Technology & Marketing Law Blog

May 03, 2009

April 2009 Quick Links

By Eric Goldman

[Just a reminder that I am posting some “quick links” exclusively to my Twitter account, so if you want to keep up with everything, follow me at Twitter or subscribe to the RSS feed.]

Marketing/Spam

* Zango is dead (and so is adware), Ken Smith, Zango's CTO, conducts a post mortem: What Zango Got Wrong and What Zango Got Right. Mike Masnick's post-mortem.

* The FDA's instructions about pharmaceutical search marketing have led to lots of confusion. See Search Engine Land and the NYT.

* NYT: "Never Mind What It Costs. Can I Get 70% Off?"

* Tsan Abrahamson on social media and marketing law.

* Asis Internet Servs. v. Consumerbargaingiveaways. A district court diverges from Mummagraphics and says CAN-SPAM does not preempt CA's anti-spam law even if there is no common law fraud.

* Jackson v. American Plaza Corp., No. 08-8980 (S.D.N.Y. April 28, 2009), A Craiglist advertiser isn't a third party beneficiary of Craigslist's contract for purposes of stopping another advertiser from breaching the contract (in this case, spamming the forum).

Defamation

* Gardner v. Martino (9th Cir. April 24, 2009). I'm not a fan of talk radio, and the 9th Circuit apparently isn't either. The court upheld an anti-SLAPP dismissal of a defamation claim against the radio talk show host because "The Tom Martino Show is a radio talk show program that contains many of the elements that would reduce the audience’s expectation of learning an objective fact: drama, hyperbolic language, an opinionated and arrogant host, and heated controversy." Accord DiMeo v. Max. As Marc Randazza notes, rulings like this pose a challenge for those who think contextually ridiculous statements should be treated as "cyberbullying" or "cyber-harassment." Cf. the Finkel v. Facebook case involving asinine but clearly meaningless chatter on a private Facebook page.

* Some big defamation losses reported by CMLP:
- Blogger hit with $1.8M damage award.
- $12.5M defamation judgment against a gripe site.

* CMLP has a page organizing all of its 47 USC 230 material.

Intellectual Property

* Publicly republishing a private email leads to a default judgment of copyright infringement.

* Bryant v. Europadisk, Ltd., 2009 WL 1059777 (S.D.N.Y. April 15, 2009). In 2000, musicians authorized distributors to distribute their [hard copy] recordings, which the defendants ultimately ripped and allowed Amazon and Rhapsody to deliver via downloading. The resulting lawsuit turned on the interpretation of the license agreement term “internet sites.” The court says the term "is not ambiguous and does not extend to websites selling digital copies of songs. At the time the parties entered into the agreements, The Orchard sold physical copies only. As its Vice President explained by affidavit testimony, digital downloads of music did not become a “viable business” until iTunes was launched in approximately April 2004, long after Media Right and Gloryvision entered into contract."

* Octomom is seeking trademark registrations.

Miscellaneous

* GeoCities is shutting down.

* eBay will referee customer disputes.

* Wilson Sonsini's VC financing term sheet generator.

* Oddee: 10 Most Bizarre [Online] Gaming Incidents

Posted by Eric at 06:31 AM | Adware/Spyware , Content Regulation , Copyright , Derivative Liability , E-Commerce , Internet History , Licensing/Contracts , Marketing , Spam , Trademark , Virtual Worlds | TrackBack

April 11, 2009

Q1 2009 Quick Links, Part 3

By Eric Goldman

Blogging and Social Networking Sites

* A new version of the EFF Legal Guide to Blogging. While you're there, consider joining EFF as a member. The EFF does first-rate work, and they can use all the support they can get in this economic downturn.

* Red Tape Chronicles: "Blogger: Cash4Gold tried to 'bribe' me."

* Klein v. City of Laguna Beach, 594 F. Supp. 2d 1142 (C.D. Cal. Jan. 23, 2009): "many of the cases striking down ordinances that restrict sound-amplification equipment are artifacts of a bygone age that offered activists few media of mass communication. Twenty, thirty, or fifty years ago, a sound truck was an important means of spreading a message to a large group of people. Now, one must only have a computer and a printer to publish a newsletter or handbill. The Internet, e-mail, text messaging, and widespread mobile communications devices have made it easier than ever to reach a large audience on a small budget. Indeed, it might be easier for Mr. Klein to reach the youth he wishes to target by using Facebook or MySpace."

* Maybe everyone already knew this, but I learned something interesting about Blogger. Apparently in some cases they will place an interstitial warning in front of certain user-posted content.

* Doninger v. Niehoff, 2009 WL 103322 (D. Conn. Jan. 15, 2009). On remand from the Second Circuit, the district court denies damages for a student whose off-campus blog entry led to school discipline. At the same time, Wendy Davis reports on how a Conn. Bill Would Protect Students' Free Speech Online:

* Funny article on Facebook's efforts to police against people who create funny account names, which sometimes ensnares people who actually have funny names like Batman, Six, Super, Pancake and Kisser.

* Facebook Sex-Extortion Plot: a boy pretends to be a girl, gets boys to send naked photos to him, and then threatens to go public with the photos unless they consent to sex with him.

* Dynamic Sports Nutrition, Inc. v. Roberts, 2009 WL 136023 (S.D. Tex. Jan. 16, 2009). A former employee republishing confidential information via his blog is enjoined.

* We now know that Facebook settled with ConnectU for $65M. However, ConnectU might get a little more cash after this information was inadvertently disclosed by its former counsel, Quinn Emanuel, in a marketing brochure.

* Facebook gets TRO against Wallace.

* Some people gave up Facebook for Lent.

* Reuters writes up a shocking study: many teens on MySpace post things they might regret.

* State v. Hause, 2009 WL 295404 (Ohio App. Ct. Feb. 9, 2009). Facebook photos help convict a woman for allowing minors to drink alcohol in her house.

* U.S. v. Villanueva, 2009 WL 455127 (11th Cir. Feb. 25, 2009). MySpace photo and YouTube video showing defendant holding firearms contribute to sentence enhancements for firearms charges.

* John Palfrey & Adam Thierer discuss Palfrey's arguments to "improve" 47 USC 230 by reversing Doe v. MySpace.

Defamation/Cyberbullying

* JuicyCampus has shut down. LA Times, Chronicle of Higher Education, CMLP.

* Lengthy article on the AutoAdmit lawsuits. And a mixed ruling in Ciolli v. Iravani.

* Noonan v. Staples (1st Cir. Feb. 13, 2009). Truth is NOT an absolute defense to defamation in Massachusetts, which apparently also has seceded from the Union because the First Amendment no longer seems to apply.

* Neuwirth v. Silverstein, 2009 WL 294737 (Cal. App. Ct. Feb. 9, 2009). Reiterating that a website can be a public forum for purposes of anti-SLAPP laws. The CMLP writeup.

* Douchebags Lawsuit dismissed. Marc Randazza mocks the lawsuit.

* Rios v. Fergusan, 2008 WL 5511215 (Conn. Super. Ct. Dec. 3, 2008). Connecticut court has jurisdiction to issue restraining order against North Carolina man who posted YouTube video threatening Connecticut woman.

* Fahmy v. Hogge, 2009 WL 33418 (C.D.Cal. Jan. 2, 2009). Court denies Fahme's motion to set aside the dismissal based on lack of jurisdiction because Fahme made the error that caused the dismissal.

* 24Grille v. TripAdvisor (complaint filed April 2, 2009). Restaurant sues TripAdvisor for anonymous TripAdvisor review. Hello 230!

* Censorious laws brewing in WV and NJ.

Yelp

I have been meaning to post about my experiences with Yelp as a reader and a writer, but that has been repeatedly deferred. So, instead, how about a quick recap of Yelp’s woes? Yelp has been under the microscope quite a bit in the last few months.

* Wendy Davis recaps all the Yelp-related litigation she and I could find--at least 5 known cases. CMLP recaps a couple of the lawsuits.

* This East Bay Express article about Yelp caused quite a stir. It was followed up with more attributed sources. A number of other media outlets covered Yelp, including News.com and the NYT. For a full rundown of Yelp haters, check out the Eater coverage.

Wikipedia

* 25 Biggest Blunders in Wikipedia History.

* Two books about Wikipedia I’ve been checking out.
- Wikipedia, the Missing Manual.
- How Wikipedia Works.

Pornography

* Mukasey v. A.C.L.U., No. 08-565. The Supreme Court declined the cert petition regarding the challenge to the 1998 Child Online Protection Act, officially killing the law after a decade of litigation. Putting aside the merits of the law, it would have been a huge shock to the Internet community to have a circa-1998 criminal act resurrected! I'd like to think Congress will be wiser than to try to criminalize Internet porn a third time, but the regulation of Internet porn is like a siren song to Congressmembers.

* State v. Hurst, 2009 WL 580453 (Ohio App. Ct. March 6, 2009). From the unfortunately-named Licking County courts, the defendant downloaded 14,000 pornographic photos into his work computer's local cache in a five day period (he acknowledged he spent 70% of his workday downloading porn). An expert said that about 50 of the photos were child pornographic. The defendant was convicted of possessing child pornography even though he argued that he didn't intentionally download the photos, getting a 39 month sentence and classified as a sex offender.

* Excellent article by Colette Vogele on suing over a sex tape.

Gambling

* The credit card payment systems blocked the New Hampshire Lottery due to the Unlawful Internet Gambling Enforcement Act of 2006.

* Peer-to-peer gambling OKed in Washington.

Posted by Eric at 12:53 PM | Content Regulation , Derivative Liability , Internet History , Privacy/Security | TrackBack

April 10, 2009

Q1 2009 Quick Links, Part 2

By Eric Goldman

Trademarks/Domain Names

* The ridiculous Jones Day v. BlockShopper case settled. The settlement agreement. The ABA Journal and Legal Blog Watch stories. Commentary from CMLP, Paul Levy, Tom O'Toole.

* The trial court denouement of the S&L Vitamins v. Australian Gold did not turn well for the defense--$6M jury award. The S&L Vitamins v. Australian Gold and Designer Skins v. S&L Vitamins cases subsequently settled. According to Ronald Coleman: "This settles, for our clients S&L Vitamins, Inc., the Australian Gold case and the related appeal in the Designer Skin case. All money judgments are vacated and parties bear their own fees. Our client agrees to move on to another line of work, however."

* Twelve Inches Around Corp. v. Cisco Systems, Inc., 2009 WL 928077 (S.D.N.Y. March 12, 2009). 17 USC 512(f) does not cover trademark takedown notices.

* Suarez Corp. v. Earthwise, 2008 U.S. Dist. LEXIS 92931 (W.D. Wash. Nov. 14, 2008). Including a competitor's name in a web page disclaimer creates initial interest confusion when the competitor's name is indexed by the search engines. Compare Promatek v. Equitrac, the 2002 7th Circuit case ordering the defendant to include the plaintiff's name on its web page as a cure for initial interest confusion.

* CRS Recovery v. Laxton, 2008 WL 4408001 (N.D. Cal. Sept. 26, 2008). Another California-based court says that domain names are property that can be converted. I'm amazed that these cases are still being brought.

* North American Bushman, Inc. v. Saari, 2009 WL 211932 (M.D. Pa. Jan. 27, 2009) The parties entered into a settlement agreement that "Plaintiffs further agree not to use, and in addition, to offer up or destroy, any material that includes, but is not limited to, the names, photos, images, embroideries, of likeness of [Defendant] James Saari and any of the a above named trade names and trademarks of Defendants." The court holds that this provision wasn't breached when third party users posted comments referencing the defendants in UGC areas of websites operated by the other party.

* Advice Co. v. Novak, 2009 WL 210503 (N.D. Cal. Jan. 23, 2009). Justia page. Stupid lawsuit alert! Attorneypages.com believes Attorneyyellowpages.com infringes its trademark. Case dismissed for lack of personal jurisdiction. Participating in Google AdSense doesn't automatically create jurisdiction in CA.

* DSW v. Zappos, which involved allegations of trademark infringement based on Zappo's affiliates, settled.

* An update on Google's AdWords woes in France.

* Kiva Kitchen & Bath Inc. v. Capital Distributing Inc., 2009 WL 890591 (5th Cir. April 2, 2009). The Fifth Circuit upholds enhanced damages under ACPA. Good discussion of the purpose of damages in the ACPA.

* Toys R Us buys the domain toys.com for over $5M. Is any domain name worth $5M any more?

* A 2007 interview with "Pokey" of Pokey.org fame. This is one of my favorite domain name disputes from the 1990s. A very smart cyberlawyer (Ian Ballon), on behalf of the trademark owners of Pokey & Gumby, unexpectedly got into a public tangle with a 12 year old kid nicknamed "Pokey" over the domain name pokey.org. Debating 12 year old kids in the press never turns out well.

Advertising/Marketing

* Some new material on behavioral advertising: an FTC report and a CRS report.

* Latest NYT article on human billboards. See my prior blog post.

* Privacy advocates are freaking out about Google Android and its ability to deliver location-based information and ads. But location-based information and ad targeting is inevitable...and a good thing.

* Action over mobile marketing: Mobile Messenger settled a false advertising suit with Florida for $1M, and another settlement. Google's response.

* The class in the "Vista Capable" lawsuit was decertified.

* Tsan's post on the latest FTC efforts to rein in testimonials on social networking sites and blogs. Unfortunately for the FTC, some of its efforts may be preempted by 47 USC 230.

* eBay v. Digital Point Solutions, 2009 WL 481269 (N.D. Cal. Feb. 24, 2009). eBay loses an intermediate round in its cookie stuffing lawsuit against Digital Point Solutions.

* e360, a serial defendant in spam cases, sued Choicepoint for selling it email addresses that led to the suits. Apparently neither e360 nor Choicepoint got the memo that the days of email list brokering are dead.

* 10 Creative Bathroom Ads.

Search Engines

* Study: Google's search lead not matched by loyalty. A critical response.

* Is Google giving big brands extra credit in its organic search results rankings? Compare: media giants complaining they don't get enough weighting in organic results.

* Sign of improving consumer search skills: search queries are getting longer.

* Yahoo reserves the right to "auto-optimize" advertiser accounts by changing ads and advertiser bids automatically. This is not a popular move.

* Wired: The Plot to Kill Google.

Posted by Eric at 10:20 AM | Domain Names , Internet History , Marketing , Search Engines , Spam , Trademark | TrackBack

March 19, 2009

IEEE ComSoc SCV Talk: "Engineers' Role in Internet Law Development"

By Eric Goldman

Last week, I gave a talk at a meeting of the IEEE Communications Society, Santa Clara Valley chapter. I don't often get the chance to speak to a group of engineers, so I decided to go in a little different direction than my normal talks. I gave a procedure-oriented talk about how lawyers and engineers can work together to improve legal compliance. Along the way, I pointed to the Roommates.com and Cablevision cases as two case studies of how product design choices can influence the legal analysis (one good, one bad). My talk slides.

Posted by Eric at 10:25 AM | Copyright , Derivative Liability , Internet History | TrackBack

March 11, 2009

The Third Wave of Internet Exceptionalism

By Eric Goldman

[I initially wrote this as an editorial for our University magazine and republished that version through InformIT as well. Here's the original unedited version I submitted.]

From the beginning, the Internet has been viewed as something special and “unique.” For example, in 1996, a judge called the Internet “a unique and wholly new medium of worldwide human communication.”

The Internet’s perceived novelty has prompted regulators to engage in “Internet exceptionalism,” crafting Internet-specific laws that diverge from regulatory precedents in other media. Internet exceptionalism has come in three distinct waves:

The First Wave: Internet Utopianism

In the mid-1990s, some people fantasized about an Internet “utopia” that would overcome the problems inherent in other media. Some regulators, fearing disruption of this possible utopia, sought to treat the Internet more favorably than other media.

47 USC 230 (a law still on the books) is a flagship example of mid-1990s efforts to preserve Internet utopianism. The statute categorically immunizes online providers from liability for publishing most types of third party content. It was enacted (in part) “to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation.” The statute is clearly exceptionalist because it treats online providers more favorably than offline publishers—even when they publish identical content.

The Second Wave: Internet Paranoia

Later in the 1990s, the regulatory pendulum swung in the other direction. Regulators still embraced Internet exceptionalism, but instead of favoring the Internet, regulators treated the Internet more harshly than analogous offline activity.

For example, in 2005, a Texas website called Live-shot.com announced that it would offer “Internet hunting.” The website allowed paying customers to control, via the Internet, a gun on its game farm. An employee manually monitored the gun and could override the customer’s instructions. The website wanted to give people who could not otherwise hunt, such as paraplegics, the opportunity to enjoy the hunting experience.

The regulatory reaction to Internet hunting was swift and severe. Over 3 dozen states banned Internet hunting. California also banned Internet fishing for good measure. However, regulators never explained how Internet hunting is more objectionable than physical space hunting.

For example, California Sen. Debra Bowen criticized Internet hunting because it “isn't hunting; it's an inhumane, over the top, pay-per-view video game using live animals for target practice….Shooting live animals over the Internet takes absolutely zero hunting skills, and it ought to be offensive to every legitimate hunter.”

Sen. Bowen’s remarks reflect numerous unexpressed assumptions about the nature of “hunting” and what constitutes fair play. In the end, however, hunting may just be “hunting,” in which case the response to Internet hunting may just be a typical example of adverse Internet exceptionalism. [For more, check out my 2005 editorial on Internet hunting.]

The Third Wave: Exceptionalism Proliferation

The past few years have brought a new regulatory trend. Regulators are still engaged in Internet exceptionalism, but each new advance in Internet technology has prompted exceptionalist regulations towards that technology.

For example, the emergence of blogs and virtual worlds has helped initiate a push towards blog-specific and virtual world-specific regulation. In effect, Internet exceptionalism has splintered into pockets of smaller exceptionalist efforts.

Regulatory responses to social networking sites like Facebook and MySpace are a prime example of Internet exceptionalism splintering. Rather than regulating these sites like other websites, regulators have sought social networking site-specific laws, such as requirements to verify users’ age, combat sexual predators and suppress content that promotes violence. The result is that the regulation of social networking sites differs not only from offline enterprises but from other websites as well.

Implications

Internet exceptionalism is not inherently bad. In some cases, the Internet truly is unique, special or different and should be regulated accordingly. Unfortunately, more typically, exceptionalism cannot be analytically justified and instead reflects regulatory panic.

In these cases, regulatory exceptionalism can be harmful, especially to Internet entrepreneurs and their investors. It can distort the marketplace between web enterprises and their offline competition—occasionally advantaging the website (such as 47 USC 230), but typically hindering the web business’ ability to compete. In extreme cases, such as Internet hunting, unjustified regulatory intervention may put companies out of business.

Accordingly, before enacting exceptionalist Internet regulation, regulators should articulate how the Internet is unique, special or different and explain why these differences support exceptionalism. Unfortunately, emotional overreactions to perceived Internet threats or harms typically trump such a rational regulatory process. Knowing this tendency, perhaps we can better resist that temptation.

Posted by Eric at 12:20 PM | Content Regulation , Derivative Liability , Internet History | TrackBack

February 20, 2009

Facebook User Agreement Imbroglio Recap (and Some Comments of My Own)

By Eric Goldman

I didn't have a chance to blog on the Facebook user agreement amendment flap in real-time, but now that Facebook has rolled back its amendments and everyone is catching their breath, the Monday morning quarterbacking is proceeding in full earnest. Some of the articles that caught my attention:

* CNET News.com: "Facebook's about-face: Change we can believe in?"

* InternetNews: "Experts: Facebook Must Rethink TOS Stance"

* EFF: "Facebook's reaction is a tremendous victory for its users." I guess that's true, in the way that getting back to zero at a casino sometimes can be considered a win.

* Bill McGeveran powerfully (and with irony) demonstrates that Facebook's terms weren't all that unusual. Et tu, Consumerist?

Some of my own observations:

* When you're a high-profile company living in the media fishbowl like Facebook, there is no such thing as a minor amendment to your user agreement.

* Facebook's amendments--and the news reports about them--were confusing for two independent but often correlated problems. First, lay readers often misread user agreements, especially broad license grants that users mistakenly read as statements of ownership. This is a well-known and long-standing phenomenon; see, e.g., the flap over GeoCities' user agreement from a decade ago. So initial news reports on Facebook's amendments were garbled and perhaps overly dramatic.

Second, Internet lawyers often draft user agreements using legalese in ways that make the agreements indecipherable to lay readers...and, not infrequently, to other lawyers. Having drafted a lot of them in my life, I'm a pretty sophisticated reader of user agreements, yet it took me a fair amount of time to parse Facebook's license terms to figure out what they were saying--and, even then, I wasn't quite sure. In particular, the "perpetual" and "irrevocable" terms in the license agreement were in seeming conflict with Facebook's promise in the same license grant to honor a user's privacy settings. In other words, if a user can set the configurations to remove content from Facebook's purview and Facebook will honor those instructions, then how is Facebook's license grant irrevocable? Unless I'm missing something big, this looked to me like a drafting error by Facebook. (And check out Nancy Kim's op-ed identifying this exact issue--in March 2008).

This suggests a drafting lesson we might internalize from Facebook's hassles (Jonathan Zittrain makes a complementary point). We as Cyberlawyers are used to parroting the exact words from the applicable statutes and caselaw because it seemingly increases the precision of the agreement, but frankly I think Facebook and other Internet companies would do a whole lot better--both legally and in the court of public opinion--if it junked the legalese and actually tried to write license grants in real English.

* Partially obscured in the haze is the lurking question of whether Facebook can unilaterally amend its user agreement without providing any notice to users. I don't even see this as a close question. From my reading of the precedents, I think the answer is pretty emphatically NO, both as a matter of contract law (and see more; but compare MySpace v. theglobe.com) and FTC law (see, e.g., the Gateway Learning case). Without a doubt, I wouldn't want to be Facebook trying to defend the new incremental changes in court.

* I got a few inquiries about whether a lawsuit against Facebook would have been successful. As Ethan explained recently, there may be unexpected hurdles to any such lawsuits.

* Now that Facebook has stirred the hornet's nest, it's not clear that they can simply roll back to the prior version of the user agreement and put everyone back in the happy apple. Instead, having called attention to its licensing policies, Facebook will be lucky if the pre-amendment terms survive as those undergo critical and jaundiced scrutiny from users. David Kirkpatrick touches on this.

* No matter how Facebook resolves its agreement, this episode has been damaging to its trust relationship with its users. It gives users yet another reason to question whether Facebook is a site we can trust. For users who lived through the Newsfeed and Beacon episodes, this may be a three-strike situation. For others, the fracas is yet another wedge in the users' relationship with Facebook. Trust is hard to earn and easy to lose.

Having said that, in the past couple of quarters, Facebook has been riding a strong network effects bull and seeing remarkable growth DESPITE Beacon. So Beacon clearly did not destroy users' trust in Facebook. At the same time, if users fall out of love of Facebook due to loss of trust, they will scale back their involvement with Facebook, which ultimately could negate the network effects benefits they are currently experiencing. IMO, this is the real risk created by Facebook's highly publicized problems.

Posted by Eric at 08:57 AM | Internet History , Licensing/Contracts , Privacy/Security | TrackBack

February 06, 2009

2008 Cyberlaw Year-in-Review

By Eric Goldman

It's a sign of my schedule that I'm just now getting to this, and this post will be more pithy than I initially conceived. This post recaps some of the Cyberlaw highlights from last year. Frankly, the two biggest stories of 2008 were the financial markets meltdown and the ascension of President Obama, neither of which have a lot of Cyberlaw angles. In light of those big developments, Cyberlaw in 2008 was comparatively quiet. However, there is still plenty of interesting developments to revisit.

Broad Themes

A few broad themes emerged last year:

* Ludicrous trademark claims. 2008 hardly had a monopoly on dumb trademark claims; those are perennial. But 2008 certainly saw some asinine entries, including putative Cyberlawyer Eric Menhart's claim to own a trademark in the term "Cyberlaw," Jones Day's efforts to claim that a web page referencing its name as the employer of some homebuyers violated its trademark rights, and putative Cyberlawyer John Dozier's claim that if his name is used as anchor text, the link must go to his website or it violates his trademark right.

* This was a good year for expansive readings and applications of user agreements. Some examples:
- the Lori Drew prosecution, where Lori was convicted of violating an agreement that someone else clicked through.
- Jacobsen v. Katzer, where a user of copyrighted material is bound by a contract that he/she never clicked through at all.
- AV v. iParadigms, where kids were not allowed to void a user agreement despite their status as minors (and despite the fact that some of them had no meaningful choice about whether or not to consent).
- JuicyCampus enforcement action, where the New Jersey Attorney General's office tried to treat a negative user behavioral restriction in a user agreement as an affirmative marketing representation that such user behavior would not occur on the site.

* One of the long-standing Cyberlaw memes is that websites must either be passive conduits to avoid liability or active editors to manage their liability, but if a website chooses the latter, the website is liable for any editorial mistakes. That is, if the website edits its site but misses something, it's fully liable for what it missed. This simply isn't true under 47 USC 230, which allows websites to choose to be passive, active or anything in between without varying liability. In the IP context, this passive v. active meme has had more traction, but 2008 saw two solid cases suggesting that if a website tries to police its premises and fails, courts will be sympathetic and excuse any omissions. Example #1: Tiffany v. eBay, where the court gave eBay extra credit for its VeRO program as a basis to excuse any counterfeit goods that slip through. Example #2: Io v. Veoh, where the court was more willing to excuse Veoh because it had undertaken extra policing efforts than was required for the 17 USC 512 safe harbor. Finally, although not an IP case, the court in Cisneros v. Yahoo also lauded search engines for their affirmative efforts to block gambling ads, which the court acknowledged was a hard challenge.

* Despite some adverse rulings early in the year, punctuated by the Ninth Circuit's en banc ruling in Roommates.com, the 47 USC 230 immunization is still extremely robust. We saw a number of expansive and pro-defense rulings per 230 throughout the year, including Craigslist, Doe v. MySpace, Cisneros v. Yahoo and Goddard v. Google. Perhaps more importantly, in the three 230 cases I've seen since Roommates.com that cited to the opinion, all three cited the opinion in ruling for the defense.

