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June 30, 2005
Symantec Sues Hotbar for Declaratory Judgment That Symantec's Classifications/Descriptions Do Not Create Liability
Symantec Corp. v. Hotbar.com, Inc., Case No. C05-02309 (N.D. Cal. complaint filed June 7, 2005).
This complaint was filed 3 weeks ago, but I was only able to get a copy of the complaint today. Even then, I have not yet seen or uploaded the 169 pages of exhibits; I will try to get those online soon. [UPDATE: see below--Exhibits are now online]
As helpfully catalogued by Ben Edelman, a fair number of software vendors have demanded that anti-spyware vendors or anti-spyware critics stop characterizing their software as “spyware” or “adware.” In this complaint, Symantec fights back against one such demand, seeking a declaratory judgment that Symantec’s descriptions and characterizations of Hotbar’s software do not create legal liability.
Specifically, as best as I can tell from the complaint (without the exhibits), Symantec has characterized Hotbar’s software as “adware” (Para. 32), which Symantec defines as “Programs that facilitate delivery of advertising content to the user through their own window, or by utilizing another program’s interface. In some cases, these programs may gather information from the user’s computer, including information related to Internet browser usage or other computing habits, and relay this information back to a remote computer or other location in cyber-space. Adware can be downloaded from Web sites (typically in shareware or freeware), email messages, and instant messengers. Additionally, a user may unknowingly receive and/or trigger adware by accepting an End User License Agreement from a software program linked to the adware or from visiting a website that downloads the adware with or without an End User License Agreement.” (Para. 9).
In addition, Symantec described Hotbar’s software as follows: “Adware.Hotbar adds graphical skins to Internet Explorer, Microsoft Outlook, and Outlook Express toolbars and adds it [sic] own toolbar and search button. These custom toolbars have keyword-targeted advertisements built into them. Adware.Hotbar can send information on browsing habits to various servers, which may be used for targeted marketing.” (Para. 34).
As far as I can tell, these two statements (the labeling as “adware” and the description of the software) comprise the entire set of "statements" that Symantec is concerned about creating liability. Symantec seeks a declaration from the court that the characterization and description:
· Is accurate
· Does not create trademark infringement
· Is not trade libelous or disparaging
· Does not intentionally/negligently interfere with contract
· Does not intentionally interfere with prospective economic advantage.
These requests indicate the types of claims that Symantec feels that Hotbar could theoretically bring against Symantec. Presumably, these also represent the types of claims that software vendors might generally bring against anti-spyware vendors or critics.
So far, so good. However, I was surprised at how many seemingly extraneous and gratuitous facts were alleged in the complaint. It appears that Symantec alleged a bunch of facts whose only relevance is to illustrate how Hotbar is not a good corporate citizen. While I know many anti-spyware vendors and critics feel this way, Hotbar’s corporate citizenry has absolutely zero relevance to the merits of Symantec’s classification or description.
Some examples of the gratuitous remarks. First, the complaint spends several paragraphs talking about “spyware” and how lots of institutions don’t like Hotbar’s software. I assume this is designed to make readers of the complaint think negative thoughts about Hotbar by implicating that it might be spyware. Only problem—at least as alleged in the complaint, Symantec never called Hotbar “spyware” either in the classification or description at issue, making all of the discussion about "spyware" completely irrelevant to the complaint.
Second, the complaint makes extraneous remarks such as that Hotbar has a really long EULA (Para. 24) and that it targets its application to kids (Para. 26). True or not, these facts once again have nothing to do with Symantec’s description or classification (i.e., Symantec's definition of adware does not implicate either EULA length or target audiences).
I understand litigators play hardball; that’s why they get paid the big bucks. However, litigators can go too far, and personally I think it’s unprofessional to put facts in a complaint that have no relevance to the causes of action but instead serve only to smear the defendant’s character. I’m not 100% convinced that happened here; perhaps the exhibits make some of these facts relevant. If not, then these facts should not be in the complaint, and Hotbar probably could get the judge to strike them if it chose to go that route. Further, if these facts are truly irrelevant, then I find their inclusion in the complaint entirely consistent with the general anti-spyware zealots' campaign to misdirect and obfuscate the real legal issues in a hope that sufficient taints by association can lead to their desired outcome regardless of the law or what constitutes the best social outcome.
Despite the complaint's seemingly gratuitous attempt to smear Hotbar, I nevertheless applaud Symantec for standing up for its classification and description. I can’t opine on the merits of Symantec’s allegations or the merits of its case; that’s for the court to decide. However, I remain deeply troubled that software vendors are attacking anti-spyware vendors and critics solely to bully them into changing their legitimate opinions. We need room for honest critiques of software vendors, and nastygrams can distort the marketplace by excising helpful but critical comments that consumers need to know.
Therefore, we need some counterweight against the senders of bogus nastygrams to discourage them from sending such letters without fear of negative consequences. I’m a little disappointed that Symantec—if they really believe in the accuracy of their classifications and descriptions—didn’t try harder to find some affirmative causes of action it could have brought against Hotbar based on their nastygrams.
Finally, the complaint indicates just how much we would all benedit from consistent, widely-accepted definitions of adware and spyware. Symantec's complaint introduces no less than 6 different definitions of adware, each with their own unique nuances. I know the CDT is leading an effort to come up with good definitions, and I'm watching this effort closely. I remain hopeful but cynical that we can reach consistent definitions so that we can at least all speak the same language.
UPDATE
Ben Edelman has graciously agreed to host the 6MB+ of exhibits, which unfortunately came off PACER in seven different PDFs.
Exhibits A-E
Exhibits F-H
Exhibits I-J
Exhibits K-M
Exhibit N (part 1)
Exhibit N (part 2)
Exhibits O-Q
Posted by Eric at 10:36 AM | Adware/Spyware | Comments (1)
June 28, 2005
Shocking Revelations About BitTorrent
By Mark Schultz
Ernest Miller, Ed Felten, and I (clearly the lesser blogger of the three) have been blogging about what happens to BitTorrent after Grokster.
Ernie Miller has discovered a circa 2001 cybermanifesto in which BitTorrent creator Bram Cohen declared himself a "a technological activist" who "further[s] my goals with technology. I build systems to disseminate information, commit digital piracy, synthesize drugs . . ." (emphasis added). Ernie has determined that the cybermanifesto appears to have been posted around the time Cohen was first working on BitTorrent. [Update: Bram Cohen has revised his site to say that the manifesto is a parody, first posted in 1999] In the words of an esteemed philosopher, "D'oh!"
This appears to be the work of a young man (he would have been about 26), written in the Estimated Prophet style of serial cyberdeclaration writer John Perry Barlow. I've written things I wish I could take back in the digital era, but I'm glad my own days of impetuous youth were drawing to a close by 1994. An aggressive lawyer suing Cohen and BitTorrent, Inc. would (will) be sure to make the most of this statement.
The question is, just how much can be made of this statement? Ernie Miller asks: "How far will a lawsuit under the active inducement standard as articulated in Grokster go with this statement? Will this open the door to discovery? Will this make the addition of search engine (with advertisements) look like a bad act? Will it make trackerless BitTorrent look like a bad design decision?" Those are all great questions, probably of some concern to Bram Cohen and his friends. I wish him well, especially since he has created wonderful and beneficial technology, apparently with the best of motives, notwithstanding this one particular statement.
I don't have the time to consider and offer my answers to all of Ernie's thoughtful questions. I would like to make one point: There is a difference between Bram Cohen and his company, BitTorrent, Inc., and BitTorrent the technology. The fate of BitTorrent as a technology should not depend on Bram Cohen's intent in developing it. I think that if courts develop the Grokster standard the "right" way (the way I would like), they will draw a distinction between the acts of people and technology. Like the old saw about guns and people, we should say that technology doesn't commit infringement; people use technology to commit or induce infringement. Technology should not be suppressed just because a particular developer or distributor induced infringement. The rare exception to this principle would be a piece of technology (e.g., a satellite descrambler) that has no substantial non-infringing use. (Of course, Justice Ginsburg and two other justices disagree with this interpretation of Sony (Footnote 1 of the concurrence)).
A positive development from Grokster would be to move the focus of the contributory liability debate regarding technology from how end users employ technology to the actions of its promoters. Sony has caused too much focus on how the technology is used by end users after the fact. While actual or potential use of technology by end users is a reasonable basis for a safe harbor from liability, it can be a troublesome basis for imposing liability. After the fact, use-based tests for liability, like Judge Posner's cost-benefit balancing test in Aimster suppress innovation by making life incredibly dangerous for developers. You don't know if you are liable until you see what people do with your product, and if that use changes, you could later become liable. The Grokster inducement standard is more likely to create certainty, because one's liability is based on one's own actions.
The unfortunate thing is that the Grokster opinion leaves room for a plaintiff to bootstrap inducement from the later actions of end users. If the standard evolves in this direction, it will be harmful. We must avoid this "bootstrap effect" to maintain access to innovative technology. Even if Bram Cohen had "bad intent" in developing BitTorrent (I don't think he did), all subsequent distributors of BitTorrent should not be accountable for his actions or the actions of some end users. Such a distributor should be able to avoid liability, so long as substanstatial non-infringing uses are possible and the distributor does not actively induce infringment.
Posted by Mark Schultz at 08:45 PM | Copyright , Derivative Liability | Comments (1)
More on BitTorrent and Grokster
Mark Schultz
Ernest Miller notes that I should address the new trackerless BitTorrent and BitTorrent search created by Cohen. He was right. So, here goes.
As Wired News reported a few weeks back, Bram Cohen and fellow developers released two innovations to BitTorrent: First, a BitTorrent search engine, and second a trackerless version of BitTorrent. These innovations create toughter questions than the original BitTorrent.
First, the search engine is BitTorrent's first commercial venture, as it accepts advertisements. If you type "star wars" into the search engine, you find links to several torrents, one of which apparently is a pirated version of Revenge of the Sith. (Here's a link to the search, but don't expect the results to stay the same.) What I found interesting is that Sith was only one of the results. The rest appear to be for fan films, which Lucas allows (with occassional equivocation) fans to create and distribute. So, most of the results I found were legal. I suspect this relatively clean result means that Cohen et al. are policing the links. (I may have chosen a biased example, since the BitTorrent folks must know that BitTorrent use in the pirating of Sith has made the movie industry very angry.)
It appears that the new BitTorrent search engine would qualify as an "information location tool" under 17 U.S.C. § 512 (d). This section of the Copyright Act provides a safe harbor from liability for search engines and similar services that comply with its provisions. For qualifying services, it sets up a notice and takedown regime. The problem is that section 512(d) is not an absolute shield. To qualify, the service provider must not have "actual knowledge" of infringement or "aware[ness] of facts or circumstances from which infringing activity is apparent." If BitTorrent.com becomes an open and notorious source for links to infringing torrents, it could face trouble. At the very least, they are likely to spend a lot of time taking down links, as Mark Lemley notes in the Wired article.
What probably will matter most in the long run is the behavior of Cohen et al., rather than how the search engine functions. My hope (and I believe a reasonable reading of Grokster) is that Grokster establishes a principle that people, rather than technologies, do bad things. Looking at the three key "bad behaviors" from Grokster (see my earlier post), we can see a roadmap for "good behavior."
The first question is whether BitTorrent.com is directing its promotion its service to large numbers of infringers. As detailed in my earlier post, Cohen and his fellow developers have a long and credible history of building and promoting BitTorrent for legal use. They continue to talk the right talk. As Wired reports,
"the company is eager to highlight its utility as a completely lawful program for furthering free speech. That's the vision that drives the company, says [COO Ashwin] Navin -- now anyone can publish their own movies, music or software, because BitTorrent all but eliminates expensive bandwidth costs."
Cohen et al. will need to be very careful not to promote illegal filesharing, but they have done a good job so far. They have control over the message they present--they need to maintain a steady, moderate line of promoting legal uses. Greedy talk of how people can download lots of music or revolutionary talk about overthrowing the music industry would only get them in trouble.
BitTorrent.com can also control how it looks with respect to the third "bad fact" from Grokster--will its business model depend on attracting lots of downloaders of illegal material? In many respects, the new search engine appears to be a lot like Google (in substance and appearance). It helps people find stuff; the stuff in this case happens to be torrents. The question is what is the affect if some (or most) of those torrents happen to be illegal? If BitTorrent keeps its search pages clean enough to comply with the Section 512 safe harbor described above, then it likely is fine. If it does not, then it likely will be known as a vast collection of infringing links, and thus its business model will appear to be based on inducing infringement.
The second of the "bad behaviors" in Grokster is more troubling: The inference of bad intent from the failure to create filtering mechanisms. As Susan Crawford, and others have pointed out, footnote 12 of the opinion seems to discourage the creation of duty to filter: "Of course, in the absence of other evidence of intent, a court would
be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial noninfringing uses. Such a holding would tread too close to the Sony safe harbor." If that understanding holds, then the marketing, promotion, and business model will be the key factors in avoiding inducement.
The new trackerless version of BitTorrent presents similar considerations. To put it simply, this innovation makes it easier for people to set up torrents on their own web sites and blogs. Torrents thus may become even more decentralized and harder to find. Arguably, as Ernest Miller points out, this is a design decision that facilitates infringement, so a court might infer intent to induce. As I noted above, footnote 12 of the decision likely makes the marketing and business model aspects more important than the design aspects. As I have said, Cohen et al. have always placed the right emphasis on legal sharing and continue to do so, describing the trackerless version as embodying "our hope that BitTorrent will enable more independent web publishing." As Ernest Miller puts it, "Bram Cohen must remain purer than Caesar's wife."
