March 18, 2010
Viacom v. YouTube Summary Judgment Motions Highlights
By Eric Goldman
Who doesn’t enjoy a good old-fashioned mud-slingin' showdown? That’s exactly what we’ve got on our hands in the dueling summary judgment motions from Viacom and YouTube in the long-running copyright infringement case (see my initial post from March 2007). While we might have some voyeuristic fun watching the sparks, the latest salvos prove that the parties are both losers for not finding a way to settle this case. Only the lawyers win when two heavyweight contenders get locked into a cosmic death struggle. Everyone else would be better off if Viacom and YouTube instead had poured their millions of dollars of legal fees towards developing innovative and profitable ways to serve consumers’ interests. It’s ridiculous that they can’t find a way to do this.
Combined together, the filings tell a “Tale of Two YouTubes.” Viacom focuses on YouTube of Yore, circa 2005-06, while YouTube’s brief largely focuses on YouTube of Now. In that sense, the briefs largely talked past each other.
By focusing on the past, however, it shows that time is slowly working against Viacom in two ways. First, the legal precedent since Viacom’s filing has been largely YouTube-favorable. The three Veoh opinions (Io v. Veoh, UMG v. Veoh 1, and UMG v. Veoh 2) have filled in some key legal gaps that existed at the time of Viacom’s filing. While the Veoh cases aren’t binding on the judge, this judge now can follow in someone else’s footsteps rather than trail-blaze. Viacom does cite the Columbia v. Fung case, which helps its cause some, but I think YouTube gets the better of that exchange.
Perhaps more importantly, the intervening time has been good to YouTube as a business and as a brand. In this sense, compare Grokster to YouTube. At the time of the Grokster cases, it was still very much an open question whether Grokster would ever evolve into a tool where legitimate activity dominated. While we might still have had that same question about YouTube in 2006, by 2010 YouTube has answered that question resoundingly. YouTube’s business practices have matured, everyone has had positive legitimate experiences with YouTube (even behind-the-curve judges), and it’s clear that major legitimate players have adopted YouTube as a platform for their legitimate activities. For example, YouTube’s brief makes the point that all of the 2008 presidential candidates published YouTube videos as part of their campaign. I’m guessing no 2004 presidential candidates used Grokster for campaign purposes.
So as time goes on, YouTube solidifies a brand as a legitimate part of our information infrastructure. As we learn that the YouTube story has a happy ending, I suspect judges become less interested in punishing YouTube for past practices. For this reason (and others), I thought a lot of Viacom’s inducement arguments ran hollow because they ran counter to my brand impressions of YouTube. I would also note that Viacom appears to be giving up its litigation over activity after May 2008, so even Viacom seems to be happy with YouTube in its current form.
This raises an interesting legal point that I can’t resolve. Let’s assume for sake of argument that Viacom is right that YouTube induced infringement in 2005-06. Let’s also assume that no one is arguing that YouTube currently induces infringement (after all, Viacom isn’t contesting post-May 2008 activity). How do we determine when YouTube flipped the switch from inducing to not? And does flipping the switch cure any of the past infringement, or does it only cut off future claims? Because we have so few cases of inducement, we really don’t know how the doctrine works with a site that morphs over time.
I thought both YouTube and Viacom scored points against each other in the briefs. I’ll summarize some of those points below, but first I want to highlight a few standout points for both parties:
In YouTube’s case, I could not get over that Viacom has TWICE withdrawn clips from its complaint. I thought the first time Viacom did that was embarrassing and damaging to Viacom’s case, but then Viacom admitted that it didn’t catch all of its errors on the first withdrawal and therefore had to make a second withdrawal of clips. WTF? How hard it is for Viacom to accurately determine which clips it has not permitted to show on YouTube? Whether it intended to or not, Viacom has answered that question to its detriment: hard enough that an entire brigade of extremely expensive lawyers obligated to do factual investigations by Rule 11 can’t get the facts right the first OR SECOND time. For me, this undercuts Viacom’s credibility to its core. Rather than YouTube simply making intuition-based arguments to the judge that it’s really hard to figure out legitimate vs. illegitimate clips, Viacom’s failings have proven to the judge that it’s too hard—too hard for lawyers charging upwards of $1k an hour despite having unrestricted access to accurate information in their clients’ possession, and clearly too hard for YouTube’s slightly-above-minimum-wage customer support representatives with no such information advantages.