* Battles over keyword advertising are hardly over, even though Utah officially backed off its attempt to ban them. The ABA IP Section tried to get into the act, and American Airlines sued Google, settled, and then sued Yahoo.

Top 11 Cyberlaw Developments of 2008

#11: Utah Trademark Protection Act repealed. The Utah Trademark Protection Act had the potential to throw the entire keyword advertising business into turmoil. Instead, now that it's repealed, it just remains as a dramatic reminder of the Utah legislature's incompetence regarding Internet legislation.

# 9 and 10: Fair Housing Council v. Roommates.com and Goddard v. Google. The Roommates.com en banc opinion makes the list based mostly on its potential consequences, not its actual effect. It remains one of the most significant pro-plaintiff incursions into the solidly defense-favorable interpretations of 47 USC 230, but it's so riddled with contradictory and ambiguous language that no one really knows what to do with it. I think Judge Fogel's reading of the case in Goddard v. Google has the potential to become the defining interpretation of the case, and his solidly defense-favorable reading of the precedent in excusing Google for ads placed by its advertisers may only reinforce how little Roommates.com changed the law.

#8: AV v. iParadigms. This case was a terrific win for online fair use enthusiasts because the for-profit commercialization of a database of third party copyrighted works was still deemed fair use. The upholding of the contract against the minors forced to enter into it was also significant. Before this ruling, my assumption is that any plaintiff trying to form a class action lawsuit in the face of an adverse user agreement could always form the class on behalf of any minors who had the right to void the contract. This case seems to shut down that loophole in user agreement protection.

#7: Io v. Veoh. The 17 USC 512(c) safe harbor has been law for over a decade and has produced a couple dozen rulings, but few are cleaner and more decisive for the defense than this one. It was a textbook example of a court rejecting the many different arguments plaintiffs make to kick a defendant out of the safe harbor, and as mentioned before, it was a great validation for Veoh's decision to do more than 512 required.

#6: Jacobsen v. Katzer. From a doctrinal standpoint, this case raises really difficult questions about how a copyright consumer can be bound to terms that he/she never "assented" to. Even so, this case had huge implications because it effectively validated that open source licenses can be binding on licensees, giving much more legal credibility to the entire multi-billion open source software industry. However, an odd footnote: on remand, the district court denied an injunction for the plaintiff, raising more issues about what exactly the plaintiff won at the Federal Circuit.

#5: Tiffany v. eBay. A fantastic validation of eBay's practices against a very serious and sympathetic challenger who had plenty of evidence that counterfeit goods were being sold on eBay's site. The case also shows that courts can grow tired of IP owners simply making up their own rules about how online sites should protect them and then suing the sites for breaching these artificial rules.

#4: Mazur v. eBay. A more scary case to 47 USC 230 defense enthusiasts than the Roommates.com opinion. The court says that eBay isn't protected by 230 for some of the marketing representations it makes, even if those representations are rendered untrue by third parties. While this makes a lot of doctrinal sense, it is also a green light for plaintiffs to mine a website's marketing representations as a way to bypass the otherwise-fatal consequences of 230 on a lawsuit triggered by user behavior or content.

#3: Google Book Search settlement. This makes the list for two independent reasons. First, many folks were hoping the case would establish solid precedent on online fair use, and the settlement ended that hope. Second, the proposed Book Rights Registry has the potential to reshape a number of major industries, including the book publishing business, the book retailing industry and the library industry.

#2: the Lori Drew prosecution. I think this may have been the most polarizing Cyberlaw development of 2008, exposing deep divides in people's appetite for punishing bad conduct online. It's hard to assess the overall implications of her conviction because no one rallied to praise Lori Drew's choices, and her case is still a ways from a final legal outcome. However, the possible implications of the case were so complex that it took a special three part series for me to explore its nuances (1, 2, 3).

#1: Cartoon Network v. CSC (the "Cablevision" case). Boy, the more I think about this case, the more important it becomes. The case upends our assumption that if we see it online, it's fixed, creating a new class of unfixed electronic works. Also, the court treats the users, not the service, as making the requisite copies, which reinforces the possibility that online providers can be just "dumb technology providers" for copyright law purposes and reinvigorates the possible defense that a service provider's copying is just done as a proxy for its users. However, the Supreme Court's ambiguous response to the cert petition--not yes, not no, but a request to the Solicitor General for comments--leaves this decision in a precarious position.

Other Developments of Special Note

47 USC 230

* Doe v. MySpace. The Fifth Circuit soundly rejects the argument that MySpace had an obligation to police its “premises.”

* Craigslist. Judge Easterbrook's language in Doe v. GTE had given plaintiffs some hope that the Seventh Circuit would provide a friendly venue to plaintiffs trying to overcome 47 USC 230. Judge Easterbrook may still love his language (which he quoted extensively in the Craigslist ruling), but his practical and no-nonsense ruling for the defense squelches the hope that the Seventh Circuit will become a plaintiff's haven.

* New Jersey's enforcement action against JuicyCampus. State AG offices HATE 47 USC 230.

Affiliate Liability

* Impulse Media. A jury thumped the FTC's overly expansive views of affiliate liability for spam.

* NY v. Direct Revenue. A state judge emphatically rejected the NY AG's office's expansive views of affiliate liability for adware.

Trademarks/Domain Names

* American Airlines' lawsuits against Google and Yahoo. No one I know fully understands why American Airlines sued Google for selling its trademarks for keyword ads. No one I know understands what concessions Google gave to American Airlines to settle the case. And no one I know understands why American Airlines decided to sue Yahoo after procuring the Google settlement. It's all a big mystery.

* NSI's grabbing of domain names in response to WHOIS queries. Is there any better example of ICANN's failings to police domain name retailers than to have one retailer selling a scarce good grabbing the good exclusively (blocking attempted sales by all other retailers) when a customer merely inquires about it?

* Kentucky's attempted seizure of 141 gambling-related domain names. As I wrote before, "Is a domain name property? Yes. See the Sex.com case. Can a plaintiff seize a domain name pursuant to a favorable judgment? Yes. Is it appropriate for Kentucky to seize domain names for gambling websites available in Kentucky? Of course not, because this would effectuate an extraterritorial reach by curtailing non-Kentucky residents from making possibly legal uses of the domain name."

* Eric Menhart, a lawyer who claims to practice Cyberlaw, doesn't know that Cyberlaw is a generic term.

* New gTLDs. Maybe I should reserve this development for 2009...if it happens.

Others

* McCain complains about 512(c)(3) notices taking down his YouTube videos. Surprise! 512(c)(3) notices are unforgiving. Sen. McCain, now that you've had a first-hand taste of their power, maybe you'd like to revisit the statute to see if it's producing the right incentives?

* FCC's bust of Comcast. The pro-regulatory forces were queued up to pounce on any examples where an IAP violated Net Neutrality principles, and Comcast's chicanery in forging reset packets was impossible for anyone to defend.

* NebuAd's flameout. Behavioral ad targeting is in our future unless regulators stop it. NebuAd won't be the winning provider of targeting services, but legislators will keep trying to regulate it further out of existence nonetheless.

Posted by Eric at 05:50 PM | Adware/Spyware , Copyright , Derivative Liability , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Publicity/Privacy Rights , Search Engines , Spam , Trademark | TrackBack

February 03, 2009

Social Networking Sites and Blogs Talk for Students

By Eric Goldman

Today I gave a talk entitled "Social Networking Sites and Blogs" for the on-campus Student Intellectual Property Law Association (SIPLA). My slides. In conjunction with this, I thought it might be useful to organize a bibliography of my previous postings and materials on these topics.

Blogs Generally

* Three part series on blogging: How I decide which blogs to read?, Should I blog? and If I decide I want to blog, how do I get started?

* LexBlog Q&A with Rob La Gatta, parts 1 and 2

* Bay Area Blawgers census

* Blogging, Scholarship and the Bench and Bar Panel Recap

* North Carolina Blogging Conference Recap

* Recaps of the first and third gatherings of the Bay Area Blawgers

Blog Law

* Co-Blogging Law

* Blog Law Recap

* A Guest Blogger's "Meta" Post About Guest Blogging

* Blog Content Aggregation, RSS Feeds and Copyright Law

* Steinbuch v. Cutler: New Lawsuit Over Blogging--Steinbuch v. Cutler, Steinbuch v. Cutler Update--Cutler's Motion to Dismiss, Steinbuch v. Cutler Update, Steinbuch v. Culter Update: Cox Out, Cutler Bankrupt, Steinbuch's Second Battlefront Against Cutler Shut Down

* BidZirk v. Smith: Griping Blog Post Leads to Lawsuit--BidZirk v. Smith and Blogger Wins Lawsuit Over Gripe Post--BidZirk v. Smith

* Defamation Lawsuit Against Blogger Dismissed on Jurisdictional Grounds--Fahmy v. Hogge

* Bloggers' Defamation Liability Not Dismissed--Saadi v. Maroun

* Blogger Protected by Anti-SLAPP Statute--GTX v. Left

* Connecticut Blogger Not Subject to Texas Jurisdiction--Healix Infusion v. Helix Health

* Co-Blogger Identity Isn't Disclosed via 512(h), but Takedown Letters Are Copyrightable

* Blog Defamation Lawsuit Lacks Jurisdiction--TrafficPower.com v. Seobook.com

Social Networking Sites Generally

* Social Networking Sites and the Law

Facebook

* Facebook v. ConnectU. See also Facebook's Lawsuit Against Competitive Email Harvesting Continues--Facebook v. ConnectU

* Telephone Numbers as Identity Authenticators--Abrams v. Facebook

MySpace

* MySpace Defeats Sherman Antitrust Claim for Blocking Links to Competitor--LiveUniverse v. MySpace

* Lori Drew Conviction Reflections Parts 1, 2 and 3. See also Lori Drew Prosecuted for CFAA Violations--Some Comments, and a Practice Pointer

* MySpace Gets 230 Win in Fifth Circuit--Doe v. MySpace. See also MySpace Suit for Liability for Sexual Assault Dismissed and Doe v. MySpace.com --- Continued

* Principal Loses Lawsuit Against Students and Parents Over Fake MySpace Page--Draker v. Schreiber

* MySpace v. theglobe.com

Other Social Networking Sites

* Website Isn't Liable When Users Lie About Their Ages--Doe v. SexSearch and Doe v. SexSearch Affirmed by 6th Circuit, But Not on 230 Grounds

* Xanga.com Busted for COPPA Violation

* Erika Rottenberg talk recap

Posted by Eric at 01:25 PM | Content Regulation , Derivative Liability , Internet History | TrackBack

January 26, 2009

Decay Rates of Committed Online Community Members--an Epinions Case Study

By Eric Goldman

Building on several previous blog posts, I am writing up a extended discourse explaining why Wikipedia will fail. A key part of my argument is that committed Wikipedians will turn over faster than they can be replaced. Unfortunately, I'm not aware of a study of Wikipedian turnover rates. However, I had a rough sense of turnover rates in the Epinions community, and I was able to consult some publicly available data to do a quick 'n' dirty empirical study. Here's what I came up with (I did the data review at the end of December 2008):

I looked at Epinions’ top 20 most popular authors in 1999 to see if they were still active on the site, which I defined as writing at least one opinion in the past 12 months (i.e., in 2008). I manually reviewed each of the top 20 reviewers' profile pages. According to my definition, only seven of the top 20 (35%) still actively contribute to Epinions, meaning that 65% of those early power users have turned over in 9 years.

Indeed, six of the 20 (30%) have stopped coming to Epinions at all, and thus their accounts are no longer active. An explanation of inactive Epinions accounts: Epinions generally expires accounts if the person has not visited the site within a certain number of months (I'm not sure what the period is nowadays). Among other consequences of inactivity, Epinions wipes out any earnings that haven't been cashed out before expiration. Most Epinions reviewers don't earn a ton of money, but power reviewers with very popular opinions generally should be earning enough that they would be willing to expend a minimal effort to keep the cash coming. As a result, inactive members have an incentive to keep visiting the site occasionally and cashing out earnings even if they are no longer interested in continuing to write. The fact that 30% of them gave up the cash entirely is interesting to me.

The 1999 class of power Epinions reviewers is special in part because of the unique circumstances of the dot com bubble and the very high payouts that Epinions offered to "prime the pump" of reviews. Thus, many reviewers were drawn to the site by the opportunity to earn lucrative amounts, and it may not be surprising that these users turned over (in some cases, in disgust) when payout rates were significantly reduced during the dot com bust.

For comparison, I also looked at the top 20 most popular authors in 2003, many of whom either joined after the dot com bust or had acquiesced to Epinions' reduced payouts by this time. This has been a much more stable group: 15 (75%) are still active contributors, and none of the 20 have inactive accounts.

Putting the two stats together (and acknowledging the many weaknesses of this limited empirical review), I see a community decay rate among Epinions' most committed members of:

* 25% after 5 years
* 65% after 9 years

I'm not sure if this decay rate will look anything like WIkipedia's. Among other major differences, the glue that binds these reviewers to Epinions is different than the binding force for Wikipedia, because Epinions reviewers get both paid for their contributions (even if it's not a huge amount) and get much more reputational recognition than Wikipedians. (I'll explain more about cash and credit in the paper). Also, by definition all Wikipedians joined during or after the dot com bust, so they may have different and more manageable expectations than the early Epinionators.

If you are aware of any other studies of community membership decay rates, specific to Wikipedia or more general, I would be very grateful for the referral. Please email me. Also, if you would be interested in exploring this topic with me in a more scientifically rigorous way, let me know--I might be interested in doing a real study of this phenomenon at some point.

UPDATE: In a short amount of time, I've already gotten some email from people who want me to build out the entire argument about Wikipedia--basically, to see the full paper. I'm gratified by this because most of the time people recoil in horror at the thought of reading my academic papers. (Yes, this includes my mom, who is otherwise the most sympathetic audience a son could ask for). In any case, I'll be presenting the paper at Uniiv. of Colorado Boulder in early February and then I hope to post it online in a month or two after that. Thanks for your patience.

UPDATE 2: Jason Lee Miller's comments.

Posted by Eric at 04:09 PM | Internet History | TrackBack

November 14, 2008

Just who is an Internet access service provider under CAN-SPAM?

Worded to prevent lawsuits by individual email recipients, the federal CAN-SPAM Act limits who can bring suit for a CAN-SPAM violation. In addition to state and federal enforcers, the Act allows suits by "Internet access service providers." Just who are they, and can individuals find a way back in to court under this provision?

By Ethan Ackerman

One of the most distinct differences between the federal CAN-SPAM Act and state anti-spam laws is the federal law's restrictions on who may bring suit for a violation. Like many federal laws, it's vital to consider the environment in which it passed in attempting to understand the scope and intent of its provisions.

After several years of experience with state laws allowing individual email recipients to bring suit under state laws, and both actual and exaggerated instances of 'professional plaintiffs' bringing questionable suits against email marketers, many business and marketing lobbyists were eager to limit who could bring suits under a federal spam law. While efforts to expand or limit liability under federal laws are as old as the 1st Congress, 2003 was a notable high-water mark. At the same time as, and in the same Congress as, the CAN-SPAM Act, similar Acts altering liability standards and raising barriers to lawsuits and class actions were being passed under the mantra of "tort reform." Limitations on environmental and manufacturer liability, extending sovereign immunity to vaccine developers, restrictions on class actions, preemption of state enforcement and consumer protection laws, statutorily-mandated settlements of active court litigation - these were some of the hallmarks of the 108th Congress' involvement with the judicial branch.

In this environment, it's not surprising that various provisions in the CAN SPAM Act were negotiated back and forth to expand or contract liability, standing and preemption. This blog has previously covered the preemption back-and-forth, but similar negotiation went into just who could sue, and how, and where, and for how much under the CAN SPAM Act.

The final version of s.877 signed into law in 2003 that became the CAN SPAM Act reflects the compromises on several issues necessary to get sufficiently broad political support. This post will attempt to identify each of those issues in turn.

The final bill allows suits by a broad swath of federal regulatory agencies to enforce the law, including most notably the FTC. The scope of state officials' enforcement of the federal law, and just who else could sue, was somewhat more disputed. Prior year versions of the bill allowed suits in state as well as federal court. The initial Senate version of s.877 also allowed suit in federal or state court, but the final version negotiated with the more lawsuit-averse House of the 108th Congress restricted suits to only US federal District Courts, and now redundantly also granted the relevant federal agencies additional authority to removes suits filed by States to federal courts.

The issue of caps on damages and attorney's fees was also near and dear (or anathema) to many in the 108th Congress, and extensive changes exist between various versions of the bill as conditions were horse-traded and various constituencies weighed in. State enforcement statutory damages swung from $20 to $250 over the course of the different Congresses, with treble damages being available, then dropped and replaced with discretionary 'aggravated' damages possibilities. State enforcers' attorneys fees similarly went from mandatory to discretionary between the introduced Senate version and House-approved version. Statutory damages for internet access providers saw similar swings and horse trading, ultimately with certain egregious violations triggering $100 damages and other damages valued at $25, a far mark from a proposed 'up to $10.' Damages caps were also a feature, but swung from as little as $500,000 to in some cases $3 million.

Similarly, the political demands of the House resulted in additional, heightened pleading standards for civil suits by anyone other than federal enforcement agencies. These heightened standards, absent in the initial Senate version but added in sections 7(f)9 and 7(g)2 of the final version, raised a scienter pleading requirement for state enforcers and constricted the definition of 'procure' for suits brought by Internet access providers.

But back to the big difference

As initially indicated, the biggest difference between most state and the federal anti-spam law is the absence of a private right of action for spam recipients in the federal law. In the 108th Congress, a general private right of action was a non-starter. Even the initial Senate version of the bill restricted suits to enforcement officials and Internet access providers. Contrary to the desires of state enforcers from state with such provisions, and apparently an uncomfortable concession from the minority Democrat sponsors, the absence of a private right of action was a stated minimum.

The final wording of Section 7 of the CAN SPAM Act specifies who can bring suit, listing first federal enforcement, then state enforcement, and finally granting Internet access providers the right to bring some civil suits. So who is an 'Internet access provider'?

The short answer - the definition written in the 'definitions' section of CAN SPAM - is that the "term `Internet access service' has the meaning given that term in section 231(e)(4) of the Communications Act of 1934 (47 U.S.C. 231(e)(4))." This somewhat unenlightening reference leads to the actual statutory definition of:

The term “Internet access service” means a service that enables users to access content, information, electronic mail, or other services offered over the Internet, and may also include access to proprietary content, information, and other services as part of a package of services offered to consumers. Such term does not include telecommunications services.

This broad definition originally was passed into law as part of the earlier Child Online Protection Act (not to be confused with the Childrens' Online Privacy Protection Act). Importantly, CAN SPAM also used other definitions from other prior laws defining similar terms. One example, one short line above the CAN SPAM 'internet access provider' definition, is the definition of 'Internet.' CAN SPAM defines 'Internet' by reference to the earlier passed Internet Tax Freedom Act, 47 USC 151 note. Importantly, CAN SPAM did not adopt the much narrower, more ISP-centric definition of 'internet access provider' in that Act. The Internet Tax Freedom Act defines an internet access provider as "a person engaged in the business of providing a computer and communications facility through which a customer may obtain access to the Internet..."

This definitional difference is important because CAN SPAM was written with service providers above and beyond just then-traditional modem-pooling, DNS-providing traditional ISPs in mind. Spam impacts next-generation services like online website hosts, online email providers, online proxies and filtering services, and CAN SPAM was drafted to take into account not just the dial-up AOLs of the world, but also the Rackspaces, the Hotmails, and the TUCOWs.

So courts have uniformly picked up this clear distinction, right?

If they had, what would there be to write about? While CAN SPAM was commonly understood to prevent end-user lawsuits, that portion of the law is implicit, not explicit. CAN SPAM was, however, explicitly written broadly to cover all, even the as-of-yet-uninvented, online service providers that spam negatively impacted. Unfortunately, subsequent court cases addressing the issue of whether it is an 'internet access provider' bringing suit have sometimes attempted to reinsert traditional ISP-style definitions into the Act.

A recent case getting the issue correct is Haselton v. Quicken Loans Inc.. Though anti-filtering activist Bennett Haselton, administrator of peacefire.org, sued Quicken in his individual capacity, separately incorporated Peacefire also was a named plaintiff. Defendant Quicken made much of the fact that Haselton was the sole employee of the organization and alleged Haselton was simply an individual end-user filing suit. Haselton countered, and the court agreed, that Peacefire's filter-circumventing service, even if operated only by Haselton, was clearly an 'internet access service provider' within the meaning of the Act.

Unfortunately, other courts, and commenters, have often channeled their skepticism over the litigation intentions of a plaintiff into interpreting this broad definition narrowly. For example, the Gordon v. Virtumundo court's palpable disagreement with serial plaintiff Gordon's litigation intentions and strategy led it to reach to hold, contrary to the plain wording of the definition, that Gordon's multi-user internet email service was not a " a service that enables users to access ...electronic mail... offered over the Internet." UPDATE

While they may be legitimate concerns over the capacity and legitimacy of serial plaintiffs' anti-spam suits, courts can address them without resorting to unnecessarily adjusting definitions in the statute. In Hypertouch v. Kennedy-Western University, for example, the court correctly recognized that an email service provider, even though small and providing accounts without charge, was nonetheless a 'internet access service provider.' As Eric blogged earlier, this court addressed its, and defendant's, concern that the plaintiffs allegations were inadequate and more properly addressed towards the actual marketing company in its ruling that plaintiff was an internet access service provider, but its claims were inadequate to survive a motion for summary judgment.

12/08 Update An observant Tri-cities reader gently corrects me, noting that Judge Coughenour ultimately did, contrary to what I suggested, conclude the plaintiff qualified as an Internet access service provider in Gordon v. Virtumundo. After reviewing all the criticisms and interpretation of legisaltive history and analogous cases that suggested Gorden was not intended to qualify, Judge Coughenour did ultimately conclude Gorden qualified "under the statute's capacious definition." So, my speedy reading aside, Gordon v. Virtumundo stands as an appropriate example of a court properly addressing questions about the propriety of a suit without narrowing the definition of an Internet access service provider after all.

Posted by Ethan Ackerman at 01:29 PM | Internet History , Spam | TrackBack

October 14, 2008

September 2008 Quick Links, Part 3

By Eric Goldman

eBay

* Universal Grading Service v. eBay, Inc. More fallout from the National Numismatic v. eBay case--another lawsuit alleging antitrust and defamation because eBay designated some coin rating services as preferred and impliedly devalued others.

* Windsor Auctions v. eBay has been refiled in a new jurisdiction.

* Mehmet v. Paypal, Inc., 2008 WL 3495541 (N.D. Cal. Aug. 12, 2008). Upholding the consequential damages waiver in PayPal’s user agreement.

* A company's failure in the marketplace can drive up the value of its collectibles on eBay.

Google

* Stelor Productions, Inc. v. Google, Inc., 2008 WL 4218107 (S.D. Fla. Sept. 15, 2008). In the lawsuit alleging that Google causes reverse confusion of Googles.com [warning: annoying music ahead], the plaintiff doesn't get to depose Sergey or Larry yet. Rose Hagan, Google’s long-time chief trademark counsel, is the lucky substitute.

* Lots of rhetoric in the Google/Yahoo ad syndication deal. Google’s advocacy website. Google Chief Economist Hal Varian explains why the deal won’t raise ad prices in the auction. Randall Stross weighs in.

* Google has changed course and now allows religious groups to advertise on the keyword “abortion.”

* Kubit v. Google Groups, 2:2008cv00738 (M.D. Fla. complaint filed Sept. 29, 2008):

I then would like to sue Google Groups for not removing the posts when I repeatedly asked them to for 2 years. I believe I am entitled to at least a small amount of compensation for the emotional distress and lost business income that has resulted from them allowing these posts to remain on their Google Groups, even though I offered them VERY solid proof that I do not have HIV. If they had stopped the posts when they first occurred, they would not have proliferated to hundreds of websites. I became suicidal for a period of time after the posts started. I incurred a lot of emotional pain and fear because of the posts and had to seek psychiatric and psychological help to get my life back together. I still suffer from fears of dating, living a public business life and trusting others.

Yes, this is a pro se complaint. Yes, it is preempted by 47 USC 230.

Marketing/Advertising

* NebuAd is dead (1, 2). Even so, the lure of intermediaries aggregating deep data about consumers for commercial purposes will never die.

* Is Gator/Claria dead?

* The EU passed a non-binding resolution against sexual stereotypes in advertising.

* Celebrity branded merchandise run amok.

Miscellaneous

* Valleywag: "The 5 most laughable terms of service on the Net." For more laughs, see Mark Lemley’s Terms of Use paper.

* Murakowski v. University of Delaware, 2008 WL 4104087 (D. Del. Sept. 4, 2008). This reminded me a lot of the Jake Baker case from the mid-1990s.

* The Virginia Supreme Court reversed itself on the Jaynes anti-spam prosecution, and Jaynes walks. Does Virginia routinely pass unconstitutional laws?

* Becker v. Toca, 2008 WL 4443050 (E.D. La. Sept. 26, 2008). Ex-wife's alleged delivery of "Infostealer" program to grab passwords from ex-husband could violate the ECPA, SCA and CFAA.

* Interesting article on ESPN’s exclusive distribution and bundling agreements with Internet access providers.

* Funniest law firm names.

* Silly? Horrifying? A sign of the apocalypse?

Posted by Eric at 06:17 PM | Adware/Spyware , Content Regulation , Derivative Liability , E-Commerce , Internet History , Licensing/Contracts , Marketing , Privacy/Security , Search Engines , Spam | TrackBack

October 11, 2008

September 2008 Quick Links, Part 2

By Eric Goldman

Copyrights

* In the Harry Potter fair use case, the court declared that the Lexicon encyclopedia isn't fair use.

* The judge declared a mistrial in the Jammie Thomas case.