Ultimately, none of this will stop BitTorrent's developers or any other developer from getting sued. As I told my clients in practice, if somebody wants to sue you, they will.
UPDATE: See here for further blogging on "shocking" revelations about BitTorrent.
Posted by Mark Schultz at 12:54 PM | Copyright , Derivative Liability
Important 2d Circuit Adware Case--1-800 Contacts v. WhenU
1-800 Contacts, Inc. v. WhenU.com, Inc., Docket Nos. 04-0026-cv and 04-0446-cv (2d Cir. June 27, 2005).
Overshadowed by yesterday’s Grokster mania, the Second Circuit finally issued an important ruling about WhenU's liability for trademark infringement.
The court found that WhenU was not liable for trademark infringement as a matter of law: "We hold that, as a matter of law, WhenU does not 'use' 1-800's trademarks within the meaning of the Lanham Act, 15 U.S.C. 1127, when it (1) includes 1-800's website address, which is almost identical to 1-800's trademark, in an unpublished directory of terms that trigger delivery of WhenU's contextually relevant advertising to C-users; or (2) causes separate, branded pop-up ads to appear on a C-user's computer screen either above, below, or along the bottom edge of the 1-800 website window."
By rejecting 1-800 Contact's case for lack of a trademark "use," which is a precondition for any trademark infringement liability, all other aspects of the trademark case (likelihood of confusion, defenses) were moot. In other words, if the plaintiff can't establish trademark use, then trademark infringement defendants are entitled to summary judgment regardless of any other alleged facts. Thus, the appellate court did not remand the case to the district court for further fact-finding; instead, 1-800 Contacts loses as a matter of law, and 1-800 Contact's trademark claims are completely dead unless they want to appeal the case to the Supreme Court (which would strike me as an odd move here). Because 1-800 Contacts already lost its copyright case, I think their case is effectively dead as well.
What Does This Case Mean?
I think the opinion is generally great. The lower court opinion was truly awful, and the Second Circuit clearly and unambiguously rejected that opinion. In particular, the court gave us lots of insights into what constitutes trademark "use" in the Internet keyword context. There has been considerable confusion on this very question, and the Second Circuit's opinion will be persuasive precedent in all future cases throughout the nation.
The court also understood that this case involved important issues about how consumers look for wanted information and pick preferred tools to do so. Specifically, the court derisively rejects WhenU’s repeated exhortations that WhenU’s pop-up ads are “unauthorized.” The court emphatically states that contemporaneous displays of software windows on a user’s computer screen do not need to be authorized by a trademark owner. The court then notes that WhenU’s pop-up ads are authorized because the user downloaded the software. The court fully appreciates that 1-800 Contacts’ arguments had the potential to take choices away from consumers about how they manage their computer desktop and windows, and the court correctly shuts down this anti-consumer effort.
Amidst the abundance of good news, I do have a few minor twinges of disappointment. Most notably, the court did not discuss the "initial interest confusion" doctrine at all. This doctrine has junked up Internet jurisprudence since 1999, and the lower court opinion exemplified exactly how courts misuse the doctrine. Thus, I was hoping that the Second Circuit would confront this issue and, optimistically, give us a clear statement of the doctrine. That clear statement will have to wait until another day.
Also, the opinion is plagued by several odd arguments that mostly seemed designed to limit the case to WhenU's facts. As a result, this opinion may offer very limited utility to search engines regarding their practices of selling keyword-triggered ads. This is unfortunate because we desperately need clarity on this topic, and the court's reasoning easily could have extended to search engines.
Finally, I fear this case will only exacerbate the trend where plaintiffs like 1-800 Contacts use their legislative influence to convince state legislators to pass protectionist/anti-consumer anti-adware laws like Utah and Alaska have done. Under the Second Circuit’s reasoning, the Utah anti-adware law is currently ineffective against adware vendors (at least, as applied to WhenU) because it requires trademark infringement as an essential element of the claim, and the lack of trademark use means that WhenU is not committing trademark infringement as a matter of law. However, Alaska's anti-adware law has no such requirement--an omission that, I think, reinforces both its unconstitutionality and preemption by federal law—which may also lead other states to replicate Alaska's law as a "model."
Whether this battle is fought in courts or the legislatures, this opinion does not end the battle over keywords, adware or how law can help (or hurt) consumers in making choices. Nevertheless, this case will have a major impact in the Second Circuit and beyond, and fortunately the opinion reaches the right result and makes a number of great points in doing so.
What Constitutes Trademark “Use”?
The court unambiguously says that WhenU did not engage in trademark use. In doing so, it points to two previous cases, Wells Fargo v. WhenU and U-Haul v. WhenU, where district courts had found that WhenU had not engaged in trademark use. The lower court simply ignored this precedent, and the Second Circuit properly chided the judge for cutting this corner. As the court says: “the district court’s consideration of these two comprehensive decisions on the precise issue at hand was confined to a footnote in which it cited the cases, summarized their holdings in parantheticals, and concluded, without discussion, that it ‘disagree[d] with and [was] not bound by these findings.’….Unlike the district court, we find the thorough analyses set forth in both U-Haul and Wells Fargo to be persuasive and compelling.”
The court then discusses how keyword triggers and displaying pop-up ads do not constitute a trademark use:
Trademarked Keywords in the Database Used as Triggers
The court says that WhenU does not use 1-800 Contact’s trademarks when it puts the term in its database of keywords that trigger ads. The court properly notes that WhenU “does not ‘place’ 1-800 trademarks on any goods or services in order to pass them off as emanating from or authorized by 1-800.” Later, the court correctly says that including the term into WhenU’s database “does not create a possibility of visual confusion with 1-800’s mark.” Thus, the court understands that if consumers do not see or perceive the trademark in association with the defendant’s goods or services, there is no trademark use. This is a point that many courts simply overlook or misunderstand, and the Second Circuit gets it 100% correct here.
However, in support of this point, the court makes an odd distinction between “www.1800contacts.com” and the trademark “1-800Contacts.” The court says that www.1800contacts.com “functions more or less as a public key to 1-800’s website.” I have no idea what the court means by this. The court could have said that the term www.1800contacts.com is functional and thus is not entitled to trademark protection, but the court doesn’t say that. If it did, we would have a hard time understanding why the trademark “1-800Contacts” isn’t also functional (it’s the “public key” to calling the company).
I think the court is trying to distinguish between using words as trademarks and using words for other cognitive or semantic meanings. I support such a distinction, but it is a difficult distinction to make. This brings to mind the attempted distinctions made by the district court in Playboy v. Netscape. In that case, the search engine was triggering ads on the words “playboy” and “playmate,” and the lower court said that the search engine was using the words as dictionary words, not for their trademark meaning. I think this subjective inquiry is dangerous (I would rather focus on what consumers understand the words to mean), and the distinction only applies to trademarks that are also dictionary words (i.e., not fanciful terms).
Is the Second Circuit trying to revitalize that distinction? It seems so. The court says that WhenU is using the term www.1800contacts.com “precisely because it is a website address” while for WhenU to have capitalized on the trademark’s fame/recognition, WhenU would have had to include the exact trademark (1-800Contacts) in the database. Thus, arguably the court could, in the future, distinguish any other keyword in the WhenU database that aren’t a URL. The court recognizes this potential but sidesteps it. In FN 11, the court says that it doesn’t opine on whether including the exact trademark in the database is necessarily infringing. Too bad—we’d like to know the answer to that question!
The court then further limits its reasoning to WhenU-specific facts when it notes that WhenU customers cannot buy specific keywords. Instead, WhenU sells topical categories, so customers cannot “request or purchase specified keywords to add to the directory.” This distinguishes WhenU from other adware companies, but it also distinguishes WhenU from all search engines that sell individual keywords. I don’t think it’s fair to read the opinion for the converse proposition—that selling individual trademarked keywords is a trademark use—but the opinion arguably leaves that possibility open.
Finally, in a footnote, the court takes a dig at 1-800 Contacts for duplicity. The court notes that 1-800 Contacts has bought keyword-triggered ads in adware using trademarks of its competitors (including the advertiser defendant in this case, Vision Direct). Note to plaintiffs: courts don’t like it when you engage in the same behavior that you claim caused you harm.
Placing Pop-Up Ads Over Plaintiff’s Website
The court says that placing pop-ads on 1-800 Contacts’ website is not a trademark use because the ads do not display the 1-800 Contacts’ trademarks. This is a confusing statement because some ad copy could have displayed 1-800 Contacts’ trademarks (if only to make comparative advertising, or perhaps more confusingly). It’s not entirely clear how the court can make a sweeping factual statement about the ads’ contents.
However, the court might not care about the ad copy, at least for purposes of WhenU’s liability. WhenU’s ads were labeled as coming from WhenU, so the court might be saying that WhenU didn’t display the trademarks itself and therefore the court cares less what was in the advertiser’s copy. Note that Google’s contributory liability for ads that contained the GEICO trademark is the remaining issue in the GEICO v. Google case.
The court continues by arguing that the pop-up ads are not directly triggered by 1-800 Contacts’ trademarks. In support of this argument, it again makes the distinction between a URL and the trademark, but it also says that the pop-up ads could have triggered by a number of terms other than 1-800 Contacts’ trademarks, including “contacts” and “eye care.”
In my mind, there are lots of reasons why the pop-up ad could have appeared, and we can’t make any assumptions about what happened, why it happened, or what consumers expected. The court fully gets this point. It notes that WhenU users receive ads “in a myriad of contexts,” and then in FN 14 it fully embraces the point: “1-800’s claim that C-users will likely be confused into thinking that 1-800 has sponsored its competitor’s pop-up ads is fairly incredulous given that C-users who have downloaded the SaveNow software receive numerous WhenU pop-up ads – each displaying the WhenU brand – in varying contexts and for a broad range of products.”
Reinforcing that simply overlaying pop-up ads on plaintiff’s website isn’t trademark use, the court analogizes to offline trademark “adjacencies”—such as how retail stores put their house brand next to branded products on store shelves. I have a lot more to say about adjacencies in a future paper. However, I think the court is 100% correct that adjacencies should not be a trademark “use,” and I further think the court understood that the pop-up ad is just another form of adjacency.
Finally, the court again notes that WhenU’s practices differ from other adware companies and search engines because WhenU sells categories, not individual keywords. As with the prior discussion, I would not read this opinion for the converse proposition (i.e., selling individual keywords is a use), but the liability seems to be left open.
My Bias
I worked with the Electronic Frontier Foundation to file an amicus brief in favor of WhenU. Although the brief didn't get cited, it may have been helpful to the court to recognize the important social issues implicated by the case and to see how the lower court opinion was a travesty that needed to be soundly rejected. I have also written a lengthy law review article criticizing the lower court opinion (among others) and making several arguments that dovetail well with this ruling.
Posted by Eric at 12:35 PM | Adware/Spyware , Derivative Liability , Trademark
What Happens to BitTorrent After Grokster?
By Mark Schultz, Assistant Professor, Southern Illinois School of Law
Thanks to Eric for the chance to guest blog here. And congratulations to Eric for predicting the decision right. He called it about a month ago--I was there, under a tree in front of the lodge at Zion National Park.
Now that the Supreme Court has spoken in Grokster, many are eager to know what happens next. Not what’s next for Grokster and Streamcast. They are yesterday’s news, doomed to be overwhelmed by phalanxes of music industry lawyers. No, the question is what will happen to BitTorrent, the next-generation filesharing program that one study claims now accounts for the majority of file sharing traffic and 35% of all Internet traffic.
BitTorrent and its creator, Bram Cohen, should be just fine. Some services that use BitTorrent to promote infringing file sharing for commercial gain, like the now defunct Suprnova.org, are most likely in trouble. The difference in results points to one fortunate aspect of today’s decision. The Court’s holding focuses on “bad actors,” not “bad technology.” In that respect the safe harbor of Sony still stands. (Whether the prospect of having to defend oneself as a “good actor” will stifle technological development is a subject for another post or a law review article).
Why are BitTorrent and its creator okay? I've researched BitTorrent's development for a forthcoming article on copyright and the jam band community. Jam bands are bands like the Grateful Dead and its vast and diverse progeny who allow fans to record concerts and exchange the recordings legally. Cohen has said he developed BitTorrent in response to the needs of his friends in the jam band community who were legally downloading shows. One of the earliest version’s of the BitTorrent FAQ indicates it was being developed for legal trading by "etree" (the online community at the center of the jam band world). The FAQ reads:
“BitTorrent's customer is etree. Etree is a loose-knit community of people who distribute live concert recordings online. They never charge money, and only distribute recordings of bands which give permission. Etree suffers from not having nearly as much upload offered as there is download demand, a problem BitTorrent is intended to solve.”
From what I have been able to determine, the files used to test BitTorrent during development were legally shared jam band files. Cohen’s innocent intent is significant under today’s ruling.
Today, the Court held that one could be liable for contributory infringement if for “distribut[ing] a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement.” The Court pointed out three notable pieces of evidence of intent: (1) Grokster and StreamCast attempted to capture and aggregate Napster’s vast audience of known infringers; (2) They did not attempt to filter infringing material; and (3) Their business model was based on making money by showing banner ads to large numbers of people. Cohen and BitTorrent (as a technology) come off looking pretty good.
First, BitTorrent looks far better than Grokster and Streamcast under the Sony standard. What the Sony standard is after today will be the question for some time. It appears that Justice Breyer and two others would definitely excuse a product like BitTorrent as there is a substantial non-infringing use (etree). One presumes that Justice Souter and two others probably would, or else they would have followed Justice Ginsburg’s lead in promoting a version of Judge Posner’s Aimster balancing test.
