RIAA). Sometime thereafter, a small software company named Roxio purchased the defunct Napster's source code and brand, betting that Napster's worldwide name recognition would help it launch a legal music distribution service. Not long ago, Napster 2.0 launched, selling individual songs for 99¢ and monthly "subscriptions" for $9.95. The Nittany Lions intend to fund their new service from the $160-per-year "information technology fee" that its students are required to pay. The university declined to state how much it paid per student in the deal but claims the amount was "substantially less" than Napster's standard $9.95 per month. See the New York Times' coverage: "Penn State Will Pay to Allow Students to Download Music."

Posted at 11:55:37 PM | Permalink

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Topics: Civil Liberties, Cyberlaw, IP, Technology

Update: Sony Music and BMG intend to merge

After reporting yesterday on the burgeoning business of partnerships among media companies (Media Giants Getting Together), the Washington Post reports today that "Sony Music Entertainment Inc. and BMG Entertainment have signed a nonbinding letter of intent to merge, creating a goliath that would control a quarter of the world's music business." (New Duet in Music World) See yesterday's blog on media partnerships.

Posted at 11:02:53 PM | Permalink

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Topics: Civil Liberties, IP, Politics, Technology

Wednesday, 5 November 2003

Partnerships mask media consolidation

The Washington Post has an interesting article about the rise of partnerships in the news media industry. (Media Giants Getting Together) In a field where scoops were once jealously guarded, they are now shared with abandon.

More and more media organizations — newspapers, magazines, television networks, Web sites — are forming globe-spanning, interlocking and often-cyclic partnerships with each other; some paid, others not. In an effort to hold budgets in line while expanding out of their traditional niches, newspapers give stories to each other, print reporters appear on television news shows and Web sites link to newspapers, television networks and magazines.
In recent years, civil libertarians have lamented media consolidation with increasing frequency and volume. The more outlets that are controlled by Big Media, they argue, the fewer voices will be heard in the marketplace of ideas. If, for example, AOL Time Warner owns the Turner family of cable stations, cable infrastructure, AOL's Internet publishing empire, a record label, a handful of broadcast television and radio stations, and a newspaper or two, then its news and entertainment reaches a mind-boggling number of people. A few other media companies (Disney, Knight-Ridder, and the New York Times Co., to name a few) own assets with a similar dispersion across media. Big fish can drown out the voices of littler fish so that the public is left with only a few practical choises for information sources. The resulting homogeneity deprives us of the opportunity to hear minority viewpoints and consume any but the most-popular (or lowest-common-denominator) entertainment.

The partnership model is supposed to mitigate this dystopia. No single company could possibly expand fast enough to grow all the businesses mentioned above internally. Therefore, they must either acquire other companies or form partnerships with other companies to extend their reach as far as possible. Mergers and takeovers result in unified control from the top down. Partnerships are more fluid, usually comprising only a small number of specified joint projects and lasting only for limited times. Projects and their durations are specified in advance in contracts between the partners. Partnerships are likely to focus on efforts most likely to deliver a cost-savings benefit or extend the partners' "reach" as far as possible in a short time. As reported in the Washington Post:

"One of the major justifications proffered for broadcast mergers and newspaper/broadcast combos is 'efficiencies' and 'synergies,'" said Andrew Schwartzman, president of the Media Access Project, which has opposed many media mergers. "As these deals demonstrate, it is possible to achieve both without actually purchasing or controlling both properties." [Hyperlink mine] At the same time, however, Schwartzman warned that such partnerships "can be abused as a means of reducing service, especially at the local level."

What does this mean for the average consumer of news, entertainment, and other information? One can no longer determine the ultimate source of information from the medium in which it is received or from the "brand name" at the top of the page or at the beginning of the broadcast. An article in the Washington Post may come from the Dow Jones company (via the Post's partnership with the Wall Street Journal). A Discovery Channel documentary may come from the New York Times (via their collaboration on the Discovery Times cable channel).