* Designer Skin v. S&L Vitamins has reached its denouement. Previous blog coverage of the case (1, 2). In the prior ruling, the judge denied the plaintiff damages for the copyright infringement. In the final ruling, the court enjoins cutting and pasting product shots but allows the defendant to recreate the product shots. Ronald Coleman has more here and here (noting that the court says that, per MercExchange, an injunction does not automatically follow from a finding of copyright infringement).

* Wired's 5 year retrospective on the RIAA's litigation campaign against file sharing.

Social Networking Sites, Blogs and Online Publishing

* J.S. ex rel. Snyder v. Blue Mountain School Dist., 2008 WL 4279517 (M.D. Pa. Sept. 11, 2008). Upholding student discipline for creating a fake MySpace page of principal. The school initially based the discipline on the student infringing copyright (by cutting and pasting the principal's photo) but this aspect of the case wasn't mentioned at all in the court’s reasoning.

* O.Z. v. Board of Trustees of Long Beach Unified School Dist., 2008 WL 4396895 (C.D. Cal. Sept. 9, 2008). Two seventh graders make a video about killing their teacher, described as:

The slide show is essentially a dramatization of the murder of Mrs. [redacted]. The first slide photo states, "Mrs. [redacted] dies." Throughout the slide show there are photos of Plaintiff dressed up in a costume, depicting a woman meant to resemble Mrs. [redacted]. There is red text on each slide photo that describes the scene. One slide says, "Jelly Donut's knife: haha fat bastard. here i come!" In this same photo, the viewer can see a butcher knife lunging at Mrs. [redacted] character from the camera's point of view. The butcher knife is then laid on the fallen victim while the text reads, "hehehe. i'm a shank yoooooooooo!" At the end of the slide show, it reads, "your [sic] dead, BITCH! :D".

I think they thought it was funny, but no one else did. One of them posted the video to YouTube. It's unclear what happens to the poster, but the co-content creator was suspended and forced to transfer to another school for her eighth grade. In this case, her TRO request is denied, even if she didn't intend the video to be publicly distributed and even if the video was not a "true threat."

* Spanierman v. Hughes, 2008 WL 4224483 (D. Conn. Sept 16, 2008). Teacher who was fired for inappropriate MySpace communications with students can't sue the school.

* An encouraging update on the Lori Drew prosecution.

* Bill McGeveran on Facebook Beacon and legal liability.

* Good NYT article on the sociology of Facebook and Twitter.

* Sam Bayard on an interesting but confusing ruling from Montana on its shield law applied to anonymous online posters.

* Verdana Partners v. Giles. Online newspaper wins anti-SLAPP claim.

* Jardin v. Datallegro, Inc., 2008 WL 4104473 (S.D. Cal. Sept. 3, 2008). A litigant's taking down a blog post and its comments is not destruction of evidence.

* Nemet Chevrolet has appealed its 230 loss. Previous blog coverage.

* Do Facebook's anti-spam policies overregulate Facebook's power users?

Posted by Eric at 07:49 AM | Content Regulation , Copyright , Derivative Liability , Internet History , Spam | TrackBack

September 23, 2008

Carterfone and Open Access in the Digital Era Symposium, October 17

By Eric Goldman

On October 17, we are having a neat event at Santa Clara University. A brief word about the genesis. I don't normally travel in telecom circles but I went to a few events in the past year or so, and at these events the FCC's 1968 Carterfone opinion and the "Carterfone principles" were heavily invoked. It was clear that Carterfone was an important opinion and of continuing relevance today, but I was having a problem--it wasn't clear that the speakers were referring to Carterfone consistently. Instead, everyone seemed to have their own idiosyncratic interpretation of the case. So the idea was to get together a group of experts to see if we could try to work through the case's meaning and implications. This also gives us a platform to talk about Net Neutrality, optimal regulatory structures for network design, open access principles and a whole bunch of other interesting academic issues.

We have a terrific and eclectic group of speakers, but I am especially excited that the opinion's author, Nick Johnson, will be joining us for a keynote talk. It will be interesting to see how he and the group survey the opinion 40 years later. A brief marketing description is below the line. As usual, admission is free unless you want CLE (and even then, it's free in some cases). Please feel free to spread the word, and I hope to see you there.
___________________

Carterfone and Open Access in the Digital Era
Santa Clara University School of Law
Sponsored by the High Tech Law Institute and the BroadBand Institute of California
October 17, 2008
9 a.m. – 5 p.m.

The FCC’s 1968 Carterfone decision—celebrating its 40th anniversary this year—is frequently cited in policy discussions about Net Neutrality and open access, but there is little consensus about how its provisions should apply to Internet access providers and emerging communications technologies. This Symposium will gather leading telecommunications policy experts to explore the opinion’s implications—past, present and future—on communications policy. Nick Johnson, the former FCC Commissioner who authored the opinion, will provide the keynote address.

Attendance is free and open to the public. Five plus hours of CLE are also available to attorneys at HTLI benefactor firms and in-house counsel for free, to Santa Clara Law alumni for $50, and to everyone else for $100. Santa Clara Law is a State Bar of California approved MCLE provider.

For speaker information and to register online, visit
http://law.scu.edu/hightech/carterfone-symposium.cfm.

Posted by Eric at 03:51 PM | Internet History | TrackBack

August 14, 2008

Fall 2008 Cyberspace Law Syllabus

By Eric Goldman

I've posted my latest Cyberspace Law course syllabus. Some changes from last year:

* added an August 2007 Search Engine Land article by Chris Silver Smith on geolocation technologies and their efficacy.

* added California Penal Code Sec. 502.

* added my slides on trespass to chattels and related doctrines (to save some classtime laying out these complex doctrines).

* added my Fair Use Cheat Sheet (I had routinely distributed it to students during the semester, but this year I finally remembered to include it in the reader).

* substituted the Second Circuit ruling Cartoon Networks v. CSC for the district court ruling in Cablevision. I deleted the Field v. Google case because it became largely redundant with the Cartoon Networks ruling for the pedagogical point about volitional activity.

* substituted the amended Ninth Circuit opinion in Perfect 10 v. Amazon.

* added the Ticketmaster v. RMG case. I'm not sure what to do with this case, but I'm thinking of using it as a mid-semester mini-review.

* deleted the Lockheed v. NSI case and added the Tiffany v. eBay case. The Lockheed case is probably more general in nature and is a 9th Circuit case (and it's a lot shorter!), so this was a tough call. On the other hand, I think the facts in the Tiffany case better reflect the modern web economy than the 1990s-era Lockheed case.

* substituted the Roommates.com en banc ruling for the 3 judge panel ruling. Fortunately, last year, by the time I got to Roommates.com, the 3 judge panel ruling had already been wiped away by the en banc grant, so I never had to teach that hairball.

* substituted the FTC's updated CAN-SPAM regulations.

* substituted the Fifth Circuit Doe v. MySpace ruling for the district court opinion.

* deleted the module on spyware/adware. I've not been able to get there in the past 2 years, and I don't see how that will change this year.

Cases from this year that barely missed the cut:

* A.V. v. iParadigms
* Mazur v. eBay
* Zango v. Kaspersky

I need to look at yesterday's Federal Circuit Jacobsen case. This may be a post-printing addition.

There are still some areas I'm not happy with:

* the Perfect 10 troika of cases regarding secondary copyright liability. They are a big chunk of reading with a low pedagogical payoff because the legal rules are incoherent.

* the keyword advertising cases. I'm still waiting for a great teaching case on keyword advertising. The FragranceNet case is an OK summary of the discussion, and the Playboy v. Netscape case has a number of useful pedagogical angles, but neither is ideal.

More on this topic:

* my Fall 2007 syllabus recap
* my Fall 2006 syllabus recap
* my Fall 2005 syllabus recap
* my Cyberspace Law course page listing all of my syllabi, exams and sample answers from the past 14 years
* my essay on Teaching Cyberlaw

Posted by Eric at 08:15 AM | General , Internet History | TrackBack

August 07, 2008

July 2008 Quick Links, Part II (Non-IP Edition)

By Eric Goldman

Search Engines

* Google explains all of the ways that it reinterprets the actual search query provided by a consumer to deliver results for words the searcher didn't use. As I've said before, Google's intermediation makes it impossible for a judge to assume that a defendant's website was ranked based on the search terms selected by the searcher.

* In the vein of In re Yahoo, Google was hit with two class action lawsuits alleging that Google failed to disclose that AdWords ads were going to be placed on undesirable pages liked parked pages. See Levitte v. Google (complaint and Justia page) and RK West v. Google (complaint and Justia page).

* Google was denied attorneys fees in the long-running Parker v. Google case. Parker v. Google, Inc., 2008 WL 2600299 (E.D. Pa. June 30, 2008).

Wikipedia

* Defamation lawsuit against Wikimedia tossed per 230. I've been waiting for the actual ruling to do a complete writeup. If you see it, please pass it along.

* NYT: "Wikipedia Tries Approval System to Reduce Vandalism on Pages." Surprised?

Trespass to Chattels

* In the latest development in Oracle v. SAP/TomorrowNow, SAP has shut down TomorrowNow, the subsidiary that prompted the lawsuit from Oracle. The Second Amended Complaint expands the finger-pointing at SAP for supervising its subsidiary. Still unresolved: the size of SAP's check to Oracle, and possible jailtime for TomorrowNow folk.

* Thomas O'Toole: Illinois adds anti-scraping provision to its attorney discipline website to block Avvo's crawlers.

Marketing

* 50 Cent is back in court on another questionable legal theory (see our first deconstruction of his litigation tactics). This time, Taco Bell tried a quasi-ambush marketing stunt to get something for free that he thinks they should have paid for.

* Rebecca on the latest ruling in NetQuote v. Byrd, the "lead fraud" case. Also, the ruling has some interesting discussion about whether a competitor who clicks on a competitor's ads in AdSense is guilty of a tort of "click fraud." The court says not in this case.

* TRUSTe is converting from a non-profit to a for-profit company.

Porn

* ACLU v. Mukasey (I've lost track of the number of AGs who have been the named defendant in this lawsuit). The Third Circuit struck down COPA for the third time.

* PC Magazine: RIP Usenet, killed by the New York AG office's campaign against child porn traded on USENET.

Miscellaneous

* A bizarre article on "Internet trolling" in NYT Magazine. With its rambling and scattered discussion, I have no idea what the author defines as trolling. However, the article did bring to mind a much better 1994 article from Wired, The War Between alt.tasteless and rec.pets.cats.

* Steinbuch v. Cutler, 2008 WL 2622853 (E.D. Ark. July 1, 2008). The court denied a motion to transfer the long-running case to DC.

* If a caffeine-addicted blogger goes off about your business, it's risky to fight back.

* Mike Masnick: Keeping The Benevolent Dictators of Silicon Valley Honest

* Wed, Aug. 13, 1-2 Eastern time, David Donoghue, Evan Brown and I will be doing an ALI-ABA teleseminar about the latest developments in 47 USC 230. Details. Mention coupon code TSPV02EG and save $30.

Posted by Eric at 06:57 AM | Content Regulation , Internet History , Marketing , Search Engines | TrackBack

July 21, 2008

Teaching Cyberlaw Article

By Eric Goldman

As part of the recent St. Louis University Law Journal's issue on Teaching Intellectual Property Law, I published a short article entitled "Teaching Cyberlaw." The abstract:

"Over the past dozen years, Cyberlaw courses have become a staple of the law school curriculum. This Essay, part of a Spring 2008 St. Louis University Law Journal issue on Teaching Intellectual Property Law, explores methodological and pedagogical issues raised by these courses."

This article, based on my experiences teaching Cyberlaw for the past 13 years, organizes my thoughts about the pedagogy of teaching Cyberlaw, including course titling, doctrinal coverage, teaching materials and more. I think the article will be particularly interesting to folks teaching the course for the first time, but I expect veteran Cyberlaw professors will find a few interesting tidbits as well. I was given a limited word count cap, so I didn't intend to make this article exhaustive. Instead, I view it as a tentative and limited effort to help kick off a community discussion about how we teach the course.

On that front, I am scheduled to be the Chair of the AALS Law & Computers Section in 2009, which principally means that I will help organize the Law & Computers session at the AALS Annual Meeting in New Orleans in January 2010. (Hard to believe, but it's less than 18 months away!). One idea I've been considering is to have a panel discussion about Teaching Cyberlaw issues at that session. Comments/thoughts?

When i did my research for my Teaching Cyberlaw article, I didn't find any other law review-style articles that addressed Cyberlaw pedagogy at any length. Then, just as my article was going to press (and therefore after I could make any changes), a topical article emerged: Patrick Quirk, Curriculum Themes: Teaching Global Cyberlaw, International Journal of Law and Information Technology, March 2008. Quirk uses the article to enumerate 10 topical "themes" that are likely to be omnipresent in Cyberlaw courses both today and in the future:

"Where are we? (Jurisdiction),
Who are we? (Transacting via networks),
Who pays us? (E-money and funds transfer),
Who protects us? (Spreading and transferring transactional risk),
Who funds us? (The other type of computer ‘security’),
Who taxes us? (Who doesn’t?),
Who bugs me? (Network crimes and misdemeanors),
Who came before me? (Historical analogies for technology regulation),
Who watches (over) us? (Ubiquitous privacy issues),
The pervasive problems of intellectual property."

I definitely organize my course differently, but vetting different organizational approaches is part of the pedagogical fun.

Posted by Eric at 08:37 AM | General , Internet History | TrackBack

July 01, 2008

June 2008 Quick Links

By Eric Goldman

Trademarks/Domain Names

* Utah Lighthouse Ministry v. Foundation for Apologetic Information and Research, 2008 WL 22043807 (10th Cir. May 29, 2008). CMLP writeup. Nice 10th Circuit win for a gripe site against trademark infringement and cybersquatting. This case, plus the SKI VAIL case, indicate that the 10th circuit is making progress undoing the harm it created in the Australian Gold v. Hatfield case.

* Georgia has a new anti-phishing law (16-9-109.1) that acts as a para-trademark law. See my comments on the analogous California anti-phishing law.

* After initiating a trademark lawsuit against a consumer review site and soundly losing in court, Lifestyle Lift paid $17,500 to settle its own lawsuit and avoid claims for legal fees under Rule 11 and the Lanham Act.

* Marty reports on a German case saying that white-text-on-a-white-background is a trademark use.

* Update on the battle over the trademark registration for "SEO."

* Will TLD proliferation lead to a new open era in domain name administration, or will the resulting anarchy just reinforce that top search engine placement is the really important online real estate? It seems like the currently limited number of TLDs has some benefits from a bounded rationality standpoint, and those benefits will be lost in a cacophony of unknown TLDs.

Patents

* My colleague Colleen Chien has posted "Patently Protectionist? An Empirical Analysis of Patent Cases at the International Trade Commission" (forthcoming William & Mary Law Review). She empirically demonstrates that the ITC mostly involves disputes between two domestic litigants, making it a redundant battleground with federal district court but nevertheless an attractive venue for plaintiffs due to a number of procedural advantages. She makes a number of recommendations to eliminate the litigation gamesmanship offered by having parallel venues. Check it out.

Search Engines

* Udi Manber, chief algorithm keeper for Google, reiterates why it's silly for lawyers and judges to put too much legal emphasis on the relative placement of search engine results, saying "it's definitely the case that if you do the same search on a different cluster, you may get slightly different results at a given time. It's also the case that if you do the same search on different days you may get different results, because some of the results are things we indexed five minutes ago."

(Over)Regulation

* In response to an enforcement effort by the NY AG's office, several Internet access providers have blocked access to newsgroups that are putatively sources of child pornography. See the NYT story and the NY AG press release. In practice, this means wholesale takedowns of newsgroups that may have nothing to do with child porn. For example, Verizon is killing all USENET hierarchies except comp.*, misc.*, news.*, rec.*, sci.*, soc.*, and talk.*. Wired suggests this is the death of online intermediary freedom as conceptualized in 47 USC 230. Of course, 230 never protected intermediaries from criminal exposure for child porn, and this isn't the first time that an access provider has knuckled under to the NY AG's office. See the BuffNet enforcement action from 2001.

* Ohm, Paul. The myth of the superuser: fear, risk, and harm online. 41 UC Davis L. Rev. 1327-1402 (2008). A neat article on how regulators manufacture a fake bogeyman, the unbeatable "superuser," as a justification for expansive regulatory power.

* No evidence that data breach disclosure laws actually help reduce identity theft. Surprised?

* The FTC wants civil enforcement authority for spyware actions. Haven't they heard that the adware battle is already over...and they won?

Contracts

* Mark Radcliffe expresses concern about the ALI's proposed software licensing project on open source licenses.

* Sarah Bird on a messy contract lawsuit involving an SEO contractor.

Anonymity

* Tendler v. www.jewishsurvivors.blogspot.com, 2008 WL 2352497 (Cal. App. Ct. June 10, 2008). A subpoena request to identify a blogger doesn't support an anti-SLAPP cause of action.

* In the AutoAdmit lawsuit, Doe 21's motions to squash the subpoena and proceed anonymously were both denied. David Hoffman provides an update on the case.

Event Tickets

* Chicago has moved against eBay for reselling tickets in violation of its amusement tax law.

* The Ticketmaster v. RMG case ended with a default judgment granting a permanent injunction and $18.2M in damages.

General

* Vanity Fair: How the Web Was Won.

* Paul Levy blogs about a plaintiff's effort to bypass 230 by suing the authors of complaints about the vendor and then joining the consumer complaint site as a necessary party as a cost-increasing tactic.

* BusinessWeek on emerging technological tools to protect workers' attention against unwanted/untimely interruptions.

* Text message-savvy kids educate the North Carolina DMV about the meaning of the term "WTF," which was used on a license plate example on the DMV's website.

* I have one free pass to OMMA Behavioral in San Francisco July 21. First person to send me an email asking for the pass gets it.

Posted by Eric at 12:32 PM | Adware/Spyware , Content Regulation , Derivative Liability , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Patents , Privacy/Security , Search Engines , Trademark | TrackBack

June 03, 2008

May 2008 Quick Links, Part 2

By Eric Goldman

Copyright

* Google says it isn't settling the Viacom lawsuit (I don't believe it).

* Interesting juxtaposition: (1) Chronicle of Higher Education: How It Does It: The RIAA Explains How It Catches Alleged Music Pirates and (2) BusinessWeek ran a lengthy retrospective on Tanya Andersen's battle against the RIAA, including her beefs against the RIAA’s investigation and enforcement tactics.

* A music warez trader was convicted by a jury of criminal copyright infringement.

Online Contracts

* Juanda Lowder Daniel. Virtually mature: examining the policy of minors' incapacity to contract through the cyberscope. 43 Gonz. L. Rev. 239-269 (2007/08). This article addresses the very important issue of contracting capacity of minors. See my most recent post on that topic.

* Adelman v. Sparks Network (Cal. App. Ct. May 20, 2008). The Jdate online dating service allegedly failed to include required language (such as notice of a mandatory cooling-off period) in its user agreement. The court dismisses the plaintiff's lawsuit nonetheless because he was a happy customer who didn't suffer any damage.

* Tom O'Toole surveys some recent online contract cases. He offers the following conclusions: (1) Contract Terms Should Be Available for Review, (2) Clickable Buttons/Links Should Clearly Signal Assent, and (3) Humans Are Not Helpful.

* I realize this point would be better explored in a full blog post, and I suspect this point has been made in the academic literature (if so, I'd appreciate some cites so I can pass them along). The issue: how might the endowment effect explain consumer antipathy towards EULAs? Wikipedia says the endowment effect means that "people value a good or service more once their property right to it has been established." This observation occurred to me when I attended a ridiculously stacked panel at the ION Game Conference on "user rights" in virtual worlds. Many of the gripes/grumbles related to very common EULA provisions that simply overrode default law. It occurred to me that maybe part of the problem was that consumers assume the defaults are appropriate rights allocations granting them the "property" right, in which case they suffer a greater psychological loss when those defaults are varied than if different defaults were set. One obvious policy consequence: as part of the considerations when setting defaults, policy makers should include the psychological costs of varying the defaults. If the interaction between EULAs and the endowment effect hasn't been written about, it would make an excellent paper topic.

Other Topics

* A military court has said that distributing a hyperlink to child porn does not constitute criminal distribution of child porn. Tom O'Toole explains the situation.

* A.B. v. State, 2008 WL 2031388 (Ind. May 13, 2008). It seems like the digital age recipe for guaranteed trouble: 8th grader + hatred towards a school principal + MySpace. How many judicial cases are we going to see with this combination? This one involves some mean-spirited and profanity-laced comments about her principal made by a 14 year old girl on a private MySpace page accessible only by 26 students. The principal saw it only because one of the students gave a printout to the principal. The court concludes that posting to a private MySpace page doesn't satisfy the criminal standards of "intent to harass, annoy, or alarm" via the Internet.

* Doe v. Friendfinder Network, Inc., 2008 WL 2001745 (D.N.H. May 8, 2008). The court denied the plaintiff's motion for reconsideration on Friendfinder's 230 eligibility for the statement "Sorry, this member has removed his/her profile."

* Another "where are they now?" retrospective on dot com boom companies, ironically running in the Industry Standard (which wiped out in the dot com bust itself).

Posted by Eric at 11:56 AM | Content Regulation , Copyright , Derivative Liability , Internet History , Licensing/Contracts , Privacy/Security , Virtual Worlds | TrackBack

May 07, 2008

April 2008 Quick Links

By Eric Goldman

Anti-Gaming

* Even though Ticketmaster won its lawsuit, Minnesota overreacted to the Hannah Montana ticket crush by banning software to circumvent an online ticket allocation process. See Sec. 609.806. Check out the hyperbole in this press release! What's next? Are legislators going to make SEO a crime?

* Google modified its relevancy algorithm 450 times in 2007. And yet courts still cite to Brookfield for how search engines operate!

* The UK cracks down on shill marketing online. ClickZ: "Under the new [UK] Consumer Protection from Unfair Trading regulations, it will be illegal to "Falsely claim or create the impression that the trader is not acting for purposes relating to his/her trade, business, craft or profession," or to "falsely represent oneself as a consumer."" See also AdAge.

IP

* Speaking of SEO....the latest pathetic attempt to grab a generic term and trademark it? "SEO." Sarah Bird is on the job.

* Do student notes of a professor's lecture constitute copyright infringement? We may find out.

* Atlantic v. Howell. More on the "making available" theory of copyright infringement.

* Sarah Bird on registering copyrights in websites and blogs.

* A for-profit T-shirt listing the names of deceased Iraq soldiers sparks a publicity rights lawsuit.

General

* Bowen v. YouTube, Inc., 2008 WL 1757578 (W.D. Wash. April 15, 2008). The court upheld the forum selection clause in YouTube's user agreement.

* eBay is ending its promotion of third party live auctions. Maybe because of this loss?

* Rebecca blogs on SuccessFactors, Inc. v. Softscape, Inc., 2008 WL 906420 (N.D. Cal.), an odd case involving the Computer Fraud & Abuse Act and an "attack PowerPoint" allegedly sent by a competitor to its prospective customers.

* Kate Kaye writes about the new Internet industry lobby group, the "State Privacy and Security Coalition," designed to fight laws like the Utah Trademark Protection Act.

* Kevin Werbach, The Centripetal Network: How the Internet Holds Itself Together, and the Forces Tearing it Apart, UC Davis Law Review, Forthcoming. An interesting paper applying "network formation" theory to show how the Internet came together as a unified network and how those unifying forces are under constant stress.

Posted by Eric at 08:52 PM | Content Regulation , Copyright , Internet History , Licensing/Contracts , Marketing , Publicity/Privacy Rights , Search Engines , Trademark | TrackBack

March 02, 2008

Feb. 2008 Quick Links

By Eric Goldman

Advertising

* BusinessWeek: Monetizing social networking sites isn't as easy as everyone had hoped, clickthrough rates are through the floor (0.04%!), and ad proliferation on the sites is driving users away.

* Wilbur, Kenneth C. and Zhu, Yi, "Click Fraud" (January 2, 2008). This paper appears to argue that search engines can increase their profits by failing to disclose the true rate of click fraud on their network.

* In re Miva, Inc. Securities Litigation, 2008 WL 450037 (M.D. Fla. Feb. 15, 2008). This lawsuit alleges that Miva and some associated individuals understated or misreported Miva’s reliance on click fraud, spyware and third party distributors in its public statements and thus inflated the company's stock price. Last year, the court dismissed many of the allegations but let a couple survive. In this ruling, the court dismisses a few more defendants from some statements and lets the rest of the case proceed.

* Going-out-of-business sales are often just another scam. (HT ContractsProf). Note this is completely consistent with economists’ theoretical predictions of final-period behavior of trademark owners.

Google

* Google's stock has lost $70B in market cap in 7 weeks. Oh darn. Clickz offers some theories about why Google's clicks are declining. Could lower rates of click fraud be part of it?

* Hal Varian, Google's Chief Economist, argues that Google's marketplace success is solely due to its "secret sauce" (i.e., the advantage of learning by doing) rather than any defects in the marketplace.

Spam

* Jaynes v. Virginia (Va. Sup. Ct. Feb. 29, 2008). By a 4-3 vote, the Virginia Supreme Court upheld Jeremy Jaynes' 9 year sentence for violating Virginia’s spam law.

* Silverstein v. Experienced Internet.com, 2008 U.S. App. LEXIS 3364 (9th Cir. 2008). Ninth Circuit dismissed a CAN-SPAM lawsuit for lack of jurisdiction when the defendants attest that they didn't send the message and aren't local.

Domain Names

* NSI has been sued for its practice of grabbing pre-registration domain names based on WHOIS searches. The complaint. Good luck defending those practices, NSI!

* Two more breathy articles about the economics of domaining from the New York Times and Network World.

47 USC 230

* Johnson v. Barras, 2007 CA 001600 B (DC Superior Ct Feb. 1, 2008). Court dismisses a lawsuit against a website for republishing a defamatory story per 47 USC 230.

* Yet another doomed lawsuit against MySpace for facilitating communications between an adult male and an underage female that led to sex. Sam Bayard's comments.

Pornography

* NY Lawyer (login required): "Defense Bar Sees Growing Practice in Internet Sex Crimes"

* A federal obscenity prosecution for publishing graphic short stories (without pictures) on the Internet? As Tim Wu says, "astonishing."

