Conference on machinima law at Stanford

April 24-25, announced here. Description:

Play Machinima Law is a two-day conference that will explore a series of key issues relating to what is often called "player-generated" or "user-created" content based on digital games or created in game and virtual worlds. Topics will include machinima, game art, game hacking, open source ideas and "modding", technology studies, player/consumer-driven innovation, cultural studies, fan culture, legal and business issues, transgressive play, game preservation, and notions of collaborative co-creation drawn from virtual worlds and online games. Experts from the major players in the digital game arena, lawyers, practitioners, and academics will convene at Stanford to discuss the legal issues associated with gameplay in regards to user-generated content, machinima, and game-related practices.

Integrative Thinking About Life Cycle Analysis: Promises & Limitations

Initiative for Global Environmental Leadership (IGEL), Penn/Wharton, Second Annual Conference-Workshop

Life Cycle Information and Policy Implications –

Moderator: Ellen Goodman (Rutgers Law)

How does the law deal with the goals of market efficiency and, possibly competing, shaping consumer preferences in environmentally friendly ways?

Opening thoughts: LCA is complex and uncertain and there are competing methodologies; it may be inherently inappropriate to make a green/greener claim in marketing; nobody has really done LCA of multiple competitors’ products. At the same time, lots of companies are making these claims. And there’s a market for LCA, people believe. What is to be done?

Mary Ann Curran (Director, Systems Analysis Branch, Life Cycle Analysis, EPA)

Discussed variations on the idea: life cycle assessment v. life cycle analysis v. life cycle management (which includes social needs). “Lust-to-dust” analysis looks holistically at multimedium (air, water, solid waste) and multiattributes. Victim of its own success—people are using the term “life cycle” in different ways.

She sees 3 variants: (1) greenhouse gas life cycle analysis. It has the cradle-to-grave component, but only in terms of warming impact. Very true for biofuels. (2) people say they’re looking at product life cycle, but are really looking at end-of-life management. Recycling v. conservation. Nanotech: once the product is used and ends up in the water, we need to figure out its impact. (3) Application of life cycle thinking, like the EPA’s Environmentally Preferable Purchasing—EPA looks cradle-to-grave at product category, but then apply a theory of what needs to be done. So, with paint, they give good marks to paint with low VOCs or recycled cans—a checklist approach. A modified LCA. The reason: the data are so hard to get at to do a full LCA. We need better data.

Tools she’s seen: carbon management (where are carbon or CO2 equivalents released across the life cycle?); comparative risk assessment (used by people interested in exposures, across the product system: where are chemicals released into the environment?); ecological footprint (material analysis in square miles of resource use); net energy balance (are you getting more energy out of the system than you’re putting in—corn ethanol v. gasoline, process inputs in making fuel); exergy (energy use modeled so that it produces work; anything not being used as work is being absorbed by the environment—quantitative, but leap of faith to say there’s an environmental impact); fuel cycle analysis (variation of air emissions); greenhouse life cycle; LCA; material flow (seems like LCA, but differs in looking at particular material, e.g. aluminum as it’s created and enters into the economy; you’re supposed to look at enviro impacts across the way, v. looking at impacts of the product into which the aluminum is incorporated); sustainable development indicators (not precise tool, but a checklist approach of issues to be addressed).

Greenhouse analysis is a good study, but let’s not forget the water and land issues. Message: LCA is the cornerstone of sustainability, though other tools play a part. LCA allows manufacturers to look inward and make improvements, and helps government make policy, but better data is the key.

Rebecca Tushnet (Georgetown Law)

Background: How do LCA issues become questions of advertising law?

When you make a representation in your ads it’s always necessary to ask: What will a reasonable consumer think? A reasonable consumer is moderately skeptical, but believes in specific factual representations, and often believes that there is evidence behind them, so you have to be able to back up your claims. Consumers don’t and won’t know the details—something like assessment v. analysis will be meaningless to them.

In America (and be aware, EU regulates comparative claims much more heavily, so watch out for that), there are three sets of potential challengers:

(1) Government--FTC: Green Guides, guidelines for marketers with examples of what is and isn’t acceptable, currently under review—comments are invited. Carbon neutrality and offsets, for example, are a big issue; LCA fits in too as a new development since the Green Guides were first promulgated.

(2) NAD-arm of Better Business Bureau and Lanham Act; (3) consumer lawsuits.

Some examples of problematic greenish claims: “Animal Care Certified,” “raised without antibiotics,” “degradable,” “environmentally friendly—without mercury.” Those are all misleading, for various reasons.

LCA if done right is a step up: under the caselaw, if your methodology is reasonable, then even if you come out differently under a different methodology and which is better is debatable, you aren’t engaged in false advertising. Do it fairly and in good faith, without cherrypicking or shading the facts, and you can advertise it, even if there’s disagreement. This is why twenty years of litigation between headache remedy makers left competing superiority claims in ads—each advertiser has evidence on its side, and though they can’t all be right none of them are definitively wrong. Caveat: if the FTC or the EPA decides on a method or metric you need to use, you need to use it.

Key concepts to take away: Falsity is not the same as misleadingness. Beware of both. When dealing with FTC or NAD, you need substantiation. And in competitor lawsuits you need substantiation for establishment claims—claims that state or imply scientific backing, which most environmental claims will. Finally, beware “environmentally friendly”—that’s a term that raises regulatory hackles. It may be that good LCA is the only way to be able to make a general “environmentally friendly” claim.

Mario Teisl (University of Maine, Economics)

Labeling can come from different players: NGOs, government agencies; some are based on absolute product differences, others are industry-specific (e.g., fisheries). Information is not a single thing; neither is “the consumer.” There are multiple types, and your information will be targeted for different consumers/values.

Assumption: consumers are confused about LCA because they don’t care or they’re stupid. But that’s not right. 15% of the population is unreachable and will misunderstand regardless of what you do.

What is the purpose of eco-awareness strategy for labels? Labels allow consumers to make comparison across products; not educative in the short run, though there are educational approaches. Labels and ads do give consumers something they didn’t have before: shows what the choices are. Consumers didn’t know and had no incentive to learn before the label. Why tell someone to consume green if there’s no way to implement that when they go to the grocery store?

Are these strategies effective? Depends on your metric. They can (but will not always) change knowledge, attitudes, and behaviors. Evidence on dolphin-safe labeling of tuna, and the Nordic Swan and how it affected paper product sales, shows significant shifts. Companies’ use of the strategies also suggests that they’re effective at least sometimes. But do they translate into environmental change? That’s harder to tell. (Someone might consume more paper if she knows it’s recycled.)

Assume that people do care, but are confused/ignorant. Women are more affected by environmental information; age, income, education effects; social psychology effects—can affect the way people view others and the way they think others view them (status). Choice characteristics: how consumers process info depends on preexisting perceptions of the product or company, which sometimes may not be in a direction the marketer wants.

Stages of choice: buying eggs v. buying cars. People make 2 decisions with cars: what class of vehicle to get—SUV, truck, minivan—99% based on usefulness of vehicle for them, not environmental considerations. Once the class decision has been made, though, decisions among types are affected by environmental information. Quite often environmental benefits don’t cost more there. Info environment makes a difference—won’t research the background of a can of tuna, but when you buy a car you get loads of information—manufacturer, Car & Driver magazine, other sources.

Issue awareness: is the issue close in space, in time, in biological characteristics (we like fuzzy things more than slimy things/biodiversity).

Consumers’ reactions to LCA will not necessarily be what you expect.

Details, source (credibility), and presentation (table, numbers, summary score, whether it’s absolute or relative, graphics) all matter. Whether the information is standardized within or across product classifications is a big deal. Is it mandatory or voluntary? These individual components interact—the negative effect of non having standardized info can be mitigated by the level of detail. Ancillary info: not on the product—(1) info you control and (2) info you don’t control. Government may check your claims, but NGOs/competitors can also take your info and change it. Since most Americans are ignorant of environmental labeling (better history in the EU), when most people don’t have firm beliefs about your product, it’s easy to attack your strategy.

Communicating these characteristics effectively isn’t easy. You can even get a negative reaction—consumers already have preexisting expectations about your product; some consumers will respond negatively to a new environmental message that goes against what they already think about the product. Teisl found this with health and environmental claims—some segment of the population always pushes back against positive product claims. People are inherently skeptical, and the hard sell gets a harder pushback.

Info disclosure is hard. But LCA is hard too, and you’re doing that. It’s worth doing right.

Nutrition labeling clearly affected consumption. Note that we had nutrition labeling before the FDA intervened—it was just nonstandardized and patchy, so consumers couldn’t use it. You can’t just start throwing info out; you need to figure out what people want to know and what they understand. So: keep nutrition panel short. Over time, the FDA added lines because people asked for more. It’s not everything-or-nothing.

Laura Forlano (Yale Law Information Society Project)

New technologies, especially pervasive computing/social media, and their role in environmental sustainability. Human-centered design: find out what people are doing and why, which can explain why corporate policy isn’t getting implemented (why hotels say they don’t replace your towels as a default, but individual room cleaners often do replace your towels even when you hang them up—perhaps they get more tips that way). Can be applied to consumers as well. You can use lead/early adopters to figure out what to do for majority consumers. In LCA, tell the stories of the workers at the plant and the relationship of the plant to the community.

Prototype: A pollution e-sign project, communicating local air quality through wireless devices as they pass by. Another project by Natalie Jerimijenko: a printer queue virus, printing out a tree ring every time one tree’s worth of paper has been used. Same artist: OneTrees, planted a bunch of cloned trees in a bunch of places and looked at environmental impacts on them. Another idea: add barcodes to products linking to information online—can find out whether a company is polluting or using coerced labor.

Q: Secretly environmentally friendly products, blocked by legal/environmental concerns from announcing redesign. Is the balance proper?

My answer: false positives trade off with false negatives most of the time, though there are design improvements like Teisl talked about. I think the standard is right, even though there will always be mistakes.

Q: How to affect decisions on what type of vehicle to buy?

Teisl: Car & Driver doesn’t care; if you get Car & Driver/other information sources like Consumer Reports to pay attention, that may help. Still, a lot of times people have commuting characteristics—carpenters need trucks. You may want to get people out of SUVs into station wagons; even within each class, there’s a relatively wide range of environmental characteristics, though that wasn’t true in the past. Do you have producers change the product, or try to educate consumers? They both work.

Locked out: standing ends false designation of origin case

Kwikset Corp. v. Superior Court, 90 Cal. Rptr. 3d 123 (Ct. App. 2009)

This case (earlier trip to the court of appeals discussed here) is founded on claims that Kwikset falsely labelled its products as made in the USA when they didn’t meet the statutory definitions of same. The litigation was begun before California amended its unfair competition statutes to tighten standing requirements by requiring economic injury—lost money or property. Here, the court of appeals determined that the real parties in interest (plaintiffs) couldn’t allege standing under the new requirements.

Basically, all that plaintiffs could show was that they purchased Kwikset locksets based on the “Made in the U.S.A.” claims. But that’s not sufficient to allege loss of money or property, because the locksets had intrinsic value even if their geographic origin wasn’t what the plaintiffs wanted. The injury has to be economic, not the injury inherent in deception.

Here, there was no allegation that the locksets were defective/poor-performing, were not worth the purchase price, or cost more than similar products without false country of origin labels. The purchasers intended to buy locksets. As long as a person receives a product or service of equivalent value in exchange for the payment, she hasn’t lost money for purposes of the California statutes.

This ought to depend on the idea that the plaintiffs intended to buy locksets; if you induce me to buy storm windows with the false representation that I need them, and I don’t need them, then even if they’re perfectly good storm windows I’ve suffered a monetary loss. But some of the cases go further and suggest that as long as I paid market price I’m just out of luck, which seems to open up fertile ground for deception. The court responded to this concern by noting that public prosecutors don’t need to meet the standing requirements; in fact, after plaintiffs here sued, the defendants entered into a consent order with the FTC “limit[ing]” their use of inaccurate country of origin labels.

Plaintiffs argued that they could amend the complaint to allege that alternative, cheaper locksets were available, or that the locksets weren’t worth the price paid, but there was no record evidence or other proof of this, and the case has already been through trial. There was no reasonable possibility they could truthfully amend the complaint.

False patent marking may not be false advertising

Rainworks Ltd. v. Mill-Rose Co., 2009 WL 773531 (N.D. Ohio)

Rainworks makes gutter protection systems, including the Hedgehog. Rainworks has a US patent for an ornamental design for a gutter filter.

In 1997, Rainworks approached Mill-Rose about selling the Hedgehog in the US, supplying it with confidential information and samples pursuant to a confidentiality agreement. Rainworks ultimately gave an exclusive license to another defendant, AmeriSales, to sell gutter filters and other products to be sold under the GutterPiller name, provided that AmeriSales could not market using the internet. Rainworks was to own all brand names. Eventually, Rainworks terminated the agreement for failure to pay minimum royalties.

Rainworks sued a bunch of defendants for patent infringement, trademark infringement, false advertising, and related claims, including false patent marking.

Defendants sold GutterPiller protectors as patented, allegedly knowing that they weren’t covered by any patent, in violation of 35 USC § 292. This requires a showing that the false marking was for the purpose of deceiving the public. As a defendant testified at deposition, the false marking here was done in error. It was supposed to be “our registration number for the registration of our name.” (What? What would that even be? If that was the intent, how did the packages end up with the number of Rainworks’ patent?) The false markings were on the packaging, not on the product, even though it would have been feasible to mark the product itself—and marking the product itself, where feasible, is a requirement for giving notice of a real patent under 35 USC § 287. Because marking the packaging would be insufficient to give notice of a real patent, marking the packaging is equally insufficient for false marking liability under § 292, a penal statute. (Again, what? Seems to me the marking and false marking provisions are directed at very different problems.) Anyway, in light of the deposition testimony, there was a genuine issue of material fact on intent to deceive.

Rainworks then argued for patent infringement under the doctrine of patent marking estoppel—given that defendants marked some or all of their products/packages with Rainworks’ patent number, they can’t deny infringement of that patent. But some courts have been skeptical of the doctrine—it should only apply when it’s inequitable for a defendant to reverse positions. The court declined to apply estoppel here, because the patent number was only marked on packaging (oh, and the products were described as patented in defendants’ ads; that must have been an interesting deposition).

Rainworks argued that falsely advertising a product as “patented” or protected by a particular patent was false advertising under the Lanham Act and state law. The court found genuine issues of material fact on materiality—whether the claim was likely to influence a consumer purchasing decision—and harm—whether the misrepresentation was causally linked to damage to Rainworks. Among other things, the packages with the false patent number weren’t shipped to consumers until they’d ordered the product, so they may not have influenced purchasing decisions. (And the ads?) There was also evidence that Rainworks isn’t a true competitor, because it wasn’t selling in the US; no one in the US would buy from Rainworks’ website because of the prohibitive costs involved.

Vanishing premium case reappears

Broberg v. Guardian Life Ins. Co., 90 Cal. Rptr. 3d 225 (Ct. App. 2009)

Guardian allegedly sold Dr. David Powell a $500,000 whole life insurance policy in 1993 by falsely promising that policy dividend and interest earnings would pay premium costs after the 11^th year, so that out-of-pocket premium costs would disappear—a “vanishing premium” policy. Plaintiffs (trustees of the Powell Irrevocable Trust) allegedly didn’t discover the deception until they were billed for additional out-of-pocket premiums in September 2004.

Guardian’s agent provided Powell a three-page illustration showing the elimination of out-of-pocket premiums in the 12^th year. The illustration indicated that it was prepared for Powell, not a preprinted form, and contained a handwritten notation “11 year” as well as a printed term “vanishing premium,” with a 30-year schedule that showed no “annual outlay” after the first 11 years. Powell alleged that Guardian knew at the time that its existing dividend scale, on which the illustration depended, was unlikely to continue. The first page had no disclaimers, cautionary language or footnotes. The second page did mention “important footnotes,” and the third page had 39 single-spaced, capitalized lines with various qualifications. In the middle of that, there was a disclaimer that the dividents were neither estimated nor guaranteed, but were simply based on the 1993 scale.

Powell sued for fraud, negligent misrepresentation and violation of California consumer protection law.

The trial court ruled that the disclaimers and the policy language itself put Powell on inquiry notice, meaning that the limitations period had run. Also, the disclaimers precluded a finding of justifiable reliance. Though Powell additionally alleged that Guardian failed to disclose actual annual reductions in its dividend scales in 1994-1996, the trial court held that the difference between Powell’s annual statements and the numbers he would have seen if the dividends had held steady should have put him on notice. The illustration showed a value of $23,642, while his 1997 annual benefit statement showed $23,362—a $280 difference. And the statutory CLRA claim wasn’t viable because life insurance isn’t “goods or services.”

The court of appeals reversed, except for the “goods or services” holding. (Kicking out the CLRA claim was important because that was the claim that provided for a recovery of attorneys’ fees.) As for the other claims, the limitations period begins to run when a reasonable person would have discovered the factual basis for a claim. The disclaimers were not so clear and obvious as to trigger notice.

For the same reasons, they were not sufficient to preclude reliance on other marketing representations as a matter of law. Only if reliance on a misrepresentation was manifestly unreasonable in light of the plaintiff’s own intelligence and information will she be denied recovery. She must not put faith in preposterous representations, nor may facts within her observation show the representations to be so obviously false that to rely on them requires closing her eyes to the truth. Her conduct must not be preposterous and irrational. Here, there was a factual dispute over whether Powell’s reliance was manifestly unreasonable. If he read and understood the disclaimers, that might bar his claims. But the disclaimers were buried in a sea of same-sized, capitalized print, and there was no cautionary language on the first page of the policy illustration containing the deceptive language and figures indicating that Powell’s out-of-pocket payments would “vanish,” so the disclaimers could not be found to be adequate as a matter of law. Any provision that limits coverage reasonably expected by an insured must be conspicuous, plain and clear. The same principle applied here.

Likewise, the policy term stating premiums would be payable “for life” didn’t trigger notice or preclude reasonable reliance as a matter of law. Powell’s argument wasn’t that he was told premiums would stop; he argued that he was told that policy earnings would pay the premiums after the 11^th year.

A dissent would have found that the statute of limitations had run because the disclaimers and the policy language were sufficient as a matter of law to give Powell notice that the cash values weren’t “guaranteed,” and thus also there could be no justifiable reliance on the other representations. The policy instructed, in bold type, “Read this policy carefully.” And it warned that the footnotes were “important.” The whole thing was only three pages, and the twelfth line on the third page began, “Figures depending on dividends are neither estimated nor guaranteed, but are based on the 1993 dividend scale. Actual future dividends may be higher or lower than those illustrated depending on the company’s actual future experience….” The dissent concluded that “[a] reasonable person would have followed these instructions, and having done so would have seen these disclaimers.” They were written in plain English, and would have given a reasonable person cause to suspect that the alleged representations about vanishing premiums might be wrong.

Fordham, last panel

In the Trenches

Moderator: Thomas D. Halket, Attorney and Chartered Arbitrator, Halket & Weitz LLP

Practitioners provide guidance about things to be aware of when advising intermediaries.

Ian C. Ballon, Shareholder, Greenberg Traurig

Different liability frameworks for counseling clients:

Copyright: notice and takedown

UGC has generated a lot of cases about website liability. Congress wanted sites to have flexibility in their policies, but a service provider must have a policy, even if it doesn’t publicize that policy (it must inform users that it has such a policy), including provisions for terminating repeat infringers—he says that’s someone who’s gotten a second notice. (Really? Notice? Not a determination of infringement?) One court accepted a three-strikes rule, which tends to seem fair to Americans.

Red flag notice also suffices to require the service provider to take material down. In the 9^th Circuit, even red flags aren’t red. Stolencelebritypics.com wasn’t a red flag by name alone. When dealing with adult material, a false claim of “stolen” adds to the marketability. The burden is on the copyright owner, not the content provider. Not everyone would go with the 9^th Circuit, which also found that “free passwords” wasn’t a red flag, because the passwords could have been fake or promotional; the only party with a burden to investigate is the copyright owner. (The passwords weren’t infringing, were they? At best the ISP would have been subject to tertiary liability, no?)

What kind of acts are covered? Veoh case: If material is stored at the direction of the user, anything else that happens to it—public performance, translation to Flash, etc.—doesn’t change the character of the material to kick the ISP out of the safe harbor.

Does the DMCA preserve vicarious liability? What counts as a disqualifying direct financial interest plus right and ability to control? Courts have defined this narrowly, but it’s something to focus on with a client.

Filtering: Grokster made clear that filtering isn’t required, but an unwillingness to filter in combination with other factors may support an inducement finding. Filtering is thus good practice. (Eek.)

Other issues:

Trade secret: reason to know material is a trade secret. What is reason to know? That’s a tough one; maybe the standard should be closer to TM standard in eBay.

Trademark: very narrow grounds for third party liability. If you’re compliance oriented like eBay, then having notice and takedown is a good practice even without a statutory framework even without the DMCA. (I’d note that this depends on what you do: if you help people sell stuff, then yes, notice and takedown makes sense; if you host reviews or other content where people talk about, denigrate, applaud, or show pictures of trademarked products/services, then notice and takedown is a terrible idea. I’m guessing he’d actually agree and was just thinking about auction-type sites.)

Child porn: reporting requirement—reporting it absolves you of liability.

Obscenity—scienter requirements in almost all statutes; no prosecutions of intermediaries for user-generated obscene material. Best practice: take down obscene material, except it can be hard to figure out what is obscene.

“Harmful to minors”/child safety—Congress persistently sought to legislate; ACLU persistently got the laws knocked out. MySpace and Facebook have accords with state AGs that only bind them but are good indicators of best practices.

Defamation and state law civil claims other than IP: CDA 230! (In the 9^th Circuit, even state law IP claims go.)

Jay Westermeier, Of Counsel, Finnegan, Henderson, Farabow, Garrett & Dunner LLP

Contracts are a neat way to deal with risk. Browsewrap is more prevalent than clickwrap these days. (Westermeier made a bunch of suggestions about the contracts for practitioners.) Is a provision in a browsewrap contract saying that data is only for personal use enforceable against someone who’s making money by using the website? Yes, that’s commercial. Enforced against a woman who was using data from the Southwest Airlines website for her own business.

Google as misleading advertiser?