Would you trust an NBC news report on the latest consumer electronics? Before you answer, consider that NBC is owned by General Electric and has a 50% stake in MSNBC, along with Microsoft. Consider whether NBC has a financial incentive to make people more inclined to buy products made by GE or Microsoft. Now answer the question.

Posted at 10:45:47 PM | Permalink

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Topics: Civil Liberties, IP, Politics, Technology

Tuesday, 4 November 2003

Update: MIT suspends music-on-demand service

The New York Times reports that the Massacusetts Institute of Technology (MIT)has "temporarily suspended" its ballyhooed music-on-demand service. (Article: Music-Sharing Service at M.I.T. Is Shut Down) (See my prior blogs on this issue: 1, 2.)

Posted at 12:35:41 AM | Permalink

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Topics: Civil Liberties, Cyberlaw, IP, Technology

NYT summarizes Diebold brouhaha

Yesterday the New York Times (NYT) published an excellent overview of the situation that Diebold Election Systems has created for itself. (Article: File Sharing Pits Copyright Against Free Speech) (See my previous blog entries on Diebold: 1, 2, 3, 4.) The crux of the summary:

Diebold Election Systems, which makes voting machines, is waging legal war against grass-roots advocates, including dozens of college students, who are posting on the Internet copies of the company’s internal communications about its electronic voting machines.

The students say that, by trying to spread the word about problems with the company’s software, they are performing a valuable form of electronic civil disobedience, one that has broad implications for American society. They also contend that they are protected by fair use exceptions in copyright law.

Diebold, however, says it is a case of copyright infringement, and has sent cease-and-desist orders to the students and, in many cases, their colleges, demanding that the 15,000 e-mail messages and memorandums be removed from each Web site. "We reserve the right to protect that which we feel is proprietary," a spokesman for Diebold, David Bear, said.

Posted at 12:00:38 AM | Permalink

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Topics: Civil Liberties, Cyberlaw, DMCA, IP, Politics, eVoting

Sunday, 2 November 2003

Monsanto sues farmers for saving soybeans

Taking a page from the RIAA playbook, agriculture giant Monsanto Corp. has taken to suing farmers to enforce its patent on Roundup Ready® (RR) Soybeans. Monsanto developed the patented soybean seeds (bearing a trademarked name, no less) to resist its best-selling herbicide, Roundup®. The new plants allow farmers to apply more herbicide to control weeds without killing their crops. However, Monsanto does not simply sell the seeds. It licenses them, and the license terms prohibit saving seeds from one season for planting in the next. Never mind that saving seeds has been standard operating procedure in farming for the entire history of human agriculture.

I have no beef with Monsanto licensing its patented technology rather than selling outright the products based on it. However, it has done an inexcusably negligent job of informing farmers of the contents of the form contracts by which it sells RR soybeans. The New York Times (NYT) reports (Saving Seeds Subjects Farmers to Suits Over Patent) that farmers sign the contracts without reading them — believing they are the same standard seed-sale agreements they have signed in previous years. Although some farmers are aware of the $6.50 "technology fee" per sack of seeds, Monsanto appears to have made no effort to call attention to the anti-saving provision. Obviously, many farmers saved some seeds and replanted them in the next season, violating both the contract and Monsanto's patent. The NYT article says that many farmers are fighting the lawsuits, taking them all the way to judgment, and that the first is now up on appeal. It is only a matter of time before we get appellate-level decisions on the enforceability of these contracts under contract-of-adhesion and antitrust law.

Posted at 7:15:48 PM | Permalink

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Topics: Civil Liberties, IP, Politics, Technology

Friday, 31 October 2003

Update: MIT lacks music licenses

As I blogged a few days ago, a group of MIT students devised an analog system for transmitting music via the university's cable television infrastructure. They intended to distribute streaming music free of charge to students without triggering copyright rules that mandate royalties for digital on-demand distribution. Today the Los Angeles Times reports that MIT had to suspend service for part of its music library because Loudeye Corp., the company from which it believed it had purchased licenses for the music, did not have the relevant licenses to sell. (Article: Music Service at MIT Hits a Snag) MIT and Loudeye are now engaged in very public finger-pointing.