* The Utah legislature is considering entering the marketplace again, this time through a certification mark program for Internet access providers who are willing to combat porn. See HB407. Of course, the Utah legislature has had terrific success in the past creating successful new business opportunities that the marketplace has overlooked.

User-Generated Content

* Nick Carr: "What we've seen happen with self-regulating communities, both real and virtual, is that they go through a brief initial period during which their performance improves - a kind of honeymoon period, when people are on their best behavior and rascals are quickly exposed and put to rout - but then, at some point, their performance turns downward. They begin, naturally, to decay." Like, I think, Wikipedia.

* Slate on the top-heavy nature of contributions to Wikipedia and Digg.

* Christian Science Monitor: Teachers Strike Back at Students' Online Pranks.

* Sam Bayard on a motion to quash in the AutoAdmit case.

Reputation

* eBay no longer lets sellers leave negative/neutral feedback for buyers. This putatively stops sellers from retaliating against buyers who leave legitimate complaints, but it also skews the database towards only positive reviews, which ultimately undercuts its credibility.

* In India, where courtships remain very brief by US standards and grooms can be paid dowries by the bride's families, there is an emerging trend for brides to hire "wedding detectives" to ferret out the scoop on grooms and whether their representations are correct.

* Funny article on being a secret shopper for Consumer Reports.

* Dan Solove's book, The Future of Reputation, is now available online for free. Ethan's review of the book.

Patents

* Six years later, eBay finally buys it now: eBay v. MercExchange settles with eBay buying out some of MercExchange's patents and licensing others.

* Mike Masnick: "Psst! Patent Examiners Do Not Scale"

Copyright

* Mike Masnick: “Why We Should All Want Politicians Who Plagiarize.”

* Do Not Resuscitate...My Copyrights (funny).

Miscellaneous

* Citizen Media Law Project has a useful discussion on getting insurance for cyberlaw risks.

* People v. Fernino, 2008 WL 382348 (N.Y. City Crim. Ct. Feb. 13, 2008) (woman violated a no-contact order when sending a MySpace message to the person).

* Mike Masnick: "We Need A Broadband Competition Act, Not A Net Neutrality Act"

* A retrospective on some of the leading dot-coms from the 1990s.

Posted by Eric at 05:32 PM | Content Regulation , Copyright , Derivative Liability , Domain Names , E-Commerce , Internet History , Marketing , Patents , Privacy/Security , Search Engines , Spam , Trademark | TrackBack

February 21, 2008

Eric Menhart Backs Off CyberLaw Trademark Claim

By Eric Goldman

You may recall that last month we all had a good laugh over self-proclaimed Cyberlawyer Eric Menhart's trademark application for the term "CyberLaw" to describe his Cyberlaw practice. (In case it wasn't clear, we weren't laughing WITH him...). Despite his initial blustery defense of the application (which, as a reader noted to me, violated the First Rule of Holes), Menhart has now backed off his claim to own the term "CyberLaw." Instead, he has amended his application to seek a trademark registration only in his stylized CyberLaw logo. (Thanks to Tricia Bishop at the Baltimore Sun for calling my attention to the amendment and sending the copy). Unfortunately, I won't dare display the logo here because it would likely make me his next enforcement target; but you can see the design in the amended application.

With this amendment, I'm inferring that all of us--even Michael Grossman, the victim of Menhart's efforts to enforce his purported trademark rights in the term "CyberLaw"--are now free to use the term "Cyberlaw" for its dictionary meaning without fear of getting sued by Menhart. However, Menhart doesn't appear to have changed his tune about the merits of his initial application. Instead, the Baltimore Sun quotes him as saying that he amended his application because:

It was very clear that this was not going to be an academic argument, it was going to be more of a shouting match, and I didn't think it was worth my time to get involved in a shouting match with people that were going to shout louder and had more ammunition in their holsters than I had

Funny--I would have thought it wasn't worth his time because the application was completely unmeritorious.

What Eric Menhart might characterize as a "shouting match" is actually online word of mouth in action. (Note: the Baltimore Sun article incorrectly quoted me as saying that the blogosphere "gang-heckled" him. Actually, I said that we "gang-tackled" him, but the imagery of gang-heckling is perhaps nevertheless appropriate). Historically, it has been fairly rare to see bona fide public evaluations of a lawyer by his or her peers; that kind of reputational information was often well known among lawyers practicing in the geographic/doctrinal area and effectively unavailable to everyone else. Now, through the Internet, everyone--including Menhart's prospective clients--can easily find out what his peers think of Eric Menhart's choices, enabling this reputational information to have a much greater effect at rewarding or punishing marketplace participants as appropriate.

UPDATE: More coverage of this topic:
* Brett Trout
* Ron Coleman
* Sam Bayard
* Techdirt

Posted by Eric at 11:32 AM | Internet History , Trademark | TrackBack

February 14, 2008

Classic Article on "Cybermediaries"

By Eric Goldman

Mitra B. Sarkar et al., Intermediaries and Cybermediaries: A Continuing Role for Mediating Players in the Electronic Marketplace, J. COMPUTER MEDIATED COMMUNICATIONS, 1995

I've been working on my Brand Spillovers paper, which in part addresses the trademark legal principles that govern intermediaries including retailers and search engines. The Sarkar article is one of the most prescient and clear-sighted articles assessing the role of online intermediaries. In particular, it provides a terrific checklist of ways that intermediaries can provide valuable services to consumers and producers, thus continuing to add value to the distribution chain even as transaction costs generally decrease due to electronic mediation. This article is even more remarkable because it was written in the mid-1990s, at the height of cyberspace exceptionalism and at the time when conventional wisdom was that the Internet was going to create widespread disintermediation. A refreshing read, even today.

Posted by Eric at 11:09 AM | Derivative Liability , E-Commerce , Internet History | TrackBack

January 18, 2008

Who Owns "CyberLaw"(TM)? Eric Menhart, a DC IP Attorney, Thinks He Does

By Eric Goldman

Every now and then, we see comical efforts to claim trademark rights in common Internet-related terms. You might recall that the word "Internet" itself was once a trademark (see a list of registrants dated 1994); the term "listserv" is also a trademark that the owner is trying to preserve (bonne chance!), and Hormel has protested the use of its "Spam" trademark in connection with email. Typically, the trademark owner is trying to prevent the genericism of its trademark. Those battles are almost always futile, but I can see why they are fought.

The latest would-be-funny-if-it-wasn't-so-sad attempt to assert trademark rights in a common Internet term involves the term "Cyberlaw." But unlike the anti-genericism efforts, Eric Menhart--a self-described "recognized leader" in intellectual property--is seeking to fence in the generic term "Cyberlaw" to convert it into his own property. He has filed a federal trademark application (application 77341910) in the term "CyberLaw" for the following services:

Legal document preparation and research services for attorneys; Legal research; Legal services; Legal services, namely, preparation of applications for trademark registration; Consulting and legal services in the field of privacy and security laws, regulations, and requirements; Expert witness services in legal matters in the field of intellectual property and information technology; Providing a website that features information on the development of international law, regulations, legal policies, and legal practices in a manner that promotes global governance by all types of organizations; Reviewing standards and practices to assure compliance with intellectual property and information technology laws and regulations; Attorney services; Litigation services; Legal services, namely, trademark maintenance services; Copyright management; Copyright management consultation; Registration of domain names for identification of users on a global computer network; Arbitration; Arbitration services; Consultation in the field of data theft and identity theft; Intellectual property consultation; Intellectual property watch services; Licensing of advertising slogans and cartoon characters; Licensing of computer software; Licensing of intellectual property; Litigation consultancy; Mediation; Patent licensing; Preparing and filing incorporation papers; Providing information relating to legal affairs

He claims a priority date of Feb. 22, 2007. Mysteriously, his website displays the circle-R next to the term "CyberLaw" even though it's only a pending application (the application was just filed Dec. 1, 2007).

Fortunately, I'm 100% confident that the TM Office will reject this application because the term "Cyberlaw" has become a generic description for the law of the Internet and related fields--see the Wikipedia entry on the topic. In fact, the term "Cyberlaw" has been around over 15 years. I did a search in Westlaw's News Database and the earliest reference I found was a Macweek article discussing Jonathan Rosenoer's AOL "Cyberlaw" column--from 1992. I'm reasonably confident we could find earlier references. For example, I found a 1993 National Law Journal article ("A Shingle in Cyberspace: Lawyers Online Find Clients--and Some Risks" by Rosalind Resnick) that discusses the "burgeoning field of cyberlaw, those legal issues confronting the online world."

Unfortunately, the improbability of this trademark hasn't stopped Menhart from asserting his perceived rights against third parties. The EFF writes about one such demand against Michael Grossman, a Chicago attorney who runs a blog entitled "CyberBlawg." I'm wondering how many other people have been the unlucky recipient of a demand letter from Menhart asserting similar claims over "CyberLaw." Perhaps those demands will stop once the TM application gets bounced by the TM Office, but the harm done in the interim could be substantial.

One final observation (and I apologize in advance for any snarkiness here, but I know I'm saying what most of us are thinking). It's impossible to ignore that the trademark applicant is a lawyer claiming expertise in Cyberlaw. What kind of Cyberlawyer doesn't know that the term "Cyberlaw" isn't trademarkable for Cyberlaw services, *especially* not by one who claims a priority date of 2007?

Coverage from around the web:
* Boing Boing
* Slashdot
* Techdirt
* Dvorak
* Las Vegas Trademark Attorney (with a careful analysis of precedent trademark applications)
* Groklaw
* Freedom to Differ
* Lex Ferenda (finding a Cyberlaw reference as early as 1987)
* Likelihood of Confusion
* Your Name is My Business
* NameWire
* Life on the Wicked Stage
* Joho

UPDATE: The Baltimore Sun ran an interesting feature on Eric Menhart in 2004. The article notes some critics said that Menhart's "enterprising nature has led him into another pursuit that some people describe in harsh terms -- like 'extortion' or 'blackmail.'"

UPDATE 2: Mr. Menhart has blogged a response to EFF that reinforces that he really doesn't get it. Two unavoidable facts of life for him:

1) The PTO will bounce his TM application
2) If he ever attempts to enforce his purported trademark rights in "CyberLaw" again, he will be met by a buzzsaw of opposition from some very determined folks.

In light of these facts, most savvy lawyers would realize that the absolutely wrong approach is to dig in his/her heels.

Posted by Eric at 03:59 PM | Internet History , Trademark | TrackBack

November 16, 2007

The Victorian Internet

By Eric Goldman

Tom Standage, The Victorian Internet (1998). Find it at Half.com and Amazon [the Amazon link is an affiliate link]

As you might infer, I'm not at the cutting-edge of reading books. I don't read that many books in general; and I tend to read books well after everyone is done talking about them. But I enjoyed this book so much, and it has aged so well over the past decade, that I thought it was worth a shoutout. One side bonus: given that the book is no longer a hot release, you should be able to get this book used for well less than $10.

The book discusses the history of the telegraph. The book explains the technologies preceding the telegraph, the battles between the inventors of the telegraph, the telegraph's role in spawning new technological innovations (and creating enormous wealth for some of those folks) and the ways that the telegraph did--and did not--change society.

Its thesis is that many phenomena we associate with a global electronic network first occurred in the 19th century, not the 20th, which has made our celebration of the Internet's novelty (a topic at its zenith in 1998 when the book was published) ahistorical. The book thoroughly delivers on this thesis. One particular anecdote really hammered this point home. The book talks about a telegraph-mediated "online wedding" that first occurred...before 1848. (Indeed, the book "Wired Love" was published in 1879 and an article "The Dangers of Wired Love" ran in 1886). Yet, numerous newspaper articles from the mid-1990s marveled at Internet-mediated weddings as if they were completely unprecedented.

More generally, the book broadly makes the case that some things never change. For example, the book describes the arms race between telegraph companies establishing pricing schemes to curb attempts to send more information at a lower cost, just to have telegraph senders coming up with new gaming strategies. The book discussed the paranoia of major institutions in response to telegraphy, including governments that sought to control the use of cryptography in telegraphy and newspapers that assumed that the telegraph would destroy their business. (In the latter case, the newspapers adapted and thrived in response to telegraphy). The book also described how the telegraph contributed to feelings of information overload.

The book ends on a bittersweet note. It observes that people thought that the borderless telegraph communication network would contribute to world peace by breaking down barriers to communication. It didn't. If anything, the telegraph played an important role in 19th century imperialism and contributed to some of the bloodiest wars in history. Similarly, 150 years later, many similarly romanticize how the Internet can make the world a better place. Perhaps the Internet is truly different from the telegraph in this respect, or perhaps, we are just ahistorically proclaiming the latest technology innovation as our savior. As the book says, "That the telegraph was so widely seen as a panacea is perhaps understandable. The fact that we are still making the same mistake today is less so."

From my perspective, the only thing "missing" from this pithy and efficient book was a more thorough discussion of how lawmakers reacted to the rise of the telegraph. I would like to know more about how 19th century regulators coped with--or, more likely, freaked out about--the technological assumptions changed by the telegraph.

It seems safe to assume that some legislators misunderstood the technological underpinnings of telegraphy. The book gives numerous examples of how people didn't understand that the telegraph sent only electronic signals and wasn't a teleportation technology, such as the story of a woman in 1870 who sought to "telegraph" sauerkraut to her son. Again, some things never change; in 2003, a member of the House of Lords had a similar misunderstanding about spam. [the exact quote: "Will the Minister explain how it is that an inedible tinned food can become an unsolicited email, bearing in mind that some of us wish to be protected from having an email?"]

In this vein, the book offered one possible explanation for Sen. Stevens' explanation that the Internet is a "series of tubes." [the exact quote from Wired: "the internet is not something you just dump something on. It's not a truck. It's a series of tubes. And if you don't understand those tubes can be filled and if they are filled, when you put your message in, it gets in line and its going to be delayed by anyone that puts into that tube enormous amounts of material, enormous amounts of material."] Many telegraph operators built out a network of pneumatic tubes to move messages over short distances because this was quicker and more accurate for those messages. So perhaps Sen. Stevens was thinking of the telegraph when he referred to the "series of tubes."

The book was published before Western Union sent its last telegram. At the time I knew this represented the end of an important era, but after reading this book I better understand the significance of that event. Some day, someone will send the very last TCP/IP enabled http message...an event that will also probably pass with a whimper, not a bang.

Posted by Eric at 05:54 PM | Internet History | TrackBack

November 13, 2007

Geolocation and A Bordered Cyberspace

By Eric Goldman

I recently gave a talk on the general theme of the future of e-commerce, and I was allowed to take the topic in any direction. I decided to talk a little about the propagation of geolocation technology and its consequences for a borderless Internet. My notes from the talk:
______

A constant problem in Cyberlaw: the difficulties of authenticating users for age and geography. With respect to geography, in the mid-1990s, there was a strong belief that cyberspace was borderless. Examples:

* John Perry Barlow's 1996 Declaration of the Independence of Cyberspace

* 1997: ALA v. Pataki, where a state anti-Internet porn law (a baby CDA) was struck down as violating the dormant commerce clause. In that case, Judge Preska said: "Geography is a virtually meaningless construct on the Internet."

But there are ways to restore geographic borders to the purportedly borderless Internet:

1) Ask users to self-report. Users may want to self-report geography, especially in the e-commerce context where they want physical goods delivered or need to report their address to authorize a credit card purchase. But the law could force online actors to compel users to self-report geography and then act on the reported information. Examples:

* LICRA v. Yahoo. The French court envisioned that Yahoo could do 90% effective geographic authentication through a combination of IP address analysis and user self-reporting if Yahoo popped up windows asking users to self-report before being allowed to access the website.

* Alaska SB 140, an anti-adware law. To combat pop-up ads, the statute requires software vendors to display pop-up windows asking users to self-report geography.

A world with compelled requests for user self-reporting of geography would be a pop-up filled world constantly asking "where are you now? where are you now?" [see the analogous Verizon ad campaign] This makes user self-reporting undesirable, in addition to being unreliable.

2) IP address analysis. IP addresses are allocated on an International scheme. Yahoo used this scheme to display local ads, a fact noted in the LICRA court. IP address analysis can be more regional; for example, Google does geo-targeting on a more granular basis. Ex: if I search for "mercedes" in Google, I get local Mercedes dealers in the Bay Area. But IP address analysis is incomplete/imperfect.

So if the only geographic authentication tools were IP address analysis or user self-reporting, the Internet would remain more borderless than bordered. However...

3) Geolocation technology. In the future, Internet access devices will be coupled with GPS technology that will automatically report user geography. For example, many mobile phones already have GPS technology in them, and consumers use other mobile devices (e.g., Blackberries) that have geolocation technology. Inevitably, the boundaries between computers and these geolocated mobile access devices will dissolve, meaning that Internet access devices will be geolocated and will automatically self-report user geography as part of interacting with other online actors.

A geolocated Internet will have some benefits. Most obviously, ads can be geographically targeted in ways that can help consumers (i.e., a driver searching for gas can get ads from nearby gas stations). It will also enable other localized content where that matters (weather, directions, location of friends).

But a geolocated Internet will also enable governments to force online actors to "honor" the geographic information. Thus, states could legitimately enact state-specific laws and require online actors to customize their offerings for state residents. Governments could also use the geolocation information to created walled environments, including more highly filtered/screened content. We've already seen this in China and some other countries. In these situations, Internet users will have very different Internet experiences based on their geography. Thus, a geolocated Internet should contribute to the demise the Internet utopianism. Instead of bringing people together over a borderless network, a geolocated world reenables borders that will keep us further apart.

Posted by Eric at 05:44 PM | Content Regulation , E-Commerce , Internet History | TrackBack

October 21, 2007

Ticketmaster Wins Big Injunction in Hannah Montana Case, But Did the Public Interest Get Screwed?--Ticketmaster v. RMG

By Eric Goldman

Ticketmaster L.L.C. v. RMG Technologies, Inc., 2007 WL 2988403 (C.D. Cal. Oct. 16, 2007)

You may remember Ticketmaster's multi-year battle against Tickets.com over data aggregation and deep linking. Ticketmaster never got a solid win in that case, but here Ticketmaster successfully advances the same legal theories against someone gaming its allocation of tickets. Hannah Montana fans might cheer this ruling, but some of the court’s analysis makes this a troubling Cyberlaw development.

Introduction

This case involves what I'll call "ticket sniping"--the practice of quickly snapping up highly-sought-after tickets when they first go on sale and then reselling them at higher prices. When it comes to hot concerts--such as the upcoming Hannah Montana tour--Ticketmaster's price may be well below the prices people are willing to pay in the secondary market. Why don't event promoters use auctions or other dynamic pricing scheme to capture this upside on the first sale? I'm reminded of the odd pricing systems for IPOs--just like that market, perhaps Ticketmaster (as an intermediary) deliberately underprices below the market-clearing price to increase its profits.

In any case, initial ticket buyers from Ticketmaster can get an economic windfall, which naturally motivates people to game the initial first-come, first-served ticket allocation system. RMG was one such gamer. They developed software that helped its customers beat other buyers in the rush to get hot tickets. Ticketmaster sued RMG to stop their gaming activities; the court issues a preliminary injunction:

Copyright

The court says that RMG directly infringed Ticketmaster's copyright in its web pages by browsing them to test the operation of its software tool. Effectively, then, the court says that web browsing is copyright infringement. This isn't the first time a court intimated as much, but it's troubling every time we see it.

The court overlooks any implied license to browse because Ticketmaster's "browsewrap" on its home page (which says "Use of this website is subject to express Terms of Use which prohibit commercial use of this site. By continuing past this page, you agree to abide by these terms") acts as an express restriction on browsing, so any access in contravention of those terms constitutes copyright infringement.

One of the key Qs is how RMG's software differs from other search engine robots. The court skirts this Q, simply pointing to Perfect 10 v. Amazon as excusing the cache copies made by web users who follow search engine links. Of course, search engine robots make lots of other copies, and we think these copies are excused because the final presentation (the display of search results snippets) doesn’t infringe. The court doesn't address this at all.

The court also says that RMG is indirectly infringing based on a Grokster inducement theory because RMG's marketing said it's offering "stealth technology [that] lets you hide your IP address, so you never get blocked by Ticketmaster." This is a pretty expansive interpretation of copyright inducement because the marketing references IP address blocks, not copyright infringement, but it's very consistent with the court's moral condemnation of RMG's behavior.

Anti-Circumvention

The court says that website pages are protected by copyright, and the website used a CAPTCHA to restrict access to these copyrighted works. Thus, distributing the software tool designed to circumvent the CAPTCHA to access the copyrighted website violates 1201(a)(2) and 1201(b)(1). Not only does this give unexpected copyright protection for CAPTCHAs, this ruling seems inconsistent with several precedents holding that bypassing a password protection system doesn't violate 1201.

Breach of Contract

As indicated above, the court upholds Ticketmaster's browsewrap. Admittedly, Ticketmaster has improved its contract formation processes since it litigated against Tickets.com, but I'm not sure this was as easy as the court treated it.

Computer Fraud & Abuse Act

Surprisingly, the court denies relief for this claim because Ticketmaster couldn't allege $5,000 of loss. I tell my students that if they can't construct $5,000 of loss under the CFAA, then they aren't thinking creatively enough.

Conclusion

It's easy to point at RMG and its customers as the bad guys. After all, they are trying to get an unfair advantage in the first-come, first-served allocation of scarce tickets for their economic benefit, with the result that later comers have to pay more to get the same tickets.

But what about Ticketmaster's role in this situation? They haven't designed a technologically gaming-resistant allocation of tickets, so they need legal help to solve that deficiency. I also remain suspicious about Ticketmaster's incentives here, both in setting prices and in policing against ticket allocation gaming. Their motives may not be nearly so consumer-friendly as they try to portray.

And this opinion is hardly pro-consumer either. This ruling won't be a problem if future courts limit this ruling solely to a company's efforts to legally protect a competently designed anti-gaming strategy. But some of the more dramatic rulings are anything but consumer-friendly, such as the implicit holding that browsing is copyright infringement and the upholding of Ticketmaster's browsewrap. If other courts apply these principles more broadly, Hannah Montana concertgoers may have gotten a benefit at the expense of us all.

Posted by Eric at 03:45 PM | Copyright , Derivative Liability , E-Commerce , Internet History , Licensing/Contracts , Privacy/Security | TrackBack

October 10, 2007

Pandora Founder Westergren Speaks at SCU

By Eric Goldman

I *love* Internet radio. I typically listen to it all day long while I'm pounding out emails, articles and blog posts (like this one). I've tried a number of services, including Accuradio, Sky.fm and Last.fm. However, now I listen exclusively to Pandora, which in my opinion is the best of the bunch. Pandora really does get better based on the feedback I give it, which gives me enough incentive to customize it to my tastes. (I won't embarrass myself by exposing my idiosyncratic music preferences here, other than to say that I don't think I've seeded Pandora with any band that started after 1990. Hey, I'm a product of my time.)

In any case, when the High Tech Law Institute was contacted by the Santa Clara University's Center for Innovation and Entrepreneurship to co-sponsor a talk by Tim Westergren, one of Pandora's founders, we jumped on the opportunity. Tim gave an outstanding talk last night to an enthusiastic audience of at least 200 people.

Pandora was founded in 1999 and raised $1.5M in early 2000. That money ran out in 2001 when no more VC money was available. For the next 2 1/2 years, the company went on 300+ VC pitches with no luck, but was able to run on fumes in large part by mostly deferring employee salaries (a total of $1.4M deferred). This is an amazing feat for a number of reasons, including the fact that most employees need to put food on their table, plus I don't think the labor laws really tolerate employee salary deferrals. In any case, in 2004, the company raised new money and revamped the business model. In October 2005, the company launched a consumer-oriented Internet radio, and the rocket ship took off.

This roller-coaster ride was partially tied to the company's search for a viable business model. Pandora first thought it would be an online music retailer (typical thinking circa 1999). Then, it focused on B2B licensing of its services to other online retailers (typical thinking circa 2001). By 2004, there had been enough external changes to contemplate a consumer radio service--broadband had become more widespread, and the webcasting license fees were set at a more palatable level. In their October 2005 relaunch, they first started with a consumer subscription model but quickly realized the futility of getting people to pay for Internet radio. Now, they are effectively ad-supported, and Tim thinks that they can reach profitability at the end of next year assuming the webcasting royalty rate will be reset. (After the tribunal issued the new webcasting rate, the company held a board meeting to decide if they should just fold up their tents and give the remaining money back to investors--instead, they pushed for a listener grass-roots campaign, which was wildly successful).

Pandora's main competitive differentiator is its "Music Genome Project." 50 trained musicians with at least a college degree in music (called "music analysts") listen to songs all day long and rate each song on 400 different musical attributes. See the 2005 WSJ article discussing them. By profiling songs this way, the system can predict that a person who likes an artist's song might like other songs with similar musical attributes. From listening to Pandora for many, many hours, IMO the system isn't perfect, but it does a pretty good job, and it has definitely hooked me on music that I wouldn't have listened to otherwise.

However, the human capital required to build this database is significant and expensive. Sure, the supply of people with a music degree willing to be paid to listen to music all day long should be favorable, but still, a low salary multiplied by 50 people is still a big number. As Tim acknowledged, this is the opposite of scalability--a song can take up to 1/2 hour to catalog--which reduces Pandora's ability to comprehensively catalog the "long tail." On the other hand, they already have a database of 500,000 profiled songs, and they are adding 15,000 songs a month. Plus, having found a way to survive while building such a large database, the database is now a big barrier to entry, because any competitor seeking to take a similar approach (patents permitting) would have to incur serious upfront costs to replicate a competitive system.

Pandora does a little search engine marketing, but principally they rely on viral marketing--build a better product and let the customers evangelize it to their friends. They claim 8.5M registered listeners, growing at the rate of 500k new registrants per month. Listeners interact with Pandora on average 7-8 times per hour to give feedback or configure things (that sounds about right from my personal experience), which is remarkable as a stickiness measure. The result of this interaction is a database of 1B thumbs up/down opinions, a gargantuan database of user preferences. Tim said that Pandora uses this database for some collaborative filtering, but it sounds like this database is could be a globally important resource if made available more widely. (I'm sure the privacy folks are running through all the ways this data could be misused.)