YouTube also scored points for its descriptions of Viacom’s stealth marketing practices. Although these facts only help YouTube’s legal posture a little, the lawsuit’s discovery process has unveiled some non-public information about Viacom’s practices that should be interesting to the FTC and state attorney generals. Viacom’s alleged stealth marketing practices are aggressive—close to the permissible line, if not over it. As a result, they might be exactly the kind of consumer misdirection and inauthentic online content that the FTC has been railing against, and we know the FTC is looking for test cases in this area. So, a lawsuit that began as Viacom v. YouTube might morph into FTC v. Viacom. This is one of the known risks of picking a fight—once started, you can’t control where it goes.
From Viacom’s brief, two references really stood out. First, Viacom found an email where Google employees characterized YouTube (pre-acquisition) as a “video Grokster.” Viacom argues that YouTube was like Grokster factually and therefore should be treated like Grokster legally. The Google email admits (in the lay sense, not the legal sense) this factual equivalence. Google can legally discredit the email's importance, but it can’t easily avoid talking out of both sides of its mouth.
Second, I was struck by the fact that Chad Hurley lost his entire email repository. I’ve had that happen to me too, so that fact standing alone isn’t damning. However, the brief goes on to say that when he was grilled about his co-founder’s email stash, Hurley developed “serial amnesia.” The combination did make me wonder about this situation.
As I read the brief, I made some brief notes about points of particular interest. Those notes:
YouTube’s Summary Judgment Motion
I thought both briefs were well-written and generally effective. However, the YouTube brief successfully struck a conversational tone—a nice balance between formality and accessibility.
[note: my references are to the PDF’s page numbering, not the brief’s page number at the page bottom]
PDF Page 21: Viacom sent a bulk takedown request covering about 100,000 clips on February 2, 2007, but this purge didn’t reduce YouTube traffic or increase Viacom’s traffic.
PDF Page 24: plaintiffs are suing over at least one clip of 1 second. 1 second???
PDF page 34: YouTube has terminated 400,000+ user accounts for infringement out of its 250M accounts. Although that’s a low percentage, that’s a surprisingly high absolute number.
PDF page 40 (FN 9): some litigated clips never got a takedown notice at all.
PDF page 45: YouTube says it did lacked “red flags” knowledge of infringing activity because, in some cases, the copyrights were obscure.
PDF page 47: No red flags because copyright owners routinely voluntarily upload lots of copyrighted material to YouTube, and copyright owners try to cover their tracks. Copyright owners do this because YouTube marketing works. Copyright owners’ embrace of “viral marketing”/“stealth marketing” eliminates any potential red flags.
PDF page 49-50: Details of Viacom’s stealth marketing efforts:
* It uses an “army” of third party marketing agents (at least 18 firms)
* Account names don’t indicate a Viacom relationship
* Email addresses aren’t linked to Viacom
* Clips are deliberately uploaded from networks not tied to Viacom, such as Kinko’s
* Clips are deliberately altered videos to make them look stolen. I thought this was the most damning fact. It’s disingenuous to rail against piracy and yet try to take advantage of the marketing benefits of seemingly unauthorized copying.
PDF page 50: Viacom has released clips with the intent that users spread them virally.
PDF page 53: Viacom has a deliberate and complex strategy for leaving up clips. This part of the brief was confusing so I didn’t fully follow the timeline. Here’s what I understood about Viacom’s “leave-up” policy. Through Oct. 2006: leave up clips less than 5 minutes. Oct 2006: Viacom tells BayTSP to leave up all clips shorter than 2.5 minutes [or is it 3 minutes?]. Then, Viacom expanded the leave-up policy to include every clip shorter than a full episode; and in some cases, even full episodes were expressly left up.
PDF page 54-55: Viacom found 316 clips of South Park and took down only 1.
PDF page 56: “If Viacom deliberately refrained from sending takedown notices for certain videos, how could it be that YouTube was obligated to remove those same videos on sight—without any request from Viacom?”
PDF page 59-60: No red flags because some copyright owners granted licenses that permitted YouTube uploading. Also, some clips may be subject to joint ownership, and YouTube can’t tell if one of the joint owners had consented.
PDF page 61: no red flags because of fair use/de minimis use. I was surprised that the Lenz case wasn’t explored.
PDF page 73: Viacom had complex whitelists of YouTube accounts that wouldn’t be challenged.