Posted at 6:05:06 PM | Permalink

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Topics: Civil Liberties, Cyberlaw, IP, Technology

Wednesday, 29 October 2003

Update: Press coverage of DMCA exemptions

Update on my prior entry about the Copyright Office's report on DMCA exemptions (short version, long version). The press is covering the issue today:


The Wired article has this succinct summary of the exemptions granted yesterday: "People may bypass a digital lock to access lists of websites blocked by commercial filtering companies, circumvent obsolete dongles to access computer programs, access computer programs and video games in obsolete formats, and access e-books where the text-to-speech function has been disabled."

Posted at 9:25:41 AM | Permalink

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Topics: Civil Liberties, Cyberlaw, IP, Politics, Technology

Tuesday, 28 October 2003

Elvis' income tops among dead celebrities

Interesting development that brings the law of publicity to the fore: Last week Forbes magazine reported the top-earning dead celebrities. (Article: Top-Earning Dead Celebrities) Elvis Presley ($40 million) has held the top spot since Forbes introduced this ranking three years ago. This year, he is followed by the likes of "Peanuts" cartoonist Charles Schulz ($32 million), J.R.R. Tolkien ($22 million), and former Beatles John Lennon ($19 million) and George Harrison ($16 million). Tolkien's rank is temporary, I suspect, and will fall once the Lord of the Rings films finish their theater and video runs.

Posted at 3:20:15 PM | Permalink

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Topics: Civil Liberties, Cyberlaw, IP, Politics

Law driving innovation

The government should occassionally drive innovation. This is especially true when the potential benefits of a new science or technology are great but the probability of developing products based on them within a reasonable time is small. This is an obtuse reference to the old argument that the government should, in some cases, support "pure" research. In most cases, however, government intervention in the market for research and development (R&D) is unwarranted and even destructive. The case for government intervention absolutely breaks down when market forces have already produced the first viable product. Where multiple products compete, there is no plausible argument yet-made for government intervention.

Sometimes, however, government actions shape innovation as the unintended consequence of legitimate actions taken in another sphere. This is happening right now in the area of copyright law. Since the first Congress enacted the first American copyright act in 1789, copyright law has grown in two directions: more complex and more protective of copyright owners' interests. Both trends have deeply affected copyright markets in the last two centuries. Since the 1976 copyright act — the most recent major overhaul to copyright law in this country — the complexity of the law has had a disproportionate impact on the technologies developed to serve the copyright industry. My theoretical opinion and this practical reality collide in the project of two Massachusetts Institute of Technology (MIT) students.

The New York Times reported yesterday that MIT students Keith Winstein and Josh Mandel have developed a system for distributing music via campus information networks that appears to comply with copyright law and partially render moot the grand public debate over file sharing. (Article: With Cable TV at M.I.T., Who Needs Napster?) The project transmits music over MIT's cable television infrastructure in analog form — thereby taking advantage of the bulk licenses that copyright producers routinely grant to television and radio operators and avoiding digital transmission, which triggers the nastier niceties of the copyright act. This new technology adds precisely zero end-user functionality to existing distribution systems (namely, file sharing networks and radio). Its sole purpose was to formally circumvent a distribution mechanism that copyright producers find objectionable. John Schwartz of the NYT writes that "some legal experts say the M.I.T. system mainly demonstrates how unwieldy copyright laws have become." Mike Godwin, senior technology counsel to Public Knowledge, says the students have "sidestepped the stonewall that the music companies have tried to put up between campus users and music sharing."