A couple of other interesting factoids:

* at peak hours, Pandora's traffic represents 1.5% of global Internet data
* they block International users because of the lack of Internet webcasting statutory licenses parallel to the rights enacted in the DMCA
* 94% of their database of 500,000 cataloged songs are played every day--powerful evidence of the long tail effect that consumers will enjoy otherwise obscure content if the transaction costs are low enough
* Tim said Pandora's biggest competitor is ClearChannel. Clearly, they want to own the entire radio industry, not just the Internet radio market.

Check out Pandora and see what you think. If you want a jump start and you promise not to laugh at my tastes, I can email you my heavily customized stations.

Posted by Eric at 06:00 PM | Copyright , Internet History | TrackBack

October 07, 2007

September 2007 Quick Links Part II

By Eric Goldman

Contracts

* Manasher v. NECC Telecom, No. 06-cv-10749 (E.D. Mich. Sept. 18, 2007). NECC included the following language on its invoices: "NECC's Agreement 'Disclosure and Liabilities' can be found online at www.necc.us or you could request a copy by calling us at (800) 766 2642." Not surprisingly, an arbitration clause in the referenced document wasn't incorporated into the contract because (among other deficiencies) there was no "call to action" that communicated that the referenced document was part of the agreement. HT: Tom O'Toole.

* Hofer v. The Gap Inc., No. 05-40170 (D. Mass. Sept. 28, 2007). 2 friends decide to vacation together in Jamaica. Friend 1 books the travel arrangements for both of them through Expedia. Friend 2 suffers a personal injury at the resort and wants to hold Expedia liable. Expedia invokes the liability protections in its user agreement, but Friend 2 never consented to or even saw that user agreement. No problem, says the court--Friend 1 was Friend 2's agent and therefore automatically bound Friend 2 to Expedia's agreement. For an analogous case involving software installed on a home computer, see here. HT: Tom O'Toole.

Web 2.0

* Video Professor, Inc. v. Doe (D. Colo.). Video Professor believes a bunch of individuals are committing false advertising, disparagement and other torts by bashing Video Professor's products. Video Professor knows it can't sue the intermediaries per 47 USC 230, so instead it's seeking subpoenas to unmask the gripers. This lawsuit seems misarchitected from a legal standpoint (at least, the Lanham Act portions), but it's also a really bad idea from a business standpoint--the chance of this lawsuit rehabilitating their online reputation is near-zero, and the chance of raising the profile of the gripers' comments in the search engines is near-one. Fortunately, Paul Levy is fighting back. HT: Consumer Law & Policy Blog.

* Michael Erdman reports that the Chicago Lawyers Committee v. Craigslist appeal is moving again. For a while, the case was deliberately sitting idle at the Seventh Circuit, presumably to facilitate settlement, but the Seventh Circuit has now issued a briefing schedule.

* Gary Price reports on the move in Wikipedia Germany to have all page edits reviewed by "trusted editors." More on this from the New Scientist. Yet more evidence that Wikipedia is looking increasingly like other editorially controlled content databases.

* Want to see a user community in the midst of turmoil? Check out the troubles at RateItAll. The consequence: 4 power users are gone, taking 20,000 items of content with them.

* News.com: 9 Fun Ways Web 2.0 Startups Can Commit Legal Suicide

Search Engines

* Jayne v. Google Internet Search Engine Founders, 2007 WL 2852383 (M.D. Pa. Sept. 27, 2007). This was a ridiculous pro se lawsuit that the court easily dismisses on its face. The interesting aspect is that the court says that Google isn't a state actor. This isn't the first court to say so, but it reinforces that Google and other search engines aren't subject to Constitutional restrictions.

* Google filed a motion to dismiss the American Airlines lawsuit. HT Gary Price.

* MediaPost: Personalized search results expand the number of search results that users look at and strongly improve clickthrough rate.

Content Regulation

* I missed this when it was first filed: Interactive Media Entertainment & Gaming Association v. Gonzales (D.N.J. complaint filed June 5, 2007), a First Amendment challenge to the Unlawful Internet Gambling Enforcement Act of 2006.

* American Booksellers Foundation for Free Expression v. Strickland, 2007 WL 2783678 (S.D. Ohio Sept. 24, 2007). Another state level anti-Internet porn law was struck down (this time in Ohio), but only on First Amendment grounds. Influenced by the upholding of state anti-spam laws, the court rejects a challenge to the law on dormant commerce clause grounds. This is a rare opinion saying that a baby CDA state law didn’t violate the DCC.

For Fun

* Happy birthday, smiley!

Posted by Eric at 08:33 AM | Content Regulation , Derivative Liability , Internet History , Licensing/Contracts , Search Engines , Trademark | TrackBack

September 07, 2007

August 2007 Quick Links, Part II

By Eric Goldman

* e360 Insight v. Spamhaus Project, 2007 U.S. App. LEXIS 20725 (7th Cir. Aug. 30, 2007). An email marketing company was listed on Spamhaus' ROSKO and sued for defamation and other torts in Illinois. Spamhaus took the position that US courts have no authority to render a judgment on a UK-based operation. The district court ultimately awarded $11.7M in damages and various equitable relief. The Seventh Circuit affirmed the default judgment but vacated the damages and equitable relief, sending those back to the district court to reevaluate the appropriate remedies. I understand that Spamhaus wanted to make a philosophical point by not fighting the lawsuit in the US, but had they overlooked their philosophical objections, they should have won a quick victory per 47 USC 230(c)(2).

* Perfect 10 has appealed its Ninth Circuit 230 loss in ccBill to the US Supreme Court.

* Search Engine Land had a good overview/recap article on geolocation technology. It provides a clear and easy-to-read explanation why the folks who think online businesses can just stay out of a state that enacts dumb regulations are full of crud.

* Pisciotta v. Old National Bancorp, No. 06-3817 (7th Cir. Aug. 23, 2007). Another court (this time, the Seventh Circuit) says that consumer fretting about possible future identity theft isn't enough harm to support a lawsuit. See the analogous JetBlue, Acxiom and Key cases.

* Wikipedia Scanner--an automated tool to determine who is editing Wikipedia pages. Katie Hafner's NYT article on the matter. David Hoffman does a little sleuthing on law firm edits.

* NYT: In the 1990s, a lot of people sought to build an infrastructure for micropayments. Consumers resisted them, but today those efforts seem a little silly--AdSense advertising can generate the same financial benefits for a web publisher without the overhead. Meanwhile, the credit card systems are being stretched to cover micro-transactions because merchants are aggregating a consumer's orders and processing them in bulk (rather than processing each one individually) as a way to reduce the transaction costs.

* NYT: "As video games have surged in popularity in recent years, politicians around the country have tried to outlaw the sale of some violent games to children. So far all such efforts have failed."

* AP: Chinese animated cops will be patrolling the Information Superhighway beat.

* Tired of negative reviews on Yelp, a San Francisco restaurant put up a sign saying "no Yelpers." I wonder if a sign like that lessens or exacerbates negative publicity.

* NYT: Book authors obsessively check Amazon sales rankings and try to game them.

* Facebook accidentally posted some of its source code to a public website. Surely an interesting development for ConnectU's discovery team!

* Another Internet company hires its own in-house economist--this time, virtual world Eve Online.

* A nice retrospective on the Cleveland Free-net, which at one point was a prominent component of the Cyberspace community.

* I have one free guest pass to the CLE International New Media Law conference in SF on Oct. 1-2. Free to the first person who sends me an email request. [SORRY--TAKEN!]

Posted by Eric at 09:48 AM | Content Regulation , Derivative Liability , E-Commerce , General , Internet History , Privacy/Security , Virtual Worlds | TrackBack

August 13, 2007

2007 Cyberspace Law Syllabus

By Eric Goldman

I've posted my 2007 Cyberlaw syllabus. Unlike the past few years, which were a little slow cyberlaw-wise, the past 12 months saw a lot of important developments. Let me recap some of changes I made to my reader reflecting these developments:

Additions

Copyright: I added the Cablevision case (after editing out some of the mind-numbing description of cable technology), which provides an interesting exposition on how the source of bits matters in copyright law (we'll reinforce that message with the Amazon.com "server test"). I companioned the Cablevision with the Field case to show a very different philosophy about "volitional" server activity, so I'll ask the students to see if they can reconcile the two cases.

I struggled with how to handle the Ninth Circuit's troika of Perfect 10 opinions. The opinions are long, complicated and irresolute, but it's hard to discuss one without discussing the other two. I decided to include all three but I don't feel great about that decision, given that it takes 115 pages (about 1/6 of my total reader) to work through the three cases, and I'm not sure students will come away any smarter about Ninth Circuit online copyright law after reading all three.

Trademark. I substituted the FragranceNet case for the 1-800 Contacts v. WhenU case. The 1-800 Contacts case remains a very important keyword law precedent, but as a teaching case it was just so-so. The adware subject matter increased the complexity, and it punted on the most interesting question of search engine liability. However, most of the other recent keyword law cases have been even less teachable. Fortunately, the FragranceNet case does a pretty job of recapping the 1-800 Contacts case as well as other recent decisions, and it frames the policy issues nicely. I've paired it with the Playboy v. Netscape case, which will make a good compare/contrast. However, if the Second Circuit gets off its duff, I'd be thrilled to substitute in the court's opinion in the Rescuecom appeal. (I'd be even more thrilled if the court reaches the "right" result!).

I also updated my materials to reflect the Trademark Dilution Revision Act.

230. I continue to stick by the seminal Zeran case, which remains both powerful precedent and a colorful teaching case. However, this year I added the Ninth Circuit hairball Roommates.com opinion. I really didn't want to--it's such a messy opinion--but I think for now the case represents a vitally important incursion into 230 law that any good Cyberlawyer needs to know about it (even if they don't know what to do about it). If we're lucky, perhaps the Ninth Circuit will rehear the case en banc and issue a new and more lucid opinion before I have to teach the existing opinion.

In addition, I created a new module on "blogs and social networking sites" and added the Doe v. MySpace case, a great opinion for exploring the differences between online and offline "premises."

Spam. I teach spam at the semester's end, when time is running out, so we'll see what I'm actually able to cover this year. I've added two recent cases: the Mummagraphics case, which wiped out a lot of state anti-spam laws and has a nice interplay with trespass to chattels, and the MySpace v. theglobe.com case, which has an odd contrast with Mummagraphics on the state anti-spam statutory analysis; plus it shows how online contracts can substitute for legislative rights.

Other. I added some explanatory material, including my standard dog-and-pony CLE presentations on keyword law and blog law and my brief distillation of social networking site law. I also updated the CRS on Spyware.

Other Changes

* I eliminated my standalone section on "search engines" and folded the material into the rest of the reader. I think there's pedagogical value to isolating and deeply exploring search engine issues, which is why I initially segregated the material. However, search engine issues crop up throughout the foundational material, so I'm not sure that segregation worked.

* I deleted the following material:
- Corbis v. Amazon. This was an excellent case to teach 512, but I think the ccBill case superseded it in a number of respects.
- the district court opinion in Perfect 10 v. Google, which was superseded by the Perfect 10 v. Amazon Ninth Circuit opinion.
- 1-800 Contacts v. WhenU (as discussed above)
- Alaska SB 140, which I ran out of time to discuss last year.

Deliberately Excluded

* The Utah anti-keyword advertising law represents one of the most important statutory changes of the year, but I omitted it because I anticipate Utah will modify it, and there's no point teaching a moot law.

* I skipped the Unlawful Internet Gambling Enforcement Act. I've generally shied away from teaching online gambling in Cyberlaw; the topic requires a lot of time to teach, making it hard to squeeze into a semester-long survey course. Plus, the new law is an analytical mess, so I'm not sure what the students would get out of the discussion.

* We were so excited to get the California Supreme Court's Barrett v. Rosenthal ruling, but the actual opinion doesn't add much to Zeran, so I thought it wasn't worth the time.

Posted by Eric at 07:57 AM | Adware/Spyware , Copyright , Derivative Liability , Internet History , Search Engines , Spam , Trademark | TrackBack

August 04, 2007

Taking Intangible Electronic Files is Criminal Fraud--NM v. Kirby

By Eric Goldman

New Mexico v. Kirby, 2007-NMSC-034 (N.M. June 13, 2007)

This is a very confusing case, so maybe you can help me figure out what it means. At minimum, this case highlights the problems that can be arise when a web design/development relationship goes sour. More broadly, it also contributes to the already confused case law about when intangible electronic records can be "stolen," but this lesson comes at a high cost--in this case, 18 months of jailtime for the defendant.

Facts

According to the Supreme Court's statement of facts, Kirby retained Collett, a website designer, to "develop[] and/or improv[e] a World Wide Website to be installed on the client's web space on a web hosting service's computer." I believe the site at issue is environmentalbenefits.com. The agreement specified that Collett retained the copyright "to the finished assembled work of web pages" and Kirby would be "assigned rights to use as a website the design, graphics, and text contained in the finished assembled website" after Kirby paid the contract price of $1,890 plus tax.

But Kirby never paid Collett--although, according to this site, Kirby paid with an allegedly bum check. Kirby also changed the password for the designed website, which effectively cut off Collett's ability to access those files--the files that, per the contract, Collett still owned.

If Kirby stiffed Collett, it seems like Collett had several legal options, including breach of contract and copyright infringement. Instead, this case went to state prosecutors, who prosecuted Kirby for criminal fraud based on Kirby having taken "a Website Design belonging to Loren Collett, by means of fraudulent conduct, practices, or representations." The jury convicted Kirby, and the Supreme Court affirmed. According to this site, Kirby was sentenced to 18 months in jail.

Questions

This case raises some tough issues, including:

* Why did NM prosecutors pursue this case? On its face, this looks like a garden-variety $2000 commercial dispute. Heck, it could have been handled in small claims court. Instead, Kirby get a felony conviction and jailtime. Huh?

* Did Collett retain a duplicate copy of his files in his possession? If so, how did Kirby "take" non-rivalrous electronic files?

* In that vein, why isn't this crime preempted by copyright law? Copyright preemption is inherently confusing, so I don't feel too bad about being confused here. Indeed, on its face, a commercial fraud crime should be sufficiently removed from copyright law to avoid preemption easily. But in this case, Kirby was prosecuted for converting Collett's intangible files. This sounds a lot like copyright infringement to me. Of course, this ruling isn't completely unprecedented: cases like Kremen v. Cohen and Thyroff have held that intangible electronic records can be converted, though I think the copyright preemption analysis in these cases is hardly satisfying (plus, the recent Utube case held that an intangible asset could not result in trespass to chattels). Though the case talks about copyright a lot, there's no reference at all to preemption--perhaps it wasn't raised by the public defender?

Lessons

1) This case reminds us of the importance of drafting a website development agreement properly. For example, the contract's provision that Kirby would be "assigned rights to use" the website is fatally ambiguous. I wrote a lot on the issues associated with web development agreements in the 1990s; see, e.g.,
* A Fresh Look at Web Development and Hosting Agreements (1998) with sample web development agreement
* Top 10 legal issues for clients of Web developers (1996)
* Pitfalls in Outsourcing Your Website (1996)

In particular, the excerpted contract language indicates that the parties were struggling with defining their respective ownership interests. This is a typical area of confusion; I racked up a fair amount of billable hours in the late 1990s on this very point with people (including opposing lawyers) who didn't get it. Even when the deal value is low, a savvy lawyer can add significant value, at relatively low cost, helping the parties understand this topic.

2) This case reminds us that, unless the contract specifies otherwise, the web designer owns his/her web development work product even if the retaining party pays for the work. This isn't new either (web development lawsuits from the 1990s addressed this point), and here the parties actually expressed addressed ownership in their contract. Nevertheless, caveat emptor!

3) This case extends the meme that intangible electronic records are just as tangible as chattel for conversion purposes. I remain concerned in general about this trend. We may benefit from a careful rethinking about the implications of rivalrousness on conversion doctrines.

4) I'm trying to figure out how broadly this case could apply. For example, would it apply in other circumstances where a party cuts off another party's access to electronic files by changing a password? With little effort, I can think of two: (1) divorcing spouse cuts off spouse's access to shared account containing copyrighted works, and (2) website terminates customer by changing the password, cutting off access to copyrighted material stored in the account (I'm assuming the contract doesn't expressly grant this right). Each fact pattern appears indistinguishable from the elements at issue in this case, although there may not be the requisite scienter to find fraud. if there were (for whatever reason), this case could expand the realm of criminality much further than we might have anticipated.

5) No matter what, the Supreme Court opinion and some of the source materials at this site strongly indicate that the New Mexico judicial system still doesn't understand Internet technology very well. If this were a typical civil case, that would be a shame; if this technological confusion directly led to jailtime for the defendant, it may have produced a travesty.

Posted by Eric at 04:05 PM | Copyright , Internet History , Licensing/Contracts | TrackBack

August 01, 2007

July 2007 Quick Links, Part II

By Eric Goldman

Virtual Worlds

* After a remarkable run as media darlings, Second Life is now experiencing some of the inevitable backlash. Case in point: Wired's "How Madison Avenue Is Wasting Millions on a Deserted Second Life." In this respect, Second Life reminds me a little of Keen.com--both provide fantastic platforms for monetizing user-generated content, but that powerful economic platform is likely to take root primarily in the sin businesses (porn, gambling, etc.). (FWIW, Keen.com appears to have cleaned up the dial-a-porn and is now focused exclusively on dial-a-horoscopes). As a result, it will be interesting to see what happens to Second Life's numbers in response to their anti-gambling crackdown. Meanwhile, lawyers--the classic late adopters--are gushing about Second Life's potential as a business generator--an interesting counter-perspective to the Wired article.

* World Copyright Law Report: "Some residents have been using a rogue version of a program called CopyBot to make a copy of anything in the Second Life world, thus threatening to undermine the whole basis of the Second Life economy."

Wikipedia

* More marketers wake up to the value of inserting links into Wikipedia despite Wikipedia's nofollow tag. See my earlier explanation of this. Meanwhile, a Wikipedia administrator talks about what Wikipedians consider white hat practices for marketers.

* Willing to cite to Wikipedia in your legal briefs? Need some custom-tailored authority to support your argument? Edit Wikipedia to say what you want!

* Mike Godwin has become Wikimedia’s GC. You may recall that Mike and I bet about Wikipedia’s future; it appears he has raised the stakes on that bet substantially!

User Generated Content

* "GC's Client from Hell": Whole Food's CEO John Mackey pseudonymously posted about his company's stock and his competitor's stock on Yahoo Finance. The WSJ article has some of the juiciest postings. The NYT on CEO "sock puppetry."

* A restaurant owner used consumer reviews from Yelp as part of deciding to fire employees.

* Interesting interview with the pseudonymous founder of a pay-for-Diggs business.

Blogs

* The ABA Journal has entered the crowded field of blawg directories with one of their own.

* Blawgworld 2007: 77 blawgers chose their favorite posts, which were compiled into an e-book. The compilation turns out to be a great way to get noisy blawgers to promote their brilliant contributions to the e-book, which generates traffic and link love for the publisher, which in turn creates a nice delivery vehicle for sponsored content/advertising.

Miscellaneous

* Asch Webhosting, Inc. v. Adelphia Business Solutions Investment, LLC, 2007 U.S. Dist. LEXIS 52932 (D. N.J. July 23, 2007). IAP terminates customer based on complaints that customer was a spammer. Court holds that the consequential damages waiver applies, effectively negating customer's alleged damages. Rejecting the customer's argument that the termination was in bad faith, the court says: "Plaintiff’s arguments about the accuracy of the spamming complaints do not change the Court’s determination because regardless of the ultimate accuracy or veracity of the spamming complaints, defendant was entitled to rely on those complaints so long as it did so in good faith, and plaintiff has not demonstrated any bad faith by defendant." HT: Technology Law Update.

* Consumer Law & Policy Blog: "companies in two recently filed federal cases explicitly invoke [the recent Supreme Court decision in] Leegin as a justification for terminating the eBay auctions of competitors that charge lower prices online."

* Declan on whether anti-spyware vendors are screening for "fedware" (government keystroke loggers designed to capture data before it's encrypted).

Fun

* More proof that technology can save lives: During a power outage at a hospital, doctors were able to complete a surgery using the light of open cellphones.

* I’m a new fan of Oddee. Some recent posts (it helps to think about sexual connotations when interpreting the photos):
- "15 Unfortunately Placed Ads."
- "Most Unfortunate Logos Ever"
- "Unfortunate Business Names.”

Posted by Eric at 11:06 AM | Adware/Spyware , E-Commerce , General , Internet History , Marketing , Spam , Virtual Worlds | TrackBack

July 31, 2007

July 2007 Quick Links, Part I

By Eric Goldman

Search Engines

* According to this study, up to 40% of search queries are "re-finding queries" (i.e., the searcher is trying to re-find previously viewed information). The implication: "Because people repeat queries so frequently, search engines should assist their users by providing a means of keeping a record of individual users' search histories, perhaps via software installed on the user's own machine." As I've said before, search engines necessarily will need client-side software to see more consumer behavior if they want to improve relevancy for consumers. HT Greg Linden.

* People are spoofing the Googlebot.

* Hal Varian, a first-rate scholar at Berkeley's SIMS, is now Google's chief economist. I don't know how many other Internet companies have economists-on-staff, but I could see this as a growth area.

Intellectual Property

* Prediction: at least one person will go to jail for prereleasing the new Harry Potter book. It's just too conspicuous for the feds to ignore. Indeed, at this point, it seems unavoidable that every launch of an eagerly anticipated copyrighted work will also involve criminal prosecutions for unauthorized prereleasing (see, e.g., this post). Meanwhile, BusinessWeek is marveling at how many websites are now cooperating with copyright owners rather than fighting them.

* Capitol Federal Sav. Bank v. Eastern Bank Corp., 2007 WL 1885134 (D. Kan. June 29, 2007). Kansas TM owner lacks jurisdiction in Kansas over New England bank allegedly committing TM infringement, even though the New England bank bought keyword ads on the trademark (but, those ads were geo-targeted to Massachussetts). Along the way, the court (as usual) cites to Zippo but rejects the "website doing business" prong, instead requiring the plaintiff to show that the website was doing business in the forum jurisdiction.

* Masterson Marketing, Inc. v. KSL Recreation Corp., 2007 WL 1975425 (S.D.Cal. April 13, 2007). Oh man, what a crazy lawsuit. Freelancer takes product shot of hotel and licenses photo to hotel. Hotel then provides photo to third party websites (such as Expedia) as a way of promoting the hotel. The freelancer claims the hotel breached the license and proceeds to sue what seems like every website in the travel industry. This case is now going on 5 YEARS...over a product shot. (Disclosure note: I worked a little on the case when I was affiliated with Epinions, which is one of the defendants. Yes, it's that old). This ruling deals with the hotel's attempt to recreate the product shot with a different photographer. The court grants SJ to the defendants on the copyright infringement of a recreated shot (per ETS-Hokin). The court also makes it clear that the plaintiff isn't going to get any of the plaintiff's profits, which I assume means the plaintiff is going to get bubkus damages (plaintiff isn't eligible for statutory damages).

* From the NY Times: Mr. Skin is a website that provides subscribers with access to pictures and videos of naked actresses taken from movies. Mr. Skin doesn't normally get permission from copyright owners, seemingly making it a prime target of a business-ending copyright lawsuit. It tries to justify the wholesale republication of clips and stills under the guise of fair use because it claims to be a movie review site, but I doubt that many judges would find that argument very persuasive. However, movie studios have realized that promotion via Mr. Skin increases demand for the movies ("sex sells"), even if Mr. Skin is already showing the "money shot" on its site. As a result, instead of getting lots of C&D letters, Mr. Skin gets lots of promotional copies from movie studios.

* Microsoft is trying to patent what Ars Technica describes as the "mother of all adware." Microsoft is also trying to patent a system for tracking people to deliver relevant advertising. People may find these patents a little creepy, but I see them as both inevitable and ultimately a good thing.

* Washington Post: a new website is trying to position the purchase and resale of exclusively branded fashion items (e.g., Birkin purses) as an investment. And to stabilize the investment decisions, the website screens out the knock-offs and certifies authenticity.

* Domaining to become a $4B/year industry?

Posted by Eric at 12:40 PM | Copyright , Domain Names , Internet History , Patents , Search Engines , Trademark | TrackBack

July 02, 2007

June 2007 Quick Links

By Eric Goldman

Email

* Spam cases are coming at a regular clip, and it's tricky divining the latest state of the law. Two recent cases that caught my attention:
- US v. Impulse Media Group, 2007 WL 1725560 (W.D. Wash. June 8, 2007). This case involved a porn site that used affiliate marketers who didn't comply with the porn spam labeling requirements. The government argued that the advertiser should be strictly liable for this breach, but the court fairly emphatically rejected that (same as Cyberheat). But the news isn't all good for the defense, as the court also rejected its SJ motion, showing that the question of scienter about affiliate behavior remains a tough one for courts. Venkat's writeup.
- Kleffman v. Vonage Holdings Corp., No. 07-2406 (C.D. Cal. May 22, 2007). A nice complement to the Facebook v. ConnectU case, each holding that aspects of California's anti-spam laws are preempted by CAN-SPAM. In this case, the targeted behavior was the fact that the emailer may have used multiple email addresses to bypass electronic spam filters, but there wasn't anything false/deceptive about each email itself. See the BNA write-up and Venkat's writeup. I've lost track of the preemption cases, but it seems like state anti-spam laws are really getting munched after the Mummagraphics case.

* NYT on the pros/cons of captchas.

* Goodmail has expanded its pay-to-email system to Comcast, Cox, Roadrunner and Verizon.

Intellectual Property

* In Explorologist v. Sapient, involving the posting of a video deconstructing Uri Geller's act, the defendant is arguing (per CCBill) that 47 USC 230 preempts British copyright law.

* A rushed high school yearbook editor downloads lots of Facebook photos and adds them to the yearbook to fill space. Not a good idea!