PDF page 75: Viacom sued over clips it had authorized for posting.
PDF page 99: less than 1% of YouTube clips have been subject to a takedown notice. Again, I am surprised that this was appropriately rounded to 1%; I would have expected an even smaller fraction.
PDF page 105: Viacom spent over $1M advertising on YouTube from 2006-08. All of which (and more) YouTube has reinvested in its litigation against Viacom.
Viacom Summary Judgment Motion
PDF page 9 (FN 1): This was a confusing footnote, but a crucial one. It appears that Viacom is only interested in infringement pre-May 2008 (before YouTube deployed digital fingerprinting for Viacom). The way I read it, Viacom isn’t going to pursue any claims for activity post-May 2008. Thus, Viacom apparently is acquiescing to—or even happy with—YouTube’s current practices. Consistent with the Tale of Two YouTubes, Viacom reinforces that it’s really only interested in the past, not the present.
Viacom complains that it took too long for YouTube to deploy the digital fingerprinting for it. It says that YouTube withheld the tool as part of a quid-pro-quo to require content owners to sign a license and revenue share deal.
PDF page 14: YouTube founder Karim uploaded infringing content himself.
PDF page 14-15: YouTube was a junkie for traffic to infringing content—it wanted and needed the traffic. They felt they would lose 80% of their traffic if they did a crackdown of obviously infringing clips.
PDF page 17: YouTube tried and then removed the ability for every user to flag clips for copyright infringement. I personally think Viacom overemphasized this point. Service providers are trapped in a dilemma. If they do more screening than 512 requires, copyright owners say that evidences their right and ability to control (indeed, Viacom itself makes that argument in its brief). But if they don’t do more, copyright owners complain that they could have done more. Good grief. With respect to user flagging of copyright infringement, users are a terrible source of credible information about what constitutes copyright infringement (at least, when it’s not their works involved), so the user flagging tool inevitably would generate too many false positives. Requiring 512(c)(3) notices is a logical way to avoid the deluge of false positives.
PDF page 17: Dunton surveyed top clips on YouTube and thought 70%+ were copyrighted. Later, Dunton said 75-80% of clip views were from copyrighted content.
PDF page 19: Karim says in a board meeting that the site would benefit from preemptive takedowns of blatantly illegal content, but no changes were made.
PDF Page 22: pre-acquisition, a Google employee referred to YouTube as a “video Grokster” and a “rogue enabler of content theft.”
PDF Page 22: Google’s investment banker Credit Suisse reported to Google that 60%+ of YouTube’s views were of “premium” content, of which only 10% was authorized.
PDF Page 29-30: Hurley lost all of his emails, and Schmidt deletes all emails after he reads them (guess he doesn’t use Gmail’s “archive” feature). Hurley developed “serial amnesia” when confronted with Karim’s emails.
Posted by Eric at 04:08 PM Permalink | Copyright , Derivative Liability , Internet History | TrackBack (0) | Printable Version
Beacon Class Action Settlement Approved -- Lane v. Facebook
[Post by Venkat]
Lane v. Facebook (Case No. 09-3845 RS; March 17, 2010) [scribd link]
Judge Seeborg yesterday issued an order approving the class settlement in Lane v. Facebook, the class action lawsuit arising out of Facebook's Beacon program.
Background: Shortly after the uproar around Facebook's launch of its Beacon program, a group of plaintiffs filed a class action lawsuit in the Northern District of California. Prior to this lawsuit, another group of plaintiffs sued Blockbuster in Texas, based on Blockbuster's participation in the Beacon program. Both plaintiffs asserted, among other claims, violations of the Video Privacy Protection Act, a statute which protects against disclosure of video rental records.
In Texas, Blockbuster argued that the claims should be subject to arbitration based on a terms of service. The court rejected Blockbuster's arguments on the basis that the terms of use were illusory because they contained language saying that they could freely be amended at any time. (Here are posts by Professor Goldman and Tom O'Toole on this potentially far-reaching ruling.) Blockbuster appealed this ruling.
Meanwhile, the California plaintiffs (represented by Scott Kamber) announced a settlement of their claims. The proposed settlement did not provide for monetary damages to the plaintiffs; Facebook agreed to set aside a chunk of money to fund a "privacy foundation," which would be staffed by nominees of counsel for the parties. (Here's a summary of the proposed settlement terms at CircleID.)