Alex W. Cannon, Regulating Adwords: Consumer Protection in a Market Where the Commodity Is Speech, 39 Seton Hall Law Review 291 (2009). Excerpt (footnotes omitted):

[T]he judicial treatment of Google as a fully protected First Amendment speaker is dangerous precedent. Google is an advertising machine, and as a publicly traded company its directors are obligated to increase the value of the organization by utilizing every tool at its disposal to get consumers’ eyes on ads. In this respect, Google does not express an opinion in the traditional context of the First Amendment. Rather, by achieving a symbiotic balance between its clients and its users, Google is able to garner massive profits. Google’s corporate interests need to be weighed against societal interests such as informational reliability and informational autonomy. Further, the traditional free-market checks disintegrate in light of Google’s rather un-savvy users. The most visceral danger would be to allow Google, with its ability to tactfully and discretely manipulate consumers, unfettered power to subjectively control access to an important speech market. Finally, this Comment proposes that the Federal Trade Commission (FTC) would be able to regulate Google’s sponsored search results under the commercial speech doctrine.

Fordham, filtering

Intermediaries as Legal Filters

Moderator: Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law, Penn State University

Notice and takedown is reactive; what about proactive options, like filtering? Relates to the issue of net neutrality. Proactive filtering may serve intermediaries’ commercial interests. Deep packet inspection allows price discrimination, quality of service discrimination. Other examples of filtering: Eudora had a red-pepper scale of the provocativeness of an email. His wife, who also works at Penn State, stopped getting his emails; he had a link to his blog in his sig, and Penn State’s software determined that terms like “blogware” were automatically disallowed. Once filters are available, what does that do to the notice and takedown/safe harbor regime?

Dr. Ian Brown, Senior Research Fellow, Oxford Internet Institute & Honorary Senior Lecturer, University College London

Three examples of floundering towards information law: copyright infringement, gossip, and child abuse.

E-commerce directive: provisions on liability of intermediaries, similar to DMCA. Telecom lawyers in the 90s were very good lobbyists. Art. 12 “mere conduit”; Art. 13 “caching”; Art. 14 hosting; Art. 15 no general obligation to monitor. The only mandatory exception to the reproduction right in temporary copies is for intermediary transmission.

Movement to 3-strikes regime for users to lose internet service after 3 accusations of infringement. Driven by France. Constitutional objections: disproportionate; infringes rights to privacy, expression, association, education, commerce, civic engagement under the European Charter of Fundamental Rights. Also procedural problems: transparency, public examination of evidence, impartiality, etc. Europe has been slower to enforce constitutional norms than the US, though. It might be 20 years before we get a ruling on that—case filed 1991 on UK’s DNA database, just decided that it was an infringement on the rights of people who hadn’t been convicted.

Another problem: Data Protection Directive, driven by Germany which has obvious historical reasons for feeling very strongly about protecting personal information. The Directive applies to companies as well as governments, and even to individuals, except for a carveout for exclusively personal/domestic activities like keeping an address book. And the only real case out of this directive, Lindqvist, involved gossip on a website about a church member who had a broken leg, and that’s sensitive medical information. The Data Protection authority took her to court, and posting on a website was ruled not to be a personal/domestic use. How far can we regulate individuals as well as data controllers? Individuals are within regulators’ sights.

Blocking child abuse images. The British Telecom system blocks access to pages on a secret blacklist. This is imposed by other retail ISPs by the government in various ways. Wikipedia had a problem because one article showed an album cover deemed to show a child sexual image. UK users were blocked from accessing the article. The technical way this was done also resulted in Wikipedia thinking, because of the IP referring addresses, that everyone in England was coming from a couple of IP addresses, and because Wikipedia bans vandals’ IP addresses, English users were unable to edit Wikipedia for several days. Now blacklists are being considered by the EU, including topics like sites promoting terrorism and discussing bomb-making, with little consideration of constitutional issues.

What role can tech play in protecting fundamental human/constitutional rights? Were the recording industry attacks on P2P systems an unexpected boon for free speech, by spurring a boom in research and experimentation with systems that are decentralized and harder to control?

Can we design for privacy? Data minimization: is your data really necessary? Limit personal data collection, storage, access and usage. Anathema in the US, but a key principle in the EU. Encrypt data when it’s in the cloud, decrypt it only under user control; protect it against companies and governments.

Final thoughts: if code embeds values, we need to think about embedding constitutional values in global computation and communication systems. Why are cyberpunks so disgusted with regulation and so committed to designing disruptive tech? Disgust with corruption in the broad sense: lobbies driving legislation.

Wendy Gordon, Visiting Professor of Law, Fordham Law School; Philip S. Beck Professor of Law & Paul J. Liacos School in Law, Boston University School of Law

Her concern is methodology.

Grokster seemed to threaten the possibility of a thriving filterless internet. Tim Wu said: when the Court pinned liability on intent, it was ducking the hard questions of how important substantial noninfringing use is. Does it ever make sense to use an intent test? Her own view is that copyright is 90% about increasing the store of public knowledge, and 10% about just claims of desert. Morality’s role is often overstated, but it has a place. Is there a defense of an intent orientation?

There are certain bad acts that most of us would hesitate to undertake even if they had longterm good consequences: e.g., the trolley problem. Maybe what was being encouraged by Grokster was, really, terrible. Downloading kids may have been engaged in moral wrongs. But the underlying infringement by the kids is judged on a strict liability standard, so Gordon doesn’t think it should be ranked with things that ought to be prohibited at all costs.

Also, highly probable that claims of property in music cause harm. Standard: how would people do in the absence of the property? How would kids have fared but for this music that surrounds them, coupled with a prohibition on copying? Many are worse off than if they’d never heard the music—if someone sends music out into the world and it affects others, people need some liberty to reuse, even sometimes with exact copies. (She gave me a shout-out!) Exact repetition is part of every religion, every doctrine, the Pledge of Allegiance, every ritual. Copyright owners are not merely conferring a benefit that they can withdraw at will; others act in reliance when they integrate music into their psyches. Thus we can’t condemn uploading/downloading as a blanket matter.

Without that moral core, then Grokster’s behavior doesn’t seem so evil that it excuses us from taking longterm consequences into account.

Dawn C. Nunziato, Associate Professor of Law, George Washington University Law School

Her topic: How broadband service providers are and should be regulated in discriminating against legal content and applications. Backdrop: FCC’s August 2008 ruling that Comcast was unlawfully discriminating against P2P filesharing protocols. Communications providers as common carriers: designed to facilitate transportation/communication without discrimination—postal service, telegraph service, etc. are not permitted to engage in acts of discrimination. That’s how narrowband internet was initially regulated in the 1990s. How should cable broadband be regulated, then? If common carrier, then discrimination would not be allowed.

In 2002, the FCC decided that cable broadband was not a common carrier. What regulation, then? Regulated as “information providers,” which means minimal if any regulation. Brand X: Supreme Court upheld this. DSL and other broadband providers said: what about us? FCC said in 2005: you’re all immune from common carriage regulations. At the same time, the FCC made some broadband policy statements, according to which internet users should enjoy freedom to access their choice of legal content and freedom to run the applications of their choice. These policy documents do not establish rules and they’re not enforceable, yet the FCC pledged to act if they were violated. And these freedoms are subject to broadband providers’ discretion to engage in reasonable network management practices.

Nunziato has documented discrimination against legal content—allegations of Comcast censoring political email; AT&T prevented NARAL from sending messages to willing subscribers; Comcast blocked P2P filesharing using deep packet inspection and then allegedly lied about it. FCC characterized this as opening mail to see if Comcast wanted to deliver it, and argued that Comcast was doing this to protect its own interests in, e.g., video on demand.

Comcast complains: but we’ve been deregulated! FCC: you’re not subject to common carriage regulation, but nonetheless we have ancillary jurisdiction to regulate you, as Brand X said. Comcast: Ancillary to what? FCC: To the 1996 Telecom Act that set forth internet policy of an open internet, and to other areas.

Where are we now? A mess, caused by FCC’s decision to exempt broadband providers from common carriage regulation. These are the pipelines for the internet, and they have no business interfering with free speech.

Frieden: points out that FCC regulated cable before it had statutory authority; ancillary because it had jurisdiction over broadcast TV and cable TV had the potential to affect broadcast.

James Grimmelmann, Associate Professor of Law, New York Law School

Search engine amplification often worsens lots of internet problems, but search engines shouldn’t be targets for solutions. People have always been jerks; now they can be jerks on an unprecedented scale by allowing large-scale anonymity. Site operators have the technical power to mask or muzzle the jerks. But website operators aren’t the only intermediaries in the picture. Web pages aren’t megaphones blasted to horrified recipients: mostly people choose to visit, usually by searching. Search amplifies hate.

If we gave search engines more duties, we might hide harassment without unmasking speakers or shutting down webhosts. But: good search engines help people find the info they want, not the info other people want them to find. Ability to find info is essential to our ability to make our own decisions; it’s also economically important. Search is too important to muck up, so we need to be careful in regulating.

Good search favors active users, and so does good information policy. If you make search less useful, users can’t as easily lead self-directed lives. Crippling search gives content creators and third parties unwarranted power over search users—that is, over everyone who uses the internet. Notice and takedown would make some information unfindable, removing it from the commons. It would also be a slippery slope to making search engines responsible for whatever speech is online. We need internet-wide, general purpose search engines—key to the last decade. Fundamentally, search engines don’t want to mislead their users with half-truths and libel. (Unless, I’d say, the users want to find the half-truths and libel—compare to the argument that eBay doesn’t like counterfeiting; sure it doesn’t, at the point at which counterfeiting starts to interfere with eBay’s own credibility and profitability, but users who are thrilled with knockoffs don’t cause any problem for eBay.)

Search engines also don’t have a relationship with site owners that allows counternotification as a ready response. Regulating search would be a pretense of allowing speech—a “free speech zone” where no one finds the information who doesn’t already know about it. But speech is also about the audience—if people want to find the information, they should be able to do so. Tampering with search is second-best: if we don’t like the content, target the site, which will have better information about the quality of the content and its value.

Jerry Lewis, Chief privacy officer at Comcast: agrees with Nunziato that the law is a mess. There are real underlying technical reasons to engage in network management—congestion issues. The old management technique was content-agnostic and focused on applications generating congestion (P2P services). New technique: content- and protocol-agnostic. It looks at heavy users, and manages them directly. You can always claim free speech interests as a basis for regulation; he’s not convinced they’re important.

Comcast didn’t censor political speech; it has a spam feature and a number of customers hit the “this is spam” button on these emails. Once Comcast looked at the emails and saw they were political, they were whitelisted again in relatively short order. Comcast blocks ½ billion spam messages a day, and there’s a process to fix the inevitable errors.

Scafidi: Gordon’s argument sounds like anyone who has created something and declines to release it is acting immorally. Or maybe it’s immoral to create a bad story that horrifies people, or a jingle that sticks in people’s heads. Under this rationale, is there any justification for copyright? You may benefit enough from hearing something that even a withheld copy isn’t immoral. Isn’t it better to have loved and lost than never to have loved at all?

Gordon: What she’s talking about is part of an elaborate mental conception of the moral core of copyright. In none of this is she questioning the instrumentalist/consequentialist structure of copyright—Congress can further progress in science through copyright. But she is interested in what the moral minimum of copyright must be. One branch: is downloading a violation of the moral core of copyright sufficiently serious to avoid consequentialist weighing over whether Grokster should be shut down?

Also, she is not arguing for a slippery slope. If you take Lockean “enough and as good” seriously, that wouldn’t erode all copyright. The typical commercial copier indeed receives a net benefit even after receiving licensing fees. Scafidi overstates the dangers of the “enough and as good” condition—the condition that the property claimant not do harm to others, and that if he does harm then he does not have an absolute claim to the property.

Nissenbaum for Brown: Privacy right internationally needs to be stated at a high enough level of generality that a culturally specific definition isn’t imposed on everyone. For Grimmelmann: search engines are important, yes, but how far are you willing to go? Can we regulate search engines at all?

Grimmelmann: Purely comparative point—we should go after the site that hosts the content first and preferably.

Brown: Then what do you do if the site is outside your jurisdiction but the search engine isn’t?

Grimmelmann: That’s Yang’s point. As the regulator accountable to my own citizens, I go after the search engine. But for the good of the internet overall, we need harmonization and a set of international standards.

Goldman: Example of internet filtering—move to increasing obligations on intermediaries: cutting off online gambling by going after the payment processors. What do we think of that?

Brown: Regulation is nothing if it can’t be effective. If the US is not going to block access to specific sites, as the UK/EU are trying, then you need an alternative. Note that US trade partners are going after the US for US moves!

Grimmelmann: He thinks this is a procedural issue. Are intermediaries subject to potentially inconsistent and unpredictable litigation? But if you do it in the government, you get a secret blacklist and the process may not be sufficiently transparent and accountable. Assuming we want to ban access to X, how do we go about identifying X and blocking it in an effective and procedurally fair way?

Q: Court records—used to be friction-heavy, so openness had limited costs, but also limited benefits. Now that dissemination is frictionless, does that show that openness was always a mistake?

Grimmelmann: The courts have a responsibility to make privacy decisions; practical obscurity can no longer perform a protective function, so courts have to take new balances into account. Most things ought to be immediately publicly available, sensitive information can be request-only, and truly sensitive material can be sealed.

Brown: Grimmelmann’s suggestion is like the end-to-end rule—decisions are made at the very extremes, not by the intermediaries.

Q: Is trade secrecy a barrier to accountability, for example with filtering/search algorithm decisions?

Brown: in the EU, courts would never allow IP to override human rights concerns.

Fordham, continued again

The Social Impact of Intermediaries

Moderator: Joel R. Reidenberg, Associate Chief Academic Officer & Associate Vice President for Academic Affairs, Fordham University; Professor of Law and Director of CLIP, Fordham Law School

Helen Nissenbaum, Professor of Media, Culture & Communication & Senior Fellow of the Information Law Institute, New York University

Terms of Service: A Play in One Act. Cast: Archie, Dan, Eric, Jack, Maureen, Orin, Wendy, Helen, Valentine, a prof. of business ethics.

Archie: Google’s introduced behavioral ad targeting, and that’s creepy. I’m going to use TrackMeNot, a Firefox extension that obfuscates your real searches and makes profiling harder.

Eric: But that’s illegal! It violate’s Google’s ToS. Art. 5.3, you agree not to access the services by any means other than the interface provided by Google, including scripts and webcrawlers.

Archie: I’ve never seen that!

Helen: Are ToS the law?

Valentine: Why shouldn’t Google be able to impose any ToS they please?

Dan: This reminds me of eBay v. Bidder’s Edge or Intel v. Hamidi: would a court uphold these terms? As a matter of justice: Info intermediaries profit from free availability of info online, then they turn around and impose restrictions?

Helen: Consider the affordances of architecture. The limits of real property depend on the features of real property; characteristics of the medium should matter here too. Since generating logs is inherent in web traffic, does that mean that any manipulation of them is ok?

Archie: Why should site owners be in full control of our interactions? Can’t I defend my privacy?

Eric: This is a free market; parties set the terms. Walk away if you like.

Maureen: That imposes a burden on all individuals surfing—it constrains us from doing what comes naturally and makes us afraid of simple clicks.

Orin: We should write these rules into a technical handshake.

Joel: If automated access degrades efficiency of a site, there should be recourse.

Helen: Discernable harm, sure, but not just traffic the site doesn’t like, whether automated or not.

Prof. of business ethics: Moral issue: Information isn’t free. The intermediary takes info at the bottom of the food chain and creates value. If you don’t want to pay for information, you must be prepared to give it for free. Otherwise you’re like people who fast forward through TV using their DVRs.

Archie: Does that make me a free rider?

Wendy: we don’t know what owning a website entitles us to; shrinkwrap contracts may not be socially beneficial. We will not discover morality in architecture. We must determine the relevant public values to assess the reasonableness of terms and thus whether TrackMeNot is morally defensible.

Jack M. Balkin, Knight Professor of Constitutional Law and the First Amendment & Director of The Information Society Project, Yale Law School

Too many intermediaries; can’t really generalize. Flickr =/ Google Docs =/ Facebook. But he’ll do so anyway. In ancient days, people were very worried about the difficulty of accessing mass media and reaching other people. Old intermediaries, those threats of yore, are now circling the drain. Access is no longer the problem—new intermediaries encourage people to talk as much as they want, especially if they’re posting naked pictures of themselves.

Basic problem with respect to new intermediaries: they want people to post more stuff in order to feed the business model, but most of it, as Clay Shirky says, “isn’t for you.” So, there’s a lot of crap out there. How do you find the stuff that’s valuable, relevant, and credible? We’re in a deeply experimental period.

Mike Yang, Managing Product Counsel, Google, Inc.

There’s some regulator in Turkey who’s furious that something appeared on YouTube; someone else in Korea. You can’t compartmentalize these issues nationally—the panels have had an American view of what intermediaries are doing online. But every day he sees what users are doing internationally, dramatically changing their lives and societies. We take a bunch of stuff for granted in the US that can’t be taken for granted elsewhere, and intermediaries deliver a lot of that worldwide.

Yang doesn’t see the crap; he sees when the content challenges an existing regime: a government, a corporation, a social norm. 1% sounds like a pretty bad balance, but think of Google’s scale—if 1% of billions of users are empowered in a new way, that’s great. The legal department doesn’t get complaints about “my boyfriend posted a nasty picture.” They get the company, the government. They have a slanted view, but those things prove the power for good created by intermediaries. Google’s services create problems for a lot of people, and he tends to see that as good things: free speech causes problems; transformation of existing content makes people upset as it adds new creativity to the world.

Frustrating: the arbitrariness with which the law is being applied at this point. Often the upset person can’t reach the person who they think hurt them, so they lash out at the only party they can reach: Google. Often they can’t find a user even in their own countries. Google’s risk analysis: do I have servers in the country that can be seized? Do we have employees who can be thrown in jail? Google has to act differently when the litigant has a hold on it, whether that way or by the prospect of large damages. Result: arbitrary and chaotic application of international law, not good for users overall (though Yang was careful to say that chaos has its benefits for users as well).

Running joke: by the time the lawyers start thinking about it, it’s probably obsolete. This conference reflects the fact that the law is now focused on intermediaries. We’re at the height of intermediary power. Engineers say: the web is going to open source, openID, FacebookConnect—the concept of the unitary intermediary is not going to reflect the reality. The user will store login info with one provider. Gadgets and applications will be from other companies, and information will flow between all those different points. Some of the parties will be easily reachable by third parties, others not; the law is ill prepared.

Reidenberg: Hearing that social expectations are changing in a way that gets further from the scope of the law and governance and more towards private decisions. TrackMeNot is a private self-help response that fits into this. Yang suggests that international issues make the matter worse. Is law breaking down?

Balkin: Law? No. Yang will still have a job forever.

Yang says yes, he will, it’s just that it won’t be principled. Obeying the law is not the same as giving moral authority to the law while you help your client interpret it. His decisionmaking comes down to a practical assessment, which is scary—other companies may not make ethical decisions. Sometimes he does take ethical stands, but mostly we don’t and shouldn’t leave it up to companies to decide what is the right thing to do for society.

Balkin: Why isn’t it up to companies, which are part of civil society, to decide what the right thing to do is? JP Morgan in 1906 decided that governments couldn’t deal with a fiscal crisis, so he did—and made a bundle, exercising his financial power to stem a liquidity problem. He thinks Yang is basically right descriptively: the locus of power has to be decisions made by companies, many of them intermediaries, about how to structure free speech and control of information. Law is not where the action is.

Yang: Sure, companies have moral/ethical responsibility. But if you have a disagreement in society (comment: I’d say, if you have a law purporting to resolve that disagreement), government is where we’ve looked to resolve those differences, and the law as a tool is diminishing.

Nissenbaum: She’s ambivalent about use of personal info. The law should support the right of individuals to have a say—a company should not be able to enforce ToS that preclude individuals from taking steps to protect the privacy of their information. The law isn’t direct enforcement, but structuring.

Q: Does there have to be a tradeoff between new and old intermediaries? How would we think about quality control of speech?

Balkin: The printing press disrupted the authority of the Catholic Church, but we still have a Catholic Church. He thinks a third way—aggregation, mass participation—is going to develop particular techniques for assessing quality and value, which will be different from current ones, just like a secular world developing out of the printing press assessed quality and value differently from the pre-print world. There will be a tradeoff, but that’s not a reason to be pessimistic.

Eric Goldman: For Balkin: are you suggesting that the “third way” is not hierarchical? Google linking power; Amazon’s sorting of most popular products; eBay’s seller ranking—seems to be a lot of hierarchy.

Balkin: Quality, salience and accreditation are always problems. Government has one way—gov’t produces public goods. Hierarchical system outside gov’t: university, newspaper, publisher: structured as professions, to which people devoted their lives. New way: mass participation, linking, aggregation. Primarily a change in civil society. A different kind of hierarchy—instead of going to journalism school or getting a PhD, and being trusted because of credentials, people will produce knowledge in different ways, only some of which rely on education.

Yang: Net impact of Google is disaggregating. Google Books aggregated a problem that used to be diffuse, but the net effect is to disaggregate power. To the extent we aggregate power or influence, we are pretty subject to competition and the whims of our users. Critics say we’re omnipresent, but it’s because we’re giving users the services they want. (Isn’t that what NBC said?)

Nissenbaum: In relation to privacy in particular, we may want to strive for fairly abstract laws. The norms of info flow are very culturally specific, and we don’t want one nation to impose its culture on others—this is privacy-specific and not about other things we might think of as fundamental liberties.

Q: Civic groups as intermediaries between individual and government—interest groups, social groups, brotherhoods, etc. Social theory used to think those were key to avoiding tyranny. What happens today?

Balkin: Good point—his points were about knowledge, the question is about politics. Where do ideas of the good and the just come from? Various forces in civil society change common sense about rights and justice, and in a democracy that’s supposed to change the law. If democracy is premised on this circulation of ideas, what happens to that in our new world?

Blogosphere: a way of circulating ideas about politics, and it seems to be doing a pretty good job of supporting existing civil society, even amplifying them. There are technologies that actually make it easier for groups to form in real space. Susan B. Anthony had to get on a train and travel around the country, where she had to give the same speech, and they needed committees of correspondents writing to each other all the time. Imagine what Stanton and Anthony could do today—how much quicker to organize, raise money, stay in touch. Final point: if you’d asked a First Amendment scholar ten years ago what’s the biggest problem in democracy, the answer would have been: the flow of money in politics. In the last election cycle, there was much more participation in producing money for governance. It wasn’t perfect and was mostly about the presidential election, but disaggregation/new tech made it possible for more people to influence who gets political office, which improves the problem of corruption/the rich drowning other voices out.