* Techdirt: Who owns the right to license the design of military weapons to toy manufacturers?

* Marty on intellectual property protection for sexual activity.

Contracts

* A California man claims he bought a Gateway computer that never displayed text properly. Is he bound to the clickthrough agreement displayed on bootup? If this is the only way Gateway presented its contract, the answer should be no.

* At a conference at Southwestern Law School, I heard Prof. Lon Sobel talk about "idea submission" law. He illustrated the phenomenon that "where there's a hit, there's a writ": he suggested that hit TV shows produce an average of 6 "you stole my idea” demand letters. The great 1980s movie Coming to America produced 12 such letters, which resulted in 7 actual lawsuits. Interestingly, Prof. Sobel made the case (implicitly, not explicitly) that there is no separate law of "idea submissions," but rather any such doctrines are subsumed within standard contract law.

eBay

* eBay has changed its stance towards fighting counterfeiters, and it now does more policing itself.

* eBay shill bidder pays $400k to settle with NY AG.

Social Networking/Blogs

* The NCAA kicked a reporter out of the stadium for live-blogging the event. Tip to NCAA: It’s neither possible nor wise to control the flow of real-time information. Get over it. HT: Techdirt.

* Just came across this article: Stacey Schesser, MySpace on the record: The admissibility of social website content under the Federal Rules of Evidence, First Monday, volume 11, number 12 (December 2006).

* Wired: 7 MySpace sex offenders busted.

Marketing/Advertising

* AMCO Ins. Co. v. Lauren-Spencer, Inc., 2007 WL 1795970 (S.D. Ohio June 20, 2007). Insured offers jewelry from a website. Third party claims that the insured's jewelry constituted copyright infringement. Insured tenders the lawsuit to her insurance company under the advertising injury policy. Insurance company seeks a DJ of no coverage. The court says that the website constitutes advertising for the products, and so the policy applies to photos of the allegedly infringing jewelry items, even if the photos themselves were created by the insured. Observation #1: The advertising injury policy is very helpful to web businesses. Observation #2: Due to cases like this, I suspect insurance companies are reducing their willingness to offer advertising injury coverage to web businesses.

* Taylor v. XRG, Inc., 2007 WL 1816142 (Ohio App. Ct. June 21, 2007). The defendant was a vendor retained by bulk fax senders that handled consumer responses, including opt-outs from future faxes. Court held that the vendor wasn't liable for any TCPA/state anti-junk fax laws allegedly broken by the fax sender.

* Newish ad format: ads running 2 seconds in duration.

Search

* It's taken me a while to digest some of Google's new efforts. First, Google released two tools (a new toolbar button and a new personalized tab) to anticipate searchers' needs based on their past searches. Second, Google expanded its search history to incorporate all aspects of a user's searching through its services (what it calls "web history"). Meanwhile, Google has reduced its storage of personalized search data from 18-24 months to 18 months before that data gets anonymized. FWIW, I've been using Google personalized search since November 2005 (presumably, some of my data will be flushed any time now). Google has now captured almost 12,000 searches (with a high so far of 255 searches in a single day). Despite this, Google still doesn’t do a good job making predictions for me.

* Another great study from Jim Jansen (see the last one I blogged about). This one presented identical search results branded from different search engines and found that consumer ratings of relevancy varied based on the brand (Yahoo and Google came out on top). The logical inference--branding does matter to perceptions of relevancy. HT: SEL.

* Matt Cutts on the various ways humans affect Google search.

Domain Names

* Denmark's .dk TLD registry has enacted rules targeted at wiping out domainers. See here (Sec. 8.3.6).

* What's hotter than iPhones? iPhone-related domain names.

Adware/Spyware

* Declan on the latest legislative rally against spyware, the Senate's Counter SPY Act.

* The FTC issued final approval for the DirectRevenue settlement of $1.5M. Commissioner Leibowitz dissented, saying the cash payment was too light.

Online Reputations

* Avvo has filed a motion to dismiss the lawsuit over its ratings of attorneys. The motion is very heavy on the 1st amendment and very light on 230. HT: WSJ Law Blog.

* The Washington Post gushes about Reputation Defender and its competitors, without really acknowledging the value of reputational accountability or the potential for takedown/pushdown abuse.

* Entrepreneurs figured out a way to game FICO scores. Fair Isaac will try to close the loophole.

* Ed Magedson of Rip-Off Report was the victim of a vicious harassment campaign demanding that he remove complaints from the site.

* Lengthy NYT article on Wikpedia. Not much new there, but it does hint at the young age of Wikipedians, and it talks about how "pride of ownership" motivates Wikipedians.

Other

* June 26 was the 10 year anniversary of the classic Reno v. ACLU Supreme Court opinion.

* The NYT has launched a new technology blog called BITS.

Posted by Eric at 02:37 PM | Adware/Spyware , Content Regulation , Copyright , Derivative Liability , Domain Names , Internet History , Licensing/Contracts , Marketing , Search Engines , Spam , Trademark | TrackBack

June 03, 2007

May 2007 Quick Links

By Eric Goldman

Spam

* MySpace Inc. v. The Globe.com Inc., No. CV 06-3391 RGK (C.D. Cal. Feb. 27, 2007). This case has some personal interest because theglobe.com was one of my flagship clients before I left the law firm in 2000. This ruling held theglobe.com liable under CAN-SPAM, California's anti-spam law and the user agreement for spamming within the MySpace network. See the BNA writeup. Among other remarkable angles of this ruling, the court upholds the liquidated damages clause based on the anti-spam restrictions in the contract. Based on this adverse judgment, in April the parties settled for over $2.5M —basically, all of theglobe.com’s remaining cash, leaving its survival in serious jeopardy.

Domain Names

* Domainers are hot. Business 2.0 article on Kevin Ham, a major domainer who has wildcarded Cameroon's .cm TLD. NYT article on NameMedia, which owns 725,000 domains.

* From the AP: Entrepreneurs loaded up on Virginia Tech- and victim-related domain names following the massacre.

Marketing

* Broadway producer Scott Rudin was annoyed that the New York Times' website published user-submitted reviews of his play. To tweak them for doing so, the play cherry-picked some comments from the users' submissions and ran them in ads for the play with the attribution "The New York Times Online." An NYT editor objected to that attribution because it connoted an editorial judgment of the paper, rather than the paper's readers. Read the fun back-and-forth between Rudin and the editor.

* From the Washington Post: Billboards are the second-fastest growing ad category (after the Internet) due to increased traffic congestion and new digital billboard technology. And a technologist has developed eye-tracking technology that may let billboard advertisers accurately count eyeballs.

* Optima Funding, Inc. v. Strang, 2007 WL 1430699 (Cal. Ct. App. May 16, 2007). A mortgage company said it never sent unsolicited faxes or authorized anyone to do so on its behalf, but it did use lead generation companies. Strang sued Optima repeatedly in small claims court for TCPA violations. Optima struck back with a 17200 claim, basically saying that Strang was falsifying evidence to connect Optima to the faxes. In this ruling, the California Appellate Court upholds Strang's anti-SLAPP motion to strike.

* NYT: Custom postage stamps haven't really caught on. (Note: I just tested on them in my IP course exam).

* NYT: "The High Price of Creating Free Ads." Advertisers may not save any money by relying on user-generated ads. See my previous blog post about the legal costs of UGC ads.

* Rebecca discusses false advertising developments in one of our least favorite 1201 cases, Static Control v. Lexmark.

* AP: Wisconsin bar owner gets a ticket for serving Coors Light beer using a Miller Lite-branded tap. He should have known better than to cross the only major brewery still in Brewtown by serving Colorado beer.

Search Engines

* Brodsky v. Yahoo (C.D. Cal. complaint filed May 11, 2007). A stockholder derivative lawsuit against Yahoo alleging that Yahoo inflated its stock price by hyping its ad businesses. I read through the lengthy complaint and found it mostly nonsensical. For example, consider this allegation of wrongdoing: "whereas Yahoo!’s rivals were paying high-traffic vendors to route traffic through their Web sites, Yahoo! was charging large vendors for access and was dependent on that revenue to make its revenue targets, making Yahoo!’s Web site a less desirable location for vendors to drive traffic to." Huh? Search Engine Land has more.

* Google has blacklisted all term paper websites from its AdWords program. Reminds me a little of Macellari v. Carroll

Intellectual Property

* Grisman v. YouTube, Inc., C-07-2518 (N.D. Cal. May 10, 2007). Second class action lawsuit against YouTube (and third major broadside, including the Viacom lawsuit). Appears to be highly derivative of the Football Association Premier League lawsuit (see the WSJ Law Blog for more on this).

* Clark v. Amazon.com, CIV S-05-2187 (E.D. Cal. May 10, 2007). Clark published a book, sold 187 copies and gave away 234. He sued Amazon (and other online booksellers) claiming that he alone had the exclusive right to distribute the book, so their resales were infringing. Amazon responded that the resales were covered by the First Sale doctrine. Clark responded by saying that Amazon sold more copies than he sold/gave away, but that's because Clark mistakenly believed that a seller's lifetime transactions rating were all based on sales of his book. Summary judgment for Amazon.

* Like other content producers, pornographers are feeling the sting of online competition--especially due to the low barriers to entry of amateur-produced content.

* From Washingon Post: Appraisers are going to war over recycling of data they generate during appraisals, which they claim violates promises made to them. When I was guest-blogging at Concurring Opinions, I blogged on the possible IP angles of this dispute.

* BusinessWeek: "Faking out the Fakers: Faced with a tidal wave of counterfeit goods, companies are turning to secretive sci-fi technology. But crooks catch on fast." It's like the analog version of DRM.

* The USPTO's collection of aural TMs.

Miscellaneous

* Bray v. QFA Royalties LLC, 2007 WL 1306517 (D. Colo. May 3, 2007). Posting a suicide note on a private franchisee-group's website isn't grounds for termination of franchises. See Wiggin and Dana's writeup.

* Nazaruk v. eBay, Inc., 2007 WL 1417287 (10th Cir. May 15, 2007). In a non-substantive opinion, the 10th Circuit upheld the venue clause in eBay's user agreement. My post on the district court opinion.

* Washington Post article on individuals declaring "email bankruptcy," i.e., deleting everything in their in-box and starting afresh.

* To mitigate risk, the Concurring Opinions multi-contributor blog has been converted into an LLC.

* University of San Francisco has created a single page aggregating blogs from the entire USF community.

Posted by Eric at 12:59 PM | Content Regulation , Copyright , Derivative Liability , Domain Names , Internet History , Licensing/Contracts , Marketing , Search Engines , Spam , Trademark | TrackBack

June 01, 2007

UCC 2B/UCITA Resurrected--ALI's Principles of the Law of Software Contracts

By Eric Goldman

Let me start with two relatively uncontroversial propositions:

1) UCC Article 2, drafted principally in the 1950s, was designed to govern the sale of tangible items, not software
2) Accordingly, Article 2 fits awkwardly when applied to "intangible goods" like software

Given this, it seems eminently logical that the UCC should have an Article 2 complement written specifically for intangible goods. This premise animated the efforts to draft the proposed UCC Article 2B back in the 1990s. It sure seemed like a good idea at the time. The project may have made some poor drafting decisions (particularly the decision to extend 2B to apply equally to both functional software and "inert' data, which makes logical sense but also quickly expanded the effort's enemies), but the project was ultimately doomed by politics.

When the 2B project died, in its wake it left the same perceived doctrinal hole and a very large draft document. That draft morphed into UCITA, a draft with most of the same objections as UCC 2B and fewer supporters. I was always amazed that anyone adopted UCITA at all, but the early adopters--Maryland and Virginia--now look a little foolish. They are stuck with a highly complex law that is non-standard compared to the rest of the nation; and numerous states adopted anti-UCITA laws making the Maryland/Virginia law inapplicable to their residents. The contracts I've done with Maryland/Virginia companies invariably exclude the application of UCITA; and I'm reasonably confident that UCITA causes Maryland and Virginia companies to routinely lose negotiations over venue selection clauses in their contracts. With no one invested in UCITA and lots of remaining resistance to it, it just seems like a matter of time before Maryland and Virginia repeal UCITA.

Meanwhile, perhaps the third time is a charm. The American Law Institute is trying again to develop a law to govern software contracts in a project entitled "Principles of the Law of Software Contracts." The reporters are Robert Hillman from Cornell and Maureen O'Rourke from BU.

The project has two interesting architectural aspects. First, it purports to apply only to software, not content, so it seeks to avoid the topical sprawl that doomed the 2B/UCITA effort. Second, as a "Principles" project, it is not intended to be a model law, and there's no expectation that a final draft will be proposed to any legislature for adoption. Of course, this raises the question about the value of the effort--if it's not a model law, and it's not a treatise, what is it, and how will it help?

I skimmed through the first draft and, despite the amorphous purpose, it struck me as a thoughtful starting point for discussion on an important topic. More work needs to be done, and I will need to organize my thoughts about some of the points that didn't make sense to me. Fortunately, there's no immediate rush. ALI's projects tend to take several years, so we'll hear more on this project in the next few years.

Posted by Eric at 10:45 AM | Internet History , Licensing/Contracts | TrackBack

May 28, 2007

Facebook's Lawsuit Against Competitive Email Harvesting Continues--Facebook v. ConnectU

By Eric Goldman

Facebook, Inc. v. ConnectU LLC, 2007 WL 1514783 (N.D. Cal. May 21, 2007)

A universal truth of the digital era: a website displaying user email addresses will be targeted by email harvesters sweeping up those email addresses to spam the users--either to poach a competitor or to send bona fide spam. This is hardly a new phenomenon; I can't believe it's been almost a decade since eBay's competitor Onsale harvested eBay users' addresses and sent competitive spam (an action which prompted eBay to encourage users to adopt handles that weren't the users' email addresses).

Social networking sites have lots of user contact info that makes them juicy targets for the harvesters, so they have had to be particularly vigilant against spammers. In this case, Facebook sued a competitive social networking site, ConnectU, for a harvesting/spam attack. (This isn't the only battlefront between the parties; in separate litigation, ConnectU claims that Facebook stole ConnectU IP). In this ruling, ConnectU moves to dismiss Facebook's claims, with limited success.

The most interesting ruling relates to California Penal Code 502. If you haven't looked at this statute recently, you'll be amazed at its breadth and the fact that it provides for civil remedies in the penal code. The operative provision here restricts "Knowingly accesses and without permission takes, copies, or makes use of any data from a computer, computer system, or computer network." Apparently, ConnectU provided a tool that enabled Facebook users to provide ConnectU with their login credentials, which ConnectU then used to grab data from Facebook's servers. (I tested on very similar facts in my 2006 Cyberlaw exam--see Q2). The court has no problem saying that, as alleged, ConnectU knew it was accessing Facebook's servers and took data without Facebook's permission. There have been other 502 rulings in California, but this ruling reminds us of the statute's scope and its utility as an anti-trespass doctrine.

The court also dismisses (with a grudging leave to amend) Facebook's various anti-spam statutory claims. First, the court holds that Cal. B&P 17529.4 and 17538.45 are both preempted by CAN-SPAM. I've lost track of all of the state anti-spam preemption cases, but I think it's significant that the court casually wiped these two California statutes off the books. Second, the court dismisses Facebook's federal CAN-SPAM claim because Facebook didn't allege that ConnectU's emails contained false/misleading header info. (Even if there was falsity, the Mummagraphics court suggests it would have to be material to be actionable).

Posted by Eric at 09:35 AM | Internet History , Spam | TrackBack

May 02, 2007

Utah's "Don't Email the Kids" Registry a "Financial Failure"

By Eric Goldman

A couple of years ago, Utah and Michigan adopted laws creating "don't email the kids" registries (called the "Child Protection Registry"--see Utah's and Michigan's). These laws allow parents to register email addresses held by kids and requires marketers sending email/spam that's inappropriate for kids to check the registry and screen out the kids' addresses.

Policy-wise, these laws are broadly appealing. First, everyone hates spam, so anything that might reduce spam is ipso facto a good thing. Second, this law is designed to protect kids from Internet evils—a politician’s nirvana!

However, I don’t think either of these rationales (reduce spam or protect kids) capture the real reason why these laws were enacted. Instead, I suspect pure-and-simple economic opportunism. In practice, the law is just an email tax. Legitimate companies concerned about legal compliance will pay to check the registry, creating a stream of new tax revenues mostly generated from out-of-staters. (Naturally, illegitimate spammers won’t comply with the law under any circumstance). You can imagine how politicians would eagerly leap at the opportunity to get a couple farthings' tax on email traffic. CA-CHING!

Meanwhile, only one company--Unspam, a for-profit company--operates a "don't email the kids" registry. I can imagine how this could be a great sales pitch to generate demand for Unspam’s services: Hey legislators, enact the law, generate new tax revenues on email traffic, you get an economic windfall, we get a cut, and EVERYONE WINS!

Despite this seductive pitch, we’ve learned that the "don't email the kids" laws are riddled with problems. For example, mechanically Unspam's registry doesn’t try to authenticate that registered emails are associated with kids, turning the registry into an across-the-board do-not-spam registry (something I think isn’t good policy). The law also suffers from the sheer illogic of trying to erect geographic borders on email traffic; a federal district court didn't agree with this concern, but we may not have heard the final word on this point.

Plus, there's the challenge of protecting the privacy of kids' email addresses in the database. As Wendy Davis of MediaPost reported last Fall:

It's now come to light that several weeks ago, a state employee in Utah released the e-mail addresses of four minors to the Email Sender and Provider Coalition. That gaffe occurred even though Unspam--the private agency managing the list--said it was inconceivable that the list would ever be divulged. "Even if ordered by a court or held at gunpoint, there is no feasible way that I, any Unspam employee, or any state official could provide you even a single address that has been submitted for compliance by any sender," Prince reportedly said in an affidavit.

WHOOPS!

Even more problematically, according to the Salt Lake Tribune, the law has been a "financial failure": the law was projected to bring $3-6M in revenues to the state, but gross revenues have been $187,224, split 80% to Unspam and 20% to Utah—netting Utah a grand total of $37,445. Worse, the law has cost Utah a lot of money, including the following directly attributable expenses:

* $58,000-a-year in prosecutorial fees (estimated cost in original law--not sure if this money has been spent)
* $75,000-a-year for a full-time Department of Commerce investigator (estimated cost in original law--not sure if this money has been spent)
* $100,000 for a private lawyer to defend the law in court (under a contract that could cost up to $200,000). Utah undertook this expense only after Unspam incurred $70,000 of defense costs itself and then cried “no mas,” although the Salt Lake Tribune article indicates that during pre-passage discussions, Unspam may have suggested that it would solely bear the defense costs.

I'm sure this law imposes other "soft" costs throughout the Utah governmental system, plus there are the transaction costs and deadweight losses inherent in any tax. But ignoring these indirect costs and evaluating the law strictly on a cash basis, this law still looks like a bad economic decision for Utah.

There is a meta-lesson here: legislatures rarely can add to state coffers via Internet regulation. Unfortunately, Utah hasn’t yet internalized this lesson despite two highly visible failures. First, in 1995, Utah enacted a digital signature law designed to capture a little piece of the e-commerce pie by becoming the safe haven for digital signature vendors--but there were no takers, so the law sat on the books unused for a decade before Utah repealed the law last year. Second, Utah tried again with this "don't email the kids" law and appears to have struck out financially as well.

Amazingly, despite these precedents, Utah keeps trying! Its latest attempt to get a little Internet gravy is the Utah Trademark Protection Act, where Utah plans to tax (mostly out-of-state) keyword advertisers. As Sen. Eastman told BNA, “Utah can be the trademark registration capital of the country, just as Delaware is the incorporation capital.” Not only would the registration fees flow back to Utah and perhaps to a Utah-based registry vendor such as Unspam (which expressed some interest in bidding on the registry contract), but Sen. Eastman thinks the law may stimulate demand for Utah’s trademark lawyers. However, there are good historical reasons to believe that the Utah Trademark Protection Act isn’t likely to fulfill these dreams of prosperity. This is yet another good reason for the Utah legislature to reconsider the law.

Posted by Eric at 03:23 PM | Content Regulation , Internet History , Spam , Trademark | TrackBack

April 21, 2007

Best and Worst Internet Statutes

By Eric Goldman

At InformIT, I published an article ranking the best and worst Internet laws. The abstract: "Over the past dozen years, the lure of regulating the Internet has proven irresistible to legislators. In the spirit of good fun, Eric Goldman offers an opinionated list of personal votes for the best and worst Internet statutes in the United States."

This list was fun to write, and I hope it stirs up some discussion about how we assess and rank legislative efforts to regulate the Internet. Before you check out the article, see if you can guess what I think are the best and worst laws, and let me know if my list surprised you (or go ahead and leave a comment there). If it makes a difference to your guesses, the Utah anti-keyword ad law came out while the article was in InformIT's editing cycle, so I was only able to include a brief reference to it--I would probably rank it the second-worst law, substituting it for the current #2, although the law is so bad that it does put pressure on the #1 worst law's ranking.

Posted by Eric at 09:24 PM | Internet History | TrackBack

April 09, 2007

March 2007 Quick Links Part 2

By Eric Goldman

Yesterday I posted the Google edition of my list of interesting items from March. Today I post the remainder of items that caught my eye last month.

Trademarks/Brands

* Bosley Medical Institute v. Kremer, 2007 WL 935708 (S.D. Cal. Mar. 22, 2007). On remand from the Ninth Circuit, the district court denies Kremer's motions to dismiss/for SJ. Michael Atkins recaps the ruling and case's history.

* Milbank Tweed Hadley & McCloy LLP v. Milbank Holding Corp. d/b/a Milbank Real Estate Services, No. CV 06-187-RGK (JTLx), (C.D. Cal. Feb. 23, 2007). After passage of the Trademark Dilution Revision Act, the court rejects the existence of "niche fame" as support for a dilution action. I’m a little surprised that this plaintiff would bring this losing argument.

* ICANN votes down a .XXX TLD. Again.

* NYT on the increasing challenges of creating a unique global brand in very crowded namespaces.

* Trademarked Sentences: A tool that helps you generate poetry by mixing trademarked slogans.

Blogs/UGC

* BidZirk v. Smith, No. 06-1487 (4th Cir. March 6, 2007). The Fourth Circuit, in a non-substantive opinion, denied a company's request for an injunction against a griping blogger's use of its trademarks. My initial write-up of the case. With this loss, the plaintiff's ill-advised decision to appeal the case is now even more clearly a complete waste of the plaintiff's money and our judicial resources.

* Chapman v. Merchandise Mart Properties, 2007 WL 922258 (D. Vt. Mar. 23, 2007). Woman tries to get TRO against physical-space trade show based on trademark interests in the term "GreenStyle," which is her blog’s title. The court rejects the request, but interestingly doesn't seem fazed by the argument that she may have a trademark interest generated from her blog name. Blog names can be trademarkable with sufficient use in commerce, a factor the court ignored completely.

* Sifry: "70 million weblogs. About 120,000 new weblogs each day, or...1.4 new blogs every second."

* A nice retrospective on the history of blogging.

* Wikipedia is requiring some credentialing after getting burned by a pseudonymous contributor who falsely claimed he was a professor.

* Ed Felten has some terrific observations about building distributed reputation systems like Digg (and, for that matter, Epinions). Ed is 100% correct that reputation systems need substantial stabilization; they don't just work deus ex machina.

Contracts

* Dorr v. Yahoo, No 3:07-cv-01428-MJJ (N.D. Cal. complaint filed March 7, 2007). Yahoo offered a premium subscription service allowing users to send email without Yahoo's ads attached. Then, allegedly, they changed the service's terms, and some of the paying customers were unilaterally bumped to a tier where Yahoo's ads were again attached to their email. Steve Bryant has more. In general, if people pay to eliminate ads, during that period of time, Yahoo should not be able to unilaterally amend the terms so that the user is paying but still getting ads.

* Ken Adams blogs on Affinity Internet, Inc. v. Consolidated Credit Counseling Services, Inc., 920 So. 2d 1286 (Fla. Dist. Ct. App. 2006), where the court held that a contract clause saying "This contract is subject to all of SkyNetWEB's terms, conditions, user and acceptable use policies located at http://www.skynetweb.com/company/legal/legal.php" was insufficient to incorporate an arbitration clause contained in the referenced document. Ken's suggested fix: "The SkyNetWEB user agreement located at http://www.skynetweb.com/company/legal/legal.php constitutes part of this agreement."

Government Agencies

* The National Do Not Call Registry: Annual Report to Congress for FY 2006 Pursuant to the Do Not Call Implementation Act On Implementation of the National Do Not Call Registry (April 2007): "The Commission believes that the fundamental goal of the National Do Not Call Registry — to provide consumers with a simple, free, and effective means to limit unwanted telemarketing calls — has been realized." My curmudgeonly take on why the do-not-call registry isn’t great policy.

* Implementing the Children's Online Privacy Protection Act: A Federal Trade Commission Report to Congress (February 2007). The FTC remains pretty pleased with itself about COPPA, but it's worried about social networking sites and the continuing lack of age verification technology. I'm not as impressed with COPPA as the FTC is; see here and here. In any case, if you're doing COPPA research, this report helpfully recounts the 12 COPPA enforcement actions to date.

* Hard to believe, but payola busts are still being made. The latest: a $12.5M settlement. See the NYT and WaPo .

* Terrific post by the EFF’s Seth Schoen about a misguided report on P2P file sharing by the USPTO and the issues with empowering users to control their computers. A must-read.

Miscellaneous

* ACLU v. Gonzales, No. 98-559 (E.D. Pa. March 22, 2007). On remand from the Supreme Court, the court once again holds that the 1998 Child Online Protection Act is unconstitutional.

* CRS Report for Congress: An Overview of Recent U.S. Supreme Court Jurisprudence in Patent Law, March 16, 2007, discussing the last 8 Supreme Court patent cases.

* We've all heard about the magic of network effects. But as this Mercury News article explains, when an Internet start-up company's network takes root principally overseas, it can leave the company with a large audience of unmonetizable users.