Once the Texas plaintiffs found out about the settlement, they moved to intervene in the California lawsuit. They argued that the two class actions should have been consolidated and that the California plaintiffs could not release claims on behalf of the class against Blockbuster, since those claims were first asserted by the Texas plaintiffs in the Blockbuster class action. Judge Seeborg denied the motion to intervene, a ruling which the Blockbuster plaintiffs appealed.
The parties engaged in a round of wrangling in the Northern District of California, and behind the scenes. Ultimately, Blockbuster settled with the Blockbuster (Harris) plaintiffs by agreeing to pay $50,000. More importantly, counsel for the two classes probably came to some sort of agreement regarding fee sharing. Counsel for the Blockbuster plaintiffs then withdrew their objections to the proposed settlement pending in front of Judge Seeborg. This left a few objections raised by individuals and public interest organizations. Judge Seeborg rejected these objections and approved the settlement.
The Court's Disposal of The Objections:
Form of Notice: One interesting objection was raised by Shan Huangfu. He argued that notice of the settlement was sent via email, was caught in his spam filter and therefore inadequate. (Here's an article by Wendy Davis flagging this objection.) I didn't pick up on this at first, but interestingly, the parties wanted to use email notice in lieu of notice through Facebook accounts, and Judge Seeborg did not agree with this. Ultimately, it looks like Facebook sent notice via email and through the potential class member's Facebook account, but did not send any paper notice. I wonder if people who cancelled their Facebook account in reaction to Beacon were more likely to fall through the cracks?
Whether The Privacy Foundation Will be Beholden to Facebook: One of the biggest objections to the proposed settlement was that the foundation created as a result of the settlement would be beholden to Facebook and wouldn't provide any public benefit. Judge Seeborg found that there had been "no persuasive showing that the Foundation will be a mere publicity tool for Facebook, or in any meaningful sense under Facebook's direct control." The foundation will initially staffed by Chris Hoofnagle, Larry Magid, and Tim Sparapani (Facebook's Director of Public Policy and a formerly Senior Legislative Counsel to the ACLU in Northern California). (Interestingly, Sparapani shares a fair amount of personal information on his publicly accessible Facebook profile.)
The Fact That No Monetary Relief Was Awarded to Class Members: Another significant objection was that the class members will not receive any compensation under the settlement (except for the named plaintiff who would receive $10,000, two named representatives would receive $5,000 each, and the remaining named representatives would receive $1,000 each). Judge Seeborg dismissed this objection on the basis that the damages available (principally, the statutory damages under the Video Privacy Protection Act) would be "speculative at best." Because of the speculative nature of the statutory damages, and the risks inherent in litigation, the settlement as structured could be viewed as reasonable.
Observations:
1. The appeal in Harris v. Blockbuster (the Texas action) has been dismissed by the parties. However, they haven't moved to vacate the trial court's ruling so it looks like it will stay on the books. (EPIC filed an amicus brief in favor of the Harris plaintiffs: [pdf]. EPIC's page on Harris v. Blockbuster is worth checking out.)
2. There were approximately 3.6 million potential class members. 100 opted out, and 4 objected. These numbers understandably swayed Judge Seeborg. I'm surprised no one mounted a vigorous "opt out of the Beacon settlement" social media campaign. This would have probably been the most effective method to derail the settlement.
3. This plaintiffs in the California action were left in the awkward position of arguing that the lawsuit that they brought would not support the award of significant damages. In fact, Scott Kamber's declaration [scribd link] argues that it would be tough to hold Facebook liable under the Video Privacy Protection Act, among other reasons because Facebook does not fall under the statute's definition of a "video tape service provider".
4. The Harris plaintiffs were in this position as well. Additionally, the Harris plaintiffs settled separately with Blockbuster, and Blockbuster agreed to pay "Plaintiffs $22,500 and also . . . pay Plaintiffs' counsel $27,500 [in fees]." (Access the Blockbuster settlement agreement on Scribd here.) From the settlement agreement, it appears that the named plaintiffs will receive settlement payments but the remaining members of the class receive nothing. In fact, the court hearing the Blockbuster lawsuit did not approve the settlement. I suppose you could say that the Blockbuster plaintiffs were receiving these amounts for their efforts expended in representing the class, but there was no class award and no class to represent. Shouldn't the remaining Harris plaintiffs receive some compensation? Another factor here is Blockbuster's precarious financial condition.