Q: How much resistance to tech is about resistance to change in hierarchy?

Nissenbaum: A big part! Access to information is like any other resource. Shifts don’t always go from powerful to weak; some information may make the powerful more powerful.

Yang: Theme for him: the futility of resistance. Litigating Napster didn’t save the music companies. Litigating Grokster didn’t save the music companies. It’s not changing the technological fundamentals. Google encounters angry governments all the time, and sometimes they succeed in forcing alterations, but the trend line is not good for them. The only country that has successfully gotten its hands around the internet is China, and that’s because it built a firewall and has tens of thousands of people sitting in rooms looking for key words; it made the investment in regulating. The law is not the place where industries/governments should seek solace.

Reidenberg: Five years from now, what will be the most interesting intermediary, socially speaking?

Yang: Five years is a long time! But the trend is the absence of a big, central intermediary. Now that the accumulation of capital necessary to have big companies has occurred, we’ll see more control in the hands of the user.

Balkin: Key tech—forms of social interaction, of which Facebook is the most obvious example. There will be a titanic struggle between Facebook and other intermediaries about interoperability and sharing content—Yang (for obvious reasons) tells a story of a smooth move to interoperability; Balkin thinks there will be a fight.

Nissenbaum: Normatively, she hopes the tech continues to allow small groups/individuals to subvert existing systems. Given the structure of the web, individuals can have a big effect by writing code.

Fordham, continued

Why is Tiffany Blue? 3rd-Party Liability and the eBay Cases

Moderator: Susan Scafidi, Visiting Professor of Law, Fordham School of Law

eBay has been sued here and elsewhere. Rolex won against eBay in Germany, requiring eBay to monitor; subsequently, eBay was found to be sufficiently monitoring. eBay lost cases in France against Hermes and LMVH. Then in Belgium, Loreal lost to eBay. Around the same time, Tiffany sued and lost in the US.

Joseph C. Gioconda, Partner, DLA Piper USA LLP (head of anticounterfeiting): Has represented eBay in some matters and Tiffany in others, but here is speaking as Tiffany’s lawyer. When he started, the contributory liability standards evolved out of brick-and-mortar operations. Judgment-proof defendants, often part of a large criminal enterprise; the people actually selling the goods were often victims of human trafficking. Designers really needed effective weapons—go after the landlords, who have deeper pockets. C&D: we have used private investigators and discovered 1000s of counterfeit sales; you are on actual and constructive notice, and you must put a stop to it or we’ll take your building.

Now this has evolved dramatically—online counterfeit drugs, so he works with pharmacos every day, not just handbag makers for whom there is less public sympathy. The eBay case was closely watched by everyone—designers, pharmacos, ISPs. Assuming that this case becomes Second Circuit law, what do we do? Did eBay do so much that other people can’t afford to do? The court tied its ruling to the facts, and eBay capably showed it was a responsible corporate citizen, so the court found that the general notice—which would have been fine if given to a landlord—wasn’t sufficient. If I don’t have eBay’s resources, an ISP asks, what should I be doing? If the ruling is upheld, should TM owners go to Congress? Should ISPs adopt eBay’s model?

Randi W. Singer, Partner, Weil, Gotshal & Manges LLP: eBay’s counsel in the case. Lots of people think eBay has a big warehouse with all the goods, but it doesn’t. Tiffany demanded that counterfeit goods be removed, and said we’ll make it easy: lots of 5 or more are counterfeit. There were other issues with keywords and sponsored links. eBay is a TM owner itself and respects TM owners’ rights, and has the VeRO system—a notice and takedown system, which works very well (comment: ha!) in the copyright context. eBay refunds users who complain they’ve purchased counterfeit goods. eBay doesn’t like counterfeiting!

Problem: you often need physical possession to discern counterfeiting: assays, measure depth of mark, etc. eBay responds to Tiffany: If we did what you asked for you, we’d have to do it for 15,000 TM owners. eBay filters out listings that red-flag their counterfeit status. It’s easy to filter out guns or lawn darts, which are flat-out banned. It’s more difficult with jewelry, because a legitimate secondary market exists. (This is why I only use eBay to buy Kate Hines jewelry, not better-known names—she’s not counterfeited.) Tiffany was never able to articulate a bright-line rule that could be technologically implemented. eBay had already taken out the low-hanging fruit, and the remainder required some expertise, which Tiffany had more of than eBay. Tiffany conceded that eBay always responded to Tiffany takedowns.

Basic TM law: the TM owner has the duty to police its mark. Tiffany wanted to push that burden onto eBay. Tiffany’s position: generalized knowledge should suffice. eBay’s business model depends on good faith cooperation between eBay and rights owners.

Giaconda: A couple of facts: 15,000 brand owners on eBay, but they’re not all multimillion-dollar businesses that can employ paralegals fulltime to send takedown notices to eBay (are they then heavily counterfeited on eBay?). So to say brand owners have to bear, not share, the cost may allow Tiffany to fight counterfeiting, others will have to trade off brand protection against other objectives, and is that fair? eBay gets a direct pecuniary benefit from the price of each item sold, which in many cases are admittedly counterfeit.

William R. Engles, Jr., Chief Financial Officer, Portero, Inc.

Online secondary market for luxury items: watches, jewelry, high-end handbags, housewares, art. Began as eBay drop-off model, focused on luxury—Greenwich, CT. Differentiated from eBay: guaranteed authenticity. In 2006, changed sourcing model—no physical stores, added dealer and brand relationships, but stayed on eBay until 2007. Then launched own site in early 2007.

Certify every item as authentic before it’s listed. Not a neutral platform—the buyer doeals with Portero, not a third party seller. Has partnerships with certain luxury industry players who certify authenticity.

Good for brands: divert consumers away from uncertified sites.

His experience on eBay: eBay bends over backwards in favor of the rights owner. Seller’s only recourse is to go to rights owner and ask them to rescind. Most luxury brands don’t want a secondary market, and thus they won’t rescind the notice no matter what, though sometimes Portero was successful—once, the legal department shut down auctions that had actually been sourced directly from the rights owner; Portero had to ask the marketers to go down the hall and talk to legal.

VeRO was ineffective and too broad in favor of the rights owner. Doesn’t work for luxury items. It’s not the right buyer group. Only 10% of their present clientele bought from them on eBay—people looking for bargains go to eBay. The third party ought to stand behind its items.

Frederick Felman, Chief Marketing Officer, MarkMonitor

Counterfeiting is not a victimless crime. Counterfeit character mask made with harmful chemicals scarred a kid for life. Counterfeit drugs; lead poisoning from counterfeit jewelry. Tiffany sent 235,000 notices to eBay—think about the burden on Tiffany. It’s automated now, but it wasn’t at the beginning. The clients who enforce with great consistency see infringement decline over time, most of them substantially. It takes a lot to establish an eBay identity, so infringers are more likely to go away—you don’t have to be faster than the bear chasing you, you just have to be faster than the other guy he’s chasing; counterfeiters move on to easier targets. That means that smaller guys do suffer, but not at the same scale that Tiffany did.

Practical things for defending a brand: Work with business side and allocate tasks. Make sure you have a benchmark to see whether you’re getting a return on investment. Devote sufficient resources to get it done: the hard part is monitoring. Infringement happens other than on eBay—B2B operators who sell to others, including retailers. Trace it back to the source, the manufacturer. The FBI only prosecutes 280 counterfeiting cases a year; they don’t have the resources to help you, so you have to help yourself. Look who else in your segment is being hit, and see if there are enforcement acts you can take (together? Antitrust concerns?). Don’t do it if you’re a Tiffany or another large brand without automation. You need to crosslist sellers so you can take action against the multiple offenders.

Singer: There’s only so much eBay can do; eBay has crashed its system adding rules to its filters before. There are smaller players out there, and the point isn’t that VeRO isn’t the end-all but that eBay wants to cooperate. It’s more profitable to build a healthy marketplace with a certain level of trust—a clean, well-lighted place as a longterm business model. (What isn’t being said here, of course, is that some consumers are perfectly happy with the knockoffs, so their interests diverge from the TM owner’s; eBay’s interests align more with consumers than with TM owners.)

Engles: His perception of eBay corporate culture was very anti-counterfeiting.

Giaconda: the eBay decision isn’t just about eBay—eBay is a bellwether for online markets. If a brand spends a lot of money and paralegal time, over time you see changes in the marketplace. But eBay is only one market. If you’re Amazon, or a direct retailer, or a new business: what do you do? The economics adapt to the law; this is about cost-shifting. His clients are sophisticated and wealthy, but relatively smaller businesses/start-ups, they have difficulty.

Q: eBay has so many disputes each year; does law have anything to do with it, or is it just a function of technology? What tech is practical/foreseeable to reduce the incidence of counterfeiting?

Singer: Recall that the fact record in this case was frozen 2005/2006. Some of eBay’s newer measures include things like barring very short auctions for certain luxury items, to avoid lightning-strike counterfeiters; you can’t join eBay and then immediately list 100 Tiffany items. The tech to do that didn’t exist when the dispute started.

Felman: Tech can’t assess many TM disputes over rights, but it can boil down some issues, can help you find recidivists, can help you decide where to focus your efforts.

Giaconda: Tech is great, but when you find the source of the counterfeits, then it’s often in China, and then what you have is an international legal proceeding.

Q: Can you use RFID or similar tech?

Giaconda: Sophisticated counterfeiters buy one genuine product, and post pictures of the receipt and the like.

Q: What are the remedies for people on the other side of a VeRO notice?

Singer: eBay does have a counternotification procedure. It depends on the rights owner.

Engles: We were a big seller, and eBay still wanted us to work with the rights owner. For smaller ones, he’s not sure what they do.

Singer: Policy decision, err on side of rights owner.

Q: Risk to competition—if the policing requirements are onerous enough, smaller players will be driven out. Good for eBay, bad for competition. Happened with COPPA: sites for children have mostly been driven out of business, and you end up with Disney/Club Penguin as the dominant players.

Giaconda: Good question. DMCA as an experiment in this context. A statutory solution might be good—giving a list of 5-10 things necessary and sufficient to qualify for a safe harbor. That lets the new players start up with some certainty. He doesn’t think that would be a dramatic shift, because legit marketplaces are probably doing some or all of these things and illegitimate ones may be struggling in this market. The real question: without a bright line rule, will tech work and will the brand owners invest in the tech? Personally: he likes bright lines better than the tort system at common law, which is complicated and slow—haven’t even scheduled the argument in Tiffany v. eBay. By the time the Second Circuit issues a decision, things will have changed again.

Felman: Notice and takedown is now under consideration by ICANN for new top-level domain names, because of the success of the DMCA. (Success is one word for it, in my opinion, but not necessarily the right word.)

Q: How many takedown notices are erroneous?

Singer: it’s hard to say. eBay doesn’t have a good way of knowing whether the notice of claimed infringement is valid any more than it has a good way of knowing whether the listing is counterfeit.

Q: Any cases against rightsowners for abusive notices?

Felman: Some claims reported on, but not much.

Intermediaries in the Information Society

Fordham, Third Law & Information Society Symposium

Content and CDA Immunity

Moderator: Olivier Sylvain, Visiting Assistant Professor, Fordham Law School

Samir Jain, Partner, WilmerHale

Prior to 230, the analogue to ISP was a distributor: a bookstore. Distributors couldn’t be held liable for distribution unless they knew or should have known about that content. The courts initially tried to apply this framework. But Prodigy, which treated the ISP like a publisher because it did some filtering, sent a shockwave through the industry. 230 was a solution.

Who gets covered by 230? Basically everyone on the internet. When? When the information is provided by another information content provider—someone who’s responsible in whole or in part for the creation or development of the content. So can the defendant be held responsible for the creation or development of the content? Finally, does the action at issue treat the defendant as the publisher or speaker of the content? That’s not entirely clear—might only apply if publication or speech is an element of the tort, with defamation being a classic example, but in practice courts have applied it quite broadly.

First appellate decision: AOL v. Zeran, involving ads for obnoxious Oklahoma City bombing T-shirts that gave out Zeran’s phone number. Zeran wasn’t responsible but got a lot of threats and abuse. AOL delayed in taking down/preventing subsequent postings, and Zeran sued. The first two elements are easy: the only issue was would Zeran’s claim treat AOL as a publisher/speaker? Fourth Circuit said yes—holding someone liable for another’s speech is almost by definition treating them as the publisher/speaker.

Recently: Roommates and Craigslist, both about housing discrimination. Roommates: what was different was that all users were required to answer the multiple-choice questions, and any answer they give was, according to the plaintiffs, unlawful—the fact of revealing gender and number of children was a violation of the law. In that situations, Roommates.com was contributing/developing the unlawful content. This is distinguishable from cases in which the answers are unlawful for particular reasons—for example, when the answers are provided by someone who’s impersonating another person (Carafano). So how broad is Roommates? The court purports not to narrow immunity substantially, though there’s some loose language in there. Subsequent district court decisions haven’t read Roommates to work a big change in 230, though.

Craigslist: The 7^th Circuit was unclear in its analysis. It didn’t answer the question of whether it was adopting the rule that 230 applies only when publication is a formal element of the tort. Much of its policy language supports a broad reading of 230—the costs to Craigslist of filtering are big. But it’s hard to tell.

Eric Goldman, Associate Professor of Law & Director of the High Tech Law Institute, Santa Clara University School of Law

230 is an incredibly broad and robust immunity that’s survived a host of attacks, 100+ lawsuits, with just a handful making some exception. Internet actors aren’t liable for 3d-party content, period. The period is the problem: bright lawyers think that they can outsmart Congress. But remarkably, they’re largely failing—Congress rarely establishes as clean a rule as here.

Exclusions: Electronic Communications Privacy Act (in his opinion, a null set); federal crimes, when the federal government brings a criminal prosecution (gambling, child pornography, obscenity—but the cases make clear that a state crime is preempted); IP (hot news, misappropriation, other state law claims). 9^th Circuit tried to cut off the flexibility in IP by saying state law IP claims were preempted, based on a policy rationale favoring nationwide uniformity. That’s not a popular ruling outside the 9^th Circuit.

Another possible workaround: Roommates—the site is responsible for the questions it picks. Possibly that can be extended to marketing representations, even when those representations can be rendered untrue by third-party content. If the site says “we don’t tolerate defamatory content,” and then someone posts defamatory content on the site, is there a cause of action for false advertising that isn’t precluded by 230? eBay v. Mazur: eBay represented that a third-party’s site was “safe.” eBay said: that’s the fault of the third party. The court said that eBay needed to be responsible for its own words.

Problem: plaintiffs are trying to take advantage of that in problematic ways—trying to hold sites responsible for negative covenants (“don’t post anything defamatory”) in their terms of service. Goldman thinks there are analytical difficulties with this, but that’s probably the most promising way around 230 because there are always marketing representations on a site that are not legal representations.

Why all the agita? 230 seems to break tort law, which we learned in law school applies when someone is involved in harmful activity. If you don’t want liability, do as little as possible. 230 breaks apart those principles as we learned them. A website isn’t liable even if it gets a C&D/takedown; even if it does something to manage/prescreen/edit the content; even if it profits from or takes ownership of third-party content; even if it looks like their content. That just doesn’t make sense from a common-law perspective, so we get the very smart Kozinski and Easterbrook thinking that it can’t be the law.

Two quick defenses of 230: (1) What content do people want to excise from the internet? Mostly, negative criticism/commentary. 230 prevents people from taking away negative content. Otherwise, we’d get a lopsided database. (2) Information markets. The job reference market is broken. Employers won’t give bad references for fear of liability. Compare product reviews on the internet. We see lawsuits against Yelp! users for posting, but Yelp! isn’t liable, and as a result millions of reviews are available on Yelp! Stark contrast to other regimes.

Nancy Kim, Associate Professor of Law, California Western School of Law & Visiting Associate Professor, Rady School of Management, University of California, San Diego

Statutory language: no provider shall be treated as the “publisher or speaker” of information provided by another information provider. Have the courts gone too far in interpreting this immunity? Courts have looked at the nature of the injury. But ISPs shouldn’t get a free pass for being socially irresponsible. They’re businesses, not free speech forums.

They should take reasonable measures to avoid harm. But offline and online are different, so reasonableness should differ. The volume of traffic, the size of the company, the difficulty of controlling content, and the problems of anonymity. There should be no pre-screening requirement, and no liability based merely on notice. Craigslist says 230 isn’t a general immunity from all civil liability. Craigslist itself had measures in place, warning posters against discrimination. The company is leanly staffed and gets millions of posts a day. Also, the Lawyers Committee could go after discriminatory posters themselves.

Roommates was different. It was foreseeable that posters would be prompted to post discriminatory ads. Roommates didn’t actually require posters to put in discriminatory information—posters could choose “no preference,” which wouldn’t violate the law. The problem was that they set up the website to prompt entry of discriminatory information.

Doe v. MySpace: A minor met an adult on MySpace then met him offline and was sexually assaulted. Claim: MySpace should have taken reasonable measures to avoid this, because it was too easy for minors to lie. Court rejected premises liability, but didn’t explain why not. It did apply what Kim considers a reasonableness analysis: MySpace had a minors policy, but the minor lied to avoid it. Age verification software too is not foolproof. Given the amount of traffic on the site, MySpace didn’t need to do more. Its business model wouldn’t work if it had to do more, and Congress has favored online business models.

What if it turned out that 15% of minors on MySpace were meeting adults and being sexually assaulted—would we still get the same result? As a society, that’s not a solution we could live with.

Turn to statute: 230 was designed, among other things, to incentivize blocking and screening technologies, and to immunize ISPs from liability for blocking content they don’t like.

How do we apply that to dontdatehimgirl.com, which publishes pictures and names (including pictures of a man’s driver’s license). All postings are anonymous. This kind of posting is likely to be impulsive. But the site is under no obligation to remove the content—even if you make up with the guy and want to remove it. Gossipreport.com encourages you to make up a profile about someone else, not yourself.

Is this really what Congress had in mind?

Rebecca Tushnet, Professor of Law, Georgetown University Law Center

Preliminary thoughts: notice the ideology encoded in the concept of “intermediaries”—I’m just the middleman—the term automatically calls our attention to the acts of compiling and aggregating. Compare this to “the press,” which also transmits the statements and images of other people (sometimes employees, sometimes not) and yet is traditionally thought at least somewhat responsible for what it transmits. On the other side, you can compare “common carriers,” which aren’t even intermediaries and nobody tries to hold them liable in the modern era. It’s maybe not surprising that we don’t know how to treat the man in the middle.

The moves in the argument over 230 are really well known, on the order of “I can’t pay the rent!—you must pay the rent!” (and somebody always ends up tied to the tracks). At this point I’m inclined to say we need housing reform: that is, if we think that 230 is failing to balance harms versus benefits properly, we need to look at other ways of achieving the benefits we want from regulation.

There are things about 230 that make me uneasy. Example: a pending false advertising/Quizno’s case, where Quizno’s asked users to make comparative ads, and a number of the funny ones said really nasty, possibly defamatory things about Subway sandwiches. If Quizno’s adopts the user-made ads as its own, shouldn’t it be responsible for any defamatory content therein?

Another question to be answered: Lack of uniformity across liability regimes: is IP’s difference from other rights sufficient to justify special treatment? Political power is the easy answer for why IP got treated specially, but there are possible defenses if you think IP rights are easier to enforce or harder to abuse than other claims. (If you think that, do you think that just about copyright? Or do you extend that to trademark? What about the right of publicity? Should publicity be treated the same as privacy?) Should we move towards a more uniform, European-style model where all the rules about intermediary liability are the same?

When we talk about changing 230, though, we go instantly to the move, countermove. Move: it’s impossible to monitor all our content; countermove: but you’re hurting innocent people. Possible synthesis? Notice and takedown: works clunkily with copyright infringement, which is easy compared to defamation and related torts, with which most would-be reformers of 230 are concerned. Potential harms to accused users: When users lose posts or accounts, their lives can be disrupted—social networks are valuable to them not just because of particular content, but because of relationships. Privacy issues: anonymity is an important value for many people; a notice and takedown regime would require the sacrifice of that anonymity to defend a statement challenged by someone upset about that statement.

This is also a debate about acceptable business models: what risks ought an intermediary to take as a cost of doing business? 230 says: not many. Speaking in “business model” terms makes it sound as if greater liability would be fine, just a matter of money, but I don’t think that’s right. The landmark NYT v. Sullivan case establishing newspapers’ almost complete freedom under the First Amendment to say things about public figures was also a case about business models. The Court was quite clear that it endorsed the paper’s business model as a means of implementing First Amendment values—if the paper had to do more fact-checking, it wouldn’t run as many political ads or stories.

Sullivan precludes defamation liability for speech about public officials unless there’s clear and convincing evidence of actual malice, which means actual knowledge or red flags about the falsity of the information published. This rule is especially useful for intermediaries.

A printer reproducing his own words can more easily assess whether he has taken reasonable care to verify truth; the real speech-chilling effects of a negligence standard come when he must guess whether someone else who wants to use his press has also taken reasonable care. Moreover, the printer-intermediary is likely to be less committed to getting a message out than a printer-speaker; more inclined to doubt the truth of another’s claims than of his own, and thus not overconfident about his chances of success in a lawsuit; and overall more risk-averse than individual speakers, not least because of the likelihood that the printer has deeper pockets and is a more attractive defendant from a plaintiff’s perspective. Sullivan, though of course protecting individuals as well, removes barriers that disproportionately discourage intermediaries from carrying others’ speech.

Thus, the Supreme Court in Sullivan analyzed what the Times knew about the truth of the statements at issue, not what the individual author of the ad knew. But Sullivan has not generally been understood as a case about intermediary liability. We have 230 because it was unclear how far Sullivan’s rationale—protection for certain speech-based business models—would extend past its rule—no liability for defamation without actual malice. Now, we’re in a better position to say that some business models do produce a more robust speech environment, and the First Amendment has to be an important concern when we talk about reforming 230.

Standard countermove to Professor Kim: the ISP says, if you make a non-immunity rule, I will take down any content about which I get a complaint. Doesn’t matter whether I’m allowed to take the chance and keep up material I’m not sure about. I won’t, because it’s not worth it to me, for exactly the reasons mentioned above.