Copyright law's burgeoning complexity may be the lifeblood of intellectual property lawyers, but it is bad social policy. I admit this as someone currently aspiring to become an IP and cyberlaw lawyer. Another prime example of complexity breeding bad results lies in the recent episode where the Minnesota Public Utilities Commission (MPUC) tried regulate Vonage and other VoIP providers as telephone service providers. The Federal Communications Commission (FCC) long ago penned the legal distinction between "telecommuniction services," which states may regulate, and "information services," which they may not regulate (because such regulations are preempted by federal law. Vonage and other VoIP providers offer consumers and businesses a method of conducting voice communication, which we would ordinarily recognize as "phone calls." The only difference, from the end-user's perspective, is that his phone is plugged into a black box which, in turn, is plugged into the wall, instead of the phone being plugged directly into the wall. The user still dials a number, talks, and listens just as he would with an ordinary telephone. The problem is that the law created two legal categories and treated them differently. As technology allowed, the market made this distinction spurious at best by offering products that straddled the line between the two categories.

In both cases, the complexities of the law drove technology and they way we use it. In the former, copyright law inspired wasteful development of a system that is, at best, as efficient as preexisting systems. In the latter, the law held up development of a highly efficient technology (compared to what it would replace) with wasteful litigation that sought to resolve whether it was really the old technology or something new. The commonality is the resources consumed by the attempt to apply overly complicated laws to new facts. These examples are drawn from this and last week's headlines. I could probably select one example per week over the last five years, with some effort. I think, however, that my point is made.

Posted at 11:19:08 AM | Permalink

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Topics: Cyberlaw, IP, Science, Technology, VoIP

Monday, 27 October 2003

AP picks up the Diebold story

The Associated Press has picked up the story of Diebold's cease & desist demands under the DMCA. (Article: Diebold threatens publishers of leaked electronic-voting documents.) This should lead more mainstream news outlets to carry the story, beyond the paltry few that have carried it thus far (1, 2, 3). This could be the third major story with national political implications broken in the blogosphere after the mainstream press ignored it.

Posted at 6:13:01 PM | Permalink

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Topics: Civil Liberties, Cyberlaw, IP, Politics, Technology, eVoting

Friday, 24 October 2003

Antipiracy indoctrination gets off to rocky start

The Motion Picture Association of America (MPAA), the chief Hollywood lobbyist, has launched an indoctrination campaign in public schools. Although MPAA calls it "education," the program fits all the elements of the definition of indoctrination in Webster's Dictionary. MPAA paid $100,000 to deliver its message to 900,000 children over the next two years, taking advantage of public schools' budget crises. Although the program's title is "A Guide to Digital Citizenship," its curriculum is more accurately reflected by its slogan, "If you haven't paid for it, you've stolen it."

As a statement of law, this slogan is absolutely wrong. There are many situations in which one can lawfully acquire property without paying for it, and a good number of those apply to file sharing, the main target of MPAA's effort. As reported by AP, the MPAA curriculum is a simplistic and one-sided presentation on a complex area of law, delivered to children, many of whom are likely to lack the knowledge and sophistication to engage the instructors in productive discussion. In one example reported by AP, one knowledgable student was cut off by the teacher when he disagreed with the scripted lesson.

Note to MPAA: Discussion is good, but proselytization is not.

Posted at 10:33:44 AM | Permalink

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Topics: Civil Liberties, Cyberlaw, IP, Politics, Technology

Thursday, 23 October 2003

Patented play or punishment?

I just got wind of patent number 6,293,874, approved two years ago and entitled "User-operated amusement apparatus for kicking the user's buttocks." The current Scientific American (Oct 2003) has an article on it. Many thanks to Clive Thompson of Collision Detection for blogging on this.