5. Judge Seeborg deferred ruling on counsel's request for fees, asking for some additional evidence on time spent by counsel. The request for fees states that the Lane class counsel incurred $1.1mm in fees and the Harris class counsel incurred $820,000. After adjustments, between the two, they seek approximately $2.8mm in fees.
6. It's interesting that a piece of legislation passed in the wake of then-Judge Bork's Supreme Court confirmation hearing ended up being influential in this context. I doubt when the legislation was passed, Congress envisioned that the statute would be central to a significant dispute around online advertising and would result in a settlement of this scale. There's no counterpart to the Video Privacy Protection Act for magazines, books or newspapers. Just videos.
7. The Video Privacy Protection Act reared its head in another privacy dispute recently. Netflix just settled with the FTC and agreed to discontinue the sequel to its recommendation engine contest. (Forbes/The Firewall) Professor Ohm flagged the issue in September 2009 post and urged Netflix to reconsider its decision to launch the second contest. While the settlement between the FTC and Netflix wasn't expressly based on the Video Privacy Protection Act, Scott Kamber also sued Netflix under this statute. Netflix announced on its blog that this lawsuit has been settled, but the terms have not been made public.
8. I guess someone can appeal. Public Citizen objected, maybe they will?
__
(h/t Wired's Threat Level)
Wendy Davis at MediaPost has been following this lawsuit closely. Here is a link to her article on Judge Seeborg's decision.
Posted by Venkat at 10:42 AM Permalink | Privacy/Security | Printable Version
March 17, 2010
Regulating Reputational Systems Slides
By Eric Goldman
Last week, I presented my Regulating Reputational Systems talk to non-lawyers at the Jewish High Tech Community. My talk slides. I've been working on this topic now for about 18 months, and I'm finally getting closer to nailing down the arguments and writing up the papers. As you can see from the slides, I believe I have come up with an under-explored policy justification for 47 USC 230. As always, comments appreciated.
I will be giving slight variations of this talk four more times this semester:
* at the UC Berkeley School of Information on April 14, 4 pm.
* at the San Jose State School of Library and Information Science on May 11, noon. I believe this will be webcast, and I will post the details to my Twitter account.
* at Erasmus University in Rotterdam, Netherlands, on May 28.
* at the University of Amsterdam on June 1, noon.
If you would like to attend any of these event, please email me and I will provide details as they become set. If you are in the Netherlands and would like to visit professionally or socially on my trip, please email me.
Some previous versions of my reputation talk slides:
* DePaul Reputation Talk Slides (October 2009)
* George Mason Talk and Paper on Economics of Reputational Information (May 2009)
* Economics of Reputational Information Talks (Oct. 2008)
* Economics of Reputational Information Talk (Aug. 2008)
Posted by Eric at 09:07 AM Permalink | Derivative Liability , E-Commerce | TrackBack (0) | Printable Version
March 16, 2010
Stratton Faxon v. Google Dismissed
By Eric Goldman
Stratton Faxon v. Google, Inc., NNH-CV-09-5031219S (Conn. Superior Ct. dismissed March 8, 2010)
Stratton Faxon v. Google was always an oddball case in the constellation of trademark owner challenges to Google AdWords. First, the plaintiff--a law firm that woke up one day in 2009 and discovered competitive keyword advertising--didn't allege trademark infringement but instead took an unusual and questionable legal path. Second, the case was filed in state court, not federal court, which made the case much more difficult to track than cases in federal court.
These oddities are now irrelevant. The court issued a "motion for judgment" on March 8 granting a motion brought by Google to dismiss the case. I haven't seen any of the underlying motions, but the net effect is that the case is closed.
However, the case may not be over. In my prior email exchanges with Stratton Faxon, they indicated that they may refile in federal court. So we'll see if this case resurrects itself.
Combined with Rescuecom giving up, Google has now whittled its pending AdWords challenges down to 8 pending cases. Furthermore, the Utah legislature has adjourned for the year without banning Google's cash cow again. In the world of Google's legal affairs, these two developments qualify as good news! Next stop: the ECJ's opinion addressing Google's trademark liability in the EU, expected one week from today.