Under Justice Ginsburg’s more demanding formulation (which appears to have only 3 votes), BitTorrent might be in trouble. Would Justice Ginsburg go this far? Her opinion dismissed the evidence of the band Wilco using Grokster et al to distribute Yankee Hotel Foxtrot as merely anecdotal. (One would think that Yankee Hotel Foxtrot would have taught people to stop dismissing Wilco, but that’s another story.) Would she dismiss etree so quickly? Yes, BitTorrent is massively used to pirate movies, but the non-infringing use of BitTorrent is also substantial. It was developed for the jam band community for legal usage, and continues to foster thriving, well-policed legal usage in that community. I would hope that if faced with BitTorrent, Justices Ginsburg, Kennedy and Rehnquist would see one of the messages of today’s decision: Technology doesn’t commit infringement; people commit (or induce) infringement.
So, would Cohen and the other original BitTorrent developers be on the hook as inducers? Probably not. There appears to be no “clear expression or other affirmative steps taken to foster infringement.” With respect to the three key facts cited by the Court, they are quite different from Grokster and Streamcast’s developers. They did not attempt to aggregate or capture a pre-existing group of infringers. Quite the contrary, as they said “BitTorrent's customer is etree,” a group of law abiding . . . Deadheads. They were not trying to make money by showing ads to infringers. While they did not attempt to filter infringing material, I would argue that the original intended users (etree) monitor torrents for legality and still do (banning the i.p.s of violators).
In sum, Bram Cohen and the original BitTorrent (as a technology) look pretty safe post-Grokster. BitTorrent's unique history and the existence of the etree community are great protection.
Sites like the now defunct Suprnova, most likely are not. Such sites add a commercial layer on top of BitTorrent (banner ads). The commercial layer is not the problem; the problem is that they drive traffic by linking to infringing torrents. They also promote the presence of infringing torrents via ads and paid search engine placements. In short, they are the sort of bad actors that today’s decision wishes to reach.
UPDATE: Ernest Miller notes that I should address the new trackerless BitTorrent and BitTorrent search created by Cohen. He was right. So I did here.
UPDATE 2: See here for further blogging on "shocking" revelations about BitTorrent.
Posted by Mark Schultz at 09:26 AM | Copyright , Derivative Liability | Comments (4)
Guest Blogger--Mark Schultz
I'm pleased to introduce Mark Schultz as a guest blogger. Mark is a law professor at Southern Illinois University, where he teaches intellectual property courses and legal ethics. Prior to becoming a law professor, Mark was an IT and IP attorney at Baker & McKenzie and the Pattishall firm (both in Chicago). Mark and I share many common interests, and I'm looking forward to hearing what he has to say.
Meanwhile, John Ottaviani will continue to guest-blog. Only a vacation kept him away from sharing his thoughts on Grokster yesterday (an omission that I'm sure will be cured on his return...!).
Posted by Eric at 09:11 AM | General
June 27, 2005
Grokster Ruling Commentary
In this post, I'll summarize some of the various blog reactions to Grokster that I've come across. You should start with my own, of course!
For another good roundup (with some overlap to this post), see Ernest Miller's The Importance Of...
SCOTUSblog. Lyle Denniston characterizes the ruling as a "sweeping victory for music recording companies and movie studios." (I don't agree).
James DeLong characterizes the rulings as an "amazingly clear, and good, set of opinions." On one level, I do think the opinions are clear--Grokster and StreamCast lose, and there is a new narrow doctrine of inducement. On the other hand, exactly what constitutes inducement, and the current meaning of the Sony "capable of substantial non-infringing use" language, seem remarkably unclear to me. I certainly would not want to be a judge interpreting a Sony defense in light of this opinion!
Larry Solum notes that the concurrence split on Sony "indicate where the lines are drawn for the next wave of P2P litigation." Separately, David Post points out the justices' split on the meaning of Sony.
At the WSJ roundtable, Michael Geist writes "BitTorrent may well have far less evidence of purposeful culpable expression, even with knowledge of infringement" and Ernest Miller writes " I think that the Court has done a pretty good job of pre-empting the possibility of much legislative action in Congress."
At the Picker MobBlog, Jessica Litman says "Given the Court's unanimity, I'm impressed by the lack on consensus on what the Sony standard means, these days." Doug Litchman should be happy with the favorable citation to his work and the general Supreme Court buy-in to his argument that intermediaries should take reasonable steps to avoid harm caused by their users, but he's not--because a thoughtful future defendant can avoid usig marketing that would trigger the inducement standard. He writes: "Surely the Court realizes that well-advised bad actors rarely leave smoking guns lying about. Hence the victory here looks hollow."
The EFF released a press release. Fred von Lohmann says "Today the Supreme Court has unleashed a new era of legal uncertainty on America's innovators...The newly announced inducement theory of copyright liability will fuel a new generation of entertainment industry lawsuits against technology companies. Perhaps more important, the threat of legal costs may lead technology companies to modify their products to please Hollywood instead of consumers." The press release continues "StreamCast is confident that it will pass muster under the new, multi-pronged test." I'm not so optimistic on this one!
William Patry writes: "I view the Court as having punted: they decided mainly an issue that wasn't in front of them (inducement) and didn't decide the one that was, the effect of Sony in the Internet era." He also shred the seeming unanimity of the case, commenting on the deep divide between the concurrences: "I think it greatly undermines [the case's influence], resulting, as predicted in a muddied, murky future."
Fred von Lohmann weighs in with a standalone blog post. On inducement, he writes "the Court's opinion may lead lower courts to conclude that once you find an overt act, however small, virtually everything else becomes relevant to divine your "intent." That would be a bonanza for entertainment lawyers eager to foist huge legal costs on defendants. Reminiscent, in some ways, of the securities class actions that have bedeviled high tech companies for years." Lots of other good comments--check it out.
Ina Fried at News.com takes a stab at winners and losers. Among her losers:
* eDonkey, LimeWire, Kazaa and others of their ilk--I do think some of these services seem like logical candidates to be sued next, especially to the extent they can be tainted by a Napster association
* MP3-only devices--I think this is a good example of someone who may be affected by their marketing. I remember Apple's marketing from a while back of "Rip. Mix. Burn." I think a marketing message like that from an MP3-only device could be intensely problematic.
* Discount music and movie lovers--I'm not sure if discount lovers will be bummed, but lovers of free copyrighted material may have to work a little harder than they have in the past.
Derek Slater at the EFF asks what is inducement? He writes that the doctrine allows "copyright holders and courts to second-guess every decision an innovator has made. Every marketing campaign, every design choice, every business plan, every document concerning how the software might be used are potentially fair game." All of this is true, but this isn't new--this is copyright law generally, and in the absence of a fact-independent safe harbor (like 47 USC 230), all of these questions are generally relevant in most types of lawsuits. He hits the mark better when he pokes fun at Friendster for having the seemingly problem phrase "-ster" as part of its name. I might add Monster.com to that list.
A Reuters story quotes Raymond van Dyke as saying that the Supreme Court had to reach this decision: "The justices really could not sanction the wholesale destruction of the content industry." Wayne Rosso laments "The bottom line is that consumers are going to have to get used to paying for their music. Period." This is not literally true of course; music producers can choose to release music for free, and plenty of already-illegal file-sharing will continue to take place irrespective of this ruling.
Susan Crawford praises the opinion. She thinks the inducement standard is relatively high: "If you've got a stated intent to help others infringe, and a bunch of "bad" ads, and lots of other evidence of culpable intent, and THEN someone writes to you and encourages you to adopt their filtering technology, and you don't -- well, then you might be liable for inducement."
Declan reports that Congress doesn't seem interested in an immediate legislative response to the case.
Dawn Kawamoto at News.com tries to show how start-ups might have problems raising money. Only time will tell, but I'm skeptical about this--business investing is filled with risks, and the risk of being sued for copyright infringement is just one of many risks.
AP story wonders about the impact on technological developments. It says "Might a broadband provider's claim of "faster downloads" be perceived as an inducement to steal copyrighted material? Will innovative startups have to hire legal teams to review every aspect of a business before it even incorporates?" But then it also says "most major technology companies declined comment, either saying they were studying the decision or did not see how it applied to their businesses."
Another good post from Doug Lichtman, this time saying: "The more I read, however, the more I think this looks like a loss for everyone -- or, worse, everyone except the determined bad actors."
Mark Schultz writes: "one fortunate aspect of today’s decision. The Court’s holding focuses on “bad actors,” not “bad technology.”" As a result, he predicts that BitTorrent and its creator should be safe, but commercial enterprises built on top of BitTorrent may not be.
Another good post from William Patry: "Grokster raises to me serious issues about the ability of the Court to deal with hard copyright technnology issues." My only observation is--you mean you had faith in the court's ability to deal with hard copyright cases prior to Grokster???
Mike Madison pokes at the meme that Grokster will reduce innovation. He writes: "Well, of course it will chill innovation. That’s the whole point of intellectual property law, isn’t it?" I had been formulating the exact same thoughts; Mike nails it before I can write them up.
If you want to relive the battle, the Copyright Office has posted all of the amicus briefs filed in the case.
Posted by Eric at 01:36 PM | Copyright , Derivative Liability
Grokster Supreme Court Ruling
Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd, Case No. 04-480. (US Supreme Court June 27, 2005).
What Happened
The Supreme Court unanimously reversed the Ninth Circuit’s upholding of summary judgment for the defendants, sending the case back to the lower courts to either consider MGM’s motions of summary judgment (which the court signals should be granted) or to conduct a trial.
There are three opinions: (1) the majority opinion, joined by all justices (9-0), finding that summary judgment for the defendants was inappropriate because MGM showed enough facts of “inducement” to defeat summary judgment, (2) a Ginsburg concurrence (representing the opinion of 3 justices), where she says that the defendants should lose under Sony, and (3) a Breyer concurrence (representing the opinion of 3 justices), saying that the defendants should have qualified under Sony.
Why Did It Happen
I think the Supreme Court reached the only logical result. It had to find for the plaintiffs. I say this because there was simply no way for the Court to ignore that Grokster and Streamcast were facilitating massive copyright infringement. As the court says, “the probable scope of copyright infringement is staggering” and “there is evidence of infringement on a gigantic scale.” If it ignored these facts, it was simply going to force Congress to act.
On the other hand, the Supreme Court had to acknowledge that the rights of copyright owners can go too far in limiting technological innovation. The majority touches on this briefly in the beginning of its opinion, but more telling is the relatively narrow ruling—and careful drafting—of its basis for reversing the Ninth Circuit. The Court really tried to make sure that it found a way to get Grokster and Streamcast without opening up too much new liability.
In particular, the fact that the Court simply sidestepped any broad pronouncements about Sony is telling. Although the opinion was unanimous that the Ninth Circuit should be reversed, the court appeared badly fractured on the meaning and application of the Sony rule. Thus, it simply tried to leave Sony for another day. One can almost imagine the discussion in chambers: there must have been clear agreement that the defendants should lose, but no agreement on how or why. As a result, the Court seized on an “inducement” theory as a way to avoid clarifying Sony.
The Inducement Theory
Is “inducement” a new basis of liability? I don’t think it's a radical new doctrine. Under standard articulations of the contributory copyright infringement doctrine, a defendant is contributorily liable when it, “with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another.” Gershwin Publishing Corp. v. Columbia Artists Mgmt., 443 F.2d 1159, 1162 (2d Cir. 1971).
So “inducement” was already part of contributory copyright infringement. One way to read this opinion is that the court merely amplified a new definition of what the word “induces” meant from Gershwin. The court’s definition: “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”
However, this definition does a couple of things to extend contributory infringement. Most specifically, the court is a little cagey about the knowledge requirement from Gershwin. As we saw in the lower court opinions in Grokster, there were plenty of questions about knowledge of what and when.
The court sidesteps all of those questions, but in doing so, I’m not sure it really overstates the rule. I think the court clearly interpolates some intent of infringement—a higher level of scienter than knowledge.
This is where the Sony rule should kick in—knowledge or intent should be irrelevant if the device-maker is protected by the staple article of commerce doctrine. The court handles the Sony rule bizarrely and in a way that is sure to spawn hundreds of law review articles. It recharacterizes Sony as merely offering/removing presumptions. The court says “Sony barred secondary liability based on presuming or imputing intent to cause infringement solely from the design or distribution of a product capable of substantial lawful use, which the distributor knows is in fact used for infringement.”
I think the court is trying to say that Sony permitted defendants to argue against any presumption of “knowledge” under Gershwin—and without knowledge, defendants are not contributorily liable. With this recasting, now, the court is suggesting that we don’t need to worry about the knowledge prong (or, alternatively, we can infer that knowledge exists) when the defendants induce infringement.
While we might obsess about the nuances of each word, conceptually I’m not sure the court’s semantic jujitsu really changes much of anything. I still think contributory copyright infringement requires scienter + actus reus. The scienter is still knowledge (or intent) of the infringements, and the actus reus is still some type of contribution/facilitation. Under inducement, the actus reus is building and marketing of the device as a way to infringe.
Did the Defendants Induce?
While I think the legal standard of inducement is not a radical restatement of the law, it could have a significant impact depending on how courts apply the doctrine to the facts. This is where I think the court went out of its way to make sure that Grokster and Streamcast lost. The evidence that supports that Grokster and Streamcast induced infringement was questionable. Abstracting from the facts, the court's basic thread seems to be:
· Napster was a bad actor
· Grokster and Streamcast tried to capitalize on Napster’s customer base after Napster’s demise
· It was wrong of Grokster and Streamcast to try to woo Napster’s customers knowing that Napster was a bad actor
In the end, the defendants appear to suffer a “taint by association”—by having been associated with the Napster collapse, they get tarred by the same brush.