Posted at 5:01:04 PM | Permalink

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Topics: IP

Tuesday, 21 October 2003

CDT report on broadcast flag

Today, the Center for Democracy and Policy (CDT), Public Knowledge and Consumers Union (publisher of Consumer Reports) issued a 31-page report entitled "Implications of The Broadcast Flag: A Public Interest Primer" [pdf]. The report has an excellent description of the background of the broadcast flag and explains how the issues affect the television and film industries, the government, and the public interest with remarkable clarity. This is a must-read for anyone interested in the most active area of debate in copyright law for the next three years.

The report's three most important findings (in my opinion) are:

  • Proposed broadcast flag regulations, currently before the FCC, create many legitimate concerns for television viewers, Internet users, and industry groups. As drafted they may restrict reasonable uses of content by viewers, hinder innovation, and impose costs that are not worth the limited copy protection provided.
  • Revisions to the broadcast flag proposal could help address many of these concerns, primarily by creating more clearly objective and focused functional standards for the devices and uses that will be permitted by flag regulations, and by creating a more open and accountable process for certifying permitted technologies.
  • Even with those improvements, the flag proposal poses unresolved issues regarding technical regulation of computers and the Internet by the government, the impact of the flag itself on innovation and future consumer uses, and the definition of "fair use" and other copyright doctrines in the digital age. It also leaves other serious copy protection problems for television content unresolved.
    Posted at 8:33:57 PM | Permalink

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    Topics: Civil Liberties, Cyberlaw, IP, Politics, Technology

Monday, 20 October 2003

Copyright Insurance: Further Discussion

This article continues the discussion on copyright liability insurance, proposed (separately) by P2P Fund and Steven Wu of LawMeme. Ernest Miller posted some criticisms of the idea, to which I responded. Ernest has posted his reply, highlighting the weaknesses of my response.

Ernest points out that the insurance policy I suggested would be unusual: it would cover settlements but not judgments in copyright infringement suits. This may seem bizarre, but it is necessary for two reasons. First, it is an attempt to dodge the required disclosures under Rule 26 of the Federal Rules of Civil Procedure (FRCP). If the policy does not cover judgments, it does not fall within the literal language of the rule. If push comes to shove, a court might see it for what it is (an attempt to dodge the rule) and assess sanctions for failure to disclose. I would not recommend this litigation strategy for most people, but someone interested in setting precedent (EFF? ACLU?) might be interested.

Second, Ernest mentions that most people would want an insurance policy that covers them for judgments as well as settlements. I do not think I argued to the contrary in my article. However, I believe that some people would make this trade-off to make the system workable and to keep prices reasonable. A culpable file sharer would be liable for at least $750 per song after judgment. Since RIAA is currently suing only people who (allegedly) share at least 1,000 copyrighted songs, an adverse judgment on all counts would incur liability of at least $750,000. Any commercially viable insurance product would require high premiums to cover such payouts — especially considering the self-selection problem and risk factors I discussed in my previous article. Few, if any, people would be willing to pay enough for the insurance to make it commercially viable. All that said, RIAA has filed over 450 file-sharing lawsuits this month. It cannot possibly intend to take them all (or even most) to trial and judgment. Settling the vast majority quickly is an integral part of RIAA's litigation strategy, and most of those settlements have been for amounts between $2,000 and $15,000. An insurance market can cover payouts of this size without exorbitant premiums, so buying settlement insurance is a reasonable counter-strategy for most people.

The next point is one that we should perhaps ask of an experienced litigator. I suggested that settlement insurance would be outside of the disclosure requirement in FRCP 26 because it would not involve a "judgment." Ernest responded that a settlement is really an "offer for judgment" under FRCP Rule 68. My understanding is that an offer for judgment under that rule is a unique species of settlement offer. The rule requires the "losing" party after trial to pay the "winning" party's legal costs that are incurred after an offer for judgment if the eventual adjudicated judgment is nearly the same as the offer. The rationale is to encourage parties to settle and to economize judicial resources. Certainly, other forms of settlement offer exist. One common settlement structure entails voluntary dismissal of the complaint, mutual release of all claims, and (usually) some money or property changing hands. There is no reason for a settlement to require a judgment in many cases. (Notable exceptions are class actions and cases where extended judicial oversight of some aspect of the settlement is required.) That is the beauty of settlements being contracts — they can be whatever the parties want them to be.