Where do people engage in free speech? Central Park? Not very likely these days. If we want practical access, it will move through private entities, whether the NYT or the NYT website.

My preference for solving some problems, though not all: Governance solutions: if intermediaries aren’t responsible for user-provided content, then they should have to give up some control over that content—they shouldn’t be able to use contracts to assert absolute dominion over what they allow. If it isn’t their content when it hurts third parties, then at the very least the people whose content it is should be allowed to play a role in governing the community of which they are a part.

Jain: It is true that ISPs will take down any challenged content if there’s any risk of liability. Even if you say there’s only a 5% risk, why will they take the risk, let alone litigation costs? Liability creates a heckler’s veto. If reasonableness depends at all on notice, then rather than expend resources the ISP will take down the content 99% of the time. There may be cases in which social values outweigh the costs (protection of youth), but as appealing as reasonableness sounds, the practical implication is that any content subject to reasonableness will disappear if challenged.

Goldman: Despite 230, you can get content off the internet from a lot of places just by asking. The incentive structure applies even with immunity. Also: has anyone in the room actually personally gotten a C&D? As a blogger, he gets them more than he likes. Being in the sights of someone in the business of suing people isn’t fun.

Kim: Sensitive to 1A concerns, but thinks they’re exaggerated. Most businesses that we think about do act in responsible, reasonable manners under her proposed model, which looks at the front-end procedures a business has in place, not the content after the injury. There was nothing in the NYT’s business model that was unreasonable. An online reasonability model could be found, taking into account things like the way that anonymity encourages defamation. Ratemyprofessor.com requires students to register, but dontdatehimgirl.com doesn’t.

Tushnet: Consider Kim’s front-end theory in light of the Tiffany’s case, to be discussed—how much has it cost eBay to establish that it’s reasonable (pending appeal)?

Q: If someone were featured on the dontdatehimgirl.com site, what would the panel recommend to do about?

Kim: Not sure there’s a good answer.

Goldman: There are ways to push that into the second page of Google results, which makes them obscure/effectively disappear.

A: Can complain to the website, citing the ToS, and generally they take it down.

Kim: If it’s a responsible business—people who make up with their exes sometimes fail to get content down from dontdatehimgirl.com, because it makes the site more popular.

Jain: Analyzing the business model is a dangerous road to go down. What Congress clearly said was that it wanted vibrant and competitive internet—a host of business models, not ex ante judging of what business models are okay. Is it reasonable to say that a 30-employee site doesn’t need to screen, or is it unreasonable not to have enough employees to screen? A detriment to innovation.

Goldman: Does dontdatehimgirl.com invite inappropriate content? The principle: people should be accountable for their choices. There might be people out there who are really bad dates. Not just boring, but bad. We might want there to be information about that circulating. Whether that site promotes the goal is up for debate, but it’s not the wrong kind of information inherently.

A: Recourse—can post response in the comments—this poster is a psychopath. (Though that response may not help a lot.)

Goldman: People can generate information a variety of ways—allow discussion and remove problematic content; other sites don’t remove content no matter what and don’t allow the target to reply—230 allows a heterogeneity of solutions. It is true: If you don’t have a right of reply on the site, you can get stuck.

Q: Juicycampus.com: The New Jersey prosecutors had trouble finding the posters of defamatory content—a specific problem where the website wouldn’t allow more speech. Is this really protected speech? How does society benefit?

Goldman: Thinks the questioner is talking about AutoAdmit, where students had trouble finding jobs. Juicycampus is the market working very well. A site was eliciting a lot of not credible content; it got drummed out of the marketplace. We are coming to a catharsis about sites that are worthy of our time and credit and sites that aren’t.

A: Public interest—one justification for free speech is not about serving the public interest, but about individual autonomy. Even if the speech is worthless to others.

Q: Generational issue, and we’re all on the wrong side in analyzing how distasteful and potentially harmful information that is not attributable to a person may be. Older people regard it as much more dangerous.

Kim: Not sure it’s true that young people don’t care, but assuming it is, they aren’t thinking longterm. Think of the stuff you didn’t care about other people knowing when you were in college.

Goldman: There was a groundswell of students who protested Juicycampus and argued for self-restraint in using it. Students can make some judgments, even as they figure out reputation in the long run.

My thought: Gender makes a big difference too. With AutoAdmit, women were afraid to go to the gym because of anonymous posters about how they looked at the gym. That’s a real cost.

Kim: Consider the chilling effect of this speech on the speech of the targets. It’s free speech v. free speech—what type of discourse do we want to take shape on the internet?

Q: The legal framework may be at odds with social practice. The definition of what is truly defamatory today may be at odds with the Victorian framework of what counts as defamation. Certain criticisms no longer cause the same kind of harm that they did when the law was formed. People are now aware that the internet counts as public—if it’s out there, it’s up for comment. So maybe we need to change the definition of public figure. (I think this is overstated; people still have local expectations of privacy—in fact, I don’t expect 10,000 people to read my blog. The collapse of the interval between globally public and completely private is a problem, and it’s not complete either.)

Goldman: with every tech, there’s a lost generation. The people afterwards learn from their mistakes.

My thought: danah boyd talks about anonymity/pseudonymity as a positive value from teen perspectives, because young people have been taught not to use their real names in order to protect themselves. To then condemn anonymity/pseudonymity seems odd to them.

Reform proposals?

Kim: Likes the 7^th Circuit rule on publishers. In general, 230 is okay, but reasonableness should come in. She thinks notice and takedown should exist in three cases: (1) where the poster requests the takedown; (2) a naked picture if there’s no written authorization from the subject and the request comes from the subject; (3) a picture of a minor, on request. (Bye-bye, Star Wars Kid.) If they don’t, they should be open to suit on standard grounds, which means they wouldn’t necessarily be liable but it would depend on the background rules.

Goldman: Likes 230; every system has its costs. What made the internet succeed? He can’t rule out that 230 was a big factor. Tinkering with 230 might undo some of that “secret sauce.” He thinks it’s a huge government success.

Hernando de Soto on property and the financial crisis

I thought this article in the WSJ was really interesting. De Soto argues that a lack of a recording system for derivatives is a key component of the problem:

[A]ggressive financiers have manufactured what the Bank for International Settlements estimates to be $1 quadrillion worth of new derivatives (mortgage-backed securities, collateralized debt obligations, and credit default swaps) that have flooded the market.

These derivatives are the root of the credit crunch. Why? Unlike all other property paper, derivatives are not required by law to be recorded, continually tracked and tied to the assets they represent. Nobody knows precisely how many there are, where they are, and who is finally accountable for them. Thus, there is widespread fear that potential borrowers and recipients of capital with too many nonperforming derivatives will be unable to repay their loans. As trust in property paper breaks down it sets off a chain reaction, paralyzing credit and investment, which shrinks transactions and leads to a catastrophic drop in employment and in the value of everyone's property.

Ever since humans started trading, lending and investing beyond the confines of the family and the tribe, we have depended on legally authenticated written statements to get the facts about things of value. Over the past 200 years, that legal authority has matured into a global consensus on the procedures, standards and principles required to document facts in a way that everyone can easily understand and trust.

The result is a formidable property system with rules and recording mechanisms that fix on paper the facts that allow us to hold, transfer, transform and use everything we own, from stocks to screenplays. The only paper representing an asset that is not centrally recorded, standardized and easily tracked are derivatives.

Of course, de Soto's claim that recording systems govern all valuable property rights is true for patents, but not for copyright (no registration required for protection, thanks, Berne Convention!) nor for trademarks--though one can expect the most valuable of both to be subjects of filing with the appropriate government office, so it's not as bad as all that.

Public Citizen's guide for citizen-bloggers

Public Citizen explains the guide as follows:

This is a guide for bloggers and non-profit organizations about writing with libel considerations in mind. The guide discusses the elementary principles of libel law and explains how to prepare for and conduct a pre-publication libel review. It is particularly importance to have a third party, not otherwise involved in the preparation of a report or blog post that criticizes individuals or organizations, compare all possibly-defamatory statements with the sources for those statements.

It should prove very useful to citizen journalists.

Dastar bars express misattribution claim

Pot Luck, L.L.C. v. Freeman, 2009 WL 693611 (S.D.N.Y.)

A very interesting case in which Dastar was used to bar what I would have thought was a claim for express misattribution not covered by Dastar (though disallowed by other doctrines). Maybe it’s the difficulty of articulating which doctrine ought to apply that made Dastar an attractive explanation for why plaintiff couldn’t win.

Anyway, on to the case: Pot Luck sued defendants to enjoin them from distributing, selling, or marketing the film High Times’ Potluck, to which Pot Luck owns the registered copyright. (The magazine High Times helped produce and finance the film; I take it that Pot Luck bears some relation to the magazine.) The claims: copyright infringement, along with Lanham Act and related state law unfair competition/fraud claims. Pot Luck had granted defendants an exclusive right to distribute the film, first in the US and Canada and later worldwide. Pot Luck alleged that defendants failed to distribute and promote the film as agreed under the licenses, wrongfully denied territorial licenses to third parties who wanted to distribute the film, and failed to pay Pot Luck.

For the copyright claim, the issue was whether Pot Luck’s claims were for infringement or for breach of contract, a question on which there is extensive Second Circuit precedent. The key was whether Pot Luck had rescinded any license to defendants; if so, it could sue for infringement, but if not, its remedies were in contract. Though Pot Luck alleged that it had made multiple demands on defendants, the licenses limit its right to rescind, granting defendants an “irrevocable” license. Such terms have been upheld under New York law. Thus, the court lacked subject matter jurisdiction.

On the Lanham Act claims, defendants argued that plaintiff lacked a protectable mark. The court, however, went in another direction. “Origin of goods” under Dastar means only the producer of the tangible goods, not the author of any idea, concept or communication embodied in those goods. As a result, “[t]he right to copy creative works, with or without attribution, is the domain of copyright, not of trademark or unfair competition. The failure to credit the true author of a copyrighted work is not a false designation of origin, but a violation of copyright.” Contractual Obligation Prod., LLC v. AMC Networks, Inc., 546 F. Supp. 2d 120, 130 (S.D.N.Y.2008) (quoting Freeplay Music, Inc. v. Cox Radio, Inc., 409 F. Supp. 2d 259, 263 (S.D.N.Y.2005)).

You might be wondering why the court is relying on cases about failure to credit when the problem here appears to be credit. This decision about maintaining the copyright/trademark boundary. Because there is no copyright claim, defendants can distribute the film without fear of copyright liability. (We’ll set aside the contract remedies.) That freedom would be unduly constrained if the defendants had to take the name of the film, or the filmmakers, off. In other words, it’s true that the film is High Times’ Potluck. If—which is far from certain—consumers believe that distributors need Pot Luck’s permission to distribute the film because the name itself implies permission, then we will nonetheless disregard that confusion as a matter of law. Any confusion is immaterial to consumers, who want High Times’ Potluck rather than wanting the identical “authorized” High Times’ Potluck. Among other things, the result in this case throws the old Beatrix Potter case, in which public domain images of Beatrix Potter illustrations were held to be protectable as trademarks when used on the cover of Potter books, into significant doubt.

For whatever reason, the court didn’t talk about the copyright/trademark conflict, instead fixating on “origin.” Because defendants were the manufacturers and distributors of the physical copies of the film, the court ruled, consumers wouldn’t be confused about the “origin” of the film. Except that the possessive title High Times’ Potluck doesn’t identify defendant, the actual origin—it (allegedly anyway) identifies plaintiff!

The court compounded the weirdness by distinguishing Chambers v. Time Warner, Inc., 282 F.3d 147 (2d Cir. 2002) (a pre-Dastar case): in Chambers, the court of appeals allowed a §43 claim against mp3.com for using musicians’ names and likenesses to promote recordings offered on its site. But, the court here reasoned, mp3.com wasn’t the “origin” of the musicians’ names and likenesses, because mp3.com wasn’t the “original producer or distributor” of the musicians’ names and likenesses. That’s kind of shockingly muddled (even setting aside questions as to why the original distributor gets a pass, such that if defendants had been the second group Pot Luck contracted with the allegations would state a claim).

The whole point of Dastar was that if you produced the physical instantiation of a copy, you’re its “origin” for §43(a) purposes. Under this reasoning, perhaps customers’ computers were the origin of the particular instantiations of the names and likenesses at issue in Chambers, but let’s assume that mp3.com gets saddled with them. Mp3.com is then actually producing the copies of the names and likenesses, just like Dastar in Dastar. The court here is comparing tangibles to intangibles. But the basic reason that the court’s reasoning is so creaky is that the claim in Chambers is false endorsement/affiliation, like Pot Luck’s here. Such a claim might or might not survive Dastar. I don’t think Chambers is so easily distinguishable from the present case. Mp3.com had the recordings to offer, and it’s copyright’s job to police that, not trademark law’s. (If we want to go some sort of nominative fair use route, we might allow the names and not the likenesses, but it depends on the circumstances.)

This decision isn’t wrong; it’s just right for the wrong reason.

Anyway, the court moved on to dismiss Pot Luck’s “unfair competition” Lanham Act claim, reasoning that Pot Luck didn’t sufficiently allege either a trademark or a false advertising claim under that head. With the federal claims all gone, the state-law claims were dismissed for lack of supplemental jurisdiction, and the court denied leave to replead any of the federal claims. Pot Luck was granted leave to replead the state law claims if it could plead diversity jurisdiction, though the court warned that many of the allegations appeared insufficient on their face, and that injunctive relief was barred by the licenses.

Announcement: Fordham Symposium on Law in the Information Society

Intermediaries in the Information Society
March 27, 2009

PANEL DISCUSSIONS

Content and the CDA Immunity
When do—and when should—intermediaries receive immunity for user content under the Communications Decency Act? Panelists will discuss the status of CDA immunity, the standard for when an intermediary can be deemed a content provider after the Roomates.com and Craigslist cases, and whether the CDA immunity should be modified.

Why is Tiffany Blue? 3rd-Party Liability and the eBay Cases
Should online auction houses or other third parties be responsible for the sale of counterfeit goods? Panelists will address the ongoing series of attempts in the United States and Europe to extend the scope of vicarious liability and contributory infringement, as well as related issues.

The Social Impact of Intermediaries
What impact do intermediaries have on society and culture? Panelists will discuss the ways intermediaries have changed how information is created and communicated—and the ways that intermediaries may impact the future of the information society.

Intermediaries as Legal Filters
Should intermediaries be used to filter information? What impact will filtering methods such as deep packet inspection have on immunity and liability for intermediaries? Panelists will examine requirements for ISPs to block access to sites containing material deemed illegal, explore filtering done for business reasons, and consider a range of filtering purposes--from censoring speech to combatting child pornography to ranking search results.

Practical Tips for Advising Intermediaries
Practitioners will provide guidance about things to be aware of when advising intermediaries.

CONFIRMED SPEAKERS INCLUDE

Jack Balkin,Knight Professor of Constitutional Law and the First Amendment & Director of The Information Society Project, Yale Law School

Ian C. Ballon, Shareholder, Greenberg Traurig

Dr. Ian Brown, Senior Research Fellow, Oxford Internet Institute & Honorary Senior Lecturer, University College London

Dan L. Burk, Founding Faculty, University of California–Irvine School of Law

Eric Goldman, Associate Professor of Law & Director of the High Tech Law Institute, Santa Clara University School of Law

Wendy Gordon, Visiting Professor, Fordham Law School; Philip S. Beck Professor of Law & Paul J. Liacos Scholar in Law, Boston University School of Law

James Grimmelmann, Associate Professor of Law, New York Law School

Paul Gupta, Partner, Orrick, Herrington & Sutcliffe LLP

Thomas D. Halket, Attorney and Chartered Arbitrator, Halket & Weitz LLP

Samir Jain, Partner, WilmerHale

Nancy Kim, Associate Professor of Law, California Western School of Law & Visiting Associate Professor, Rady School of Management, University of California, San Diego

Helen Nissenbaum, Professor of Media, Culture & Communication & Senior Fellow of the Information Law Institute, New York University

Dawn C. Nunziato, Associate Professor of Law, George Washington University Law School

Joel Reidenberg, Associate Chief Academic Officer & Associate Vice President for Academic Affairs, Fordham University; Professor of Law and Director of CLIP, Fordham Law School

Susan Scafidi, Visiting Professor of Law, Fordham Law School

Rebecca Tushnet, Professor of Law, Georgetown University Law Center

Jay Westermeier, Of Counsel, Finnegan, Henderson, Farabow, Garrett & Dunner LLP

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The symposium is open to the public.
Registration fee: $30 per person; $140 per person for practitioners who wish to earn CLE credits.

• Reduced rates available for academics, nonprofit/government employees, and Fordham Law alumni.
• Review Fordham Law's financial hardship policy for this symposium.

All events take place at Fordham Law School in the McNally Amphitheatre.
140 West 62nd Street | New York, NY 10023

Hofstra Conference on Energy and the Environment: Empowering Consumers

A Threat to Consumer Empowerment: Greenwashing

Me: I’m interested in how consumers understand advertising claims in general. The claims we are discussing here are strange from the perspective of early advertising theory – they’re not about individual use attributes like taste (experience claims). Most green claims can’t be verified by consumers, or even by a group of consumers – these are extreme forms of credence claims. Economic theory says that purely rational actors should discount credence claims entirely because they’re unverifiable. Given how common credence claims are, it’s evident that advertisers are not aiming at the market segment consisting of purely rational actors. And the empirical literature makes clear that credence claims work, if only because familiarity with any claims breeds trust in those claims. Among other things, memory of source decays faster than memory of claim, so eventually even ad skeptics start to credit the substance of ad claims.

Most people have only a vague notion of what a carbon footprint is, or lifecycle analysis, etc. And consumers know they don’t know. As Alan Levy says, buying a green product is an act of symbolism and faith. Worse still, there’s some evidence that consumers reward themselves for “good” purchases by indulging on some other metric—so if consumers think that a product is good for the environment, or otherwise morally good, on one axis, they will be satisfied and not necessarily ask about the other ways in which the product might be less than ideal, even for environmental reasons. A limited or distracting green claim can thus be just as persuasive as an unlimited one.

False advertising law may be of limited assistance in dealing with complicated green marketing claims. At least in the Lanham Act context, meaning private lawsuits between competitors, some cases hold that terms that consumers don’t understand, or only have vague expectations about, cannot be false because they don’t communicate specific enough information. Example: In one recent case, the court concluded that, although Mitsubishi designated its television set as a 1080p television set, the phrase 1080p “does not convey a specific claim that is recognizable to the targeted customer”—it just indicates a technologically sophisticated TV set. Another: when a vacuum cleaner maker made up a scale of vacuum effectiveness, but the scale had no external meaning, the court concluded that the scale couldn’t be deceptive because it didn’t tell consumers anything they understood.

For green marketing claims where consumers have no preexisting understanding of what the claim means or how it relates to other green claims, that might mean that only a regulatory standard, or maybe an industry standard, would be enough to set a baseline against which claims of falsity and misleadingness could be made. Knowledge from the FDA, courtesy of Alan Levy’s excellent summary of the research: Consumers generally don’t assume ads or labels are educational; they don’t look to Exxon for information about the environment. They are looking for product-specific information. Likewise, consumers don’t necessarily assume ads are reliable. They don’t carefully assess every claim – they know they can’t -- but they look for whether a claim is consistent with what they already know. This is the value of a positive brand identity: it makes claims automatically more credible.

What is a marketer to do? Dietary supplement makers use the news to provide information to consumers about what new products they should consumer because news is more credible. News outlets always need to fill the news cycle, and they often report what marketers tell them.

Consumers’ rules of thumb, all pointing to a regulatory solution: (1) Ubiquitous claims generate confidence that the claims have been vetted and are trustworthy. If McDonald’s and Burger King and Subway all make the same pitch about healthy meals, consumers will trust all of them more. (2) Marketing that uses the same format to convey information increases credibility. This is why the nutrition panel on food has been a huge success—it’s easy to use and it’s trustworthy; consumers don’t need to know how nutrient levels are determined or even how it was decided which nutrients should be labeled. And it explains why industry should (and often does) want a Green Guide. (3) Corollary: without a market standard, inconsistency signals ulterior motives and heightens skepticism.

Laura DeMartino, Assistant Director, FTC Enforcement Division

Enforcement isn’t the only FTC activity—business guidance, and support for self-regulation. Two simple rules: tell the truth and have substantiation for your claims. FTC looks at ads from the perspective of the consumer. Express claims are easy, but you also need to identify implied claims. FTC has Green Guides for businesses, but it isn’t an environmental agency. Its job isn’t to encourage “right” decisions, but to make sure that consumers can make their own choices.

“Eco-friendly.” The advertiser may mean that the bottle is made of recycled plastic, but the consumer may interpret it to mean that the production didn’t cause pollution. By using a broad claim, the advertiser may be conveying claims for which it lacks substantiation. Relatedly, don’t overstate claims: “50% more recycled content,” where the content increased from 2% to 3%: that’s likely to convey a false impression of a significant increase. If a claim is true but misleading, marketers can use qualifications or disclosures to limit the claim, but not by using footnotes.

“Biodegradable”: FTC requires it to break down in a relatively short time when disposed of in a conventional manner. Bunnies diaper ads said these diapers would decompose before your child grows up. FTC brought an enforcement action: Most trash ends up in landfills, which are designed to avoid biodegradation.

“Recyclable”: The product has to be capable of being collected/diverted from the solid waste stream, and there must actually be existing programs in a substantial majority of the communities in which the product is sold or a substantial majority of the population to which the product is sold. To consumers, recyclable means you can recycle this. FTC tested some qualifications, and found that marketers need to be really clear. “Check to see if recycling facilities exist in your area” did not inform consumers. You need to say: “Recycling programs may not exist in your area.”

What about “please recycle”? Doesn’t say recyclable. Research: when consumers see that, they think programs to recycle exist, so the same qualification is needed.

The Green Guides are under review. There are a lot of novel claims. For example: paint with an insulating quality that will decrease energy losses 40-60%--the FTC is now in court on that. Another claim FTC is acting against: advertiser’s device will turn any car into a hybrid. FTC can and will seek monetary remedies: not toothless.