Some of the specific facts that the court references:
· the defendants picked names that implicitly invoked Napster in customers’ heads
· the defendants offered the same basic services to customers that Napster offered
· internal StreamCast correspondence that the company was targeting former Napster users (which proves intent regardless of whether the messages ever reached consumers)
These facts are all ridiculously laughable. These are so defendant-specific and lightweight that it’s hard to take them seriously. Instead, the fact that the court showcases these facts reinforces that the court wants to make sure that Grokster and Streamcast lost in a narrow opinion.
The court also notes other facts that are more problematic from a precedent standpoint:
(1) the defendants aimed “to satisfy a known source of demand for copyright infringement” (i.e., former Napster customers). This factor again is Grokster/StreamCast-specific, although in theory this could be true of any technology provider whose products can be used to infringe. However, I'm not sure we'll find situations again where a company aggregates a group of infringing-hungry users, goes out of business due to copyright concerns and then is supplanted by companies targeting those users. As a result, so long as the courts don't overinterpret this fact, I'm not sure we'll see the fact pattern very often.
(2) Neither company tried to deploy filtering tools. The court says that this failure evidences that the defendants had no desire to reduce users’ infringement because filters would have reduced the software’s attractiveness to its users. However, in FN 12, the court says “in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial noninfringing uses.” So the court goes out of its way to say that merely failing to filter does not equal liability. However, it is possible that lower courts will misinterpret the court’s words here and treat a defendant’s failure to proactively filter against the defendant.
(3) The defendants continued to make money based on infringing activity by serving banner ads to software users. Normally, “direct financial interest” is a factor under vicarious copyright infringement; here, the court points to it as evidence of contributory infringement. I have always been troubled by the defendants' business model (banner ads over infringing P2P activity), so I’m not surprised that the court picked up on it. Further, as evidence that the defendants promoted the software as a way to infringe, this factor does provide some insight into the business model. However, merely making money off infringing activity is not per se infringement, so again it’s possible that lower courts will misinterpret this fact.
One obvious question that the court does not address—when does someone who at one point induced infringement stop being an inducer? In other words, what could Grokster and StreamCast change in their business practices or marketing today that would cut off any future liability? I don’t have an answer to this question. Maybe there is no way to stop being an inducer. At least in this case, the “taint by association” with Napster pervades the defendants, so I think that there’s no way that these particular defendants could change their behavior to satisfy the Supreme Court. However, in future cases, I think it would be helpful to know how a defendant becomes a former inducer, and I cannot tell from this opinion what that would entail.
Predictions, Consequences and Open Questions
While the case is interesting and will spawn plenty of discussion (some intelligent, some insipid), I think the Supreme Court successfully took care of Grokster/StreamCast without going too far. As a result, I think the practical consequences of this case are not that great. With the exception of Grokster and StreamCast as corporate entities (and their employees), I think this case will affect almost no one’s behavior.
Prediction: on remand, Grokster/StreamCast will lose in the courts. In all likelihood, the lower court will grant the plaintiff’s motion for summary judgment (the Supreme Court practically instructs them to do so). I further think that Grokster and StreamCast will be hit with enormous damages that will overwhelm their financial resources. As a result, I don’t see a bright future for these companies.
However, users will keep using their software, so the practical effect of this ruling on their users will be minimal. I also think that users generally will not change their file-sharing ways due to this opinion, so file-sharing will continue as if nothing happened.
Prediction: other P2P file sharing services will not change their behavior based on the ruling. The reasons why Grokster and StreamCast induce are so company-specific that very few other P2P file sharing services will feel like it affects them. Further, new file-sharing technologies will emerge that will not promote themselves as tools for infringement, thus carefully avoiding the same “taint by association” that snared Grokster and StreamCast.
Open Question: This case offers us little insight about how these other P2P file sharing services will fare in the courts so long as they don’t promote themselves as tools for infringement.
Prediction: I think the Supreme Court practically guaranteed that copyright owners and technology producers will square off in another major litigation over P2P file sharing service lawsuit. Indeed, I think it’s practically inevitable that the Supreme Court will revisit copyright liability for file sharing services in 10 years or less.
Prediction: Congress will not attempt to disturb this ruling. I think the Supreme Court successfully struck a middle ground that will keep Congress from getting involved. The copyright owners won the case, so Congress won’t be that sympathetic to their requests. Further, the copyright owners got a Supreme Court pronouncement on “inducement,” so that will substantially relax any pressure they could put on Congress to give them an inducement doctrine.
At the same time, the opinion is relatively narrow and does not put technology providers automatically on the hook for how their technology is used. I don’t think Congress would be all that excited about giving technology providers a safe harbor under any circumstance, but I certainly think this case is narrow enough that it does not put pressure on Congress to create a new safe harbor for technology. Perhaps if lower courts repeatedly misconstrue this case, technology providers will have more ammunition to get Congressional protection; for now, I don’t think this opinion is extreme enough to make Congress want to get involved.
How Did I Do With My Pre-Opinion Prediction?
I don’t consider myself an especially good prognosticator, but I think I did OK here. On June 16, I made the following (nervous) predictions:
“Supreme Court reverses the Ninth Circuit, but writes a narrow opinion that effectively limits itself to the Grokster facts--thus avoiding broad pronouncements on contributory liability generally or a major recasting of the Sony doctrine. Whatever the Supreme Court rules, I further predict that Grokster--and all of us--lose eventually. Either the Supreme Court reverses the Ninth Circuit or I predict that Congress will reverse the Supreme Court statutorily. Personally, I'd favor a narrow Supreme Court reversal over seeing Congress screw up any effort to draw lines between legitimate and illegitimate contributions to infringing activity.”
I feel pretty good about this prediction. The court did tinker with the Sony doctrine by characterizing how it affects presumptions, but the court avoided broad pronouncements about Sony—specifically, what the words “capable of substantial non-infringing uses” mean. I feel very good about the prediction that the defendants lose this case. I also think I got what I wanted—a narrow Supreme Court opinion and little likelihood of Congressional action to screw it up.
I should stop making any new predictions. I’m sure I’ve used up my prediction karma.
UPDATE (Nov. 8, 2005): Grokster settled the lawsuit for $50M and shut down its P2P file sharing service. AP story. NYT article. Washington Post article.
Posted by Eric at 01:09 PM | Copyright , Derivative Liability | Comments (5)
June 25, 2005
AP Story on Defining Spyware/Adware
As a follow-up to yesterday's story on advertiser liability for adware, today the AP runs a story about the definitional ambiguities of the words "spyware" and "adware," and the problems those ambiguities create. I think this quote sums it up best:
"`Spyware' has sort of become the euphemism for any software I don't want," said Wayne Porter, co-founder of SpywareGuide.com.
The result is chaos.
As the article points out, the characterization has important consequences for consumer behavior. The story gives some illustrations of how spyware/adware label is just another type of ambiguous metadata that can lead to mistakes in judgment.
There's plenty of other good tidbits in this article. Recommended reading.
Posted by Eric at 12:44 PM | Adware/Spyware
Problems with Congress' Latest Anti-Porn Law
Congress' latest anti-porn attack is codified in 18 U.S.C. 2257. a law which requires anyone producing or distributing pornography to engage in some costly and logistically-difficulty verifications and record-keeping. Kurt Opsahl at EFF explains how this law affects more than just commercial pornographers and, instead, has the potential to jeopardize significant quantities of socially-beneficial speech on the Internet.
The Free Speech Coalition is challenging this law and has reached a temporary settlement with the DOJ to defer enforcement of the law until a court can rule on its constitutionality. My hope is that this law, like so many of Congress' other efforts to attack pornography, will bite the dust so that online publishers will not have to incur costly and potentially-futile reviews of anything that might be characterized as pornography.
Posted by Eric at 11:52 AM | Content Regulation , Derivative Liability
June 24, 2005
AP Story on Advertiser Responsibility for Adware
Michael Gormley of the Associated Press has finally released his story on advertiser responsibility for adware (I interviewed with him almost a month ago). The article does a good job recapping the issues. I have a lot more to say on this topic; I've written an op-ed piece that I am hoping to publish in the near future. Stay tuned.
In the interim, this article illustrates the witchhunt process being used by the zealots. When "caught" advertising on adware, many advertisers will turn tail--the textbook response to unwanted PR. But advertisers aren't all that excited about preemptively avoiding advertising on adware for a simple reason--advertising on adware is, in the words of Verizon's spokesperson, "effective."
If the zealots have their way, they will find a way to change the legal environment (or obfuscate the issue to make it sufficiently impossible to tell what the law is) to make advertisers feel some of their angst. However, the fact that many advertisers aren't just folding in the face of zealousness should not be ignored. There's real value being created by the advertising--not just for advertisers, but for consumers and society at large. We should not allow misdirected zeal to moot this value.
Posted by Eric at 02:02 PM | Adware/Spyware | Comments (10)
Is Copyright Infringement "Theft"?
The BBC reports on a study that the British do not equate downloading copyright material with theft. The British have specifically rejected one of the standard analogies that downloading copyrighted music is just like shoplifting a CD of the music from a retail store.
If this attitude holds true in the US as well, it would represent a colossal failure of the movie/music/software PR machine. For years, the copyright owner groups have tried to shape public perception of copyright infringement by using value-loaded words to describe infringement: "pirate," "theft" and "just like shoplifting" are among the standard lingo of the lobbying/PR efforts. Yet, to the extent Americans can distinguish copyright infringement and "theft"/"shoplifting," then a major axis of the copyright owners' efforts will have failed.
This failure would have a second-order implication. Standard behaviorist theory says that criminal laws affect behavior only when they criminalize behavior that is generally considered wrong under prevailing social norms. Alternatively, laws that run against this perception generally fail to conform behavior. The BBC article clearly suggests that the British do not consider many types of copyright infringement to be "wrong" (indeed, the article talks about how they view it as "inevitable"). If consumers can distinguish copyright infringement from morally objectionable behavior like theft, they will behave as if copyright infringement is not morally wrong--in which case, restrictive copyright laws may be destined to fail.
As the BBC article indicates, the copyright owners' real (last-ditch?) hope is to get access to kids in school to "educate" them about copyright law while they are still forming their norms. While in principle this idea doesn't generally bother me, I'm not sure I would pick copyright infringement as the most important body of law to teach students about (assuming scarce classroom time where we can't teach every law on the books).
I have a lot more to say about the effect of social norms on criminal copyright infringement, and in particular the analogies between copyright infringement and "shoplifting," in my Road to No Warez piece.
Posted by Eric at 12:02 PM | Copyright
FTC Goes After Another Bogus Anti-Spyware Remover
FTC v. Trustsoft, No. H05-1905 (S.D. Tex. complaint filed May 31, 2005; Stipulated Preliminary Injunction Order granted June 14, 2005). The FTC has busted another vendor of anti-spyware software for making false claims about its products--specifically, that the "SpyKiller" software properly identified spyware and effectively removed it. The FTC claims that the software used an overinclusive definition of spyware to scare consumers into paying money to the vendor, then failed to remove the identified spyware. The FTC also claimed that the vendor sent emails that were not CAN-SPAM compliant.
I have no opinion about the legitimacy of this vendor's actions. It wouldn't surprise me to learn that SpyKiller was fraudware designed to play on the overhyped media frenzy about the perils of spyware. With consumers scared stiff, there's plenty of room for hucksters to prey on consumer fears.
However, I have a major concern about enforcement actions against anti-spyware vendors generally. If we can't agree on the definition of "spyware," how can we evaluate if a vendor's software is properly identifying spyware or not? One person's spyware is another person's legitimate and useful software. I know the FTC understands this point, and I'm hoping they are treading cautiously accordingly.
SIDE RAMBLE: Hey, FTC, have you considered setting up an RSS feed for your newsroom page? It would be great to be get notifications of your announcements rather than having to wait for someone else to pick up the news report or having to check the page myself manually. The Copyright Office's RSS feed is pretty nifty...
UPDATE: Suzi caught this too.
Posted by Eric at 11:39 AM | Adware/Spyware
June 23, 2005
Interview at Spyware Informer
Alex Morganis at Spyware Informer interviewed me about adware/spyware issues. Read the interview here. This ended up being a great way for me to articulate some of my latest thoughts. I hope you find the interview interesting, and I welcome your comments.
[note: I've asked Alex to fix the introduction; I don't have any affiliation with Spyware Warrior other than being a regular reader]
UPDATE: Dave Bove deconstructs my interview. Suzi has a few critical remarks too.
Posted by Eric at 11:27 AM | Adware/Spyware | Comments (1)
EFF's Legal Guide for Bloggers
The EFF has released the wonderful resource “Legal Guide for Bloggers.” It successfully strikes a delicate balance between being comprehensive, accurate and accessible to lay readers. If you’re wondering about the law of blogging, this guide will most likely answer your questions.
Unfortunately, the guide doesn’t address a set of topics on my mind: the relationship between joint bloggers and issues raised by guest bloggers. I expect to see fights over attribution, the blog title/URL, use of postings after the relationship ends, and even who gets the AdSense revenue. Unfortunately, the law in this area is destined to be complex and counterintuitive. Joint bloggers may very well be treated as “partners” under the applicable corporations law, subject to a complex set of statutory defaults. Therefore, it would make a lot of sense for joint bloggers to have a “Joint Blogger Agreement” spelling out their relationship, although I am guessing that virtually no joint bloggers (even lawyers/law professors) have anything of the sort. I have yet to see any models or examples posted online.
Meanwhile, I do plan to say more about the legal issues raised by guest bloggers. Indeed, this summer I plan to draft and enter into a “guest blogger agreement” with John O. I’ll post a copy when I draft it.