Finally, I believe Ernest misunderstands my argument about Federal Rule of Evidence (FRE) 411 and the admissibility of evidence of liability insurance to prove wrongful conduct. The Rule expressly forbids the admission of such evidence for this purpose. When I wrote that evidence of insurance is admissible for other purposes such as proving ownership, control or knowledge, Ernest jumped on knowledge as an element of wrongfulness. This argument has some intuitive appeal, since knowledge is an element of willful copyright infringement. However, in the context of FRE 411, "knowledge" means something different — it generally means that a person knows what is being done with her property.

Proving ownership, control, or knowledge would likely be done in a case where the defendant argues that RIAA has mistaken her for someone else. The case of Sara Ward is illustrative. RIAA sued this 66-year-old "computer neophyte," alleging that she made over 2,000 songs available for sharing through Kazaa. Later, it came to light that most of the songs she is alleged to have shared would appeal to someone in a much younger demographic group — e.g., "I'm a Thug," by the rapper Trick Daddy. Furthermore, she owns only a Macintosh and no PC, and there is no Macintosh version of Kazaa. She appears to have compelling defenses against the lawsuit. However, if RIAA later discovers that she purchased copyright insurance, this would be strong evidence that she really does own a PC or that she knows someone is trading files through her ISP account, or that something else fishy is going on. This is what the FRE mean by "ownership" and "knowledge." Other media stories in recent weeks have highlighted the problem of children sharing files without their parents' knowledge. These parents might defend a lawsuit based on a lack of knowledge, and evidence that they purchased copyright insurance would eviscerate such a defense.

I see no difference between the proposed copyright insurance and any other kind of liability insurance. I can buy copyright insurance to defray the cost of defending myself against a lawsuit without admitting wrongdoing, just as I buy car insurance to protect myself against the improbable event that I negligently cause an accident or that someone else hits me and has no insurance to cover my injuries. I have never driven carelessly, and no would-be plaintiff could introduce my insurance policy as evidence of carelessness. When a doctor purchases malpractice insurance, he does not use it as an excuse to deliver substandard care or deliberately harm his patients — he uses it to defray the costs of defending himself against rare lawsuits by disgruntled patients and even rarer payouts for settlements or judgments. Similarly, I trade many files via Gnutella that are not copyrighted, that I have permission to distribute, or whose copyrights I own. Occasionally, for fun, I rename files as "NOT [songname].mp3" in a deliberate effort to confuse RIAA. This practice may well land me in court some day, if RIAA does not believe those files are really "NOT" what they are named. Additionally, with the cases of obvious mistaken identity that have come to light in the last two weeks, there is even more reason for innocent file sharers — who are not infringing copyrights — to worry.

Copyright liability insurance would be designed with this audience in mind. Are they likely to be its biggest consumers? Probably not. Is that a bad thing? I am not sure where I stand on that.

Posted at 9:39:30 PM | Permalink
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Topics: IP

Copyright Liability Insurance: A Response

Steven Wu of Lawmeme has suggested a system of copyright liability insurance to protect file sharers from the risk of being sued by RIAA. The newly-organized P2P Fund is designed to serve a similar purpose, folded into a compulsory-licensing system. Ernest Miller has responded, arguing that such insurance is a bad idea. I find the idea intuitively appealing, and I think Ernest's criticisms are answerable. That said, I have reservations about the suggested implementation of the insurance scheme that must be resolved before it becomes workable.

As Steven Wu explains, self-insurance (where each person pays his own way) can be prohibitively expensive. If a sufficient number of file sharers buy into an insurance market, each one can pay a small premium and be protected. He compares this to patent infringement liability insurance, which is "professional liability insurance for manufacturers, users and sellers accused of infringing a patent holder's rights."