Katherine Farrara, BBB, National Advertising Division staff attorney

Farrara had awesome slides! NAD does ~150 cases/year with seven staff attorneys, everything from personal computers to household cleansers to male enhancement products to animal husbandry. Green claims receive some play as well. The ondustry was quick to respond to consumers’ environmental concerns in the 1980s. They made useless product changes, overstated green benefits, advertised to people’s misconceptions, and occasionally just made stuff up. Example: Hefty “degradable” bags with green imagery. The problem: they went to landfills.

Another great one: less light for same money: replace your 100 watt bulbs with 90 watt bulbs!

Companies are making legitimate efforts to educate consumers and change products, but unfortunately there will always be some who aren’t. Consumers can’t distinguish accurate and inaccurate green claims; they simply lack the info.

Examples of recent NAD decisions raising recurring issues. (1) Ad for Panasonic plasma TVs: taking one attribute of the product and saying that it lacks lead/mercury, and LCDs do, thus plasma is environmentally friendly. But consumers think that “friendly” means good for the environment, or at least not bad for the environment. But plasma consumes more energy than same-size LCDs. NAD recommended removal of the “friendly” claim.

(2) Polygreen claims: 100% oxo-biodegradable. But consumers read that as biodegradable, which is not true.

(3) Natural claims. Arm & Hammer is trying: claims “100% naturally derived surfactants,” which wasn’t true because after processing the content was only 35%.

(4) False denigration: Companies spend money to create a green product, and then want to scare the crap out of consumers about how ungreen competitors’ products are. Series of ads, all including a dead thing soaked in formaldehyde; what was marketed was actually wood paneling, PureBond, for inside the home. “Formaldehyde is quite beneficial. Unless you happen to still be breathing.”
They can definitely advertise that their own product lacks formaldehyde, but they had no evidence that the level of formaldehyde in the competing products was harmful.

Elizabeth Glazer, Hofstra Law: Two sets of interests—consumers who have the right to make their own autonomous choices. And consumers as people in the world who are benefited by the environment being better. Greenwashing is bad. But we want to avoid disincentives for companies that try to be green.

Is there anything like reverse greenwashing? Can you imagine a product that doesn’t enhance its reputation by being green, and conceals it? [Rob Walker’s Buying In discusses pretty much this scenario, with American Apparel—doesn’t spend much time advertising organic fabric or good labor policies; advertises based on sex appeal.]

DeMartino: No one forces marketers to advertise anything unless they’re saying something misleading that requires a qualifying disclosure. On the first point, deterrence: that’s why we have Green Guides and not Green Rules—FTC doesn’t want to inadvertently chill claims.

Me: I don’t buy the idea that the point is to guarantee individual choice: making a standard encourages valuing it—USDA meat grading means that people value Grade A over other possible ways of evaluating meat; organic rules encourage production of food that meets the standard and discourage production of food that only has a small percentage of organic ingredients; disputes over whether dairy producers can use the label “rBGH-free” or whether that misleads consumers about safety (even if it also provides truthful information about environmental consequences). I've written about this.

Farrara: An ad campaign goes through a bunch of hands before reaching the public. The creatives, the lawyers—they fight about what they can and can’t say. The Panasonic lawyers probably cut back on the number of green claims in that plasma TV ad. People advertise green claims in order to make money.

Q: Small Vermont business: Chose not to use “biodegradable” on a cup when the cup met ASTM standards, because appropriate recycling was not available outside Vermont. Businesses need incentive to innovate, which is absent if you can’t market; and then municipalities don’t invest in composting facilities because they don’t think biodegradable products are out there. Chicken-and-egg problem.

Separately: Given how small the impact of a CFL is, especially on a clean grid, how is anyone supposed to substantiate a claim about energy?

DeMartino: Have heard feedback on this issue of “recyclable”/biodegradable. But consumers have also reacted by saying that “recyclable” is a hollow call to action if recycling isn’t available, and use would lead consumers to discount the claim even when recycling was available. Qualifying claims may be your solution: the guides provide examples for marketers.

Q: Car manufacturers—how can all these different superiority/fuel economy claims be true?

DeMartino: EPA does require a label. After that, puffery kicks in—some claims are just not verifiable.

Q: Are there statutory changes that could help? Or is it a question of enforcement? There’s no private cause of action under the FTC Act. Should we increase penalties? Ads change minds even if they’re withdrawn.

A: I’m fond of standards, but they do have costs in controlling innovation. The nutrient panel means that it’s hard to convince people that they should pay attention to nutrients that aren’t on it. The EPA mileage estimates are wrong, but they’re still valuable insofar as they allow people to make comparative judgments between cars. (Though hybrids may change that.)

Farrara: People are anxiously awaiting the new Green Guides.

IP/Gender: Save the Date

Sixth Annual IP/Gender: Mapping the Connections
Female Fan Culture and Intellectual Property
April 23 & 24, 2009
American University Washington College of Law

Thursday, April 23, 2009 | 7:15 pm
Multimedia Show: “WeTube: Women Transforming Mass Media”
Francesca Coppa, Muhlenberg College | Jonathan McIntosh, Digital Artist and Media Activist

Friday, April 24, 2009 | 9:00 am — 4:30 pm
Opening Remarks
Rebecca Tushnet, Georgetown University Law Center

Topics:
Is There a Text in This Work? Transformation Beyond the Written Word
New Forms of Organizing: Women Reinterpret the Legal, the Educational and the Political
Cui Bono? Economic Contexts

Participants:
Ann Bartow, University of South Carolina | Francesca Coppa, Muhlenberg College | Casey Fiesler, Vanderbilt University | Melissa Tatum, University of Arizona | Robert Spoo, University of Tulsa | Tisha Turk, University of Minnesota | Ann Shalleck, Washington College of Law | Laura Murray, Queen’s University | Jordan Gilbertson, University of La Verne, College of Law| Karen Hellekson, Transformative Works and Cultures | Peter Jaszi, Washington College of Law | Kristina Busse, University of South Alabama | Abigail De Kosnik, University of California, Berkeley | Zahr Said Stauffer, University of Virginia School of Law

online registration, link to webcast and updates

Salad days for defendant who altered "best when purchased by" dates

United States v. Farinella, -- F.3d --, 2009 WL 615408 (7th Cir.)

A Posner opinion can be expected to entertain; if you’d rather read the whole thing, here it is. Farinella was convicted of wire fraud and introducing a misbranded food into interstate commerce with intent to defraud or mislead.

In May 2003, Farinella bought 1.6 million bottles of Henri’s Salad Dressing. The manufacturer-provided labels said “best when purchased by,” followed by dates from January to June 2003. In order to sell the dressing to dollar stores, Farinella pasted over the “best when” label with new labels using May or July 2004. Judge Posner called the government’s use of the term “expiration date” “false and misleading” in itself. In opening argument, the prosecutor said, “it’s a case about taking nearly two million bottles of old, expired salad dressing and relabeling it with new expiration dates to pass it off as new and fresh.... [N]obody wants to eat foul, rancid food.” Posner distinguished an expiration date—“the date after which you shouldn’t eat the product”—from “best when purchased by.” The salad dressing here is shelf-stable, and has no expiration date, or at least none of interest to anyone but the cockroaches who will survive the human race.

The reseller received some complaints about the relabeling, though none about taste or other qualities, and complained to Farinella, who said that he’d checked with the FDA and that the relabeling was okay. He was lying about checking with the FDA, and about some other things. But there was no threat to human health, or even evidence that the salad dressing deteriorated, even by the time of trial.

The FDCA defines “misbranded food,” but not specifically with respect to label dates. Farinella’s acts were criminal only if the label was “false or misleading in any particular.” There’s no FDA or FTC regulation of “best when purchased by” or of people who change the “best when purchased by” label. There was evidence at trial that Unilever picked its “best when purchased by” date based on tests, but no evidence of what was tested—Posner suggested it might have been taste.

Moreover, there was nothing in the record about what consumers think “best when purchased by” means. Without direct or survey testimony, there was no way to determine whether the redating was misleading. There was no evidence that the term has a uniform meaning in the food industry. The government contended that it was a synonym for “expires on,” but presented no evidence of this, and simply argued it to the jury as if the terms were synonyms.

There was no specific regulation covering this issue. “As far as the evidence shows, any firm in the chain of production and distribution that leads from the manufacturer to the ultimate consumer can make its own judgment of when the taste of the product is likely to deteriorate. For all we know, the date is determined less by a judgment about taste than about concern with turnover.” This was my thought—the “best” date might be one that leads to a certain amount of tossing out old but still usable product, though Posner then proceeded with standard invisible-hand reasoning to show that the producer would have some countervailing incentives as well. Posner also speculated that “best” dates allowed for price discrimination: wealthy consumers can buy before that date, and poor ones can buy after at a discount. But then is Farinella avoiding that price discrimination by deceiving consumers, who by hypothesis do consider the date material? No, because he sold in dollar stores, to price-conscious consumers who were willing to take the risk of lower quality. (But then why did he do it? Maybe price isn’t the only thing those consumers are looking for; maybe they’d rather not have to think of themselves as buying out-of-date food for their families.) Or maybe, Posner continued, the “best” date is a time-limited warranty, and if the product isn’t “best” through that date consumers are entitled to a refund.

Of course this is all speculation, but Posner thought his speculations were “less implausible” than the government’s assumption that “best by” meant “expires on,” so that consumers “would not dream of buying the product no matter how steeply it was discounted” once the date had passed. That’s a pretty extreme requirement for consumers; does the existence of freegans who score food out of dumpsters mean that “expires on” is equally irrelevant?

Posner further found that the admission of an FDA employee’s testimony was improper. The employee testified that the FDA has a database of inquiries regarding the relabeling of food products, that he had looked in the database, that he had found no record of an inquiry from Farinella about relabeling salad dressing, and that the FDA requires supporting data before approving a request to change the date. But there’s no requirement of FDA approval—there’s no statute, regulation, written guideline or opinion setting forth this requirement. One employee’s opinion is insufficient to satisfy due process. And of course witnesses can’t testify about the substance of domestic law, either. Even worse, the testimony here was “not just improper and inadmissible but incoherent”—he didn’t know what the FDA says about “best by” dates, he didn’t know what “best when purchased by” meant, and he contradicted himself on whether the FDA had authority to regulate expiration dates.

Bottom line: In order to prove fraudulent misrepresentation, “ a jury must be given evidence about the meaning (unless obvious) of the representation claimed to be fraudulent.” (Ah, obviousness. So useful, and yet so tricky in practice.) Farinella was entitled to an acquittal based on insufficient evidence.

Then—and this is why there’s probably more interest in this opinion than in even the average Posner opinion—Posner went on to consider why Farinella had been convicted despite the paucity of evidence. He blamed a series of improper statements by the prosecutor in closing argument. First, she attacked Farinella’s exercise of his right to counsel, saying that he was trying to buy his way out of his crime.

Second, she linked the “best when purchased by” date to health and safety, for example telling the jury that the date “allows a manufacturer to trace the product if there is a consumer complaint, if there is illness, if there is a need to recall the product.” But there was no evidence this was true, either in general or in particular. She repeatedly raised the specter of unsafe food: “in spite of all this talk about the quality of the dressing, I don't see them opening any of these bottles and taking a whiff”; the defendant was indifferent to “safety”; “the harm caused by the fraud was to public confidence in the safety of the food supply”; the defendant sold “truckfulls of nasty, expired salad dressing.” These and other statements led Posner to warn that the conviction would have been reversed for prosecutorial misconduct had there not been insufficient evidence.

Amy Adler on moral rights

Amy M. Adler, Against Moral Rights, 97 Cal. Rev. 263 (2008). An excerpt:

This essay seeks to undermine the foundations of moral rights scholarship, law, and theory. My argument is that moral rights laws endanger art in the name of protecting it. Drawing on contemporary art theory and practice, I focus on the moral right of “integrity,” called “the heart of the moral rights doctrine.” This right allows an artist to prevent modification and, in some cases, destruction of his art work. As I show, the right of integrity threatens art because it fails to recognize the profound artistic importance of modifying, even destroying, works of art, and of freeing art from the control of the artist. Ultimately, I question the most basic premise of moral rights law: that law should treat visual art as a uniquely prized category that merits exceptions from the normal rules of property and contract.

Who's the patron saint of disappointed postulants?

Hoyle v. Dimond, 2009 WL 604899 (W.D.N.Y.)

Defendants operate the not-for-profit Most Holy Family Monastery (MHFM). Hoyle entered the monastery in 2005, intending to become a Benedictine monk. Defendant Frederick Dimond (who goes by the name Brother Michael Dimond, OSB) told Hoyle that MHFM dated to the 1960s and that Dimond was a Benedictine monk who supervised the monastery. Hoyle gave MHFM cash of over $65,000, then decided to become a postulate, which Dimond told him required him to turn over his worldly possessions to MHFM. Hoyle thus gave MHFM $1.2 million in stock, then executed a document stating he was to receive $750,000 if he left the monastery. He later found out that MHFM was not a Benedictine monastery, that Brother Michael was not a member of the Order of St. Benedict, and that he couldn’t become a Benedictine monk through MHFM. He sued to recover money he donated to MHFM in reliance on its representations regarding its affiliation with the Order of St. Benedict, alleging fraud, negligent misrepresentation, unjust enrichment, and money had and received.

Defendants argued that the court lacked subject matter jurisdiction under the First Amendment, because the dispute couldn’t be resolved without interpreting religious doctrine, specifically what it means to be “Benedictine.” Hoyle rejoined that the fraud issue was one of affiliation: were the defendants affiliated with the “universally recognized and sanctioned” Order of St. Benedict?

Courts can’t resolve controversies that require resolution of matters of religious doctrine. But they can decide disputes if they don’t have to rely on religious doctrine to do so, applying neutral principles of secular law. Hoyle has the burden of showing subject matter jurisdiction, and favorable inferences aren’t drawn in his favor. For purposes of the motion to dismiss, the court accepted the allegations that the defendants represented themselves as Benedictine; that defendants aren’t members of the recognized Order of St. Benedict; and that they convinced Hoyle to turn over his worldly possessions ot him on the false promise that he could become a Benedictine monk. Whether defendants are associated with the recognized Order of St. Benedict can be determined using neutral principles. The dispute is not between MHFM and the Order of St. Benedict, but between Hoyle and MHFM. But, if after discovery, it becomes clear that resolving the dispute would require ruling on religious doctrine, the question could be revisited.

Supplier turned competitor faces false advertising and trademark claims

Irwin Industrial Tool Co. v. Worthington Cylinders Wisconsin, LLC, 2009 WL 606218 (W.D.N.C.)

Irwin does business as BernzOmatic. It sued Worthington for breach of contract, unlawful price discrimination, Lanham Act violations, and related state law claims. According to the complaint, BernzOmatic makes tools, including hand torches and other gas combustion devices; it has registered trademarks for BERNZOMATIC and a recognizable trade dress including color. BernzOmatic is the market leader in consumer hand torches and cylinders. For over twenty years, Worthington’s predecessor Western supplied BernzOmatic with hand torch cylinders, which BernzOmatic then sold under its own brand. Worthington acquired Western in 2004, assuming its oblgiations under the contract between Western and BernzOmatic: Worthington would be the sole supplier of specified cylinders at set prices; BernzOmatic was the sole outlet for those cylinders; and BernzOmatic had the exclusive right to sell them to distributors and retailers.

In 2005, the parties negotiated a new agreement that allowed Worthington the exclusive right to sell cylinders to certain specified customers, and also allowed Worthington to terminate the exclusivity provisions of BernzOmatic purchased fewer than 14.25 million cylinders in a 12-month period. In 2007, Worthington notified BernzOmatic that it was terminating the exclusivity provisions, and that it considered BernzOmatic’s recent acquisition of Ultra Blue Technologies to be in bad faith, because Ultra Blue’s PowerCell products directly competed with sales of Worthington Cylinders. BernzOmatic didn’t contest the termination, but pointed out that Worthington’s own exclusivity rights were terminated as well, and argued that the PowerCell products were smaller and thus not covered by the parties’ supply agreement.

Shortly thereafter, Worthington notified BernzOmatic that it was terminating the entire supply agreement because of the purported breach arising from the PowerCell sales. BernzOmatic alleged that Worthington knew that there was no breach, and had known about PowerCell for over a year before raising it as an issue. Rather, BernzOmatic alleged, Worthington just wanted a pretext to avoid the price agreement and sell cylinders directly to mass merchants and others. Worthington then dramatically increased its prices, but BernzOmatic had no alternative sources and thus had to pay the new prices, disrupting its ability to supply its customers. When BernzOmatic found a new supplier, it still paid higher prices.

Worthington began selling its own cylinders in direct competition with BernzOmatic. They were substantially similar to the previous cylinders, including the same trade dress with a distinctive blue color for propane and yellow for MAPP gas cylinders.
(Here’s a website selling Worthington cylinders with a picture of what appears to be a BernzOmatic cylinder.) Worthington began advertising using a picture of a hand tearing away a BernzOmatic label on its hand torch cylinder, revealing a Worthington label underneath and states: “Uncover the name you've trusted all along … All the quality you've come to expect in hand torch cylinders is now available direct from the source.” BernzOmatic considers this disparaging. (Here’s a website stating that BernzOmatic has attempted to avoid products liability claims by blaming Worthington and its predecessor for making the cylinders.)

BernzOmatic alleged that the ad falsely stated or implied that consumers shouldn’t trust BernzOmatic, that they were really purchasing Worthington when they thought they were purchasing BernzOmatic, and that BernzOmatic is not the brand that they trusted it was. Moreover, BernzOmatic alleged that the ad was likely to cause confusion about affiliation, connection, association, origin, sponsorship or approval.

The court first rejected the “trust” claim. Nothing in the ad explicitly says that consumers shouldn’t trust BernzOmatic, nor could such a representation reasonably be implied. Indeed, the ad is flattering: BernzOmatic has been, and should be, trusted—and because Worthington is the “source” of BernzOmatic cylinders, so should Worthington.

Next, BernzOmatic alleged that the ad falsely stated or implied that consumers were buying a Worthington product when they thought they were buying a BernzOmatic product. Worthington argued that this statement was neither false nor misleading, because it was literally true. However, the ad could reasonably be read to imply that Worthington has been the source of BernzOmatic cylinders for the entire time that BernzOmatic has been selling them, but this isn’t true—Worthington took over only in 2004 and stopped in 2007, not “all along.” This was enough to state a false advertising claim. For the same reasons, BernzOmatic sufficiently pled a false or misleading association between Worthington and BernzOmatic to state a claim.

Query: would this be the same result if the nominative fair use test were applied? In the 9^th Circuit at least, nominative fair users don’t have to speak with exquisite precision. In the 3^rd, by contrast, nominative fair use requires an accurate statement of the relationship between the parties. “All along” might be inaccurate, though it’s a bit vague.

Google Book Settlement at Georgetown

Last week, Georgetown held a symposium on the Google Book Settlement. I was unable to attend, but Siva Vaidhyanathan and James Grimmelmann spoke, and you can see their presentations at this link. I wish I'd been able to go to this and the Columbia symposium on the same issue--good summaries at the LibraryLaw Blog. With many of the commenters, I share a deep feeling that the publishers active in the settlement shouldn't be getting paid for orphan works; that's much more insulting, in a very real way, than Google or re-users getting paid for them, because the publishers not only aren't the owners of the orphan works, they're the competitors.

Reading list: trademarks as false advertising

J. Shahar Dillbary, Trademarks as a Media for False Advertising

I saw this paper presented a few weeks back. Here's the abstract:

This article explores an unnoticed aspect of trademark law which in some circumstances constitutes a license to cheat. Trademark law protects consumers against the seller who passes off his product as another’s (interbrand fraud). But it does not protect consumers from a seller that uses its own trademark to misrepresent its own product (intra-brand fraud). False advertising law protects consumers against intra-brand fraud, but only if the seller uses a descriptive term. This is the license to cheat: If a seller uses a non-descriptive mark to sell its product, no cause of action arises under the law of false advertising (because the mark is not descriptive) or trademark law (because there is no passing off). The article explores how an alternative conception of the economic function of trademarks can be used to understand the informational value of trademarks and their advertising function. After identifying circumstances appropriate for legal intervention the article concludes with a proposal for a new interpretation to the Trademark Act that addresses this troubling situation.

The seven dwarves of menopause

Dave Wieneke pointed out that images of Disney's Seven Dwarves are circulating along with an apparently popular meme naming the seven dwarves as menopausal symptoms. Of course Disney doesn't own "seven dwarves," but as he notes, a lot of times the list is accompanied with that particular Disney image. My quick Google found it back as far as 2006. Wieneke found a pharmacy ad reproducing the Disney dwarves; here's a hand-embroidered sweatshirt doing the same. It just goes to show that even Disney can get overwhelmed by a meme.

Conference announcement: Gender on the Frontiers

Columbia Journal of Gender and Law

presents its Triennial Symposium:

April 10, 2009 9:30 am- 5:00 pm

Room 107

Jerome Greene Hall

Columbia Law School

For registration information, please email jrngen@law.columbia.edu

Women Crossing Borders, 9:30 am

* Soraya Fata, Staff Attorney, Legal Momentum

* Sharmila Lodhia, Post-doctoral Fellow, Santa Clara University

* Jenni Milbank, Professor of Law, University of Technology, Sydney (Australia)

* Catherine Dauvergne, Associate Professor of Law, University of British Columbia

Traditional Institutions through a Non-Traditional Lens, 10:40 am

* Angela Irvine, Principal Researcher, Ceres Policy Research

* Eva Ryrstedt, Associate Professor of Law, University of Lund (Sweden)

* Sarah Valentine, Associate Law Library Professor, CUNY School of Law

Real Queer Advocacy: Intersection and Divergence, 11:45 am

* Libby Adler, Professor of Law, Northeastern University

* Tony Varona, Professor of Law, American University

Keynote Address, 12:45 pm (luncheon in Jerome Greene Annex)

* Dean Spade, Assistant Professor of Law, Seattle University

Legally-Constructed Gender and Sexual Identities, 2:30 pm

* Jessie Hill, Associate Professor of Law, Case Western Reserve University

* Khiara Bridges, Fellow, Center for Reproductive Rights - Columbia Law School

* Barrak Alzaid , MA Candidate Performance Studies, New York University

* Shankar Prasad, Chief Marketing Officer, AKOS Health Systems, Inc.