I understand why the EFF’s guide doesn’t get into these topics—they are peripheral at best to the EFF’s core objective of encouraging bloggers to exercise their free speech rights. Therefore, even with these omissions, I still heartily recommend that all bloggers read the EFF guide.
Posted by Eric at 10:59 AM | Content Regulation , General
Cybersquatter's Press Release: "Please Sue Me"
If you're a cybersquatter, one of the dumbest things you can do is issue a press release describing how you plan to make a lot of money on 23,000 different domain names that are variations of famous trademarks. Apparently subscribing to the view that there's no such thing as bad press, BDC Capital thought that such a press release was a good idea. Unfortunately, in UDRP hearings and ACPA proceedings, what you say in the press can absolutely come back to bite you. Good luck to them winning any challenges--the lawyers should have a field day here.
The Chronicle of Higher Education story (subscription required).
Posted by Eric at 10:51 AM | Trademark
June 22, 2005
Proposed GPL Version 3: Revenge of the Free Software Foundation?
Now for something NOT related to Grokster.
Earlier this month, Richard Stallman and Eben Moglen released an article discussing their plans to update the GNU General Public License (“GPL”). Version 2 of the GPL was released in 1991. Since then, changes in programming methods and technology have created a number of situations where it is difficult to apply the terms of the GPL to the code in question. While the GPL is widely used, there are also dozens of other “open source” licenses that are in use, some of which are inconsistent or even incompatible with the GPL. The more recent introduction of software patents and business method patents to the technology world has also made Messrs. Stallman and Moglen consider whether or not there need to be provisions relating to patent licenses and/or defensive terminations.
According to the release, there will be a process of gathering opinion and suggestions before the discussion draft of the GPL Version 3 is released.
I hope that the authors also use this opportunity to clarify one of the more difficult issues of the GPL: when is added code a “work based on the program” that requires distribution of the source code of the revised or modified or added code in addition to the original code licensed in. From a cynical point of view, it may not be in their interest to clarify this term, as they can then interpret the term differently in different contexts as they threaten developers with lawsuits or public embarrassment for alleged breaches of the GPL.
From a societal point of view, however, it would be much better to have certainty. When using open source software in projects, developers should be free to choose to license their projects under the GPL, or to structure their projects so that they can avoid the application of the GPL and license the project under different terms. The developers should not have to guess whether or not the GPL applies to the project, or have the GPL forced upon them by uncertain or vague licensing terms.
Stay tuned for details as this project moves forward.
Posted by John Ottaviani at 02:22 PM | Licensing/Contracts
Copyright Office to Have "Public Roundtables" About Orphan Works
The Copyright Office has announced that it will have public roundtables to discuss orphan works in DC July 26-27 and Berkeley August 2. This is interesting because, after receiving almost 900 submissions regarding orphan works already, I would have thought that the last thing the Copyright Office needs is more information. Maybe the hope is that the Copyright Office can divine some consensus between various groups by having them meet FTF. Meanwhile, I continue to assume that Lofgren won't push her Public Domain Enhancement Act while the Copyright Office is continuing to research the issue.
Posted by Eric at 12:01 PM | Copyright
Grokster Press Releases
The Grokster media frenzy has reached a fever pitch. Not only is the war of words taking over the mainstream press, but we're seeing a bubble of activity in the press release databases. A couple of examples.
Orrick's Press Release
How's this for a press release by a law firm? I think the lead says it all: "Supreme Court Grokster Decision on Internet File-Sharing Expected, According to Orrick, Herrington & Sutcliffe LLP." Whoa, hold the presses!
I believe it costs about $2,000 to issue a press release. I'm struggling to make financial sense of issuing a press release like this.
The full text of the Orrick press release:
June 21, 2005 09:44 AM US Eastern Timezone
Supreme Court Grokster Decision on Internet File-Sharing Expected, According to Orrick, Herrington & Sutcliffe LLP
LOS ANGELES--(BUSINESS WIRE)--June 21, 2005--The Supreme Court is expected to issue its ruling on the controversial Grokster lawsuit about Internet file-sharing as early as today, and Christopher Ruhland, an Orrick litigator in Los Angeles who specializes in intellectual property in the media and entertainment industries, predicts a titanic impact whichever way the Court rules.
"The Court's decision will have enormous consequences for copyright owners and for those who currently thrive off of copyright infringement," said Ruhland, who previously worked for The Walt Disney Co., one of the plaintiffs in the case. "What is at stake is the value of the rights afforded by the Copyright Act."
The issue in the case, brought by MGM Studios and other movie studios and record companies, is whether the distributors of file-sharing software such as Grokster can be held responsible for copyright infringements committed by those who use their programs. In August 2004, the Ninth Circuit Court of Appeals in San Francisco held that Grokster is not liable for copyright infringement. The court ruled that because Grokster claims it does not have actual knowledge of what its users are doing and cannot stop its users from infringing, it cannot be held liable.
"The studios and record companies are asking the Supreme Court to plug a significant legal hole created by the lower courts," said Ruhland. "That hole allows Grokster and others to contribute to massive online infringement, and to escape liability as long as they stick their heads in the sand, so that they do not 'know' that their users are trading infringing copies of movies and music. The reality is that certain software programs were designed to allow users to commit copyright infringement, and that is exactly how those programs are being used."
Entertainment companies already have stepped up efforts to file lawsuits against Internet users who distribute movies and music illegally, and Ruhland said they may have to do more if the Supreme Court rules against them. "If the Supreme Court rules that Grokster's conduct is legal, that will encourage others to design similar systems online," Ruhland said. "The result will be an escalation of the free-for-all in the trade of unlawful copies of movies and music that already persists."
About Orrick
Orrick, Herrington & Sutcliffe LLP is an international law firm with approximately 700 lawyers in North America, Europe, and Asia. The firm focuses on litigation, complex and novel finance, and innovative corporate transactions. Orrick clients include Fortune 100 companies, major industrial and financial corporations, commercial and investment banks, high-growth companies, governmental entities, start-ups, and individuals. The firm's 15 offices are located in New York, Washington, D.C., San Francisco, Silicon Valley, Sacramento, Los Angeles, Orange County, Pacific Northwest, London, Milan, Moscow, Paris, Rome, Tokyo, and Taipei.
Orrick was named the number-two IP defense firm by American Lawyer magazine.
Contacts
Orrick, Herrington & Sutcliffe LLP
Christopher S. Ruhland, 213-612-2274
Tim Larimer, 212-506-5170
TLarimer@orrick.com
Post-Grokster Press Event
A press event has already been scheduled for the day of the release--whenever it is--by the defense.
The full text of the press release:
i-Newswire, - What: Post-Grokster press conference, with members of the StreamCast ( Morpheus ) and Grokster legal team along with representatives from the technology industry and public interest groups including P2PUnited, Public Knowledge, the Computer & Communications Industry Association, and the Computer Electronics Association.
When: 12 Noon EDT on the day of the decision. The Court has already scheduled opinion announcements for 10:00a on June 20th, 23rd, 27th, and 30th, and may schedule additional days. If you are a member of the media and wish to phone into the conference, get in touch with one of the contacts listed below.
Who: Richard Taranto argued the case on behalf of Grokster and StreamCast ( Morpheus )
StreamCast CEO Michael Weiss and General Counsel Matthew Neco
Fred von Lohmann and Cindy Cohn of the Electronic Frontier Foundation
Charles Baker of Porter & Hedges, attorney for StreamCast Networks
Michael Page of Keker & Van Nest, attorney for Grokster
Adam Eisgrau, Executive Director of P2PUnited
Gigi Sohn, President and Co-Founder of Public Knowledge
Edward Black, President and CEO of CCIA
Gary Shapiro, President and CEO of CEA
Why: In a case now before the United States Supreme Court about when if ever technology makers will be legally liable for the infringements committed by the users of their products, and whether entertainment companies will be able to slow or dictate the course of technology development, the makers of the Morpheus and Grokster Peer-to-Peer file sharing software are being sued by 28 of the world's largest entertainment companies.
Background: The entertainment companies lost their case in District Court, and then lost again on appeal to the Ninth Circuit Court of Appeals. The lower court rulings were based, in part, on the Supreme Court's landmark decision in the 1984 Sony Betamax case, which determined that Sony was not liable for copyright violations by users of the Betamax VCR.
Contacts:
Art Brodsky
Communications Director
Public Knowledge
abrodsky@publicknowledge.org
Annalee Newitz
Policy Analyst
Electronic Frontier Foundation
annalee@eff.org
Brian O'Neal
Senior Director of Communications
StreamCast Networks
boneal@morpheus.com
One More Post-Grokster Activity
Not a press release per se, but Glasser Legal Works has already scheduled a Grokster post-mortem conference for July.
Posted by Eric at 09:56 AM | Copyright , Derivative Liability
Some People Like "Spyware"?
I'm catching up on back reading, and I came across this December 2004 Wired News article by Michelle Delio called "Spyware on My Machine? So What?" [see update below about questions about the article]
Anti-spyware advocates are wedded to the notion that spyware is never legitimate because no one wants it. Therefore, all spyware downloads must be fraudulent or illegitimate. Yet, this article provides a number of examples of people who voluntarily downloaded "spyware" or adware knowing full well what they are doing.
For example, the article discusses how some users deliberately downloaded the Claria/Gator adware software because they wanted the e-Wallet application and were willing to trade the adware exposure for the application.
In one of the quotes that hasn't been confirmed [see update below], another user talks about how his college blocked a "spyware" application that was bundled with a file sharing program. The user says: "This sucks....I can't surf the web and I can't trade files if I uninstall the spyware. Why can't the college let me do what I want to do with my computer? The school computer security guys are being way more annoying than the spyware was."
Perhaps this reporter found the only crackpots in the world who affirmatively, intentionally and voluntarily chose to install spyware/adware on their systems [see update below], but I don't think so. In fact, I think there's a pretty large group of people who went through the exact same thought process.
As a result, the foundational assumption of most anti-spyware zealots--that "spyware" is, by definition, unwanted--is false. In turn, all arguments predicated on this inaccurate assumption are tainted.
Meanwhile, the fact that some people gladly use adware reinforces just how anti-consumer the Utah and Alaska anti-adware laws are. These laws remove consumer choice about what consumers can have on their desktop--not because such choices might harm consumers, but because such choices interfere with some websites' desires to reduce competition. The student who says that "the school computer security guys are being way more annoying than the spyware was" will next be saying "my legislators are being way more annoying than the spyware was."
UPDATE: I was working off a contemporaneous printout of the article. I see now that some questions have been raised about some quotes in the article. Wired hasn't retracted the article, but it would be nice if we could confirm the quotes in question. Nevertheless, I remain convinced that there are people who subscribe to the viewpoints articulated in this article. Certainly the research work of people like Deirdre Mulligan indicate that people are willing to make knowing tradeoffs to accept spyware as part of bundles.
UPDATE 2: I have asked one of my student research assistants to look for other articles that discuss people who like their adware/spyware. If you have any suggestions, recommendations or anecdotes, I'd be grateful if you would send them to me.
UPDATE 3: I was reviewing old material and I came across this article. Michael Warnecke, Developers Ratchet Up Anti-Spyware Efforts, But Legislators Will Wait for Tech Solutions, Privacy Law Watch (BNA), April 21, 2004. The article says;
"Matthew Sarrel, technical director for PC Magainze, said that when his magazine ran a cover story on spyware in March 2003, he received scores of e-mails from readers who said that they don't mind the hidden programs as long as the trade-off allows them to get other free software they like (such as peer-to-peer file sharing programs)."
I'll keep looking for more anecdotes like this.
Posted by Eric at 09:43 AM | Adware/Spyware | Comments (4)
Alaska's Anti-Adware Law
Alaska’s legislature has passed SB 140 (to be codified at Sec. 45.45.792, 45.45.794 and 45.45.798), which is awaiting the governor’s signature. This statute contains some anti-Internet porn provisions (probably unconstitutional under the First Amendment and Dormant Commerce Clause), but I’m more interested in the law’s anti-adware provisions.
I’ve generally stopped tracking state anti-spyware laws because of the sheer volume of the state-level efforts. However, most of the statutes have been unremarkable; they are principally modeled off California’s anti-spyware law, which got defanged prior to passage by the repeated insertion of an “intentionally deceptive” standard for the proscribed acts. This intentionally deceptive standard makes these laws mostly irrelevant, because intentional deception in this context usually should trigger other legal violations without the anti-spyware laws being on the books.
Instead of starting with the California model, Alaska started with a version of the Utah amended Spyware Control Act. I blogged unfavorably about that law when it passed. In that post, I concluded that the amended Utah Spyware Control Act was effectively irrelevant. To violate the law, the plaintiff must prove that the defendant committed trademark infringement, so the statute merely creates an additional cause of action to supplement a standard trademark infringement claim.
Alaska’s anti-adware law goes further--much further. It omitted the requirement that the defendants commit trademark infringement. Instead, a defendant commits a violation simply by using adware to display pop-up advertising triggered by trademarks or URLs (whether trademarkable or not). Further, unlike the amended Utah law, the Alaska law does not contain any exclusions for fair use or nominative use.
In short, Alaska took a terrible Utah law and made it worse.
Like the Utah law, I have my doubts that the Alaska law will survive any court challenges. First, it may violate the Dormant Commerce Clause. To avoid this fate, the Alaska law tries the "clever" Utah trick of expecting that adware vendors throw up pop-ups to every user in the world to identify (and then refuse downloads to) Alaska residents. This trick has not been blessed by the courts, and given the courts’ concerns about restricting the free flow of Internet content, I doubt it will be. (Plus, there’s the bizarre irony of an anti-pop-up law mandating that adware vendors display lots of pop-ups to consumers).