The roster of pending AdWords cases (I most recently thoroughly double-checked the status of these cases on February 20, 2010):
* Ezzo v. Google
* Rescuecom v. Google
* FPX v. Google
* John Beck Amazing Profits v. Google and the companion Google v. John Beck Amazing Profits
* Stratton Faxon v. Google
* Soaring Helmet v. Bill Me
* Ascentive v. Google
* Jurin v. Google 1.0 (voluntarily dismissed), succeeded by Jurin v. Google 2.0
* Rosetta Stone v. Google
* Flowbee v. Google
* Parts Geek v. US Auto Parts
* Dazzlesmile v. Epic
Posted by Eric at 05:33 PM Permalink | Derivative Liability , Marketing , Search Engines , Trademark | TrackBack (0) | Printable Version
March 15, 2010
Data Anonymization and Re-identification Lecture Featuring Paul Ohm, SCU, April 7
By Eric Goldman
University of Colorado law professor Paul Ohm has written one of the most provocative privacy-related papers of the past few years, Broken Promises of Privacy: Responding to the Surprising Failure of Anonymization. Using examples such as the AOL "Data Valdez" release of search logs and the NetFlix personalization contest, he shows that seemingly innocuous datasets can still become personally identifiable when combined with other data sources. This puts significant pressure on our regulatory distinctions between "personally identifiable information" and non-personally identifiable information, as the combination of datasets can convert non-PII into PII. The implications potentially shake the privacy literature to its core.
Paul will be presenting his research on April 7, 6-8 pm, at SCU. I've heard Paul present this paper a few times and it's always a treat. To spice things up, we'll have two commenters on his work: Cynthia Dwork, a computer scientist at Microsoft, and Chad Raphael, an SCU communication professors. The event is free, and it includes an hour of free CLE if you want it. You can register through this URL. Hope to see you there.
Posted by Eric at 09:36 AM Permalink | Privacy/Security | TrackBack (0) | Printable Version
March 10, 2010
Utah Passes Nation's First (?) Bioprospecting Regulation
By Eric Goldman
The Utah legislature has passed SB 51, the "Utah Bioprospecting Act," which requires a government-issued license (which presumably will include a royalty cut for the state) before engaging in bioprospecting on government lands not owned by the federal government. The law is awaiting the governor's signature. If enacted, I believe this will be the nation's first state law regulating bioprospecting.
What is Bioprospecting?
Bioprospecting is the process of looking for naturally occurring animals or plants that have commercial utility. The issue is quite hot in many developing countries, which are rich in biodiversity but may be underdeveloped in research and commercialization capabilities. As a result, foreign researchers come to the country to investigate the biodiversity, identify a commercially useful native species, and then commercialize that species elsewhere without any clear compensation to the source country. We might debate the fairness of this situation, but I know that some folks have strong feelings that bioprospecting is illegitimate.
One of the main challenges with regulating bioprospecting is simply defining it. Take a look at this law's messy definition:
(1) (a) "Bioprospecting" means the removal from a natural environment for research or commercial use of: (i) a naturally occurring microorganism, plant, or fungus; or (ii) information concerning a naturally occurring microorganism's, plant's, or fungus' physical or genetic properties.
(b) "Bioprospecting" does not include: (a) horticultural cultivation, except for horticultural genetic engineering conducted in a manner otherwise constituting bioprospecting; (b) an agricultural enterprise; (c) a forest and range management practice; (d) invasive weed management; (e) Christmas tree and related sales; or (f) incidental removal of a microorganism, plant, or fungus while engaged in bona fide research or commercial enterprises.
What??? What does that mean? I think any law that has to say that it's simultaneously trying not to govern weed removal or Christmas tree farming is overly broad by definition. But look at the drafters' failed efforts to draw non-overlapping Venn diagrams. In (b)(a), how can the exclusion cover activity "conducted in a manner otherwise constituting bioprospecting"? Isn't that circular? And doesn't the (b)(f) exception swallow up the whole?
More generally, look at (1)(a)(ii). The law doesn't just regulate the removal of physical specimens, but it regulates any commercial use of information about a specimen. Huh? Does that mean that I can't publish a picture of Utah plants on state lands without the government issued-license? I wonder to what extent the contemplated licensing requirement to disseminate information about plants runs into Constitutional and federal preemption issues.
Why Did Utah Enact a Bioprospecting Law?
In the mid-2000s, Hawaii considered enacting a law about bioprospecting. I can understand this, as Hawaii is a globally leading biodiversity hotspot. Plus, there remains continuing local unrest about Hawaii's status as a state and the fate of native Hawaiians.