1. Critical Mass & Self-Selection

Steven acknowledges the first major problem, critical mass, but he underestimates its size. An insurance company lives or dies by the number of people it can attract as customers. Steven treats this as merely a problem of getting the word out to file sharers ("people will join it out of self interest, which is always more reliable than altruism: the price is worth the peace of mind."). However, he gets to this point through a general economic analysis of insurance, comparing the economic advantages that an insurance market holds over self-insurance. Unfortunately, he ignores the concomitant problem of self-selection. The people most likely to buy into an insurance plan are those most likely to need its payout — in this case, the most active file sharers (which I shall call "heavy users" of file sharing networks). RIAA has stated publicly that it will at first sue the heaviest users, people who share over 1,000 copyrighted songs. "Light users," those who share a smaller number of songs or who share none at all, are less likely to pay into a system from which they are less likely to need a payout.

Self-selection works against the viability of an insurance system, but it is not insurmountable: the system can account for varying degrees of risk. Life insurers do this routinely, charging different premiums or offering different payouts based on such factors as age and smoking, which affect a person's risk of developing health problems. Similarly, the copyright liability insurance policy could peg each person's premium to the number of files he shares, the number of hours per week he is logged onto the network, and other factors that affect the risk of attracting RIAA's ire. The identity of the insured's ISP may also be a valid risk factor. While Verizon and SBC have challenged DMCA subpoenas, others have complied without a fight.

Heavy users would pay higher premiums, giving them a disincentive to buy insurance. On the other hand, this scenario gives light users a strong incentive to buy insurance. Light users would be footing a smaller percentage of other people's legal bills and paying a small monthly premium, so they may be likely to join. This, in turn, will raise the insured base and permit the insurer to charge lower rates to heavy users after a time. The net effect of these incentives is hard to predict in advance, but the insurance industry has good economists and actuaries working for it. Someone should be able to pin down a good set of risk factors and prices.

2. Discovery & Disclosure

Ernest argues and Steven acknowledges that RIAA will likely change its litigation strategy if such an insurance system arises. I agree. However, finding out who is covered may not be as easy for RIAA as Ernest suggests.

Federal Rule of Civil Procedure (FRCP) 26 requires automatic disclosure of some insurance policies. Rule 26(a)(1)(D) requires disclosure of "any insurance agreement under which any person carrying on an insurance business may be liable to satisfy part or all of a judgment which may be entered in the action or to indemnify or reimburse for payments made to satisfy the judgment." The language of the rule plainly contemplates insurance policies that will pay judgments against a litigant, not settlements. Most insurance policies will pay out for both, because they are designed to insure against types of claims that are frequently resolved by either judgment or settlement. In this particular market, however, RIAA has repeatedly stated to the press that it wants to settle its claims against file sharers, and no claim against an individual file sharer has yet gone to trial, let alone to judgment. An insurance policy could be written to reflect this reality and insure against settlements but not judgments, thereby sidestepping FRCP 26. If there is caselaw interpreting FRCP 26 as requiring disclosure of all insurance policies (and not just those insuring against judgments), I did not find it in a brief search.

3. Insurance as Evidence of Willfulness?

Ernest further argues that the purchase of a copyright liability insurance policy is "likely to be considered evidence of willful infringement, which" would permit RIAA to seek higher statutory damages. I think he is wrong for two reasons. First, he does not explain why copyright insurance would be viewed with more suspicion than any other form of insurance. Do courts view doctors' and lawyers' purchase of malpractice insurance as evidence of negligence or willfulness? I have yet to see evidence of open season on patients and clients. Second, Federal Rule of Evidence (FRE) 411 prohibits the admission of evidence of liability insurance for this purpose. The rule reads, in relevant part, "Evidence that a person was or was not insured against liability is not admissible upon the issue whether the person acted negligently or otherwise wrongfully."