Second, it may not survive 47 USC 230’s preemption, which preempts most state laws that try to hold intermediaries liable for third party content except in limited types of claims, like IP claims. At least the Utah law could claim to be an “IP law” because trademark infringement was an essential element of a claim. Alaska's law doesn’t limit itself to trademarks and does not require trademark infringement to establish a violation. Instead, it’s squarely housed in consumer protection law. Therefore, I think there's a good chance that the law, at least as applied to adware vendors (as opposed to advertisers), is preempted by 230.
Third, I’m not entirely convinced that this law survives a First Amendment challenge. It regulates commercial speech, so it “only” triggers intermediate scrutiny. However, I’m not sure the law can make a good enough argument about the government need or the law’s efficacy to support that need. Note that, like the Utah law, the Alaska law does not give consumers the right to consent to regulated adware on their own (except that user-installed filtering software is excluded from the definition of adware). So even if users expressly say they want the software, the Alaska law deprives them of it.
Let's hope the Alaska governor vetoes the law, but it seems politically imprudent to veto a (mis-characterized) anti-"spyware" law that also attacks "online enticement." Thus, assuming the Alaska governor signs the law, any predictions about who will lead the lawsuit to clean out this stinker?
Posted by Eric at 09:27 AM | Adware/Spyware
Initial Interest Confusion Talk
I spoke yesterday about the initial interest confusion doctrine at the Intellectual Property Law Association of Chicago. My slides. I also updated my summarized list of initial interest confusion cases.
Posted by Eric at 09:24 AM | Trademark | Comments (1)
June 20, 2005
No Grokster Opinion Today
The Grokster Watch continues--no opinion today. This releases the anxiety for today, but the anxiety hardly has gone away.
My prediction on Grokster (if you came from the NY Times, this link leads to the referenced post).
NY Times article recapping predictions (free subscription required).
News.com article with predictions.
Our collective stress level will rise again Thursday!
Posted by Eric at 11:09 AM | Copyright
Mistaken Judgments for Content Labeled Advertising
Last week I applauded the FTC for arguing against the mandatory labeling of commerical emails. In that post, I argued that the labels would increase the rate of erroneous judgments by recipients, because the recipients would mistakenly believe that the advertising was lower-value content than it actually was.
Coincidentally, over the weekend I came across a study by Jansen and Resnick called "Examining Searching Perceptions of and Interactions with Sponsored Results." The researchers were trying to prove that consumers don't like sponsored search results. In the process of doing so, they presented searchers with identical search results, one set characterized as organic results and the other set characterized as sponsored links. As the press release says:
"While study participants rated 52 percent of the organic results as "relevant," searchers described 42 percent of sponsored links as "relevant" even though both sets of results were identical."
As this result demonstrates, 10% of the results were graded irrelevant solely because of the sponsored link label.
From this, I derive a contrarian policy judgment. Consumers don't necessarily benefit by knowing that content is advertising vs. organic. Indeed, such labeling may mislead the consumers--exactly the effect the consumer protectionists are trying to avoid. Consumers think they want to know if something is advertising, but if it leads to sorting mistakes, maybe they are better off not knowing.
Posted by Eric at 10:07 AM | Marketing , Search Engines , Spam | Comments (2)
Federal Circuit Refuses to Register Pennzoil's Clear Motor Oil Bottle as a Trademark
I tend to like “non-traditional” trademarks, such as color, sound, buildings, furniture designs, etc. So while we are "waiting for Grokster," I note that the Federal Circuit recently affirmed, per curium, the 2004 decision by the Trademark Trial and Appeal Board that Pennzoil is not entitled to register its clear plastic bottle for motor oil as a trademark. In its decision, the TTAB found that the use of the clear bottle was functional, and that, even if it was not functional, Pennzoil has not demontrated sufficent "secondary meaning" or "acquired distinctiveness" to warrant trademark protection.
In this case, the most damaging evidence to Pennzoil’s position that the clear container is not functional is that Pennzoil introduced its clear container after it determined that there was an obvious competitive advantage to displaying the colorization of its synthetic oils and blends in a transparent bottle. Because there were numerous non-reputation related reasons for adopting a clear container, and these were competitive reasons that should not be denied to Pennzoil’s competitors, the Board found that Pennzoil did not have a right to appropriate the use of a clear container exclusively for its motor oils.
Despite the fact that there are no other competing motor oils for four cycle gasoline engines for automobiles currently being sold in clear bottles, the Board looked at the “ubiquity” of nearly identical packaging for many related automotive products, such as two-cycle engine oil, maintenance fluids and other chemical products for automobile engines. The Board also found that, although there was an increase in the sales of Pennzoil’s motor oils and synthetic blends after it adopted the clear container, there is no evidence tying this sales increase to Pennzoil’s promotional efforts that highlighted the clear bottle.
Will this decision have implications for other products that are marketed in clear packaging and containers? The Board was careful to note that it did not want to set out a per se rule about whether or not there may be other circumstances under which a clear container could function as a source indicator. However, I cannot think of an example where a clear package would both be non-functional and have acquired secondary meaning. At least for now, then, the world is safe from those who would require us to purchase all of our products in opaque containers and packages.
Posted by John Ottaviani at 09:25 AM | Trademark
June 18, 2005
AOL Advertises on Competitors to Get Traffic to AOL.com
To build traffic for AOL.com, AOL is buying search ads on Google and Yahoo. The article says:
"AOL had initially considered spending as much as $50 million on television ads to promote the portal. But that changed after the company noticed that the biggest source of traffic to its free music site was free and paid listings on other search engines.
'We started seeing the results and said, 'Oh, my God, what if we took this money and put it into search engine marketing,' ' Mr. Miller said. Now more than half of AOL's marketing budget for the portal will be used to pay for ads on search engines and formatting Web pages so they appear in the free search results."
The article then continues:
"Both Google and Yahoo said they were happy to take AOL's money for ads on their search pages."
Yeah, I would too. Take the money now while a customer is spending like a drunken sailor. It provides a nice ride for a while although, sadly, the gravy train will come to an end.
However, taking the ads is a little odd. It's like ABC or NBC taking commercials for a CBS TV show, or a radio station taking commercials for a competing radio station. It definitely prompts competitive concerns, but my attitude is--if someone is buying free drinks for the house, why not enjoy a cold beer? Unless AOL has something special to hook Google/Yahoo users (and I haven't seen it), Google and Yahoo have nothing to worry about.
The article also discusses another strategy to get new AOL.com customers. As the article says, AOL plans to:
"find users from the more than two million people who cancel their AOL Internet access subscriptions each year. When a user calls to stop service, AOL's phone representatives will offer them a way to keep their e-mail addresses if they agree to use AOL's new free e-mail service at AIM.com."
In other words, AOL is losing so many customers, their key source of non-paying customers will be their former paying customers. This is a good thing?! Given AOL's desperation, there's only one possible direction for AOL to go. It's not up.
Posted by Eric at 05:53 PM | E-Commerce , Search Engines
Good Primer on Spyware
Spyware: Background and Policy Issues for Congress, Congressional Research Service, Order Code RL32706 (May 18, 2005). This report, written as a primer for Congress, is one of the most balanced descriptions of the spyware issues I've seen. (Balance is a rare commodity in the adware/spyware area, given that very few commentators are neutral--including me). For anyone looking to get up to speed on the spyware issues and understand the various Congressional proposals, this report is an excellent choice.
Posted by Eric at 04:04 PM | Adware/Spyware
Update on Click Fraud Lawsuit
I'm a little late blogging this. It appears that the Lane's Gift and Collectible lawsuit over click fraud is tied up in procedural limbo right now. The suit was filed in state court, the defendants moved the case to federal court, and now the plaintiffs are trying to move it back to state court. All of this is complicated by the new law that passed in the interim driving most class-action lawsuits into federal court. I'm not sure why the plaintiffs are so anxious to keep the case in state court; on its face, it appears that the new federal law pushes this case into federal court.
Meanwhile, I've traded messages with the lead plaintiff's attorney about seeing the complaint, but he said it was going to be heavily revised in light of these procedural battles. I'm still anxious to see how the plaintiffs have styled the complaint given the seemingly insurmountable terms of the applicable contracts.
Posted by Eric at 03:07 PM | Search Engines
More on .kids.us
In critiquing the .xxx TLD, I took a brief swipe at the .kids.us debacle. Meanwhile, during my trip, Reuters ran a good retrospective article on the complete failure of the domain. As the article says:
"while Congress and administrator NeuStar set plenty of restrictions to keep online predators and inappropriate content out of the .kids.us domain, they didn't provide many incentives to bring Web sites in."
That hits the nail on the head. Sites in .kids.us must comply with COPPA (which is expensive) and have difficulty making money from kids who don't have access to credit cards. Hmm...let's do the math...extra expense and low ability to make money. I'm shocked that it hasn't been a hit in the marketplace.
.kids.us is a great example of Congress run amok. In its zeal to address Internet porn, but stymied by repeatedly being slapped on the hands for passing unconstitutional laws, Congress thought it could solve the problem by creating a new market niche. Only problem: the niche doesn't exist (at least, in the form that Congress mandated). If it did, I am 100% confident that the market will find a way to solve the problem without Congress' help.
An older but good article discussing .kids.us.
Posted by Eric at 02:32 PM | Domain Names , Internet History
BBSs and History
A new documentary called BBS: The Documentary is out, and it inspired a retrospective on BBSs at Wired. I haven't seen the documentary yet, but the Wired article definitely took me back to my first flirtations with cyberspace.
I got online in 1991 and instantly fell in love. It led to my first law review article which, appropriately enough, discussed the legal treatment of BBSs--a topic that seemed so important then but of course now looks silly in the era of websites and blogs/RSS readers and wireless ubiquitious networks. I'm not sure the legal issues have changed radically; some issues (like the interplay between private property rights and free speech rights) will continue on into infinity regardless of the newest technological tools that create the conflict-du-jour.
I really don't miss the BBS era. It was chaotic and slow. Nevertheless, thinking about the era does make me a little nostaglic, just like other kinetic times in my life like adolescence/high school. We tend to suppress the bad and remember the good; and the good was pretty good, but there definitely was some bad mixed in. We do have it much better now.
Posted by Eric at 01:55 PM | Internet History
Google's Spam Rating Guide
I previously posted how Google uses humans to QA search results. Henk van Ess has subsequently posted the training manual for people doing the QA.
There's nothing too shocking in the guide. Some of the techniques it specifically addresses include:
* sneaky redirects
* 100% frame
* hidden text/hidden links
* porn on expired domains (I call this porn-napping)
* secondary search results/PPC
* thin affiliate doorway pages
I especially liked the in-depth discussion about what constitutes search engine spam in the case of hotel booking sites. I guess this is a particularly thorny problem.
Henk also posted the descriptions of how evaluators should rate. It would be fascinating to deconstruct this document from an information science standpoint.
FWIW, I still find a fair amount of search engine spam when I ego-search on my name or my articles (usually what the guide would call "secondary search results/PPC"). A page is built with snippets of legitimate content that index OK, but the pages themselves are gibberish in total. I've found small portions of my articles used as the snippets for these pages. Google does a pretty good job keeping these sites off the first page, but any deeper investigation usually turns up a good number of junk pages.
Posted by Eric at 12:30 PM | Search Engines
AWOL Opinions
While we are on Grokster watch, I also have been thinking of two opinions that seem to have disappeared into the void:
* Second Circuit opinion in 1-800 Contacts v. WhenU. The district court ruled in December 2003, the parties briefed the case in February/March 2004 (links to briefs) and the case has gone away. What's taking the Second Circuit so long?
* Written opinion in GEICO v. Google. The court stopped the trial in mid-December and said:
"Unless there's any objection, what I propose is that we terminate the trial at this point, I don't mean end it, but stop right now what we're doing to give the Court a brief amount of time, which given the holiday season might be two or three weeks, although we're going to try to do it sooner than that, to get a written opinion out on this ruling, consistent with this ruling, and to allow you-all the opportunity to see whether or not there can be a resolution of what is left in the case."
(Emphasis added). Instead of 2-3 weeks, it's now been about 6 months, and still no written opinion. What's the holdup?
UPDATE: The 1-800 Contacts and GEICO opinions are in!
Posted by Eric at 11:55 AM | Adware/Spyware , Derivative Liability , Trademark
June 17, 2005
FTC Settles Another Case for Failure to Use Reasonable Security
In the Matter of BJ's Wholesale Club, Inc., File No. 042 3160. The FTC settled with BJ'S Wholesale Club over BJ's allegedly deficient security practices. This is the second settlement of its nature in three months (the last being an enforcement action under the Gramm-Leach-Bliley Act against Nationwide Mortgage Group).
This enforcement action seems especially problematic because it's not exactly clear what BJ did wrong (except get caught, of course). I'm still trying to figure out how BJ's practices differed from industry standards. If not, this case has significant implications for everyone who touches credit cards--including all retailers, restaurants, gas stations and e-tailers.