* Carrie Nordlund, Assistant Professor of Politics, Lake Forest College

Women Committing Crimes: Gendered Conduct Outside the Law, 4:00 pm

* Rebecca Tushnet, Professor of Law, Georgetown University

* Francesca Coppa, Director of Film Studies, Muhlenberg College

* Linda Fentiman, Professor of Law, Pace University

* Benedetta Faedi, Graduate Fellow and JSD Candidate, Stanford University

Final panel will be followed by a reception in Case Lounge, JG 701, 5:00 pm.

Organization for Transformative Works membership drive

In its first year, the OTW has done a number of wonderful things: built Fanlore, a fan-run wiki; launched a journal, Transformative Works and Cultures; submitted comments to the Copyright Office in support of a DMCA exemption for vidders and other fair users; begun the Vidding History project; and coded a new fanworks archive, the Archive of Our Own--from what we can tell, one of the largest woman-run open source projects extant--that is now in closed beta (anyone can read and comment; new accounts for posting fanworks are limited) and hoping to move to open beta in the next year. With so many of the spaces where people congregate on the internet in profit-seeking hands, it's vital to keep some alternatives alive. The OTW is one of those alternatives, building a nonprofit infrastructure. Your donation is tax-deductible in the US, too, so please come on by.

Remixalicious

Given the conference I just finished, I figured I ought to share a great fanvid I just found. But first, the context.

The Discovery Channel has a great commercial about its shows as ways of exploring the wonders of the world. Webcomic xkcd does its own version. xkcd fans film a live-action version of the xkcd comic. Then another fan takes the audio from the live-action version and sets it to clips from Heroes. Watching all these makes me think: I love the whole world, and all its mysteries!

Remix/Mashup at Ohio State panel 3

Panel 3: Mashup as Political and Social Expression

Lee: What does all this have to do with democracy, as in actual participation and change rather than just feeling good about living in a democracy?

Julie Ahrens, associate director of Stanford Fair Use Project, representing Shepard Fairey in the suit with the AP: Deep conflict between copyright and free speech, where owners get to tell other people what they can’t say. Fair use is the essential lubricant to resolve the conflict. The real risks come from copyright owners trying to silence messages they don’t like. In 2008, McCain used a clip of himself at a debate in an ad; Fox News sent a takedown notice and C&D letters to the campaign. Fox was supporting Giuliani at that point, sending takedowns to all the other Republican candidates: exemplifies the use of copyright to silence.

One thing that people sometimes say is that mashups aren’t specifically commenting on the underlying work, just used to reach a public. But fair use goes beyond commentary to transformativeness generally, and creating a political message/radically different message is a form of transformative use that should be protected.

Coppa used her time to show two vids, The Glass, about what happens when you take away the glass that separates characters, and Handlebars, about the dangers of Doctor Who. In the first, the vidder takes blockbuster shows/films and shows how to watch them for intimacy and barriers to intimacy, including homoerotic tension. In the second, there’s a critique of the character—the song is perfect for the character and shows how a friendly, warm persona is actually wielding dangerous and destructive power. These remixes are like essays, but in a different medium.

Liv Gjestvang, coordinator for Ohio State’s digital media and filmmakers: We expect young people to learn to read critically, analyze and develop arguments; we need this in visual media as well, and it’s frightening how little is happening on this in schools.

Access is also a big problem. People are too blasé about this: kids all have cellphones, they say. But there’s lots you can’t do with a cellphone, especially in terms of intervening in culture. Huge population lacks broadband access.

JD Lasica, writer/blogger/consultant: Pre-YouTube, the internet was different. He has experience with sites trying to sort through content and trying to decide what’s legal and what’s not; sympathizes with YouTube’s decision not to make any judgment calls. He thought that people would put up their own works, and that would be it. We need to find a way to support journalism, which is under assault.

Jonathan McIntosh: Showed a portion of So You Think You Can Be President. Pop culture is an important part of our political language: “who’s going to be voted off the island next?”

Xavi Macias, remixer: He’s interested in the process at least as much as the product, for what it does for the remixer. He also echoed the call for attention to access, the precondition for participation. He showed portions of several different remixes by different participants in the remix institute, some of which seemed banal to me and some of which I loved—and the banal ones were just as fair and good; even if I didn’t like them, and even if nobody else did either (which I doubt), it’s still Sturgeon’s Law again.

Ben Relle: There’s a lot of good and a lot of bad out there, but the awesome thing about internet culture is that lots of different people get to decide which is which instead of bottlenecks. Examples: Barack Obollywood.

Lasica: Authenticity as a value: social media seems handmade, the product of effort and not a factory process.

McIntosh: Don’t fetishize number of views/appeals to the broadest possible audience. Sometimes that’s a race to the bottom. Works that criticize racism/sexism will not necessarily circulate as widely as ones that reinforce dominant ideas. There is value in the subculture.

Coppa: Cautionary note: so much community conversation is being hosted on for-profit networks; if the companies fold or decide they don’t want certain kinds of users, conversations can be disrupted at the drop of a hat.

Relle: With the election, entertainment was more popular early on, and later the highly critical stuff got more play. A video of a soldier without a leg addressing and criticizing Obama reached 12 million views.

Gjestvang: We need to figure out how to connect people in real life.

Macias: You can’t keep a social movement going on Facebook alone. You need to reach out into the physical world, as the Obama campaign did.

Prof. Peter Shane: But the will.i.am “Yes We Can” video wasn’t amateur, and it had a lot of power and effectiveness in the political world. Knows someone who hadn’t voted before s/he saw the video, then decided to vote for Obama.

Coppa: She cringes when “amateur” is used in this sense. The will.i.am video was done as a labor of love; amateur is not necessarily about training—many vidders have artistic training.

Q: What tech do we need?

McIntosh: Tools can be used by big corporations or small artists. Coppa spoke of trying to build public space, not owned by corporations. But that’s space and not tech.

Coppa: A lot of these spaces started out small, local, open-source; when amateurs (for love) cleared out the roads, then companies came in with the big tractor trucks. The OTW is a nonprofit to give the community longevity and avoid buyout. Tech improvements can be problematic when they come with changes in governance and structure of the community—YouTube’s automated takedowns, eliminating fair uses with an algorithim.

Q: She’s disturbed that someone would make an important political decision based on what an entertainer like will.i.am says. Shouldn’t we look for balance in information?

Ahrens: Well, the example was someone who hadn’t voted before—the video got them to vote. You can’t do in words what you can do in video and music, and this election created broad grassroots support, a lot inspired by these kinds of videos and Shepard Fairey’s poster resonating with people. Once people get involved, then you can try to get them to read the articles they wouldn’t otherwise have read.

McIntosh: Also consider why people don’t vote. If CNN isn’t speaking to them, why should they watch CNN? If will.i.am can tell you why Obama matters, that’s useful.

Relle: In aggregate, online video had more content than the candidates’ own messages. Ads would do things like show a picture of John Kerry and then some wolves, with the message “people are trying to kill us!” That’s ridiculous.

Shane: Does this have payoff beyond remixing your favorite TV show? Do people go further?

[intervening here: I have a complicated and intense set of reactions to this. I will set aside the valuation of engagement in popular culture as obviously less than engagement in “real” life. But I never understand why people ask this question: how could there not be spillover? Look, I’ve always been mouthy, starting from a place of privilege. But once I started blogging, I became a lot more confident that everyone was entitled to my opinion—and nobody even comments here! And what was I doing here? Well, a lot of summarizing of other people's words. While I wrote down my insanely detailed notes of conference presentations, or summarized false advertising cases, I realized I had things to say about them, and I put them in.

For people who aren’t sure they have things to say, experience saying them, and getting feedback, is liberating. “Who do you think you are?” is most often a question asked to suppress contribution; sometimes it doesn’t even need to be asked, because people have already internalized the message that they aren’t worth listening to. Making something, especially something that comments on an artifact that other people will know and have opinions about (and likely be willing to share same with you), gives people their own answers to that question. I’m the girl with the tablet laptop; I love copyright and trademark and advertising law; I love fanworks; I love transistors. (Boom de yada!) Who do you think you are?]

Lasica: It’s already happening in how people are getting their information, from their friends and their personalized news streams.

McIntosh: Something happens when you’re analytically or literally deconstructing and reconstructing media: when that’s the norm, cultural practice changes.

Gjestvang: Mashup isn’t necessarily countercultural or counterhegemonic, but it is speaking, and we need to consider that a good. Obama Girl was successful because it’s political and because it draws on sexist images and tropes. There needs to be opportunity for people to learn to think critically and create, but we’re not sure what they’ll do.

Coppa: Women are learning tech skills—Final Cut, Photoshop, coding, etc.—so they can make sites and banners and vids for their favorite shows. This is serious play. We are really writing, in order to communicate to an audience, which is very different from writing for a single teacher’s assignment. Remixing teaches important skills that work elsewhere.

Remix/Mashup at Ohio State panel 2

Panel 2: Filmmakers on The Creative Process
Speakers: Ben Relles (Obama girl), Gordon Quinn, and Mindy Faber

Mindy Faber showed a great video and discussed a student who made a video sampling sexist songs and images of young girls being sexualized, and afterwards said that she couldn’t look at TV the same way ever again, once having been in the position of analyst/creator. This is a key point because schools, in the position of institutions trying to manage risk, are scared by copyright and extremely deterred by the DMCA from allowing media learning.

Gordon Quinn spoke of the right to participate and the right to materially benefit from creations, and thus his desire to balance robust fair use with compensation. He showed a clip from one of his films—a use of “Puff the Magic Dragon” from Refrigerator Mothers, about the mothers of autistic children—one man wanted his mother to listen to the show, which are about “a boy in whose head was locked an untold secret.” The boy in the cartoon wouldn’t speak or communicate, and the man shared this cartoon with his mother. Restated the themes of the movie.

The author had a policy of not licensing, because everyone said the song was about smoking pot. Eventually, Quinn used a personal connection to get him to watch the film, at which point he granted a license. Stories like this explain why 10-second rules don’t work; every situation is different, and we need to work it out in collaboration.

Ben Relles: In total, his YT videos have been seen 6 million times, about the same as Obama’s YouTube channel. He relies on news clips, and when his clips are embedded elsewhere they aren’t always marked as humor; he seems quite sanguine about that. Coming up on 2 years of Obama Girl videos; fortunately for him, people want political humor even beyond the election cycle.

Faber and Quinn discussed moral issues: privacy, intimate stories are put on screen. Appropriating images of someone’s mother may be unethical regardless of fair use. Quinn discussed a movie he advised about underground abortions—very sensitive.
Relles: think about footage of Jeremiah Wright, or McCain supporters at rallies—people need to know what they can do to participate in the process. (I think this interacts with the previous discussion of morality: what does it take to become implicated in a public issue? Do we need to be fair to Jeremiah Wright, or individual McCain supporters?)

Q: Given how quickly Relles turns things around, how do you do clearance?

A: Once he was acquired by a big company, had access to lawyers to ask for ideas. Has definitely killed videos for lack of clearance, including one of Obama and Clinton making out at a Jessica Simpson concert, which he considered a real shame.

Q: How do you move this into schools?

Faber: Difficult in many ways: knowledge, resources, infrastructure. Teachers don’t know whether it’s okay for students to edit together material from YouTube, or for them to show clips of Hitchcock to teach about montage. School becomes increasingly irrelevant to kids because they are using a different system for learning. Faber supports the DMCA exemptions proposed by Renee Hobbs, which would allow both teachers and students to make clips for educational uses. Notes that you don’t need to be a success on YouTube; what you often want is to make change in the community, and showing your video to 200 of the right people may be success.

Remix/Mashup at Ohio State panel 1

Panel 1: Mashup, UGC, Hollywood, and the Law

Gillian Lusins: Standard disclaimer. Fair use is a powerful and flexible tool, centering on transformativeness, which is what you add/bring to a work so that it becomes yours (interesting language!). That’s a necessary part of fair use.

Darrell Miller, partner at Fox Rothschild in LA: His clients are actors, writers, directors, producers. They are on both sides of this debate. (Funny how everyone claims that, though I thought Lusins and Miller were saying what they believed.) They use UGC to pitch new shows. But when NBC wants to use a clip with a celebrity, his clients are part of unions with prenegotiated rights to be paid. They expect the opportunity to be paid or to give permission.

As long as UCG featuring his clients is private and small and fun and not commercial, usually he doesn’t get a phone call. If it’s all over the internet, at YouTube or Funnyordie, then he gets a phone call asking him to secure payment. Practical reality: 85% of artists are typically unemployed at any given time. Working-class artists are the majority.

Pam Samuelson: There are a wide range of opinions on UGC and the law; here are some. (1) Should be noninfringing; people have a right to participate in culture; fair use should be reserved for more commercial contexts. (2) Generally fair use, especially when it’s parody; there are lots of reasons to need to conjure up an original; many content owners react positively to such uses anyway, because it’s generally so impossible to clear rights that fair use is a better option; content owners can’t easily facilitate transactions. (3) Mexican standoff: fair use as long as it’s noncommercial. (4) Need to amend copyright law to create an exception. (5) It’s misuse of copyright to challenge fair use remixes. (6) Throw up your hands: it’s impossible to regulate UGC so get over it/Ed Lee’s warming effects theory that copyright is being reformed on the ground by people using content without permission. (7) UGC is a gray area that gets no free pass; should not be presumed lawful. (8) Must license everything; if no CC license, then no use without permission.

Me: Two axes of discussion: transformativeness and commerciality. The second is proving difficult in this conversation—copyright law has a crazy definition of commerciality, sometimes including even sharing files for free (Napster). Miller spoke of YouTube as commercial, but commercial for whom? The people uploading video are doing it for free, and most have no hope or intent of making money. The commercial hopes of the conduit shouldn’t be the key, any more than the paint store’s receipt of money for paint and canvas makes all painting commercial. People who create with no hope of monetary reward make different things than people who want to participate in the money economy, and both are valuable.

Differences in media further complicate things. For text, quotation is currently barely interesting in fair use law. At present, quoting a work in another work is essentially categorically fair use. See Jonathan Lethem. On images, the law is more confused. Images are powerful and lawyers don’t know how to deal with them as well as we deal with words. Images are hard to dissect; you need to copy them to talk about them persuasively, as with the Zapruder film. Yet they also seem expressive and thus deserving protection—both sides seek “protection” from the law. Music is even worse: lawyers don’t think well about music. The First Amendment protects music, which makes sense given that people have gone to jail in other countries for making the wrong type of instrumental music—we know music can be subversive—but it’s really hard to explain why music should count as speech. That’s a big reason why the fair use issues seem so intractable.

Lusins: Fair use is a product of the First Amendment, allowing use when the four-factor test is satisfied. (Note how this account collapses fair use into transformativeness into free speech, something I’ve written about before.)

Samuelson: She argues that fair use falls into typical patterns or clusters, beyond the four factors: authorship-promoting, competition-promoting, access-promoting, innovation-promoting, and so on. Within one doctrine, we have a bunch of doctrines, which makes it difficult to speak coherently about fair use doctrine because of the different policy functions it serves.

Lee: is the 1976 Copyright Act working reasonably well, or do we need a legislative solution?

Samuelson: Copyright works at three different levels: (1) Within the copyright industries; fair use is important. Within the industry because they generally have lawyers and familiarity with rights clearances, they do more rights clearances than other people would do (Lusins interjects that industry participants also are used to deciding when to take the risk of being sued, as with the Barbie Girl case). (2) In the courts. (3) On the ground. (1) and (3) are not the same, and part of what’s going on is interaction between the layers and influence of one on the other. Case law rides between these two, and affects (1) and (3), though (1) more powerfully. We probably should revamp the system, but the typical way to do reform is legislative, and the political economy is such that we couldn’t improve the current mess, so we’re relying on the courts to use the existing flexibility. Ed Lee argues that copyright reform is happening on the ground. Samuelson is working on principles as a basis for a new statutory framework. We should start the conversation, but we’re not there yet, and UGC isn’t generating enough litigation to demand new legislative steps.

Me: Look at the entrenched interests in sound recording performance rights going on now. I like the idea of a right in theory, but in practice it will add 80 pages to the copyright act with support for existing business models.

Lusins: Ongoing litigation about DMCA; but in terms of fair use, it’s very flexible and allows changes and new forms of communication. The test itself doesn’t need change. The European system can’t react to new uses in the same way.

Miller: The test is fair, but tech has created a class of people who have the ability to create, but no ability to litigate. Home remixer is going to be crushed right away if a copyright owner objects. He’d be interested in a compulsory license, as for musical works.

Lusins: Doesn’t like the word compulsory, antithetical to the notion of copyright. Most compulsory licenses don’t contemplate large changes to the original work. (Me: Though if you like to think about it that way, fair use is a compulsory license at a zero price.)

Lee: Go back to the individual user. He gets a lot of queries about what counts as fair use; it’s very difficult for individuals to resist threats. One proposal: Michael Carroll’s idea of having an administrative agency review fair use claims and issue opinions, handling it cheaply, like the UDRP.

Lusins: As someone who uses the UDRP, she doesn’t think it’s a great model.

Lee: Another proposal, Parchomovsky and Goldman—more detailed safe harbors, like 10 seconds of video in noncommercial work.

Samuelson: They’re both terrible ideas. Dangerous to have administrative review—the Copyright Office is nice, but they’re backward-looking, not forward-looking, and you have a better chance in court to get a new thing accepted. Look at the DMCA exemptions—they’ve been pretty narrow and constricted. We wouldn’t get a public-regarding outcome. And the safe harbors, well, if you look at the history of guidelines, like classroom use—they were supposed to be floors, but they’ve become ceilings. (If you have safe harbors, you need to have sufficient incentives for boats to leave the harbor, or you don’t get any trade.)

Miller: On the other side, 10 seconds could be too long if “Whassup?” is your only moment of success. A one-note Johnny has one asset, and an arbitrary safe harbor could wipe him out.

Quinn: Another aspect: Remixers/users need to be at the table, both commercial and noncommercial.

Samuelson: There was a time in the 1980s when the Court said commercial is presumptively unfair; then the Court retreated. It’s still important, but less so now—virtually every fair user is a commercial player, at least in terms of what gets litigated.

Me: Commercial means something odd in copyright; compare to what it means in First Amendment law, where it covers a much more limited set of works. The NYT is a commercial speaker according to copyright law, but not according to First Amendment law. Copyright’s expansive notion of commerciality has made it very hard to think about what should and shouldn’t be deemed to need to participate in a licensing market.

Jonathan McIntosh: We need to be concerned about all the people who are deterred by the exercise of power, or even its threat.

Miller: Biggest example is sampling in the music industry—deters creation. Similarly, video companies will be unwilling to let go of individual clips. For many of his clients, it’s okay if it’s underground or a small website, but when YouTube is acquired by a big company, then the talent has a bigger problem. Even if you want to protect the individual creator, the client says, NBC now owns the platform and is getting millions for ads, then the indirect commercialization is something they want a share of.

Samuelson: There are a number of organizations these days available to help the remixer who gets a threat letter. Stanford’s Fair Use Project, the EFF, clinics at many law schools around the country—USC, AU, Fordham soon (me: the OTW!); chillingeffects.org puts up threat letters and responses to show that you don’t have to cave.

Q: What about micropayments for remixes?

Lusins: Sometimes artists don’t like to license—part of copyright is the right to say no. Woody Allen doesn’t want anyone touching his movies. Also there are often multiple people with rights to control/get paid. If you use a SAG performance in another audiovisual work without permission and are subject to the SAG contract, the actor is entitled to seek triple the day rate, which can be an enormous amount of money. That’s how they keep people from reusing performances. That interest group won’t be satisfied with micropayments (not to mention giving up control).

Miller: Tom Cruise isn’t the issue—it’s the day worker living on residuals and clip licenses. If there’s a right to not compensate them, that stream dries up.

Coppa: Speaking on behalf of her practice community: one reason she emphasizes its 35-year history is to make the point that they’re early adopters, creating the internet. From her perspective, content owners are coming into her space; they’re building a shopping mall next to her community center. The idea of giving things for free on the internet is now someone’s business plan, but it used to be what people did. The idea that when commerce shows up noncommerciality has to give way—that the internet can’t be private, cool, small and fun—is really scary and destructive. To what extent is the shopping mall allowed to retroactively condemn the community center by making it look monetizable?

Miller: The community centers are analogous to the underground—never going to be a big issue.

Coppa: But the space just got bigger. YouTube users had the infrastructure change around them.

Miller: No one was making millions of ad dollars around your community, and as long as that didn’t happen it’s a nonissue. But now it’s monetized, one private entity versus another, then my clients want to participate in some form.

Coppa: But the “you” who’s profiting is different from the “you” who’s creating.

Miller: A public interest space would be different.

Julie Ahrens: Picking up on the idea that few cases end up litigated—does that mean fair use works? People have questions about what they can do all the time, and scarce resources to litigate. Are there structural ideas of reform that could help solve this outside of litigation?

Samuelson: There are a lot of tolerated uses now, which become de facto fair uses, which is good.

Me: Americans are crazy; if they get less crazy, then chilling effects would decrease. More seriously, best practices are a pretty good idea.

Remix/Mashup 2009: The Future of Creative Production and Ownership

Welcome and Introduction

Ed Lee: We’re here because of the growth in amateur creations online and off, known variously as UGC, social media, or DIY. Every person can become a publisher and potentially reach millions. Part of this is remix, including remix of other UGC. Lee showed a popular video, David After Dentist, with a high little kid (poor kid!) and then some remixes with the kid replaced by a cat, a cartoon, and Darth/Chad Vader. (My reaction: the filmmaker-dad’s rights aren’t the problem! The problem is the privacy of this poor kid!)

Opening Roundtable on Mashup, User-Generated Content, and the Future of Cultural Production

Francesca Coppa, Muhlenberg/OTW: She wants to preserve fan cultures. Her community was remixing in the snow both ways, before it was popular—she directed a series of short films about vidding for MIT, aimed at middle schoolers. Vidding is a 35-year-old remix culture invented and still dominated by women who use music to tell the story of the visuals, analyzing, commenting, etc. Vids use music as a critical lens to make viewers re-see the images.

Vidders traditionally worked underground, fearing suit and mockery because vids regularly put emotion front and center in pop culture texts—showing the love in a cop story, etc. Coppa felt this female subculture was being written out of remix history. It’s a coherent artistic environment with schools, lineages, self-reflective analysis—remix video isn’t just for teen boys.