Under FRE 411, then, RIAA could not use the proposed copyright liability insurance against file sharers in court to prove willful infringement. The file sharers therefore have a colorable argument that insurance is irrelevant to the cause of action, should RIAA ask for that information in discovery. This is a valid ground to object to questions in depositions, documents requested for production, or facts requested for admission. The insurance may be relevant (and therefore discoverable) for other purposes if the defendant makes particular arguments — e.g., if he denies having shared files, owning a computer, or some other fact that is material to RIAA's claim. In such a case, RIAA would be able to use the insurance to prove ownership, control, or knowledge — but still not wrongfulness.

Once RIAA learns through discovery that a defendant has purchased an insurance policy, it can use that information for whatever purpose it likes during settlement discussions, even if a court would bar it from using it for the same purpose at trial. Therefore, RIAA could learn of and use the insurance policy against defendants who deny certain aspects of RIAA's case but not against defendants who admit infringement. This is a problem that remains to be solved before this idea goes mainstream.

4. Conclusion

So what should we make of copyright infringement insurance? The basic idea appeals to me. Would I buy it? Sure, if the price is right and these problems are worked out. The problems are real, although not as insurmountable as Ernest implies. This debate is a good first step to solving them.

Posted at 11:31:39 AM | Permalink
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Trackback URL: http://www.danfingerman.com/cgi-bin/mt-tb.cgi/12
Topics: IP

Monday, 13 October 2003

Shift happens

John Halderman cracked an encryption and DRM system called MediaMax CD3, a product of SunComm Technologies. Why? He is a PhD candiate in Princeton University's Department of Computer Science, writing his thesis in computer security. In classic academic style, Halderman published the resulting paper on the web. In classic cranky-three-year-old style, SunnComm threatened to sue Halderman on several grounds, including a claim under the Digital Millenium Copyright Act (DMCA). SunComm's CEO's quote in the first news cycle since this story broke was precious: "No matter what their credentials or rationale, it is wrong to use one's knowledge and the cover of academia to facilitate piracy and theft of digital property." SunComm backed down from its lawsuit threat within 48 hours — after an enormous public outcry fueled by the blogosphere.

This episode is important for two reasons. First, it shows the excesses of the DMCA and underscores how ridiculously overbroad its language is (in addition to being bad policy). SunComm must have interpreted Halderman's paper as either a "device" intended to "circumvent a technological measure that effectively controls access to a [copyrighted] work" under DMCA § 1201(a) or as trafficking in such devices. No person who speaks ordinary English would ever confuse a research paper with a device. Besides, Halderman defeated the system merely by holding down his shift key, so how "effective" could it be? Effectiveness of the DRM system is, after all, an essential element of the DMCA claim. SunComm may have deserved the $10 million decline in its stock-price value the day after the blogosphere picked up this story.

Second, it shows the power of the blogosphere. The first Internet publisher to become a legitimate force in American politics was Matt Drudge when he broke the Monica Lewinsky story in 1997 — after the traditional press (namely, Newsweek) declined to print the story. The Internet's role in politics was considered routine barely five years later, when bloggers brought down Trent Lott — again, after the traditional news media dismissed an important story. The SunComm episode clearly shows that Internet publishers' influence has outgrown the first level of the political sphere, where rumor and innuendo are weapons in their own right. This time, bloggers slapped around a software company working for several major record labels — in two industries driven by bottom-line considerations. Blogging tools make Internet publishing easier than ever, and the number of bloggers is growing daily. Their voices are heard by one another — and now by the major media and corporate America. If we can continue to avoid demagoguery, this may be a good thing.

Posted at 1:16:27 PM | Permalink

Trackback URL: http://www.danfingerman.com/cgi-bin/mt-tb.cgi/7
Topics: Civil Liberties, Cyberlaw, DMCA, IP, Politics, Technology



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