The FTC complaint alleged the following:
"The Commission’s proposed complaint alleges that BJ’s stored members’ personal information on computers at its stores and failed to employ reasonable and appropriate security measures to protect the information. The complaint alleges that this failure was an unfair practice because it caused or was likely to cause substantial consumer injury that was not reasonably avoidable and was not outweighed by countervailing benefits to consumers or competition. In particular, the complaint alleges that BJ’s engaged in a number of practices which, taken together, did not provide reasonable security for sensitive personal information, including: (1) failing to encrypt information collected in its stores while the information was in transit or stored on BJ’s computer networks; (2) storing the information in files that could be accessed anonymously, that is, using a commonly known default user id and password; (3) failing to use readily available security measures to limit access to its networks through wireless access points on the networks; (4) failing to employ measures sufficient to detect unauthorized access to the networks or conduct security investigations; and (5) storing information for up to 30 days when BJ’s no longer had a business need to keep the information, in violation of bank security rules. The complaint further alleges that several million dollars in fraudulent purchases were made using counterfeit copies of credit and debit cards members had used at BJ’s stores. The counterfeit cards contained the same personal information BJ’s had collected from the magnetic stripes of members’ credit and debit cards and then stored on its computer networks. After discovering the fraudulent purchases, banks cancelled and re-issued thousands of credit and debit cards members had used at BJ’s stores, and members holding these cards were unable to use them to access credit and their own bank accounts."
As I said, other than get caught (and holding onto the data longer than it should), I'm not sure what BJ did that was unusual. The FTC is implying that every database of credit card numbers must be stored in an encrypted database with restricted access. Here, BJ failed to do this and got nailed by a hacker, which led to a fairly public problem as the hacker forced banks to reissue credit cards. But credit card databases are ubiquitous, and I'm having a hard time imagining that other retailers are doing more than BJ is doing.
The FTC's proposed remedy is pretty interesting. It seems like the FTC is foreshadowing what it considers to be best practices for managing security of credit card databases. The requirements imposed on BJ:
"• Designate an employee or employees to coordinate and be accountable for the information security program.
• Identify material internal and external risks to the security, confidentiality, and integrity of consumer information that could result in unauthorized disclosure, misuse, loss, alteration, destruction, or other compromise of such information, and
assess the sufficiency of any safeguards in place to control these risks.
• Design and implement reasonable safeguards to control the risks identified through risk assessment, and regularly test or monitor the effectiveness of the safeguards’ key controls, systems, and procedures.
• Evaluate and adjust its information security program in light of the results of testing and monitoring, any material changes to its operations or business arrangements, or any other circumstances that BJ’s knows or has to reason to know may have a material impact on the effectiveness of its information security program."
Seems like the lawyers and security consultants will love having this as the best practices! Perhaps I should get into the security consulting business...
But it's not immediately clear to me that all of this self-assessment and navel-gazing will actually improve security. It might, or it might just turn into one big paper-pushing/CYA/pay-the-consultants-and-do-whatever-they-say fiesta. You can't really mandate that people care about security; this has to be interally-motivated, or it just becomes a go-through-the-motions exercise.
As I've said before, I have historically dismissed the lawyers hyping security concerns as hucksters trying to drum up some low-utility business. If that view was once correct, it certainly is no longer, and I recant any such views. Enforcement actions like this one (and the prior Nationwide Mortgage action) send a clear message: the FTC does believe there is a baseline level of security that companies must undertake, and failing to do so has legal ramifications. While security measures must still be evaluated on a cost/benefit basis, the costs of non-compliance must now include legal risks that previously might have been de minimis but are now tangible and non-trivial.
Posted by Eric at 04:43 PM | Privacy/Security
FTC Votes Against Mandatory Spam Labeling
The FTC has recommended against adopting a mandatory label for spam like "ADV." The FTC concluded that recipients have better filtering mechanisms for law-abiding emailers and the law will have no effect against law-breaker emailers. I think this quote sums it up:
"First, subject line labeling is unlikely to enhance the sophisticated filtering strategies that ISPs use and are constantly improving. Further, subject line labeling likely would have little value for ISPs because there is no reason to expect that outlaw spammers, who are already violating the CAN-SPAM Act and possibly other laws as well, would obey a subject line labeling requirement.
Second, there are other potential practical or technological problems with implementing a subject line labeling requirement. Third, and finally, mandatory subject line labeling would not contribute in any material way to the strengthening of anti-spam law enforcement."
Therefore, the FTC favors email authentication over mandatory labels.
I agree with this conclusion, but I think it misses the point. I'm not a fan of arguments that we can't control the lawbreakers, so let's throw up our hands in futility. If there's policy value to the disclosures, then they should be mandated and enforced.
Instead, in my opinion, the real problem with mandatory labels (a type of "metadata") is that they are frequently imprecise, leading recipients to make erroneous judgments about the characterized content. In particular, the label "advertising" evokes very contradictory feelings among recipients: some advertising is valuable, but the class of advertising is generally perceived with suspicion and thus quickly discarded regardless of its utility. So the mandatory labeling may increase sorting mistakes.
In any case, I wonder if the FTC is willing to revisit its stance towards mandatory labeling of ads in other contexts, like paid search results. In the end, as I will argue in my next paper, content is either positive utility or negative utility, and each recipient determines that idiosyncratically. Labeling something as an ad does nothing to affect the content's utility to the recipient, and as summary information to facilitate sorting, it's a rather blunt label that can lead to increased errors in judgment. So I'd question all such mandatory labeling requirements across-the-board, not just in the spam context.
Posted by Eric at 01:25 PM | Spam
June 16, 2005
New Reality TV Show IP Case
RDF Media Ltd. v. Fox Broadcasting Co., 74 USPQ2d 1769 (C.D. Cal. May 11, 2005) [BNA subscription required]. The producers of “Wife Swap UK” sued Fox for its “Trading Spouses” TV show, alleging copyright infringement and direct/contributory trade dress misappropriation. Fox brings a motion to dismiss the claims. With respect to the trade dress claim, the plaintiff’s complaint alleges that Fox imitated:
“[t]he selection, compilation, arrangement, sequence, and combination of the cast of characters, the structure of each airing of a complete swap, the sequence of events, the plot, the tone, the theme, the pace, the scene set-ups, the narration, the dialogue that arises from constructed situations, the contrasting settings, the structured before-and-after dialogue, the topics explored, the dramatic and comedic effect created by music, and the introductory segment....”
The court doesn’t take much time to shred this claim, saying that it is really a copyright claim in the guise of trade dress. While a work can be simultaneously protected by copyright and trademark law, any trademark protection does not extend to the “corpus” of the copyrighted work (as opposed to the title, individual characters, etc.). As a result, the copyrighted work is the product itself, and to hold otherwise would make copyright law protection superfluous because the work could be protected under trademark law in perpetuity rather than under copyright law’s limited duration. Interesting cites to Dastar in this part of the opinion.
So the plaintiff’s attempt to get trade dress protection for the structure of its reality TV show loses on a motion to dismiss (without leave to amend).
This is an interesting case for several reasons. First, there is some good and thoughtful discussion about the overlaps and distinctions between copyright and trademark. Second, I'm interested in the plaintiff's attempts to stretch trade dress law so far--did they really think they were going to win that claim? Finally, I’m personally fascinated by the burgeoning IP caselaw involving reality TV shows. Other recent opinions that come to mind include the lawsuit by the 80s band Survivor (remember “Eye of the Tiger”???) against the TV show “Survivor” and the recent Survivor v. Surfvivor lawsuit. Seems like they should make a reality TV show about litigating reality TV show IP cases!
Posted by Eric at 12:05 PM | Copyright , Trademark
Grokster Watch
So just about all of my professional peers are on a Grokster opinion watch. Unless something weird happens, the opinion should come out either this Monday (June 20) or next (June 27). As this Monday grows closer, our collective anxiety level will go up. Is today the day? What will the court say? We're all on pins and needles!
I've heard lots of predictions. Predicting Grokster has turned into a modern-day parlor game. I don't have any special insight, but FWIW, here's mine: Supreme Court reverses the Ninth Circuit, but writes a narrow opinion that effectively limits itself to the Grokster facts--thus avoiding broad pronouncements on contributory liability generally or a major recasting of the Sony doctrine.
Whatever the Supreme Court rules, I further predict that Grokster--and all of us--lose eventually. Either the Supreme Court reverses the Ninth Circuit or I predict that Congress will reverse the Supreme Court statutorily. Personally, I'd favor a narrow Supreme Court reversal over seeing Congress screw up any effort to draw lines between legitimate and illegitimate contributions to infringing activity.
UPDATE: C.E. Petit says that Thursday June 23 also could be the day, as the Supreme Court has also said that it will release opinions then.
Posted by Eric at 11:09 AM | Copyright , Derivative Liability
June 15, 2005
Enhanced Consumer Protection Against Spyware Act of 2005 (S 1004)
Sen. Allen's anti-spyware law has finally hit Thomas (the law was initially announced in April).
Description
The law has several substantive provisions, mostly revolving around a central provision making it illegal "to install through deceptive acts or practices software on protected computers." On its face, this is already illegal, but that is consistent with Allen's objective. As the bill says in the preamble:
"According to the Commission's statements to Congress, the vast majority of unfair or deceptive acts or practices involving spyware, such as deceptively asserting control over a consumer's computer and capturing keystroke information, are already unlawful under the Federal Trade Commission Act."
In support of this threshold prohibition, the bill provides some new consequences for the illegal behavior, such as giving the FTC the ability to treble damages, impose new sanctions for a "pattern or practice" of violations, and disgorge profits.
The bill contains a tough preemption clause that would wipe out a lot of state-based legislative initiative. Given the poor drafting and diversity of regulatory models at the state level, preemption would be a particularly good thing, and this law's preemption would clean out a lot of the junk. The law also minimizes private causes of action, another good thing.
A separate section of the bill adds some new criminal sanctions under a new 1030A, presumably enforced by the DOJ instead of the FTC. The first criminalizes unauthorized installation of software and using it to commit another federal offense, giving the DOJ another opportunity to charge-stack or pick the easiest conviction. This provision tracks the I-SPY Act passed by the House.
The second criminalizes installation of software and using it to impair a computer's security protections. The consequences of this provision are a little less clear to me; I think it would be great if this provision got tightened during review to make sure it does not create false positives. This provision does not track I-SPY, but (as I discuss below) chances are that it will just be added to I-SPY.
Finally, the law proposes to augment the FTC's budget by $10M/year to increase enforcement on the Internet.
Conclusion
I think this bill has a lot of promise. The bill is comparatively well-drafted and relatively surgical, compared to abominations like the SPY Act (which is neither). I think this bill might actually support, rather than destroy, user experience on the Internet, and therefore it has a lot more merit than its alternatives.
However, I'm not entirely clear what will happen to this bill and the others pending in the Senate. A typical compromise in this situation would be to smush this act into some other act (maybe the SPY Act/I-SPY Act as passed by the House, or perhaps one of the other pending Senate bills), instead of trying to undertake the harder effort of figuring out which policies would actually be the best. In my world, smushing this act into a lousy act won't cure the defects of a lousy act, so I'd much rather see the lousy act be trumped than preserved.
Another possibility is that the Allen bill will cause gridlock in the Senate. From my perspective, this wouldn't be a bad thing either--I think it would be fine to wait some more time before regulating hard-to-define "spyware." With the Senate embroiled in bigger controversies, it does remain a possibility that the Senate won't act on any of the proposals in time.
Posted by Eric at 09:16 PM | Adware/Spyware
Public Domain Enhancement Act (HR 2408)
I'm a little late catching this, but Rep. Lofgren has introduced the Public Domain Enhancement Act (HR 2408). The law would require copyright owners to pay $1 after 50 years (and each 10 years thereafter) to maintain their copyright; otherwise, the work would fall into the public domain.
As a general proposition, I think anything that would put more copyrighted works into the public domain faster is a good idea. By setting up an easy-to-comply-with formality, the law allows those who care about their copyrights to maintain them easily, while screening out those who don't. As a practical matter, however, "binary" technicalities and formalities create hardship cases, so the law's efficacy would come at the cost of some bluntness.
However, I'm surprised that Lofgren introduced this law while we're awaiting the report of the Copyright Office in response to its request for comment on orphan works. I can't imagine that Congress will take any action while the Copyright Office is processing the nearly 900 submissions it got. Therefore, this proposal seems DOA, and I do wonder what motivated Lofgren to waste her time.
Meanwhile, this law is surely a testament to Larry Lessig's influence. He's been banging the drum on the topic of copyright durations for a while, and it must be satisfying to him to have a legislator introduce a law specifically codifying his proposal.
Posted by Eric at 09:03 PM | Copyright | Comments (1)
Intermix Says It Has Settled NY Enforcement Action Over Adware
Intermix issued a press release today claiming to reach an "agreement in principle" to settle the Spitzer enforcement action over Intermix's alleged distribution of illegal adware.
Have the Parties Settled?
On the same day, Intermix announced improved earnings. The combination of the two caused Intermix's stock price to rise 27% in after-hours trading.
Hmm. This timing seems, well, interesting. This isn't the way most lawyers would advise a company to proceed. Standard lawyer advice: no press releases on deals that aren't signed. Indeed, there have been a few reports today from Spitzer's office that the lawsuit has not been settled. Even the Intermix press release says that the details need to be worked out and approved by the court.
The way I see it, there's a non-coincidental fortuitous combination of elements:
* Good news on a closely watched lawsuit that will generate a lot of press coverage for the company.
* Good financial news at the same time.
* A predictable bump in the stock price, perhaps temporary as the press attention to the company dies down.
A cynic might smell a pump-n-dump. The conditions sure seem optimal for it.
The Terms
The terms of the claimed settlement:
* Intermix pays $7.5M over 3 years. According to Bambi Francisco at Marketwatch, this amount "represented the disgorgement of global advertising sales from the allegedly improper downloads."
* Intermix stops distributing its adware, redirect and toolbar programs, which Intermix says it has already done.
In addition, although these developments do not appear to be part of the settlement, Intermix's press release touts that it has created a chief privacy officer position (although, interestingly, the press release does not name this person) and has joined the Network Advertising Initiative.
Who Wins?