Mindy Faber, director of Open Youth Networks and filmmaker: Artists often fear lawyers. She was blown away by students’ enthusiasm for political remix as demoed by Jonathan McIntosh, so she created a Fair Use Remix Institute for students. She’s interested in fair use, but more in how young people could learn to make critical remix, to examine their cultural and political lives and talk back to what they see and hear. She showed a remix based on the Transformers movie trailer, in which an alien invasion was changed to a corporate invasion. Doing remix is a powerful form of media education.

Alison Hanold, associate director of AU’s Center for Social Media: Has worked on Codes of Best Practices, and Recut, Reframe, Recycle, which looks at how people are using copyrighted works apart from wholesale copying. Some of these methods of quoting are examples of fair use best practices in action. Fair use is often transformative and tailored (not copying the entirety). Types of fair use: commenting/analyzing; accidental/incidental as part of a scene; perserving/memorializing (clips of Kanye West saying “George Bush doesn’t care about black people” that the network doesn’t want shared); juxtaposing meanings to create new ones (the Bush/Blair Endless Love video).

People consider themselves participants in culture. They have a sense of ownership of their own culture; existing works are part of their own expressive vocabulary. Culture is always created out of old culture. Normalizing fair use is a way to keep culture healthy. Those who assert fair use rights keep it available with less self-consciously developed theories and avoid the strangulation/criminalization of culture.

Gillian Lusins, counsel for NBC Universal on the TV side (Saturday Night Live, Late Night), with standard disclaimer that these aren’t NBC’s views: She is interested in remix because NBC shows are where most people saw their first mashups, done to satirize/parody talk shows. Comedy’s lifeblood is satire/parody.

A lot of times, commentators attempt to reduce fair use to noncommerciality. In order for copyright law to preserve creators’ rights and control, we need other factors to balance. Fair use shouldn’t dwarf the right to make derivative works.

NBC’s Lazy Sunday helped popularize YouTube. (NB: Starting from The Chronicles of Narnia!) People desire to consume media in new ways—Hulu is NBC’s response to that. But in the end, these are copyrighted works and creators have ownership rights and demand artistic integrity. (Work for hire, anyone?)

Paul Miller aka DJ Spooky: Sampling from statements before, he heard about artistic integrity/media literacy; the tension between art and artifact. Sampling is always additive. You never just extract. There’s tension between content and context. Context providers are different from content providers.

The political economy of sound: sound is a universal grammar; we navigate and balance with the ear. People are still applying physical values to immaterial culture. DJing is a new kind of literacy in which sound is part of your toolbox, like paint in a palette. He likes to quote Ralph Waldo Emerson: “a writer appears to more advantage in the pages of another book than in his own.”

The 20th century obsession with mass production has been turned on its head with mass customization, and sampling is part of that.

Law is growing more distant from folk culture. Original objects are no longer key and the culture of the copy is not based on scarcity. When culture is free, what does “value” mean?
Gordon Quinn, documentary filmmaker (incl. Hoop Dreams): This is not a new issue. The Universal Declaration of Human Rights says that everyone has the right to participate in the cultural life of the community, and everyone also has the right to the material and moral benefits of authorship. There’s a contradiction/dialectical relationship fundamental to any open society.

Twenty years ago, documentarians were using fair use all the time. The insurance companies wouldn’t cover it but you could still get broadcast. Big rights owners started threatening directors, TV stations, even insurers. Hoop Dreams had to clear “Happy Birthday” when one boy’s family spontaneously sung it. Clearance culture overtook fair use. Artistic decisions were hampered.

The Center for Social Media worked to develop fair use principles. Working together, filmmakers asserted fair use and convinced TV broadcasters and even insurers to recognize fair use.

Quinn is a rights holder; he doesn’t want his work stolen. But in a democracy full of image and sound, fair use is necessary to prevent the existence of the unspeakable/unshowable.

Question from Lee: Is this time period different from the past in terms of developing new policy?

Miller: Yes, it’s time to figure out a balance. There’s a lot of poorly written law. He’s never been sued, but his friends have. They have to edit their work to the point of unrecognizability. You couldn’t make a Beastie Boys album now. The law is also unenforceable; the gap between life and law is bigger than ever.

Quinn: Copyright law itself is good; the DMCA is a problem. We need to return to founding principles. If we don’t organize as a community we will be left out. That’s how we got the DMCA.

Coppa: These processes are not new in making culture. There are new opportunities for communicating. We’ve known for a while that readers make meanings; now you can make a vid that is a staged reading, in the same medium as the original source, and communicate with others about it. You could read a book and have an opinion; you could share it at your book group; put it on the web—now you’re a publisher.

Faber: In her experience at the Art Institute of Chicago, she recalls video art quoting a lot of copyrighted material, e.g. a feminist reading of Wonder Woman. There was no C&D because no one was paying attention; artists were marginalized, not on TV, even though they were commodifying their work in the art world. They were not taken seriously. Remix culture does question ideology, including the ideology of ownership, generating backlash.

Lusing: The term transformative can evolve and has evolved. Tech-focused changes in law tend to be a mistake, freezing the law in the shape of the tech. If you’d said posting snippets of TV on YouTube is ok because there’s no market, that would have stopped ad-supported on-demand streaming as with Hulu (note: that’s not snippets).

Miller: But kids don’t think of copyright law as relevant to them. Rip, mix and burn is the psychology. Burning a CD is not breaking into a house.

Quinn: Kids in Faber’s workshop make music too. They don’t want other people to be making lots of money off of their music. Compensation isn’t the only thing, but it’s a big thing. Kids can come to understand this. (Though note, as Quinn did, that copyright law doesn’t always or even often use commercialization as the line—and it never uses “making lots of money” as the line. Ask kids if they want the song on YouTube, and if they mind that Google sells ads, and see if the answer differs.)

Beware legislative reform. You might not like what you get.

Hanold: Fair use is a good place for large copyright owners and kids to come together. Kids don’t often think of themselves as media makers. Part of media education is to work with law to create new and respect old works against wholesale copying.

Coppa then showed a vid about men and their guns as penis substitutes.

Lusins: An interesting challenge for fair use—how is it a commentary? Clearance would be extremely difficult—you’d need the director, actors, music publisher, record company—it would be like climbing Mt. Everest.

Coppa: Yet it’s a feminist essay about a show that the vidders loved, using small clips, making an argument, speaking about the show in the language of the medium.

Lusins: But what about the music?

Miller: Wouldn’t fly in the formal economy, but in the informal economy you don’t need to throw up your hands and say clearance is impossible. Much value comes from the informal economy; 50 Cent did well by using mix tapes.

Coppa: There’s no attempt to profit. You don’t watch a vid for the song. You’re watching for the commentary on the show, with the song used as a theoretical apparatus. Vidders love the ability to cut and mix songs to make better essays. Watchers then often buy the music, which is meaningful to them because of its association with the visuals.

Miller: That happened with mixtapes too.

Quinn: The song is being used as it was meant, whereas the visual puts the work as a whole in fair use territory as a critique. One could argue: they could have used other music.

Coppa: Ask a vidder: they can’t use other music. You don’t make a vid without reason to say “this song is about X.” This is not a vid that you could swap the audio out on, as YouTube ludicrously offers you the ability to do.

One challenge: when image and music become part of our language. Most clarinet players are bad; few will become successful at the clarinet; but we have music recitals anyway. We don’t tell people not to play; we tell all our kids to write, and that’s the only way we end up at the end with the 3% that are good writers. We need that kind of experimentation with remix too; even if you don’t like 97% of the stuff, that 3% is the payoff, as it is with any creative community.

Lusins: But does everyone have the right to make their own music video and post it online? Some things will only be made at great expense and can’t be free.

Miller: The music industry is collapsing; stores are closing; music discovery is shifting online. The Grateful Dead/50 Cent model creates markets.

Lusins: The record companies now see music videos as something to be exploited, not ads/promotional devices.

Lee: There’s a potential market here, but not easy and perhaps impossible to achieve.

Miller: As someone who’s participated in both informal and formal markets, he can testify: the formal market is difficult, tedious, irritating and expensive. His peer group has official albums with lawyers, but the best stuff and the most interesting is bootleg and underground. His Led Zeppelin remix has lawyers and negotiation, and yet Zeppelin ripped off blues artists. It’s all about financial power.

There are ways to coopt remixers (or at least not sue them).

Lee: The market for monetizing UGC is out there—look at ringtones—the music industry wasn’t aware of this new market with a high willingness to pay. How do we get from point A to point B? (Note that the vidder doesn’t capture as much value from the vid as the ringtone buyer does from the ringtone; the positive externalities of the vid are greater than the positive externalities from the ringtone. Indeed, transformative works face persistent externality problems, which is why Wendy Gordon’s classic analysis recognized them as likely to remain fair uses even with a collapse in transaction costs.)

Quinn: Well, you could ask the how question. But Quinn wants to ask the should question. Monetization and control change the nature of the cultural product. In fairness, Quinn continued, he also doesn’t think his check from Hulu is big enough, so there are issues on both sides. But fair users should not have to pay for a fundamental right; monetization shouldn’t distract from rights claims.

Coppa: Noncommercial culture is being squeezed out. This is also a problem of social media. Web 2.0 wants to profit from any time a human connects with another human. It’s a new enclosure; contact is occurring on spaces owned by other people. We need a sense of public culture.

Lusins: Broadband is expensive, though. Facebook eats bandwidth.

Coppa: But it’s getting cheaper, same as other tech. Indie labels are great, but we also need collaborative ownership.

Miller: Public culture has expanded so far you can’t keep up. There’s room to monetize, but the business models are outdated, like the car companies. He likes micropayments. William Gibson quote: “The future is already here. It’s just unevenly distributed.”

Q: How will art change?

Quinn: He saw people destroyed by trying to get music contracts in the 1960s, rather than playing colleges/touring. It’s worrisome when people focus on monetizing art. People share media because they want to communicate: “look what I saw on the Daily Show last night!” It’s standard human communication, like retelling a joke from Seinfeld. Our water cooler is turning digital, and that’s difficult.

Faber: Cultural v. corporate production: Dove attempted to coopt UGC for a pro-woman video, but its corporate parent makes Axe body spray with its awful ads. Dove should be called on that.

Coppa: It’s about control. Corporations want brands to be enhanced in the way they want the brands to be enhanced. Lucasfilm has an idea of what a good Star Wars viewer thinks, and it’s not that the characters ever have sex.

Q: Reconcile that claim of fair use with our outrage at McCain using Mellencamp without permission.

Coppa: It has to go both ways: it’s repurposing.

Quinn: Sometimes copyright isn’t the appropriate response. Katie Couric is made to look as if she was saying Obama’s sexist: she’s being misattributed. Attempts to control using copyright often have other motives.

Faber: Ethical issue: coopting Mellencamp for McCain’s own purposes is sketchy, but that doesn’t make it illegal.

Q: How does a vid differ from an essay? They’re both quoting.

Coppa: If you want to paint in watercolors, you shouldn’t be made to work in sculpture. In both cases, we should work for norms of citation/credit, not permission.

Faber: That’s what they teach students. Sometimes you do need the visuals because visuals give you a clearer more persuasive way to reclaim culture. It is more effective for students to assert ownership of their own culture and it is more effective in speaking to audiences.

Miller: Sampling involves tension between quotation and citation, context and content. I take a familiar beat and deterritorialize it.

Quinn: Concluding note about power. Power disparities matter, which is why it’s important for filmmakers to organize.

Third time sucks: vacuum battles continue

Dyson, Inc. v. Oreck Corp., 2009 WL 537074 (E.D. La.)

This is the third action in the past three years between the parties. First, Oreck alleged that Dyson’s “no loss of suction” ad was false. Second, Dyson brought numerous false advertising counterclaims. The parties settled, releasing all claims “arising out of” or “related to” the ads at issue, and allowing such claims for products “existing in the US marketplace” as of the day of settlement. Four months later, Oreck sued Dyson for false advertising of its newest model, again attacking the “no loss of suction” claim; this was dismissed on res judicata grounds. (The Fifth Circuit recently affirmed; I didn't blog it because I didn't see anything new about false advertising in the opinion.)

Now, Dyson sued Oreck for a new comparative advertising campaign. Oreck’s 2004 ad campaign included an infomercial in which Oreck’s founder warned customers that bagless vacuums (a class of which Dyson’s vacuums are a member) “spread dirt, bacteria, mold and allergens all over your home.” The new campaign specifically targets Dyson, claiming among other things that a Dyson model can’t clean under furniture; that the Dyson “spreads dirt,” “is messy,” uses a filter that is “not very clean or sanitary,” and is “backbreaking” in its weight; and that the Oreck XL is superior in avoiding dirt, minimizing weight, and fighting bacteria.

Because the current claims are based on new ads that came after the prior lawsuit, res judicata did not apply. What Oreck really wanted was to argue that Dyson’s claims were barred by contract: the settlement agreement. That agreement provided that the parties could use prior ad claims. Oreck argued that “messy” and “spreads dirt” were virtually identical to the earlier claims, which also covered spreading dirt, mess, and smell. However, the previous ad compared Oreck vacuums to all bagless vacuums, and featured a Hoover; Dyson argued that Oreck’s claims were false particularly as to Dyson’s vacuums, which operate differently than the earlier ad claimed. In the new ads, the “messy” vacuum is a Dyson, and Oreck’s founder allegedly disregards Dyson’s specific instructions when emptying it. This is different in kind from the earlier generic claims about bagless vacuums.

Likewise, Oreck’s ads about its new model, the XL Ultra 4120, weren’t covered by the agreement, because that model was not part of the US market at the time of settlement. Oreck argued that the model wasn’t really new, but it consistently advertised it as new, and the 4120 differs functionally in several respects from previous Orecks, including what Oreck advertised as a technological “breakthrough.” It came with new user and service manuals, and Oreck’s corporate representative testified that Oreck complied with FTC guidelines that products advertised as “new” must be at least changed “in a functionally significant and substantial respect.” The court concluded that the settlement was only a safe harbor for existing products; Dyson could bring the exact claims it brought previously against the new product.

Oreck next maintained that many of its challenged statements were nonactionable puffery: (1) the Dyson is “bulky”; (2) the Oreck vacuum emits “no puff” of dust when it is emptied; (3) the Dyson bin emptying process is “messy” and the Dyson filter is “not sanitary” and a “dirty little secret”; and (4) the XL Ultra 4120 weighs “only nine pounds,” while the weight of the DC14 is “backbreaking.”

(1) While “bulky” standing alone is a subjective opinion, context can add meaning and definition, just as “better ingredients” became actionable in the context of misleading claims about the quality of Papa John’s ingredients in Pizza Hut v. Papa John’s. In context, “too bulky to get under furniture,” a phrase uttered during a visual demonstration of the Dyson unable to maneuver under a chair, is specific and measurable, and also capable of being proven false. Thus it is not puffery.

(2) “No puff of dirt”: the ad claimed that the 4120 would not “spew dirt into the air,” as compared to the Dyson, which creates “dust city.” Though a “puff” is not a measurable unit, “no puff” is part of a general, verifiable message that no dirt comes out when a consumer changes the bag. Oreck’s own infomercials show that the presence of dirt is verifiable—a recurring theme is that emptying a bagless vacuum causes a large, visible “puff” of dirt.

(3) Whether something is messy, dirty or the like is a matter of opinion. Reasonable people can differ on whether a particular object is clean, and there’s no objective standard of cleanliness against which to measure Oreck’s ad claims. However, Dyson was not claiming that those phrases alone are false advertising. Instead, Dyson argued that two specific demonstrations in the infomercial were false and misleading because they were inaccurate depictions of the Dyson bin emptying process, thus misleading viewers into thinking that the Dyson spreads dirt. Likewise, Oreck allegedly claimed that Oreck users didn’t need to come into contact with dust and dirt captured by the Oreck vacuum; this too is verifiable.

(4) “Backbreaking”/“Only Nine Pounds”: The court agreed that no reasonable person would rely on the “backbreaking” description; it’s just hyperbole for “heavy.” There’s no danger of consumer deception. However, whether the Ultra weighs only nine pounds is a verifiable fact.

Finally, Oreck argued that it’s true that the Dyson “simply cannot” clean under furniture. In the infomercial at issue, the host tries to clean under a piece of furniture with the Dyson DC14, and the size of the nozzle keeps it from working. The XL Ultra succeeds in its place. Dyson argued that the DC14 comes with attachments that allow it to clean under furniture; indeed, Dyson’s counsel demonstrated at oral argument that the DC14’s attached wand, which easily reaches under furniture, had been removed from the Dyson shown in the infomercial. Oreck responded (weakly) that viewers would understand that a “nozzle to nozzle” comparison was being made. The court understandably found that Oreck couldn’t succeed on this defense on a motion for summary judgment. Though the ad isn’t literally false—the Dyson can’t clean under certain furniture without attachments—the demonstration is misleading. Showing the Dyson without its attachments, and stating that the Dyson can’t clean under furniture, could mislead a reasonable consumer into thinking the Dyson can’t clean under furniture at all.

Drake IP Scholars, Panel 7

Unfortunately I had to leave before the last panel, but as usual Peter Yu brought a really interesting group together.

Panel 7: Patents and Empirical Studies

Donna M. Gitter, Baruch College ―Should the United States Designate Specialist Patent Trial Judges? An Empirical Analysis of H.R. 34 in Light of the U.K. Experience and the Work of Professor Moore

Federal Circuit currently reverses 1/3 to ½ of claim constructions by district courts. Congress is considering a pilot program for specialized federal district court judges handling patent matters.

England as a comparator: there, the criteria are similar; they use PHOSITA; they have similar discovery; claim construction is a matter for the judge; claim construction is typically outcome determinative. However, there is a specialized patent court. A typical patent judge in England hears 5-7 patent cases a year, plus motions, whereas in the US a district judge typically has one patent case every 7 years. Her data suggest, depending on how you count, individual claim construction is reversed on appeal in England at a rate of 14.7% or 15.7%. If you consider cases in which reversal of claim construction resulted in reversal of the whole case, the gap narrows: 29.7% in the US, and 25.6/25.9% in England. Between 11.6% and 19.8% of individual claim terms construed at the appellate level are reversed by that court each year.

Is it something other than specialization? The overall appelate reversal rate in the US for all civil matters is less than 9% for all civil matters, 13% for the Federal Circuit; 41.9% is the reversal rate for English courts.

Katherine Linton, U.S. International Trade Commission ―Patenting Trends and Innovation in Industrial Biotechnology (with Jeremy Wise and Philip Stone)

Two recent studies on industiral biotech: chemical and biofuel industries. Industrial biotech = using enzymes or microorganisms to convert raw materials into industrially useful products. Economic and environmental benefits may result. Biofuels: corn and cellulosic ethanol; bio-based plastics. Surveyed firms; 559 reported industrial biotech production or R&D.

Their research found 1975-2007 nearly 20,000 patents total that may be related to industrial biotech, but the classifications are somewhat unclear. Big peak around 1999. University patents are about 13%. New owners (people/entities without previous patents) also increased along with everything else. Patents used in producing cellulosic ethanol: 63% held by foreign corporations, 15% domestic, 8% US universities.

Common threads: patents involve collaborations between firms, universities and government to move from R&D to commercialization. Patents are not concentrated in just a few places. Small firms hold strong foundational patent portfolios based on discoveries from a university setting; use patent portfolio to attract investment. Big players claim that patent portfolios are key to success and that patents aren’t a significant barrier to commercialization. IP activities are on the rise, especially in trademark.

David Schwartz, John Marshall Law School ―Confusing Construction or Constructing Confusion? An Empirical Study of Patent Claim Construction Reversal Rates Across Technologies

Lemley & Burk argue that patent law empirically treats different tech differently. Biotech and software: software has higher requirements for obviousness, but lower for written description and enablement. Burk & Lemley think this is a good thing: gives policy levers. Do claim construction reversal rates differ by technology?

Database: Markman-end of 2007, about 1354 patents (fewer cases). Current patent classifications are not strong for software patents. Does see different claim construction reversal rates.

Possibility: Different PHOSITAs. Maybe biotech/pharm/chem has more common vocabulary than software/business methods; if people in the field can agree more, then judges will also find it easier to agree. Software patents are simply harder to construe (making chem/pharma etc. patents more valuable). “Hypermedia distributed environment” is a term from software, and it doesn’t have a non-patent meaning; he thinks this is less common in biotech etc. So: different levels of indeterminacy in the claims, simply from lack of shared vocabulary, may drive higher reversal rate.

Another explanation: courts actually construe claims differently. District courts see the parties for several years and may use claim construction to reach the right result. Software involves more NPEs, less sympathetic; perhaps district courts factor in more equities. And the Federal Circuit just gets a cold record and doesn’t do the same.

Ted Sichelman, Boalt Hall School of Law, University of California at Berkeley ―Why Entrepreneurs Patent: An Empirical Study of Startup Company Patenting (with Stuart J.H. Graham)

Biggest reason startups endorse for patenting: preventing other people from copying; obtaining licensing revenues is less important than other reasons; signalling (reputation, increasing chances of acquisition/IPO) are somewhere in the middle, as is strategic (protection against others’ patent claims). The number one reason they don’t patent: cost, which was about $38,000—more than big firms spend on their patents, which tends to be $10,000 or even lower for really big firms like IBM with in-house counsel. Cost of enforcing, ease of inventing around are also somewhat important; very few said that they had no need for legal protection.

Discussants: Edmund J. Sease, Partner, McKee, Voorhees & Sease, PLC

Note: He worries when he hears people talk about teaching theory because what he wants from newly fledged lawyers is understanding of the law: novelty, obviousness, etc. Markman is not a good decision; the problem isn’t the courts but the standard they’re expected to apply. Words have more than one meaning; people in the business should be the ones determining what they mean; judges are not better than juries.

Call for papers

Call for Papers: 9th Annual Intellectual Property Scholars Conference

The Intellectual Property Program at the Benjamin N. Cardozo School of Law will host the 9th Annual Intellectual Property Scholars Conference on August 6th and 7th, 2009.

The IP Scholars Conference brings together intellectual property scholars to present their works-in-progress in order to benefit from the critique of colleagues. The conference is co-sponsored by the Berkeley Center for Law and Technology, UC Berkeley School of Law; the Intellectual Property Program, Benjamin N. Cardozo School of Law at Yeshiva University; the Center for Intellectual Property Law and Information Technology, DePaul University College of Law; and the Stanford Program in Law, Science & Technology, Stanford Law School.