But Utah? I don't think of Utah either as a biodiversity leader or a self-perceived victim of colonialism or imperialism. Instead, for me, Utah's main leadership role is as the nation's leader in state legislative incompetence. While this particular law is not per se stupid (in contrast with many of Utah's efforts to regulate the Internet), this law makes some of the systematic errors I've seen from Utah laws.
First, as indicated above, the law is poorly drafted and ambiguous. I have no idea what it covers. I have the same reaction to most of Utah's efforts to regulate the Internet.
Second, I don't understand why this law rose to the top of the legislative priority queue. Part of that is because I have no idea who is bioprospecting in Utah. Are there flinty old bearded codgers, riding burros overburdened with pick axes, steel canteens and blankets, muttering to themselves that "there's biogold in them thar hills"? If not, then who's doing it, and how will this regulation affect them? Note that the Utah legislature only meets a couple of months out of the year, so they have limited space to produce laws. Given all of the other obvious legislative needs, why spend time on this law?
Third, like many other Utah laws, the law reflects an unstated assumption that if outsiders are coming into Utah to make money, the Utah government coffers deserve a little taste of the action. This brought to mind Utah's deplorable "don't spam the kids" registry, which really was just a backdoor way for Utah to try to tax out-of-state email senders. That efforts was a financial failure; I expect this law to be a financially poor decision as well.
On that point, I was shocked to see the fiscal note that this law had no appropriations and "this bill likely will not result in direct, measurable costs and/or benefits for individuals, businesses, or local governments." Really? First, if there's no law enforcement, I imagine most folks will ignore the law. Second, the state will undoubtedly incur some costs to promulgate the statute's contemplated regulations and to negotiate individual licenses with registering bioprospectors. Third, the imposition of the licensing scheme constitutes a transaction cost that discourages some of the regulated activity from occurring in the first place. Some might conclude that outcome is ultimately a good thing, but it almost assuredly has economic consequences. I cannot figure out how this bill got such a clean financial report. Given the Utah legislature's sensitivity to costs, I bet a more thoughtful fiscal report would have slowed (and probably scuttled) the bill's passage.
Posted by Eric at 10:50 AM Permalink | General , Patents | TrackBack (0) | Printable Version
March 09, 2010
TradeComet v. Google Dismissed Based on Venue Selection Clause
By Eric Goldman
TradeComet.com LLC v. Google, Inc., 2010 U.S. Dist. LEXIS 20154 (SDNY March 5, 2010)
The judge has (finally) dismissed TradeComet's antitrust lawsuit against Google based on the venue selection clause in Google's AdWords contract.
The result isn't very surprising. It is consistent with recent similar rulings, such as the uncited Miller v. Facebook and Flowbee v. Google rulings. The latter ruling recently dismissed an advertiser lawsuit against Google (in that case, trademark instead of antitrust) based on the AdWords venue selection clause. The court said that TradeComet's antitrust concerns are sufficiently related to the AdWords relationship to be included within its mandatory venue selection clause.
The most interesting point is that the court upheld Google's agreement despite the fact it contains a "we can change this agreement whenever we want" provision. I've argued before that those provisions are toxic, but B2B contracts can get a little more slack than B2C contracts.
Having won yet another ruling that its AdWords venue selection clause requires lawsuits to be brought in Google's home court, it reiterates again that Google almost certainly breached its own contract by bringing a collections lawsuit against myTriggers in myTriggers' home court. Google will most likely pay for that mistake by losing its ability to pull the case back into California, even though the case has morphed into a major antitrust showdown.
Posted by Eric at 02:39 PM Permalink | Search Engines | TrackBack (0) | Printable Version
March 08, 2010
Crowdsourced Ads May Not Be Protected by 47 USC 230--Subway v. Quiznos
By Eric Goldman
Doctor's Associates, Inc. v. QIP Holders LLC, 2010 WL 669870 (D. Conn. Feb. 19, 2010). My prior post on this case.
As a long-time vegetarian (over a quarter-century), I find America's obsession with "more meat" competitions simultaneously amusing and repulsive. On my personal blog, I have routinely chronicled the "burger wars" between heartland restaurants trying to outdo each other by offering bigger and bigger burgers. As far as I know, the current high-water mark is the Beer Barrel Main Event Charity Burger, a 123 pound burger that includes 80 pounds of meat. See the photo. If you're one of those people who thinks a burger can never have too much meat, good luck working on that bad boy.