The $7.5M settlement is a sizable payment from Intermix to the NY AG. Spitzer's office can surely spin this as a big win for its office and allow it to tout that adware doesn't pay (at least, adware that doesn't meet Spitzer's standards, whatever those are).
On the other hand, clearly Intermix thinks this is a win. Their stock price rises, they lift the cloud over their business, and the insiders have a great opportunity to dump their stock on the heels of good news.
So another way to look at this settlement is that Spitzer was able to extort some cash from a public adware company that was willing to pay out to buy a boost in its stock price. These types of extortive deals are fairly common in litigation, but it's a little sad to see elected representatives (especially the enforcers of our laws) playing the game.
Meanwhile, a settlement would have 2 other consequences, both negative.
First, it means we don't get any precedent about exactly what constitutes legal/illegal adware distribution. We sorely need this precedent to prevent future extortive deals like this one.
Second, we don't get any more clarity about who else is on Spitzer's hit list and how aggressively Spitzer's office will pursue them. Thus, uncertainty will continue to dog the adware industry until we see more of the cards in Spitzer's hands.
Posted by Eric at 05:40 PM | Adware/Spyware
June 14, 2005
More on the Adware Advertiser Witchhunt
I've been traveling for 3 weeks, so I missed a lot of good stuff while I was gone. One posting I missed was this one, discussing which stocks should be shorted because of Elliott Spitzer's enforcement action against Intermix Media.
This was a very interesting post for a couple of reasons. First, I've gotten a call from several equity traders seeking my perspectives about what they should do with their stock holdings. I've found this all a little amusing, because if I really had any valuable insights on stock trading, I'd be a lot quieter and a whole lot richer (and I wouldn't still be holding on to some of my dot com stocks from the late 1990s).
Second, the referenced post was interesting because it shows how a pundit like Ben Edelman, who assiduously avoids offering his legal perspectives, can move the equity markets. (Notice how the trader put some new stocks on his short list simply because they were referenced in Ben's report). Seeing equity traders respond to innuendo and ambiguous data reinforces just how important it is that we get some legal clarity on the topic of who is liable for what.
Posted by Eric at 09:09 AM | Adware/Spyware
June 13, 2005
Patent Reform Act of 2005 Introduced
The Patent Reform Act of 2005 has been introduced. The bill itself is fairly complicated. Rep. Lamar Smith's press release summarizes the key features:
"· Provides that the right to a patent will be awarded to the first inventor to file for a patent who provides an adequate disclosure for a claimed invention;
· Simplifies the process by which an applicant takes an oath governing the particulars of an invention and the identity of the rightful inventor;
· Deletes the “best mode” requirement from §112 of the Patent Act, which lists certain “specifications” that an inventor must set forth in an application;
· Codifies the law related to inequitable conduct in connection with patent proceedings before the PTO;
· Clarifies the rights of an inventor to damages for patent infringement;
· Authorizes courts with jurisdiction over patent cases to grant injunctions in accordance with the principles of equity to prevent the violation of patent rights;
· Authorizes the PTO to limit by regulation the circumstances in which patent applicants may file a continuation and still be entitled to priority date of the parent application;
· Expands the 18 month publication feature to all applications;
· Creates a new post−grant opposition system;
· Allows third-party submission of prior art within six months after the date of publication of the patent application."
While I don't think this law represents a wholesale reform to patent law (which might not be a bad thing), this law certainly would represent a major tuning of current patent law. I'm still trying to grok the particulars, but everything I've seen suggests that most of these proposals are meritorious and would significantly improve existing law. I think we should give positive strokes when due (especially given how much legislator-bashing I do on this blog!), so I'm hopeful that we can encourage Smith and others to see a version of this reform through adoption.
Posted by Eric at 09:33 AM | Patents | Comments (4)
June 10, 2005
Groups Sue to Strike Down Utah's Anti-Internet Porn Law
King's English, Inc. v. Shurtleff (D. Utah complaint filed June 9, 2005). As expected, the ACLU is leading a charge against Utah for their latest anti-porn initiative (HB 260). The AP story. Declan's News.com story.
I have already predicted that this law will be struck down as unconstitutional. The complaint itself gets right to the point:
"With respect to the application to the Internet of the criminal provisions relating to distribution to minors of harmful to minors materials, 18 federal judges, including three Courts of Appeal, as well as one State Supreme Court, have struck down as unconstitutional laws in Arizona, Michigan, New Mexico, New York, South Carolina, Vermont, Virginia, and Wisconsin similar to the Act. In addition, the United States Supreme Court invalidated a similar federal law on First Amendment grounds in Reno v. ACLU, 521 U.S. 844 (1997), aff'g 929 F. Supp. 824 (E.D.Pa. 1996)."
This is slightly overstated because the laws do vary, but it does nicely illustrate the overwhelming odds against this law being constitutional. Indeed, although the complaint doesn't say it, I'm pretty sure that none of the challenged laws have survived the challenge (at least, in any meaningful way).
When this act is struck down, we will complete yet another wasteful cycle of legislators who grandstand about Internet porn without regard to the civil liberties they implicate and the costs they impose on society at large (and on watchdog groups like the ACLU). If you're not already a member of the ACLU (I've been a member for almost 20 years), you might consider joining to help fund expensive and unfortunately-necessary efforts like this.
Posted by Eric at 09:20 AM | Content Regulation , Derivative Liability
Do You Want Pictures With That Download?
By John Ottaviani
OK, maybe it's just a slow news day, or maybe it's because I'm working on a presentation for next week on the implications of open source software for attorneys involved in mergers and acquisitions of software companies, and I'm ready to be distracted by almost anything.
So one of my searches turns up an article at Newsforge announcing that Playboy has set up a mirror site for Apache, Firefox and Thunderbird downloads at mirrors.playboy.com. Apparently, Playboy uses open source a great deal in its technology operations, particularly servers. Setting up the mirror site is a way for Playboy to say "thank you" to the open source community.
The site is actually very plain and unremarkable. (Yes, I checked, but only to see if there were any articles). No pictures yet, but isn't it only a matter of time before we find out if the marriage of open source and sex is a winning combination on the Internet?
Posted by John Ottaviani at 08:45 AM | E-Commerce
June 09, 2005
Wal-Mart Won't Print Photos If They Are Too Good
Because copyright is a strict liability tort, "photofinishers" who print photos (like Wal-Mart and Kmart) can be liable if the customer asks to print photos owned by third parties. As a result, photofinishers are now bouncing photos that look professional on the theory that they could be infringing--even if the customer certifies to the photofinisher that the customer owns the copyright. While this isn't the most profound consequence of copyright's strict liability scheme, it's a nice microcosm of how strict liability creates some "false negative" errors (pardon the pun).
Posted by Eric at 08:12 PM | Copyright
Talk on 47 USC 230
I'm giving a talk later today on 47 USC 230 at Southwestern Law School. This talk allowed me to organize my thoughts on the state of the law. My slides.
Posted by Eric at 09:12 AM | Derivative Liability
June 07, 2005
Web Gambling Advertising Suit Against Search Engines Allowed to Proceed
By John Ottaviani
Business Wire is reporting that Judge Richard Kramer of the San Francisco County Superior Court has denied a motion to dismiss certain of the allegations in a class action lawsuit filed last summer against Google, Yahoo! and other major search engines, for their alleged involvement in the illegal advertisement of Internet gambling.
The complaint alleges that Yahoo!, Google, Overture, Ask Jeeves, LookSmart, AltaVista, Terra Lycos, Jupiter, FindWhat, Kanoodle, Business.com and Sex.com violated California law by providing paid or "sponsored" advertisements in violation of the California Penal Code provisions and the California Unlawful Business Practices Act. Google and Yahoo! reportedly have since abandoned gambling advertisements, but are still subject to the lawsuit for their prior actions.
It is not clear whether the new ruling addressed substantive issues or only went to procedural questions. The plaintiffs are attempting to break new legal ground by taking on online gambling advertising. However, given the recent court rulings expanding the scope of protection under the Communications Decency Act, the search engines should have strong arguments for immunity under Section 230 of the CDA (although the complaint specifically alleges that none of the defendants qualifies for immunity as an "interactive computer service" under Section 230(f)(2), but at best are "information content providers" under the CDA). The search engines also seem to have very strong First Amendment and dormant commerce clause defenses.
It would be very interesting to know if Judge Kramer ruled on the CDA defense. If anyone has a copy of the ruling, we would appreciate it if you would please send it along for us to look at.
Posted by John Ottaviani at 11:31 AM | Content Regulation , Search Engines
June 05, 2005
Google's Human Algorithm
Henk van Ess has been running a series of blog posts at Search Bistro about how Google uses international students to QA the relevancy of its search results. See, for example, his initial post including the advertising that Google ran through the Kelly temp agency.
This doesn't surprise me at all; rumors have been floating for a while. However, it does reinforce that Google is far from a passive intermediary for displaying third party content. Rather, Google actively manages its content database to accomplish its goals (i.e., in this case, high relevancy of search results). This should put a spotlight on its various copyright and trademark lawsuits where Google's defense has been partially based on the automated nature of its search engines.
The confirmation of human oversight of search results also undercuts Google's position that technology can solve all problems. In the end, when it comes down to subjective decisions like "relevancy," an algorithm alone isn't sufficient. This is hardly surprising, but Google has tried to position itself as weighting technology solutions over human solutions, and that positioning simply doesn't work across-the-board.
Posted by Eric at 10:15 AM | Search Engines | Comments (1)
June 04, 2005
Why I'm Not Excited About a New .xxx TLD
I'm not really a fan of new TLDs. Mostly, I see them increasingly irrelevant, so they generate a fair amount of activity but little benefit. As a result, not surprisingly, I am not excited about a .xxx TLD. Indeed, not only am I unenthusiastic, I have some serious concerns about its implications. Given how Congress hates Internet porn, it seems almost inevitable that Congress will mandate that pornographers set up shop only under a .xxx SLD, leading us back to the age-old conundrum of what constitutes pornography and launching yet another multi-round Constitutional challenge.
Meanwhile, Internet News ran a good story recapping the development of .xxx. However, I'm surprised the article did not directly reference Congress' last attempt to zone the Internet, the .kids.us debacle--which I think can only be characterized as a complete and utter failure and a waste of Congress' time.
UPDATE: The AP Story is also good. Declan reaches the same conclusion I do, and provides some good background.
Indeed, Rep. Pence of Indiana is proposing to create a "dot-porn" TLD to create exactly the zoning problem we fear with .xxx. (Warning--the UPI article is shockingly slanted!) The idea of segregating porn into its own TLD is a bad meme that just won't die!
Posted by Eric at 11:20 PM | Domain Names
June 03, 2005
Judge Patel: Maintaining An Index of Downloadable Files is Not "Distributing" the Files
By John Ottaviani
Although there was some confusion over Judge Patel's May 11th ruling in the Napster investor litigation, her May 31 ruling leaves no doubt that the Section 106(3) distribution right is not infringed merely by maintaining an index of downloadable files.
BACKGROUND
After Napster was shut down for infringing the record companies' copyrights, the plaintiffs (I'll continue to refer to them here as "the record companies") have continued to pursue the entities that invested in Napster before it ceased operations. The record companies have alleged that, by investing in Napster and assuming control of the operation of Napster file-sharing network, the investors contributorily and vicariously infringed the record companies' copyrights.
In order to find the investors liable for contributory or vicarious infringement, the record companies first have to prove that there was an act of direct copyright infringement. The record companies have offered three theories of direct infringement as a basis for their secondary claims against the investors: (1) that Napster's users who uploaded and made MP3 files available on the Napster network engaged in the unauthorized distribution of the record companies' copyrighted works in violation of Section 106(3) of the Copyright Act; (2) the downloading of MP3 files by Napster users infringe the record companies' exclusive rights to reproduce their copyrighted works under Section 106(1) of the Copyright Act; and (3) that Napster itself violated the record companies' exclusive distribution rights under Section 106(3) by indexing MP3 files that its users posted on the Napster network.
MAY 31 DECISION
Judge Patel shot down the third theory. The investors pointed to a long line of decsions and treatises by copyright professors that state that the "distribution" of a copyrighted work requires the transfer of an identifiable copy of that work, and argued that the record companies had failed to show any proof of actual dissemination of a copyrighted work.
The record companies relied primarily on the Fourth Circuit's 1997 decision in Hotaling, pointing to language that a copyrighted work is "distributed" within the meaning of Section 106(3) whenever it is "made available" to the public without authorization of copyright owner. Judge Patel distinguished the situation in Hotaling from that in Napster, by point out that there was uncontroverted evidence in Hotaling that the defendants had made actual unauthorized copies of the copyrighted materials available to borrowers at its library. Unlike that case, Napster did not have unauthorized works in its "collection". The infringing works never resided on the Napster system. While she probably did not need to go any further, Judge Patel went on to find that, to the extent the Hotaling decision suggests that a mere offer to distribute a copyrighted work gives rise to liability under Section 106(3), that view is inconsistent with the text and legislative history of the Copyright Act. She also reaffirmed her May 17 ruling that the recently passed ART Act did not change the analysis.
Because there was some evidence that at least some of the record companies' copyrighted worked were uploaded and downloaded by Napster users, and genuine disputes over those facts, Judge Patel refused to dismiss the record companies' claims that the investors were liable for secondary copyright infringement under the "uploading" and "downloading" theories.
Eric may disagree with me, but this seems to be the right result, based on the language of Section 106(3). Maintaining an index, without more, is not "distributing."
The investors are not out of the woods, yet, however. The case will proceed with further discovery on the "uploading" and "downloading" theories, and, no doubt, will either settle or result in future decisions. The Supreme Court's anticipated decision in the Grokster case also may bear on the liability of the investors.