* Jacob Loshin, Property in the Horizon: The Theory and Practice of Sign and Billboard Regulation, 30 Environs 101 (2006). A thoughtful discussion of the history of billboard regulation and some regulatory considerations.

* Coca-Cola's launch campaign for "Coke Zero" is premised on the idea that the executives of Coca-Cola want to sue the executives of Coke Zero (i.e., other executives within the same company) for "taste infringement" because the taste is so similar. Personally, I find commercials about faux lawsuits HILARIOUS. Ha ha ha. Except...if there isn't currently a cause of action for "taste infringement," with the expansion of IP rights, it may only be a matter of time... This turns the joke about how hard it would be to establish taste infringement on its head. Ironically, the commercial features Coke's actual lawyers. Yet more on this sorry story.

Posted by Eric at 09:14 AM | Content Regulation , Copyright , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Patents , Privacy/Security , Trademark | TrackBack

April 08, 2007

Oracle v. SAP Lawsuit Comments

By Eric Goldman

Oracle Corporation v. SAP AG, 3:07-cv-01658-EMC (N.D. Cal. complaint filed March 22, 2007)

I realize I'm a couple weeks late to this story, but it's too important/interesting a case not to address.

TomorrowNow (TN) is a company started by former Oracle employees. They offer maintenance services for Oracle software competitive with Oracle's standard maintenance program, but at much-reduced prices: Oracle charges 22%/yr while TN charges half that (11%/yr).

But how is TN able to undercut Oracle's pricing so drastically? One possibility is that Oracle charges supra-market rates due to the lock-in effects of tying maintenance services to software licenses. On that front, I'll note that back in the 1990s, my software vendor clients typically charged 15%/yr for maintenance--a substantially lower number than Oracle's breath-taking 22% figure. So perhaps TN is able to charge 11% as a modest start-up discount off the industry-standard 15%, and Oracle's been getting away with a great deal for a long time.

An alternative story, told by Oracle in its complaint, is that TN could undercut Oracle only by stealing. TN has a very thin development team compared to the Oracle behemoth, so Oracle might incur all of the development expenses necessary to provide maintenance services, and TN might just take those assets for free to engage in competitive free-riding. Specifically, Oracle alleges that TN gets switching Oracle customers to give TN their passwords to Oracle's website/database for its maintenance customers and then send robots to download everything (manuals, patches, etc.) it can find, which then allows it to provide services comparable to Oracle’s.

Perhaps TN, even if had engaged in such a scheme, would have been a nettlesome gnat as a standalone company, but it got scooped up by German software giant SAP, one of Oracle's main rivals. At this point, TN becomes problematic to Oracle in a variety of ways. TN is poaching some maintenance revenue outright, while it is putting price pressure on the maintenance business that Oracle retains. Further, Oracle customers who switch to TN have an easier path to migrate their overall software needs to archrival SAP.

Oracle has struck back in court with a tightly drafted complaint. Oracle claims that the scheme of getting former Oracle customer passwords and downloading lots of content from Oracle's maintenance database violates (among other things) the CFAA and Cal. Penal Code Sec. 502 and constitutes trespass to chattels and interference with prospective economic advantage. This is a well-pleaded complaint, in the sense that there are no obvious deficiencies with Oracle's pleadings. I don't love everything about Oracle's practices. For example, it makes no sense that Oracle made it possible for customers to root around the entire database for stuff, even if it didn't relate to the customer's software. Also, I would definitely have drafted and implemented the contracts differently than Oracle did. But these are quibbles; Oracle's contracts and practices are serviceable for this lawsuit's purposes.

Having said that, there are two obvious omissions from the alleged claims. First, Oracle didn't allege copyright infringement yet because it needed to get its copyright registration applications on file, so it expects to file an amended complaint. Second, Oracle didn't allege that the claimed misuse of switching customers constituted a 1201 circumvention. I'm not 100% sure why. It could be that this claim will be added along with the other copyright infringement claims, or it could be that Oracle is sufficiently deterred by the handful of cases holding that mere misuse of a legitimately issued password isn't a circumvention.

Also, it's noteworthy that Oracle didn't sue its switching customers for allegedly providing their passwords to TN, although it seems like at minimum Oracle would have breach of contract claims against them. I assume Oracle isn't suing customers because that's never good for business. Indeed, part of the lawsuit is about wooing customers; there is some hilarious and gratuitous marketing language in the complaint designed to impress Oracle customers and to rattle the confidence of customers thinking of switching to SAP.

Putting aside what's not in the complaint, if Oracle's complaint accurately states the facts, SAP could be in deep legal trouble. Of course, it's fairly typical for the plaintiff to draft a great complaint and the defendant then tells a very different story. As just one example, Oracle ties the downloads to TN via IP addresses; but IP addresses are spoofable, so it's theoretically possible that someone spoofed TN. So we have to wait until we hear both sides before we can make any rigorous assessments of merit.

Even so, I'm a little unnerved by the software industry analysts who have claimed this lawsuit is no big deal. Perhaps in the grand scheme of things, this lawsuit won't have a great deal of effect on the competitive position of SAP and Oracle. Sure, the lawsuit casts some doubts in the minds of customers who are thinking of leaving Oracle for lower-cost options that SAP/TN will be a long-term trustworthy vendor, but such doubt-sowing initiatives are fairly common the bare-knuckle competition for enterprise database software. Plus, if SAP just cuts off TN altogether, presumably the overall effect on SAP and Oracle revenues will be comparatively modest.

But this lawsuit could be a Big Deal because the facts alleged by Oracle might support criminal prosecutions for CFAA, CA Penal Code 502, criminal copyright infringement and other crimes. It's not clear if the criminal prosecutors are going to get involved in this case or if Oracle even wants them to do so, but I suspect a number of SAP employees have procured their own personal attorneys. To the extent TN was a rogue operation operating without oversight or permission from SAP corporate, then again the financial impact may be small, even if the affected individuals might suffer severe consequences. But if TN wasn't a rogue operation, any criminal prosecutions could have major ripple effects throughout the entire SAP organization.

I think the Cadence v. Avant lawsuits are illustrative, especially given the many parallels. In that case, a bunch of former Cadence employees started up a competitive company, Avant. However, to get a jumpstart on the competition, the employees walked out the door with Cadence source code. Perhaps aided by this unfair head start, Avant had a very successful marketplace run, growing into a major public company with hundreds of millions of dollars of revenue. But after the civil and criminal prosecutions, Cadence got damage awards of hundreds of millions of dollars, multiple Avant employees went to jail, and Avant was effectively knocked out of the marketplace.

I need to reiterate that we don't know yet if Oracle's alleged facts are true, or if anyone committed a crime, or if any criminal prosecutions will ever be launched. However, I think it's too breezy for software industry analysts to brush this case off as a low-risk threat. If Oracle’s alleged facts are true, this isn't business-as-usual; instead, this would constitute illegal marketplace behavior, with potentially severe consequences for the business generally and the decision-makers individually.

I have additional edgy things to say about this case in this interview. Other resources:
* WSJ Law Blog
* BusinessWeek article pitching this lawsuit as just bare-knuckle competition between giants
* A collection of industry analysts' comments

Posted by Eric at 11:08 AM | Copyright , Internet History , Licensing/Contracts , Privacy/Security | TrackBack

March 28, 2007

The End is Near – Bertelsmann Settles EMI Claims Over Napster

By John Ottaviani

Various sources are reporting that EMI has agreed to settle its copyright infringement lawsuit against Bertelsmann AG related to Bertelsmann’s investment in Napster.

The settlement removes the last large record label with claims against Bertelsmann in the Napster case. Terms of the settlement were not disclosed, but sources quoted by the LA Times put the estimate between $50M to $150M.

After Napster filed for bankruptcy protection in 2001, the record labels and music publishers dragged Bertelsmann and other investors, including Silicon Valley venture capital firm Hummer Winblad Venture Partners into the lawsuit. Infringement claims were filed against the investors, arguing that the investors were liable for contributory and vicarious copyright infringement because they had effective control of Napster. The court refused to dismiss the claims because the recording companies accused the investors of assuming control over Napster’s operations and directing the infringing activities that gave rise to Napster’s liability. UMG Recordings, Inc. v. Bertelsmann AG, 222 F.R.D. 408 (N.D. Cal. 2004).

The decision caused a great deal of discomfort among those firms, in the private equity community dealing with content distribution companies. Investors were forced to review and rethink commonly used structures to control a portfolio company, and evaluate whether and how those control structures exposed the investors to liability for copyright infringements of the portfolio company.

Last September, Bertelsmann agreed to pay Universal Music Group approximately $60M to settle Universal’s copyright claims. Hummer Winblad settled with Universal and EMI in December.

The case is still pending, with the songwriters and music publishers remaining as plaintiffs. Without the support of the record labels, it is unlikely that case will be actively pursued for much longer.

And we can finally turn off the lights on one of the longest-running Internet intellectual property disputes.

Posted by John Ottaviani at 01:21 PM | Copyright , Derivative Liability , Internet History | TrackBack

October 30, 2006

Sex.com -- An Update

By Eric Goldman

Judge Alex Kozinski recently guest lectured in my Cyberspace Law course, which prompted me to reread Kozinski's opinion in the Kremen v. Cohen Sex.com case. Because that opinion came out in 2003, it made me curious--what's happened to the lawsuit and the domain name since then?

Before getting into specifics, a quick recap. The Sex.com story has been oft-told, yet it's such a classic tale that it bears repeating. In early 1994, an enterprising Gary Kremen registered Sex.com with Network Solutions back when registrants could register domain names for free with just an email. In Oct. 1995, an interloper, Stephen Cohen, "stole" the domain name by submitting forged transfer papers to NSI. When Kremen discovered the transfer and demanded that NSI fix its mistake, NSI shrugged its shoulders and said to Kremen that he would have to go to court to resecure the domain name. Kremen did exactly that, sparking a decade-long legal battle over perhaps the most valuable domain name of all time. In the interim, Cohen allegedly reaped enormous profits (at least $40M, maybe hundreds of millions) from Sex.com during the time he possessed it.

The legal battle can be organized into 3 different fronts.

Kremen against Stephen Cohen

Kremen's first attack was against the interloper, Cohen. Kremen won a $65M judgment (which included a $25M punitive damages award) against Cohen in 2001. However, as I stress in my Cyberspace Law course, winning a judgment is a win only if it's enforceable. In this case, Cohen did everything possible to frustrate collection by fleeing the country (to Mexico, then Monte Carlo, and back to Mexico) and using clever machinations to move his money offshore and out of reach. Kremen was able to execute against 2 homes of Cohen's, including a house in upscale Rancho Santa Fe outside of San Diego that Kremen still uses as a personal residence. Meanwhile, based on Cohen's repeated acts in contravention of the judge's orders, the judge issued a contempt order and arrest warrant for Cohen.

After Kremen unsuccessfully offered $50,000 to bounty hunters to find Cohen, there was a break in the case in October 2005. Cohen was located in Tijuana, arrested by the Mexican police and extradited to the US. The judge has demanded that Cohen spill the beans about the location of the money, and Cohen refuses to do so. As a result, Cohen still sits in jail on the contempt order.

Kremen against Network Solutions

When it looked like Cohen wasn't going to pay up, Kremen went after Network Solutions as the domain name registrar, alleging breach of contract and conversion. The district court rejected the claims, but on appeal, Judge Kozinski reversed the conversion claim dismissal, concluding that California law permits intangible assets to be converted. The case was remanded to district court, but NSI settled the case in 2004. The settlement amount was confidential, but reports have put the amount at $20M.

Reading through the opinion again, I was struck by how Kozinksi's arguments could be used to support a conversion claim for other types of intangible assets, such as virtual world assets. I probed Kozinski on this very point in my class, and in his mind there's a distinction between assets taken within the game rules and outside the game rules.

I think this is right, but it may depend on the defendant. In the Kremen v. NSI case, the defendant was the service provider; but this was a truly unique situation where the customer (Kremen) and the service provider (NSI) didn't have a valid contract for the domain name registration because domain names were free. Thus, there was no consideration from Kremen for the domain name registration contract. In contrast, there is typically an airtight contract between the VW user and the service provider, and that contract will likely contain provisions that protect the service provider from any liability for asset conversion. I don't think Kozinski's reasoning could be read to extend conversion liability to the service provider in the face of such a contract. However, some other interloper who takes a virtual world asset outside of game rules could face conversion liability under the Ninth Circuit rule.

One more point about this case. When Kozinski's Ninth Circuit decision was issued, a number of commentators hailed it as a landmark case on protection of cyberproperty. It might ultimately be that, but I did a citation count and there are actually a surprisingly small number of cases citing to it so far (and none of particular note). So I personally think the Ninth Circuit decision is so fact-specific (service provider conversion of an intangible asset without any governing contract) that it's unlikely to be a true watershed decision.

Kremen against ARIN

The Sex.com battle has quietly spilled onto a third front. As part of Kremen's 2001 judgment against Cohen, the court imposed a constructive trust on all of Cohen's assets, including a large block of IP addresses assigned by ARIN. ARIN has refused to transfer the block as Kremen has asked, instead directing Kremen to follow ARIN's internal transfer policies, which Kremen apparently refuses to do. So in April 2006, Kremen sued ARIN for antitrust violations, conversion, unfair business practices and breach of fiduciary duties. See the complaint in Kremen v. American Registry for Internet Numbers (N.D. Cal.).

This is a case worth watching. ARIN is a relatively obscure and insular group, and over the years I have heard lots of frustration about their IP address block allocations and restrictions on transfer. This lawsuit has the potential to challenge these practices and change the process for IP address block allocations.

The Status Today

In Jan. 2006, Kremen sold the domain name to a low-profile pornography company, Escom, for $12M-14M. As a result, Kremen has received, so far, over $30M and 2 properties for the domain name, plus a pending $65M judgment (now over $80M including interest) against Cohen, plus any ongoing revenues he generated during the time he possessed the domain name. Talk about a lucrative domain name!

Earlier this month, Escom announced a strategic partnership with Playboy Enterprises, with the practical consequence that Sex.com has turned into a marketing portal for Playboy's content. Given the apparent value of this domain name, I'm sure we haven't heard the last word on its exploitation.

If you are interested in more of this story, Kieren McCarthy is publishing a book, Sex.com, in Britain in 2007.

UPDATE: Violet Blue writes an entertaining recap.

Posted by Eric at 05:44 PM | Domain Names , Internet History , Licensing/Contracts , Virtual Worlds | TrackBack

August 31, 2006

Alaska's Anti-Adware Law--A One-Year Status Report

By Eric Goldman

A year ago today, Alaska enacted the most expansive anti-adware law to date. This post gives a quick status report on the law.

So, what's happened in the past year? As far as I can tell, nothing. I've not heard of any preemptive challenges or any enforcement actions. Radio silence.

Contrast this with Utah's enactment of its problematic anti-adware law in 2004--the law was promptly challenged on Constitutional grounds, the court quickly issued an injunction, and the legislature amended the law within a year to render it largely irrelevant. As far as I know, Utah's law also sits unused. Overstock.com did sue SmartBargains under the initial version of the act; I'm not sure what happened to that claim after the law was enjoined.

I'm always fascinated when laws are passed with lots of fanfare and then sit dormant. Why hasn't the Alaska law generated any action (pro or con) yet? I think the secret may lie in some odd language that I overlooked when I initially dissected the statute. The law defines a pop-up ad as:

material offering for sale or advertising the availability or quality of a property, good, or service that is displayed on a user's computer screen, without any request or consent of the user, separate from an Internet website that a user intentionally accesses (emphasis added)

What does it mean that a user "requests" or "consents" to a pop-up ad? It could mean that the user must consent to each pop-up ad individually immediately prior to its delivery--a bizarre HCI process, but one that would be consistent with the apparent legislative intent. Alternatively, it could mean that a user's consent to receive pop-ups at the time of software installation suffices as consent for all subsequent pop-up ads delivered by that software. This interpretation is consistent with the express statutory language, but then it raises the question (like the question raised when Utah amended its Spyware Control Act)--what's the point of such a toothless law?

This statutory interpretation issue may explain why there hasn't been any action under the law. From the adware vendor's side, the express statutory language may provide them enough cover that there's no need to rally up the troops for a heavy-duty Constitutional challenge. Meanwhile, plaintiffs may be scratching their head trying to figure out if they have a valid cause of action.

There are, of course, other possible explanations for the seeming lack of action, including:

* there may be some lawsuit I'm not aware of (please let me know if I've missed something)
* 1 year may be too short a time period to evaluate the law.
* some adware vendors may be shunning Alaska. See, e.g., HotBar's license, which says "Special Notice to Alaska Residents: Unfortunately, according to Alaska's SB 140 Act, users who reside in Alaska may not install the Hotbar software. Therefore, by downloading or installing the Hotbar software you declare and represent that your computer is not located in the state of Alaska. To the extent that our system is able to recognize that your computer is located in the state of Alaska, we will not enable you to download the software." Superficially, perhaps the law has changed the behavior of some adware vendors. However, I don't know what Hotbar does to detect Alaskan IP addresses or otherwise detect Alaskan computers, but these procedures generally are imperfect. As a result, depending on the rest of Hotbar's interaction with users, it could be that some Alaskans may still be downloading the software in a manner inconsistent with the statute.

I can't resolve these alternative explanations yet, but for now, my vote is that this law is sufficiently poorly drafted that it will never be used by anyone. If so, consistent with other state-level attempts to regulate the Internet, Alaska may have muffed its effort. Fortunately, if this law is truly irrelevant, Alaska's muffing will be relatively harmless.

Nevertheless, Alaska's muffing may have some bearing on Congress' motivation to pass an anti-adware/anti-spyware law. For the most part, the other anti-spyware laws passed by the states add little to the legal regulatory environment (the "intentionally deceptive" standard is both duplicative of other laws and a very high threshold), so coping with them does not require vendors to do something special. However, putatively Alaska and Utah's laws were much broader, as they were intended to outlaw an entire industry--which motivates industry players to seek preemption of state laws. Yet, if both laws are effectively irrelevant, adware vendors have less incentive to push Congress for a preempting law.

Posted by Eric at 03:30 PM | Adware/Spyware , Internet History , Licensing/Contracts | TrackBack

August 21, 2006

August 2006 Quick Links (Volume 1)

By Eric Goldman

So many good links this month, I'm breaking up this quick links post into two installments. The first installment:

* When Internet start-ups want to hire their first lawyer, they typically have three immediate legal needs—they want help with securing financing, procuring a domain name, and running a sweepstakes. Yes, sweepstakes typically make the “top 3” issues on an entrepreneur’s mind. Unfortunately, the world of sweepstakes and contests is pretty murky to those of us who don’t practice it regularly, which is why I always referred these matters to specialists. Fortunately, one of those experts, Tsan Abrahamson, recently published a nice primer on the subject in the Business Law Today.

* Web users are using the back button less frequently. I’m not sure what to make of this. Are search engines doing a better job delivering relevant results or giving previewing content, so that fewer searchers are "pogo-sticking"? Does this reflect the proliferation of toolbars so that unsatisfied searchers just conduct a new search in the toolbar window rather than hitting the back button? Some other explanation?

* The Federal Trade Commission released its Annual Report to Congress for FY 2005 Pursuant to the Do Not Call Implementation Act on Implementation of the National Do Not Call Registry. An amazing 107 million phone numbers are now registered on the registry.

* Information Week provides one person's perspectives on the 12 best software programs ever. I thought this was a pretty good list. I do think we should give even more credit to the early coders who worked for the space program—they wrote amazing and (usually) reliable software using limited lines of code operating in extreme environments (very low power, very limited processing power, cold as Hades).

* Brief recap from our roundtable discussion at the ABA Annual Meeting on blog law and virtual worlds.

* A blast from the past: the famous 1993 New Yorker cartoon.

Posted by Eric at 11:00 AM | Internet History , Marketing | Comments (2) | TrackBack

August 13, 2006

Fall 2006 Cyberlaw Syllabus

By Eric Goldman

I've posted the syllabus for my Fall 2006 Cyberspace Law course. As I have done for the past 11 years, I prepared my own materials. To do so, I cull through all of the action from the past year to see what changes I should make from the prior year's syllabus. In the late 1990s, a lot--1/3 to 1/2--of the pages would change from year-to-year. In the past couple of years, this pace has slowed considerably. This year, I added only 3 new cases and 1 new statute to the reader:

* the Lamparello case (which I actually substituted in last year after I prepared my 2005 syllabus)
* Perfect 10 v. Google and Field v. Google. They make an excellent compare-contrast unit. They also provide enough material to moot the 2003 Ticketmaster ruling, which I dropped this year.
* I substituted in the Alaska anti-adware law to replace Utah's anti-adware law.

Beyond those additions, I substituted in the 7th circuit ruling in the BMG v. Gonzalez case for the district court ruling, and I dropped the FTC v. Phoenix Avatar spam case and my short editorial on advertiser liability for adware (neither of which I had time to cover).

I could make an argument that the past 12 months have been comparatively slow in cyberlaw (by cyberlaw's historical standards), at least in terms of significant precedent. There have been some fairly important rulings (the KinderStart, JR Cigar, Merck v. Mediplan and Edina Realty cases come to mind) and interesting developments (the Sony DRM episode, click fraud lawsuits and the battles over search engine queries come to mind), but very few of these cases or episodes resulted in important/pedagogically useful precedent or statutes. Not that I'm complaining--it may just be a sign of cyberlaw's maturation.

Interestingly, although blog law is hot, I couldn't really find anything useful to teach on the topic. I think this reflects that blog law is just a seamless part of cyberlaw. As a result, I'm sure I'll integrate blog issues into the course throughout the semester.

Posted by Eric at 08:34 AM | General , Internet History | Comments (2) | TrackBack

June 27, 2006

June 2006 Quick Links

By Eric Goldman

I have had virtually no Internet access over the past 10 days due to my move and travels, so my Bloglines account was bulging with more than 1700 articles. Here's a quick look at some of the items that have caught my attention this month:

* The FTC announced its own data breach due to a stolen laptop. Hmm...is it just me, or is this incident dripping with irony?

* Microsoft appears to be in its "benevolent" dictator mode again. Last year I blogged about how Microsoft made the unilateral decision to wipe some "malicious" software off users' computers without user notice or consent. (If it makes you feel any better, AOL has done the same thing). Now, Microsoft is installing mandatory software that phones home and doesn't tell users it's phoning home. Most people would categorize the phone home capability as spyware, and I'll be interested to see how the undisclosed feature doesn't violate 18 USC 1030(a)(2)(C). Yet, as Andy Patrizio wonders, where's the outrage? The consumer protection lawsuits? Andy writes:

All manner of hell broke loose over the major phone companies reportedly cooperating with the National Security Agency over international phone calls, but the news that Microsoft is watching every single Windows XP PC has been met with deafening silence.

Suzi rounds up the situation.

[UPDATE: First lawsiut over WGA filed. I'm sure more are coming.]

* JP Enterprises v. Yahoo, No. 06-cv-01046-REB-PAC (D. Colo. amended complaint filed June 6, 2006). Complaint against Yahoo Dating and other dating sites for purchasing keywords of a competitor, LoveCity. I'm not optimistic about the plaintiff's chances here, given that it doesn't seem to understand the differences between metatags and keyword triggers. Also, note the irony that Yahoo is buying ads from competitor Google.

* The WSJ writes about the accuracy of recommendation engines. The article explains how consumers make some decisions based on brand perceptions rather than actual utility they derive from the product. As a result, recommendation engines do a better job serving consumer desires by watching consumer behavior rather than relying on self-reported consumer preferences.

This also raises interesting implications for the role of brands in the search process. Brands may help consumers find what they think they are looking for, but at the same time may interfere with utility maximization. To avoid this, one recommendation engine contemplated hiding brands from the consumers.

* Heidi Cohen states the obvious. (Well, she and I think it's obvious, but apparently most marketers still don't get it.) Marketers are in the content publishing business, so they need to think like publishers, not marketers. And, from a policy standpoint, this continues to reinforce the illusory line between marketing content and editorial content.

* Another shocker: Marketers pay-for-placement in editorial content in print publications.

* Michael Scott (from his new blog, Singularity) writes a fun article about the implications of three generations of cyberlawyers: the veteran "computer lawyers" from the 1980s (that includes him), the dot com boomers from the 1990s (which I belong to), and the post-dot com busters from the 2000s.

* More evidence of "banner blindness." As usual, consumers can organically adjust to annoying marketer tactics if legislators avoid jumping into the fray.

* Finally, an article on fake consumer reviews. This is hardly the first article on the topic, but interestingly it hints that some merchants may be outsourcing/offshoring the creation of fake reviews. Forget click fraud shops in India and gold farming in China; those are passe. Instead, here's a new possible tort for you plaintiffs' lawyers--review "fraud"?

Posted by Eric at 05:50 PM | Adware/Spyware , General , Internet History , Licensing/Contracts , Marketing , Privacy/Security , Trademark

March 10, 2006

AP on Internet Porn Regulation

By Eric Goldman

Associated Press runs a retrospective/status report on Congress' battle against Internet porn. Believe it or not, this battle recently entered its second decade--Congress' first effort, the Communications Decency Act, was passed in February 1996. After that law was struck down, Congress passed the Child Online Protection Act in 1998, a law that has already resulted in two US Supreme Court opinions, led to a major flap between Google and the DOJ, and is now scheduled for trial in October. As the detritus of Congress' efforts spills out to new fronts, I can't fathom just how much legal work has been spurred by Congress' fixation on Internet porn.

Meanwhile, as the article points out, everyone has moved past children's access to online porn to even more problematic issues like online sexual predators, adware/spyware concerns and copyright liability for P2P file sharing. As a result, if the trial court upholds the law, there will be massive shock and panic as the Internet industry contemplates how to comply with a law that virtually everyone has been ignoring for 8 years.

Posted by Eric at 12:07 PM | Content Regulation , Internet History

March 06, 2006

Congress Is Lovin' the Internet...to Death?

By Eric Goldman

Congress has an unresolved love-hate attitude towards the Internet. Through the 1990s, Congress frequently said that the Internet should be left alone from a regulatory standpoint. Indeed, in some cases, Congress affirmatively deregulated the Internet; 47 USC 230 and the Internet Tax Freedom Act come to mind.