Today's post involves subway sandwiches instead of burgers, but it turns out that subway sandwich restaurants’ competition over claims of having more meat is no less stiff. Quiznos kicked off the war in 2006 by launching a "double meat" line of sandwiches. Quiznos ran two TV ads comparing the meat in its sandwiches to Subway's and set up a website soliciting individuals to make and submit their own comparative digital video ads. Subway was not amused and ultimately filed a seventh amended complaint (!) over Quiznos' ad campaigns. (What a patient judge).
The parties hotly contested every aspect of the litigation, and Rebecca does a thorough recap of the lengthy ruling. I'm going to focus on the court’s discussion of the crowdsourced video ads published on Quiznos' ad campaign website, which Quiznos defended on 47 USC 230 grounds.
Citing the MCW v. Badbusinessbureau case from 2004, the court says "the critical inquiry with respect to CDA immunity in this case is whether the Defendants merely published information provided by third parties or instead were actively responsible for the creation and development of disparaging representations about Subway contained in the contestant videos."
The MCW decision was questionable even at its time, but it's bizarre to see the court reach into history for this obscure, archaic, unpublished and geographically distant (it was a TX precedent being cited in a CT court) district court precedent. To do this, the court bypasses dozens of more recent—and more thoughtful—cases, including the multiple Ripoff Report cases that have expressly and implicitly rejected the MCW case. A more natural citation would have been the Roommates.com case, which also referenced legal distinctions between active/passive websites similar to the legal standard quoted above. However, if the court had followed Roommates.com, it almost certainly would have ruled for the defense, as Quiznos didn't require illegality or even channel users towards illegality. (Rebecca makes the same point). Therefore, I'm baffled how the court got to this legal standard citing this legal precedent.
Using this odd legal standard, the court says it's up to the jury to decide if Quiznos just exercised traditional editorial control or impermissibly "actively participated in creating or developing the third-party content submitted to the Contest website."
Unquestionably, sending this case to a jury is a 230 loss, but how bad is unclear. We'll never find out what the jury would do with the case because the parties promptly settled the case after this ruling. However, a plaintiff's ability to hold a case open through trial, rather than having it disposed of earlier in the proceedings, would itself represent a significant win for plaintiffs--it would mean plaintiffs can get discovery to fish for embarrassing facts, force the defense to incur lots of litigation costs, and get a chance to tell their sob story before a jury. (FWIW, I am not aware of any 230 case that has ever reached a jury—am I forgetting something?) Nevertheless, I think very few courts will follow this precedent given the plethora of more persuasive precedents and the fact that Quiznos' crowdsourced ads were just one part of Quiznos' larger allegedly false ad campaign. Therefore, I don't expect this 230 loss to spread to many other cases.
I also don't think this case shines much light on the legitimacy of crowdsourcing ads. There's no reason to believe that crowdsourced ads are per se problematic. At the same time, if the advertiser uses the ads offline, clearly the advertiser "adopts" the ad and takes full responsibility for its contents. If the advertiser only publishes the ad online, 230 might be available but the advertiser still might tread cautiously due to the FTC Endorsement and Testimonial Guidelines, which basically ignores 230 and holds advertisers liable for certain types of third party advertisements anyway. I think 230 may nullify this part of the FTC guidelines, but most advertisers would rather not tangle with the FTC to establish the deficiencies in the FTC's thinking. As a result, I expect most advertisers will vet most crowdsourced ads, even if they only publish them only, as if the advertiser is legally responsible for the ads and not protected by 230.
BTW, the Subway v. Quiznos lawsuit isn't the only litigation over subway restaurants' claims of double meat. In an apparently unrelated lawsuit, last month a class action suit was filed over Blimpie's "Super Stacked" sandwich for overclaiming that it had double meat.
I confess some schadenfreude when I see lawsuits against meat pushers for overhyping meat quantities. I would not shed a tear if the meat pushers lock up each other in litigation death struggles and sue each other to oblivion. Of course, consumers can facilitate that outcome by refusing to patronize vendors who "compete" with each other by encouraging us to overconsume the Earth's resources.
Posted by Eric at 07:16 AM Permalink | Derivative Liability , Marketing | TrackBack (0) | Printable Version