However, Congress is irresistibly drawn to Internet regulation. Every Congressional session, members of Congress propose literally hundreds of laws to regulate some aspect of the Internet. Obviously, not all of these laws pass, but the sheer volume is evidence of the seductive lure of Internet regulation. Congress just can’t control itself!

I was working through the piles on my desk yesterday and I came across three recently proposed laws that demonstrate this irresistibility. All three laws reflect legislative opportunism to capitalize on hot media issues; all three laws reflect a certain idealism for how markets should function; and all three laws would have radical (and possibly crippling) effects on the Internet.

1) Eliminate Warehousing of Consumer Internet Data Act of 2006, HR 4731 (Introduced Feb. 8 by Rep. Markey).

Rep. Markey promised this law in response to the DOJ-Google flap. The premise is simple enough: online companies should flush their databases of personal data so the DOJ can't abuse its power to get that data. This animating principle translates into the following operative provision:

"An owner of an Internet website shall destroy, within a reasonable period of time, any data containing personal information if the information is no longer necessary for the purpose for which it was collected or any other legitimate business purpose, or there are no pending requests or orders for access to such information pursuant to a court order." The definition of personal information is suitably broad--first/last name qualify, as does an email address.

I don’t like this law’s expansive sweep. It would govern many seemingly-unimportant websites, such as my blogs (which allow users to submit both their first/last name and their email addresses). In some cases (like mine), I can’t flush personal data because it’s in the hands of my service providers.

Further, ironically this law doesn't even correct the DOJ-Google situation. First, the data requested by the DOJ wasn't personal data as defined by the law. Second, and more importantly, Google arguably has a legitimate business purpose to keep every scrap of data it ever lays its hands on (after all, how can you organize the world's information if you have to flush some of it down the drain?). Given that many businesses can claim a continuing benefit from keeping personal data, this law won't get that data flushed. Instead, I think it merely creates weird/unexpected technical headaches.

2) Internet Non-Discrimination Act of 2006, S. 2360 (Introduced March 2, 2006 by Sen. Wyden)

This law follows on the hot topic of net neutrality, or a “two-tier” Internet, which is also linked to AOL’s implementation of Goodmail’s certified email program. The law’s basic premise is simple: data transit vendors should not discriminate between bits—each bit should get processed equally. This gets codified in a list of restrictions about the products/services that a covered entity can (or can’t) offer.

I'm dubious about the theoretical underpinnings of this law, but for now my objection to the law is far more tactical. The law restricts the behavior of "network operators," which is anyone who "provides communications directly to a subscriber." I think the law was intended to govern the provision of Internet access/connectivity. But, as drafted, I think the law covers everyone who moves data from one point to another--this should include every website that provides user-to-user communication, including email service providers, instant message providers, blog providers, "email this page to a friend" providers, etc., etc. In other words, virtually the entire Internet.

This drafting error is, in theory, fixable. The law could just define the covered entities as Internet access providers more carefully. However, I don't think this is an easy fix. I think there is no clear distinctions between the various "layers" (content v. application v. transport); at least, the distinctions aren't definable statutorily.

Worse, it significantly restricts beneficial intermediary behavior, such as blocking incoming spam. The law acknowledges this consequence and says that the governed entities can block spam if the consumers are notified and have a chance to disable the application. So whereas AOL might kill almost all incoming spam at the server level, the law would take this choice out of AOL’s hands. I’m not sure what consequences result from that, but my heart tells me it’s expensive for AOL/the consumer and it could lead to weird and unexpected results.

In effect, this law would place most of the Internet under the oversight of an administrative agency (the FCC). The Internet had thrived without FCC oversight for a while now. I’m having a hard time believing that turning the Internet into a comprehensively-regulated industry would be a good thing.

3) Global Online Freedom Act of 2006, HR 4780 (Introduced Feb. 16, 2006 by Rep. Smith).

This law builds off the Google/Yahoo-China flap. It has various proposals designed to get China and other repressive countries to stop censoring Internet content.

Specifically, the law would create a new administrative agency called the "Office of Global Internet Freedom." This title alone is disconcerting; it sounds like something out of Orwell or Kafka. Indeed, like any good dystopian view of bureaucracy, the OGIF would free the Internet by telling its citizens what they can't do.

In this case, the OGIF would help generate a list of bad censorship-loving countries. On the initial list are China, Iran and Vietnam. All US search engines or content hosts cannot locate those functions in the bad countries. (Note that the definition of search engines or content hosts covers anyone who has a search tool on their website or permits users to generate content). Search engines also cannot change their filtering based on requests from bad countries. Content hosts also can't help "Internet jamming" and can't disclose personal data at the request of bad countries.

This law seems terribly misguided. It’s as if Rep. Smith thinks that Google is so amazing that countries will change their censorship laws just to get Google’s services. But we know better. Chinese entrepreneurs will have no problem providing competent yet censorable search services. I’m sorry to be the bearer of bad news, Rep. Smith, but embargoing Google isn’t going to bring down the current Chinese government.

Meanwhile, this law represents a dangerous step towards government regulation of search engine operations. I know that pro-regulation forces would love to have the chance to regulatorily inculcate their normative values into search engine algorithms; this law represents a first step along that path. However, I think there’s little chance that government fiat will improve search engine coverage or relevancy. Instead, I think there’s a much better chance that government intervention in search engine operations will degrade search engines’ usefulness to consumers.

Conclusion

Reading these 3 laws in succession, two 1980s songs came to mind. First, Congress “just can’t get enough” regulation of the Internet. However, "If you love somebody, set them free." We’ll see just how much Congress loves the Internet as it wrestles with these bills.

Posted by Eric at 06:39 PM | Content Regulation , Internet History , Privacy/Security , Search Engines | Comments (3)

January 14, 2006

Marquette's Link to the Father of Spam

By Eric Goldman

You may recall the story of the first spam. A guy named Gary Thuerk worked for Digital Equipment Company. In 1978, he sent unsolicited emails to over 400 Internet users inviting them to attend a demonstration of some new computer equipment. For this act, he is now sometimes called the "Father of Spam."

I recently learned something new--Gary is a Marquette alum of the business school. Learn more about Gary and his reflections on his role in birthing spam: Enterpreneur, LA Times, Brad Templeton, Guinness Book of World Records.

Posted by Eric at 12:34 PM | Internet History , Spam

October 13, 2005

Peering Agreement Dispute Between Level 3 and Cogent

By Eric Goldman

Peering agreements rarely get much attention, even though they are the Internet's infrastructure. Through peering agreements, Internet access providers (IAPs) agree to exchange packets directly with another IAP. These exchanges are usually for no money with the assumption that the data flowing between the two IAPs will be roughly equivalent. If, in fact, traffic is roughly equivalent, it's cheaper to barter than to charge for packets.

This assumption animates a bedrock and venerable principle of Internet data flows--that there should not be marginal costs to trading packets. This principle is false on its face, as in fact each party to a peering agreement incurs both non-trivial marginal and fixed costs to maintain the connectivity. It's not that hard to imagine a different Internet evolutionary path where each IAP charged those marginal costs to other IAPs, in which case undoubtedly this variable charge would be passed through to consumers.

It's relatively rare for a peering arrangement to blow up. The last well-publicized event was a dispute between Cable & Wireless and PSINet in 2001.

Then, last week, Level 3 and Cogent mixed it up. Level 3 complained that it was larger than Cogent, so Cogent should have to pay Level 3. Level 3 stopped accepting Cogent's packets, so some Level 3 customers could not reach some Cogent customers. Not everyone was affected because many major IAP customers maintain multiple/redundant IAP relationships so that, even if one goes away, often the packets can route around the outage. Nevertheless, Level 3's actions led to a fairly significant outage across the Internet.

The companies have kissed and made up for one month. However, Level 3 continues to insist that Cogent will ultimately need to pay up. This dispute may not be over.

This dispute showed the relative fragility of the current Internet infrastructure. If one major player decides to change the economic rules, (a) some customers will be cut off, and (b) there could be ripple waves that could easily change the default packet processing business model from barter to for-pay. This has created some fertile ground for Congressional grandstanding, and Rep. Boucher is hinting/threatening to use his Congressional powers to unilaterally fix the Internet.

I'm not inherently opposed to a model where we pay by packet. Economists would generally favor this because per-packet pricing would more accurately signal the true marginal costs of communication, encouraging communication at an economically efficient level. For example, if spammers had to pay per packet, the working theory is that spam would radically decrease.

However, the current infrastructure--and resulting lack of per-packet charges--has been IMO a material/essential factor contributing to the proliferation of Internet communications. We take it for granted that we can communicate on the Internet without incurring some annoying and minor marginal cost, and this psychology has enabled the Internet to weave itself deeply into our society. Perhaps we've had it good for a while, and all good things must come to an end. On the other hand, it would be a shame if we lost those benefits simply because one IAP freaked out.

UPDATE: The Washington Post quotes a bunch of putatively anti-regulation people thinking this is a situation that warrants regulatory intervention.

UPDATE 2: Notice the ads on the left. Because of this post, I've been getting ads from Cogent promoting its offer to Level 3 customers giving them 1 year free if they switch to Cogent.

UPDATE 3: Cooler heads have prevailed, the parties have settled their dispute, and it appears that the parties are generally exchanging packets without payment.

Posted by Eric at 08:00 PM | Internet History , Licensing/Contracts | Comments (1)

August 14, 2005

Fall 2005 Cyberlaw Syllabus

It's hard to believe that this is going to be my 11th year teaching Cyberlaw. I've posted my newest syllabus for Fall 2005. The material I've assigned for the first time this year:

Copyright

* BMG v. Gonzalez (confirming direct liability for file sharers)
* Grokster Supreme Court ruling
* 17 USC 506(a) (showing the additions from the ART Act)
* Corbis v. Amazon (an extremely lucid opinion applying the 512 safe harbors--this is an overlooked gem of a case from a pedagogical standpoint)

Trademark

* Bosley v. Kremer (the case nicely encapsulates several facets of a gripe site lawsuit, including infringement, ACPA and SLAPP)

Spam

* My article on the harms caused by spam
* 16 CFR 316 (the various regulations promulgated under CAN-SPAM)
* FTC v. Phoenix Avatar (the case describes in accessible terms the complex evidentiary and financial trail that anti-spam enforcers must unravel)

Adware/Spyware

* The Congressional Research Service report
* 1-800 Contacts v. WhenU 2nd Circuit ruling
* Utah Spyware Control Act (amended)
* My CNET editorial on adware advertiser liability

ALthough this may seem like a lot of changes, it's noticeably less than I've historically made. I think this lower rate-of-change reflects that we are slowly but undeniably developing a body of "classic" cyberlaw cases that are both important precedent and good teaching cases, such as Specht, Hamidi, Reno v. ACLU and Zeran. I also have my "hidden favorites" that aren't especially important cases but still fun to teach, like the Noah, Promatek and Pharmatrak cases.

I did struggle a little with organizing the trademark cases. I don't think there's a single definitive teaching case for trademarks yet that nicely illustrates infringement (and applicable defenses), dilution and ACPA. Instead, I have five trademark cases that each make important but limited points:

* Bosley--good illustration of a gripe site lawsuit, but holding is fairly limited (narrow illustration of what constitutes use in commerce)
* Promatek--great illustration of initial interest confusion (especially with the bell-ringing line), metatags, how the parties can lose sight of the big picture and how judges cut corners, but hardly a traditional trademark infringement analysis
* Lockheed v. NSI--best teaching case for contributory infringement, but effectively mooted by ACPA's safe harbor for registrars
* Playboy v. Netscape--important case on keyword usage and search engines, but the case is extremely disorganized and error-filled
* 1-800 Contacts--important discussion on use in commerce and user control over their software, but very fact-specific

Worse, these five cases are spread out over the sections on trademarks, search engines and adware/spyware. I'd welcome any suggestions on other ways to think about and organize the trademark materials.

Meanwhile, if you want a blast from the past, consider my syllabus from Spring 1996. I taught this course shortly following Netscape going public, before the Communications Decency Act (it passed during the semester) and the resulting litigation, before the Zs (Zippo, Zeran and Zuccarini), and before the DMCA. Back then, "spam" meant Canter & Siegel's inappropriate postings in USENET, "crypto" was one of the top items on EFF's agenda, and the words "adware" and "spyware" had not yet been coined.

As a sign of the changes since then, I continue to teach precisely ZERO of the materials I assigned. However, a small number of the materials would still be useful today; for example, I do still teach John Perry Barlow's essay in my copyright seminar. Of course, some things never change. I taught a Playboy case in 1996, and I teach a Playboy case today (surprisingly, only 1). I suspect some Playboy case will be part of every Cyberlaw packet forevermore.

Posted by Eric at 01:20 PM | General , Internet History

July 28, 2005

Kevin Kelly on the Web's Past, Present and Future

Kevin Kelly writes a fantastic essay at Wired on the Internet circa 1995, 2005, and 2015. It's an excellent read, so I won't spoil all of the fun. However, two passages of particular note.

First, he hits the nail on the head with the following:

"What we all failed to see [in 1995] was how much of this new world would be manufactured by users, not corporate interests."

This is so true. In the mid-1990s, we wondered how we could provide adequate incentives to users to get them to create useful content. We learned the answer--disaggregation would let good content surface, and we just need good filters to ensure the proper sorting of this grassroots-generated content.

His vision for 2015 is a little too cyborg-y for my tastes, but he predicts that the Internet will act as a giant coordinated Machine much like the human brain:

"Today the nascent Machine routes packets around disturbances in its lines; by 2015 it will anticipate disturbances and avoid them. It will have a robust immune system, weeding spam from its trunk lines, eliminating viruses and denial-of-service attacks the moment they are launched, and dissuading malefactors from injuring it again. The patterns of the Machine's internal workings will be so complex they won't be repeatable; you won't always get the same answer to a given question. It will take intuition to maximize what the global network has to offer. The most obvious development birthed by this platform will be the absorption of routine. The Machine will take on anything we do more than twice. It will be the Anticipation Machine."

I particularly like Kevin's description of an "Anticipation Machine"--the system will get smarter, and we've barely seen the possibilities with today's state-of-the-art technology.

I think Kevin's predictions are consistent with two of the bigger policy issues I continue to harp on:

1) We need to ensure that regulatory policy fosters, instead of inhibits, consumer participation in content creation and other online tasks to "run the Machine." This means strong laws, like 47 USC 230, protecting those who try to develop communities.

2) We cannot fully evaluate the consequences of any pathogen jeopardizing the Internet (viruses, spam, spyware, whatever) until the Machine has had a chance to respond fully. In the end, the Internet is far more resilient than we acknowledge, and it will organically self-correct many problems if we keep the regulators from screwing it up.

Posted by Eric at 12:35 PM | Derivative Liability , Internet History

June 18, 2005

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

May 12, 2005

Internet Explorer Market Share Dips Below 90%

Microsoft’s share of the browser market has dipped below 90%. On my blogs, the numbers are even less favorable for Microsoft. Consider my blog stats in the month of May (so far):

“Unknown” 50.9 % (I believe this includes RSS readers and robots)
Internet Explorer 26.3 %
Firefox 10.9 %
Mozilla 6 %
Konqueror 2.2 %
Opera 0.8 %
Safari 0.8 %
Netscape 0.8 %
NetNewsWire 0.7 %
Lynx 0.1 %

In other words, excluding the unknown traffic, IE accounts for only 53.6% of my hits. Admittedly I skew towards a tech audience, but these stats certainly suggest that IE’s lock on the browser marketplace is experiencing significant pressure.

Posted by Eric at 03:06 PM | General , Internet History

May 01, 2005

ICANN's Domain Name Tax on .Jobs and .Travel

I missed this before—perhaps I wasn’t the only one. ICANN has repeatedly attempted to impose a “tax” on domain names. This was first proposed back in 1999 and again at the end of 2004. Now, at the end of March, we learned that ICANN is charging a tax of $2 per year on each SLD in the .travel and .jobs TLDs. The expectation is that some fee will be levied against other TLDs under ICANN's administration as the applicable agreements come up for renewal/renegotiation.

This tax, of course, raises some serious questions:
· Where’s the money going to go? More money in ICANN’s pocket means two things: (1) more flexibility for ICANN to do more ill-advised things (a propensity they've amply illustrated while operating on a shoestring budget), and (2) a greater pot of money for those interested in ICANN governance to fight over.
· What procedural limits are there on ICANN’s ability to impose new taxes or raise existing ones? Who's watching the watchman? "The power to tax involves the power to destroy." John Marshall, McCulloch v. Maryland (1819).
· As ICANN sets a minimum floor on domain name pricing (at minimum, to cover the flat ICANN tax), what will this do to the market for domain names? In general, domain name pricing has been dropping dramatically; now there may be a countervailing need to raise prices. Price increases in domain names put significant scrutiny on the value of domain names, a value that has arguably been slipping throughout this decade as more action moves to the search engines.

Posted by Eric at 04:29 PM | Domain Names , Internet History

March 31, 2005

Infomediaries--Where Are They?

I have been thinking a lot about “infomediaries.” If you’re not familiar with the term, John Hagel first described it in a 1997 Harvard Business Review article The Coming Battle for Customer Information (with Rayport) and then fleshed out his vision in the 1999 book Net Worth (with Singer).

Infomediaries interpose themselves between marketers and consumers to facilitate better marketing matches. Consumers disclose their personal preferences to an infomediary, who can then offer marketers the ability to engage in highly targeted marketing without knowing consumers' personal identities. Further, infomediaries will use their aggregated consumer demand to cut consumer-favorable deals with marketers. To make this work, consumers must completely trust that infomediaries will respect their privacy and will not become a biased shill for marketers based on which marketer pays the infomediary the most.

From an academic’s perspective, I think infomediaries would substantially improve social welfare. Consumers get what they want—relevant and trustworthy marketing without sacrificing privacy; marketers get what they want—a cost-effective source of interested consumers; and infomediaries profit by taking cuts of the deal. Society wins due to lowered transaction/search costs and fewer marketing mismatches between consumers who don’t want the marketing and marketers who cannot target granularly enough.

Compare this with our current marketing environment, where consumers lack an easy one-stop way to disclose their preferences (and many consumers refuse to do so due to privacy fears). More regulated solutions of marketing communications have high transaction costs (for marketers, and sometimes for consumers too) and a high risk of Type I and Type II errors (i.e., relevant marketing is squashed; unwanted marketing is unregulated).

Despite all of these benefits, as far as I can tell, the infomediary industry has failed to materialize. In Feb. 1999, James Glave wrote a Wired News story called The Dawn of the Infomediary listing five companies trying to enter the infomediary business: Lumeria, PrivaSeek, InterOmni, @YourCommand, and PrivacyBank. On January 24, 2005, I visited the purported websites of all five infomediaries discussed in Glave’s article. Lumeria’s site still exists but appears not to have been updated since 2000. InterOmni was acquired by Lumeria in 1999. The PrivaSeek and @yourcommand domains appear to have lapsed and been reregistered by others. InfoSpace.com bought PrivacyBank in 2000; it is unclear what happened thereafter.

In other words, it appears that all of these infomediaries are out of the business. Also gone are the group buying sites (like Mercata and Accompany) that aggregated consumer interests to negotiate better deals with merchants.

We have some more success if we broaden our definition of infomediaries further. In some industry verticals, infomediary-like businesses have emerged, like LendingTree for loans and Autobytel for cars. However, to some extent, Autobytel act like messaging services—I submit my information, a message goes to interested dealers, then the dealers spam me directly (sometimes relentlessly). Rather than protecting my privacy (whatever that means), Autobytel just ratchet up the email volume. There is still value to consumers to messaging systems, but I don’t think they rise to the infomediary level. LendingTree actually makes offers, not just referrals. However, I'm not entirely clear how these offers are ordered.

We could also try to analogize the shopbots to infomediaries. Shopbots like Shopping.com, Shopzilla and PriceGrabber have survived the dot com crash and offer some infomediary-like services, such as organizing marketing information by product and pitting merchants against each other. However, shopbots do not personalize the offers based on a consumer’s preferences or try to act as a consumer agent; instead, like some industry vertical sites, shopbots view their role as referral services (i.e., send the consumers to the merchant and get out of the way). Further, merchant listings are generally presented based on merchant willingness-to-pay, so consumers may feel like shopbots put merchant interests ahead of their own.

Why haven’t infomediaries emerged? I am struggling to answer this question. Some of the possible theories I’ve come up with:

· Infomediaries do exist but I’m not defining the term expansively enough.
· Infomediaries cannot convince consumers that they are trustworthy. In my experience, my clients would routinely start out saying that they wanted to protect their customers’ privacy, but inevitably they would, over time, look for ways to monetize their customers’ information. Further, companies usually cater to those who pay the bills; so any infomediary will inevitably be tempted to put merchants’ interests over consumers.
· Consumers’ privacy concerns are not strong enough that they need infomediaries. The empirical evidence here is sharply split. Consumers routinely say that privacy concerns inhibit their online actions, but consumer behavior routinely belies this. There are plenty of good reasons to use an infomediary beyond privacy protection, but perhaps this motivation is not as strong as Hagel predicted.
· There is no viable profitable business here (i.e., the economics simply don’t work).
· There is a market failure that prevents companies from entering the market. If we could find a market failure, would this support government intervention to sponsor the creation/operation of one or more infomediaries?

As you can see, I’m stuck. I ask for your help, and I’m opening comments on this post. (Unfortunately, to prevent comment spam, registration is required—sorry). Why do you think infomediaries have not arisen?

Posted by Eric at 10:04 AM | Adware/Spyware , E-Commerce , Internet History , Marketing , Privacy/Security | Comments (1)

March 29, 2005

Getting Paid to Drive an Ad-wrapped Car

Do you remember the dot com boom phenomenon of turning cars into mobile billboards? Some great photos here. The model was that advertisers would give drivers a new car (or pay some amount per month) to drive around in a car loudly displaying the advertiser’s branding. A few companies entered the business in 2000, including autowraps.com, buzzcar.com, freecar.com and myfreecar.com (the latter two merged).

As far as I can tell, these businesses all ended soon after they were launched. They seem one of the greatest bellweathers of the dot com madness. Competition for eyeballs was so steep that it drove prices up for all media buys. Higher prices created new marketing supply. When the boom ended and prices dropped, marketing supply shrunk accordingly, churning out marginal sources like auto wrapping.

UPDATE: See the Google Answers discussion on this topic from 2004.

Posted by Eric at 05:07 PM | Internet History , Marketing

March 24, 2005

Dot EU Approved

ICANN finally approved the .eu domain. When I joined Epinions in February 2000, a board member suggested that one of my top priorities as general counsel should be to secure the epinions.eu domain. Over five years later, does anyone even care about this TLD any more?

Posted by Eric at 12:19 PM | Domain Names , Internet History

March 12, 2005

What Ever Happened to DotComGuy?

I had reason to investigate what happened to DotComGuy. You may remember him as the guy who lived in his apartment during all of 2000, ordering all of his needs from the Internet and webcasting his life. In 2004, he failed to auction his trademark and domain name because the bid didn’t clear his reservation price, but claimed that he would work out some deal. I couldn’t easily find any further press reports, and I recently checked the website www.dotcomguy.com and got a 403 error. A rather fitting end to a mildly interesting publicity stunt from the dot com glory days.

Posted by Eric at 05:32 PM | Internet History

Seattle Times series on InfoSpace

The Seattle Times did a remarkable multi-part expose of InfoSpace. The series is particularly unflattering to Naveen Jain, InfoSpace’s founder and chief huckster. There’s a thin line among entrepreneurs between visionary and crook, and the Seattle Times marshals plenty of evidence to deem Jain the latter if you want.

The series also describes several common but deceptive practices of the dot com boom, especially the “lazy Susan” deals (also known as “roundtripping” deals). In a roundtrip deal, party A invests in party B but, at the same time, party B buys products/services from party A. The net effect is that money starts with party A, goes to party B, and goes right back to party A (hence, “roundtripping”). A variation of these deals would involve the parties each buying the other’s products (instead of an equity investment starting the cash moving).

Roundtripping deals are not inherently wrong, but treating them as revenue-producing absolutely can be. The first article in the series describes the great lengths that InfoSpace went through to manufacture revenues from roundtrip deals.

Reading the series, it’s impossible not to feel that the star companies of the dot com boom exhibited a certain duality. Some of the most celebrated entrepreneurs showboated for the press claiming to be a new, smarter breed of entrepreneurs ushering in a new era of business; while at the same time, they worked behind the scenes to prop up their exorbitant claims using all-too-traditional artifices.

Posted by Eric at 04:18 PM | Internet History

March 01, 2005

Bill Gates, KBE

News item: Queen Elizabeth will tap Bill Gates on the shoulder with a sword. My reaction: he’ll probably enjoy that more than being hit in the face with a pie.

Posted by Eric at 01:04 PM | Internet History

February 13, 2005

Randall Stross Whines About Spam

Randall Stross writes an article whining about spam as pollution and complaining that the recipient pays for spam. Haven’t we heard this argument before? As a matter of fact, we have. Often. A long time ago (his own article cites one of the early academic efforts attacking spam economics--from 13 years ago!). So why is this news?

I deconstruct some of Randall’s anti-spam rants in my article on spam harms. I will be more directly attacking the argument about “recipient pays” because of attention consumption in my next major article. For a high-level overview, see my short book chapter on data mining and attention consumption.

Posted by Eric at 10:05 AM | Internet History , Spam

February 10, 2005

Is TRUSTe Irrelevant?

TRUSTe pulled its logo from some websites for breaking its rules for the first time in 2 years. The article focuses on TRUSTe’s refusal to specify the rules violation, but this seems to miss the point, and widely. In 1999 and 2000, virtually every important website had a TRUSTe logo, and the logo had the potential to really shape consumer expectations and behavior. Now, I rarely see the logo, nor do I care if I see it or don’t. If my experience is typical (and I think it is), then TRUSTe has become irrelevant. I think a better angle for the story would have been—why does anyone care that TRUSTe yanked the logo?

Posted by Eric at 09:43 AM | Internet History , Privacy/Security