The format of the conference is designed to facilitate open discussion and to help scholars hone their ideas. Papers presented should be works-in-progress that can benefit from substantial commentary and revision. Because of the importance of group discussion, we ask that attendees and presenters plan to attend the conference for its duration. Individuals who would prefer to only attend a single session or a small number of sessions should not plan to attend the conference.

Requests to Present:
Requests to present a work should be submitted electronically, no later than April 13, 2009, to David Morrison (contact information below). Requests to present that are received after April 13, 2009 will be considered only to the extent there is available space within an appropriate session of the conference. Decisions on requests to present will be made no later than June 1, 2009, and requestors will be notified by that time. Final abstracts for inclusion in the conference binder, and papers for posting on the conference website, will be due July 16, 2009.

Requests to Present should include all of the following information:

1. Presentation topic

2. Presenter’s name

3. Academic affiliation and contact information, including e-mail, office phone and mailing address

4. Abstract in .doc or .pdf format

5. IPSC 2009 will include both plenary and breakout sessions. A small number of people will be asked to present their works-in-progress during the plenary sessions. Please indicate if you would prefer NOT to be considered for the plenary sessions.

Requests to Attend:
There will be a limited number of attendance reservations available for academics who do not wish to present a work at the conference, but who would like to attend and participate in discussions. Requests to attend should be directed to David Morrison (contact information below). Confirmation of attendance reservations will be available by June 1, 2009.

All conference presenters and attendees are expected to pay for their individual transportation and lodging costs. A block of rooms will be reserved by Cardozo for conference attendees at a discounted group rate. Check for updates on hotel accommodations at www.ipscholars.org.

Submissions:
David Morrison
IP Fellow & Administrative Director, Intellectual Property Program
Benjamin N. Cardozo School of Law
dmorriso@yu.edu

Drake IP Scholars, Panel 6

Panel 6: Information Technology and Patents

Robert A. Heverly, Michigan State University College of Law ―A Spirited Defense: Duty and Liability in Denial of Service Attacks

When you go someplace online and it’s not there: you don’t know why; it’s not like finding a shop boarded up, or destroyed by a hurricane, or whatever. Denial of service attacks can prevent people from reaching where they’re going in a way with little analogy to the offline world. Botnets: hijacked computers that aren’t protected against outside intrusion, used to carry DoS attacks out.

Battle of the metaphors: is having an infected/insecure computer like having a car with a bad tire that you drive on the highway, endangering everyone around. If you owe a duty to others to avoid driving the car, do you owe a duty to others to avoid having an unsafe computer? Or is it like having an ok car that someone secretly climbs under and uses to start throwing rocks; you’d have no duty to prevent that. (Seems to me this is about foreseeability: you may have a duty to foreseeable victims of intentional torts carried out by people you’ve let onto your property.)

In general, courts won’t imply a duty to the world. Duty usually exists because of some relationship between people, and here the only relationship is that you’re both on the information highway. There’s no general duty to stop third parties from doing bad things to other people. Also, purely economic injury is generally not recoverable in tort, so you’d need some server damage.

Joint and several liability: some courts would be troubled by holding one botnet computer owner liable for the full damage caused by a DoS attack.

Added together, seems unlikely that a person whose computer had been hijacked would be liable.

How do we preserve a robust internet, then? Could use no-fault. Encourage end-users to protect themselves.

Jon Garon, Hamline University School of Law ―Content, Control and Socially Networked Media

This is part of a multipart project (see also Reintermediation), focused on following the money and letting creators choose which economy to enter. But this part’s about privacy.

Four trends: the harnessing of social trends/data for predictions about public behavior; the growing role of audiences as curators; the expansion of behavioral advertising; the development of tools to search the “deep web” in databases etc. Slides available here.

People want to be early experiencers—opening night tickets, etc. This is important social behavior. Combined with passive data collection: lots of info out there. Google can anticipate flu outbreaks merely by watching search terms, just as well as the CDC can. Combined with curators who want to have all of some type of material archived on their hard drives. Quid pro quo: owners want permission to mine the data in return for the stuff. Watching isn’t enough: Hulu.com allowed people to embed Obama’s address on their own websites, as if there weren’t already enough places to see it.

But the revenue models aren’t yet adequate. YouTube doesn’t make money; Hulu makes money, but nowhere near the money of broadcast. Tracking: to justify ad fees, companies are increasingly adding data about who watches when and how. Behavioral advertising: the internet now knows where you are and will increasingly become contextual and more specific. The FTC has behavioral advertising guidelines, but they’re voluntary.

Meanwhile, Amazon is consolidating content distribution, cutting out the middlemen—publishers, other ways of getting content (Kindle). Recommends books for us; can it start to look at our Netflix accounts to see what else to recommend? The scary model: relying on what people do, not what they say about themselves. The software can know more about you than you know about yourself.

FTC guidelines must become law, not voluntary. Need more explicit consent, restraints on data-sharing unless there’s explicit opt-in based on meaningful information. (Not clear to me that disclosure ever, ever works. Google’s got great disclosure when you install, for example, Google Desktop, but who reads it?)

Linda M. Beale, Wayne State University Law School ―Is Bilski Likely the Final Answer on Tax Strategy Patents?

Beale is a tax lawyer, not an IP lawyer.

Why tax strategy patents are bad: The innovation fallacy of patent law. Tax doesn’t need incentives for innovation, not innovation that helps noncompliance. The IRS devotes considerable effort to close the tax gap and close down innovation in tax practices. The government shouldn’t spank tax practitioners for innovating and then hand out the candy of patents.

Institutionally, tax strategy patents allow monopolization of areas of the law, conflicting with congressional control over policy levers of tax. If the stimulus package intends to reduce tax burdens on certain people, tax strategy patents can divert the benefit for other people.

Bilski, which requires a machine (not a general purpose computer) or a physical transformation: legal relations aren’t physical objects or substances, so maybe Bilski protects us from them. One dissent, though, argues that the majority fails to grapple with the information economy.

Efthimios Parasidis, Hofstra University School of Law ―Stop that Thought!: The Neuroscience Paradigm as Evidence of an Inconsistent Doctrine of Patent Eligibility

Patents for neuroscience inventions demonstrate that Bilski leads to incontistent results. Classen v. Biogen: a classification of subjects in experimental group v. control group, similar to the claim in Metabolite v. Labcorp, which was about correlating individual blood test results to figure out whether there was a particular deficiency. Bilski seemed to get rid of mental process patents as in Metabolite. But what about neuropatents?

Brain fingerprinting: method for truth detection—EEG signals from brain measured. Compare one person’s brain scan with normalized findings on how memory is stored to determine truth. Such evidence has been admitted in two state courts here, and one conviction in India based on evidence from such a device.

Two patents have been issued on this. The inventive concept is the significance of the correlation between truth and activation in certain regions of the brain. This entails observation of a natural law. Perhaps using the EEG counts as a machine. The machine takes electrical currents and turns them into a digital signal that can be reproduced on a computer. But, Bilski doesn’t say the machine/transformation has to be an integral component. The integral component is the correlation; the machine is a means of observing the correlation.

Better way: ask whether a claim preempts a fundamental principle, law of nature, or natural phenomenon. Neuroscience patents were granted based on correlating brain results with truth. To him, that’s preempting a natural phenomenon and should be unpatentable. Similar to the Metabolite claim.

Prometheus v. Mayo, S.D. Cal. case before Bilski, is before the Federal Circuit now; it’s a Metabolite-like case that applied the preemption test.

Steam: the person who discovers/defines steam can’t patent it, but can patent a method of applying it to a useful end. That’s the right distinction.

Andrew W. Torrance, University of Kansas School of Law ―Patent Expertise and the Regress of Useful Arts

The Patent Game: IRB-approved trials of human users, testing patent, patent/open source, and pure commons regimes. Users possessed specific expertise in patent law and open innovation.

No statistical difference in innovation (unique inventions) among the regimes. Productivity (total numbers of invention per unit of time): pure patent regime generates the least productivity; patent/open source generates an intermediate amount; and pure commons generates the most. Social result (dollars in the system): even more extreme results than with productivity: lots more with pure commons.

Possible explanations: done a bad job creating the Patent Game, or choosing participants. Or, maybe, patents don’t spur more innovation.

Discussants: Daniel R. Cahoy, Smeal College of Business, Penn State University

For Heverly: What are the nonlegal incentives that still exist against users letting systems get infected? Does shaming work?

For Garon: Students are getting more savvy about privacy, e.g. on Facebook. Are we overly concerned about this as lawyers? Users can understand and react.

For Parasidis: Are these patents good for society, though?

Lars S. Smith, Louis D. Brandeis School of Law, University of Louisville

For Heverly: Think also about nuisance, not just negligence.

For Garon: Do users accept that privacy is dead? (I don’t see why this or Cahoy’s questions are challenges to the project. One huge problem is that data mining generates externalities: the kind of culture we will all live in if behavioral targeting succeeds the way it’s supposed to may not be the kind of culture that we want to live in. This is the typical reason we look to regulation to solve problems that individual choices can’t.)

For Beale: Maybe we should embrace uncertainty. Bilski gets rid of the one thing we still do well in America: business method design! Apple designs in US but makes in China. What’s wrong with designing ways to reduce taxes? Isn’t tax avoidance legitimate?

Greg R. Vetter, University of Houston Law Center

For Torrance: What does open source mean in your study? Open source has different possible meanings, from attribution to other restrictions, and that may make a difference.

Robert Bohrer: Patents are really important for drug development. It may be that many areas sustain creativity without patents, but not all, especially drugs.

Beale: She doesn’t see the positives of tax patents. Almost all the issued ones are obvious to anyone who knows tax; the problem is that patent examiners don’t know tax, and can’t learn it in a couple of hours. Beyond that, customized financial engineering might not be obvious—the dangerous ones aren’t obvious. There ought to be a principle of morality.

Sony TV settlement rejected

Date v. Sony Electronics Inc., 2009 WL 435289 (E.D. Mich.)

The court rejected a proposed class action settlement because it didn’t give the class a good enough deal. Date sued on behalf of a nationwide class over the following facts: Sony advertised certain TV sets as being capable of displaying 1080p (progressive) resolution, but those sets didn’t accept a 1080p digital signal. Instead, at best they can display an upconverted 1080i (interlaced) signal from a 1080p device. The upconversion process results in artifacts like feathering. The Sony TVs at issue cannot be redesigned or augmented to display native 1080p digital video input.

Currently, only Blu-Ray disc players, gaming devices like Playstation 3, certain hi-def DVD players, and some personal computers can transmit a 1080p signal. It’s unlikely that over-the-air signals will ever be broadcast in 1080p, though some on-demand movies are now being streamed in 1080p.

The sets at issue sold for between $3000 and $15,000. From 2004-2006, Sony sold about 3000 of the really expensive ones and 172,000 of the (somewhat) lower-end models.

The basic claim is that there’s a material difference between 1080p and 1080i, and that Sony’s advertising actively misled consumers about what Sony offered: calling the display resolution “1080p” was deceptive because the sets don’t display 1080p resolution, can’t accept 1080p video signals, and can’t display video at 1080p resolution through the PC or HDMI input jacks. Claims included breach of contract and warranty, false advertising, unjust enrichment, and violation of the Magnusson-Moss Warranty Act.

Sony argued that representing that a TV has a certain display resolution tells a consumer only what the display resolution is, not which of the many types of video signals the TV can accept. (What what? Look, this stuff is confusing, and was probably more confusing in 2005. But there’s a difference between confusing and deceptive. You tell me you’ve got a 1080p TV, I’m going to believe it, you know, displays 1080p signals output by 1080p devices.)

The proposed settlement offered three benefit levels. If a class member (purchaser/recipient) called Sony before January 8, 2008 and specifically complained about the 1080p input and inability to use the TV as a computer monitor, that person would get $90. Class members with the really expensive models would get $180 in e-credit (of which more soon) and the ones with the relatively less expensive models would get $60 in e-credit, as long as they’d bought an 1080p device such as an HD-DVD or Blu-ray player before July 25, 2008. If they hadn’t, they’d get $75 in e-credit or $28 in e-credit, respectively, so long as they bought a Sony Blu-ray player between July 25, 2008 and 30 days after the final judgment became final. (I foresee a LOLcats: final judgment is final.)

So, e-credits are good towards either buying things at Sony’s online store, for the larger award, or good towards buying a Sony Blu-ray player, for the smaller award.

The court wasn’t impressed. Not many people are eligible for cash: only 234, for a total cash payout by Sony of $21,060. Calling to complain wasn’t sufficient to qualify; callers had to use the “magic words.” People in what’s probably the largest group, the third, would have to buy a Sony Blu-ray player, costing more than their “benefit,” in order to get any value. Those who “decline to further enrich Sony by purchasing a Sony Blu-ray Disc Player[] receive nothing.” And even once they buy a 1080p device, their TV still won’t be able to display its signals. So, in order to get the third benefit, the class member has to buy a device that doesn’t work with his/her TV set. And in fact, people who don’t buy a 1080p device get nothing; the court found no reason to assume that even half the class would qualify for any part of the settlement.

Sony argued that the settlement is predicated on Sony’s belief that class members haven’t been harmed unless they have a device generating a 1080p signal. However, the court agreed that consumers are entitled to what Sony advertised they’d get. Sony argued that 1080p devices can output 1080i signals that the Sony TVs will accept. The court found this analogous to advertising a car as being able to run on gas or electricity, then delivering a car that does not allow you to plug it in for electric power. “Simply stated, Sony admits that these televisions, advertised and sold as capable of displaying 1080p resolution, are currently incapable of displaying 1080p resolution.”

Most of the objections filed to the settlement complained that they did not want to have to buy a 1080p device in order to qualify for the settlement, because that wasn’t a remedy for the misrepresentation. The objectors wanted either a true 1080p capable TV set or compensation for the premium they paid for a 1080p set.

Sony’s basic argument defending the reasonability of the settlement was that the settlement was good for the class because the claims couldn’t succeed as a matter of law. Plaintiff maintained that the case is meritorious, but settlement is appropriate because of the risks of trial. An objector, who has his own class action pending and who appeared by counsel, argued that there was a strong likelihood of success.

The court agreed that plaintiff’s case has the hallmarks of merit. Ad claims by Sony included “Full HDTV,” the “Worlds Greatest High Definition Television,” “new display technology ... to meet and exceed the demands of a High Definition Image at its full 1080 line resolution,” and ability to display digitally transmitted high definition signals without interlacing. Sony also stated in the specifications sheet that the televisions’ native video resolution was 1080p. A jury could conclude that the plaintiff was promised “a 1080p television that accepted and displayed 1080p resolution natively.” (Indeed, what else could have he been promised?) These claims are not puffery.

Sony noted that a California district court granted summary judgment to another manufacturer on similar claims. In Johnson v. Mitsubishi Digital Electronics America, Inc., 578 F.Supp.2d 1229, 1238 (C.D. Cal. 2008), the court concluded that, although Mitsubishi designated its television set as a 1080p television set, the phrase 1080p “does not convey a specific claim that is recognizable to the targeted customer.” The court disagreed; unlike the plaintiff in that case, the plaintiff here testified that the term did have a specific meaning to him. (Plus, the fact that the term might not have had a “specific meaning” to a buyer in the sense that the buyer couldn’t define it doesn’t mean it wasn’t factual, credible, and material. I can’t tell you how my Bluetooth works or what makes it different from other forms of connection, but I know I paid extra for it.)

The Johnson court thought 1080p only had meaning for engineering professionals, but Sony touted 1080p on its specification sheet for consumers. The term 1080p “carries a specific meaning for a reasonable consumer, and … Plaintiff and at least some of the class members were well aware of the specific meaning of and advantages of owning a television set capable of 1080p resolution when they purchased the television sets at issue.” The Johnson plaintiff just blindly wanted a top of the line set, but that doesn’t “dumb down” the plaintiff/objectors here.

The court noted: “Although the objectors are few, the objections illuminate the inherent unreasonableness of the settlement.” The settlement only benefits people who buy a device that doesn’t work with their TV set: “throwing good money after bad.” Sony’s argument was that no one without a 1080p device has been harmed. But, the court reasoned, class members “purchased these high-end televisions because of the advertised ‘bells and whistles’--1080p display resolution--and were misled and short-changed by Defendants. The class members thought they had purchased a 1080p capable television, in the midst of an electronics world that changes and upgrades everyday. These purchasers eagerly anticipated the possibility of 1080p over-the-air television signals, and 1080p devices, which have become a reality, e.g. Blu-ray, computers and Playstation 3.” This is a key point: class members expected to be able to use these new devices. If they haven’t bought such devices (perhaps, as the court surmised, because they learned that the devices wouldn’t display properly on their equipment), that doesn’t mean they got the benefit of their bargain. This is especially true because 1080p devices are so new to the market; only in January 2008 did an industry standard emerge.

Because of its inadequacy, the court further determined that the settlement didn’t serve the public interest because it didn’t hold Sony accountable for its conduct and didn’t deter Sony from future misrepresentations. Instead, class members have to buy more from Sony.

Thus, the settlement was rejected: it failed to meet the requirement that it be fair, adequate and reasonable.

Copyright licenses and moral rights

Historian Alice Kessler-Harris discusses a copyright agreement she fought, then ultimately conceded to. Notably, her concerns were not really economic, though she mentions occasional reprint checks for small amounts under past licenses. What she really feared was that her work would be excerpted in ways that misrepresented it. Her work wasn’t her work without her footnotes. Historians want moral rights too, though they’re configured differently than, say, painters’ moral rights.

Drake IP Scholars, Panel 4

Panel 4: Trademarks

Jasmine Abdel-khalik, UMKC School of Law ―The Mythology of Dilution

Interested in market niche fame versus general fame, and the relationship between market and geographic fame. This ties into the broader stories we tell about dilution. Here are some myths starting to circulate about dilution and perhaps unfairly narrowing it.

First, that the authority for dilution is statutory only. SCt has said that dilution is not a development of the common law. The effect is to say that if it’s not in the statute no claim is possible. At least five states recognize a common-law dilution claim: Ohio, Michigan, New Jersey, Minnesota, Illinois (though they didn’t always explain what the authority was). To the extent the states implemented statutes, they stopped relying on the common law, but Ohio didn’t get a statute. The federal district courts in Ohio, though, indicated that dilution in purely statutory. This myth is reinforced by the legislative history of the FTDA.

There are common-law antecedents: protecting TMs in noncompetitive settings. If that’s the essence of dilution, which is up for debate, then common law cases have recognized it. But Texas has rejected allowing a common law dilution claim, artificially narrowing the scope of state protection. We may not like or understand dilution, but to artificially narrow its applicability seems inappropriate. It should be under the umbrella of unfair competition under the common law—people fixate on the word “competition” when it’s really about dirty tricks or unethical behavior. §43(a) has always been recognized to be more limited than the full scope of unfair competition.

Second myth: If we have state dilution claims, do they have to be circumscribed by the same limitations as the federal law? Niche fame is not the same thing as geographic strength in a sub-US market. Congress wanted to avoid the problem of “niche market fame,” which undercuts the purpose of dilution (dealing with noncompeting uses). If my reference to a mark requires you to know what class of goods we’re dealing with, the mark doesn’t have a strength that goes beyond its class and thus doesn’t trigger the justification for dilution. But geographic strength doesn’t cause that problem. TM has always been territorial. In-n-Out Burger as an example.
States are already starting to limit their state statutes by applying federal fame standards. She thinks this is not doctrinally required.

J. Shahar Dillbary, University of Alabama School of Law ―The Role of Trademarks

Economics of TM: TM provides two types of info, info about the source and the product. The law focuses on the first type of info—helps the consumer choose among (possibly partial) substitutes by reducing search costs. But even when search costs are zero, a TM is still valuable because it reduces consumer uncertainty about product qualities. Consumers can decide how many units to purchase more easily.

A brand provides information about product attributes/ingredients. If you know that coffee generally has 266 mg of caffeine and that the daily limit recommended is 300, you won’t buy more than one coffee, but if you know Starbucks vanilla grande only has 150 mg, then you can buy two. Subway, similarly, is trying to create a mental association with its products and low calories. A TM may be the only means of communication a seller has about its own product.

At least two types of fraud: interbrand fraud, interfering with information about the source and ability to choose the right product. Intrabrand fraud occurs when a producer passes off his product as having a quality it doesn’t have. That’s the part that interferes with consumers’ attempts to buy the right quantity of units. Splenda: “made from sugar, so it tastes like sugar.” Suppose J&J changes the product so it’s not made from sugar, but continue to affix the mark Splenda. Consumers will be defrauded. TM law doesn’t protect consumers against this deception, but it should.

Yvette Joy Liebesman, St. Louis University School of Law ―When Your Trademark Is Also Your Name

Rights in names being sold now are going beyond traditional assignments, into indefinite noncompetition clauses, prohibitions on any public use of one’s name, and so on. Should contract doctrine allow complete alienation of one’s name?

Assume the contract was voluntarily and fairly made. What then?

Early on, courts were willing to enforce name transfers even when there was no confusion—1888 (Mass.) case upheld an injunction against truthful use of one’s own name. This trend has only grown as contracts increased restrictions on seller’s ability to transact under his/her own name, even in different markets and even without likely confusion. JA Apparel v. Abboud. Liz Claiborne has sold her rights to use in any sale of apparel. There are other contracts where the seller can’t endorse or promote or draw attention to any other business.

Suppose the agreements start specifying personal behavior because of the potential effect on the value of the mark? Should people be able to negotiate these? What remedies should be available for breach? Is it distinct from slavery/indentured servitude?
Suppose we bar limits on behavior—can we accept a clause that bars the seller from disrupting the buyer’s business? How will that be determined? Considerations of vagueness and breadth.

Does the purchase price matter? Abboud got $65 million: does that justify the contract?

Jeremy Sheff, St. John’s University School of Law ―Search Costs and Brand Equity in Trademark Law

Is the search costs model descriptively accurate? It is at least incomplete, largely for reasons that most law and econ models are incomplete, for relying too heavily on simplifying assumptions of rational behavior. Perhaps we can salvage it, but then does our revised model lead to the same normative conclusion that TM protection is welfare-increasing.

Marketing research: brand equity—the value to a firm of a brand. Two approaches to measurement. First, at the firm level, have to value it as an asset; back out the value of other assets from the total assessed value of the firm. This gives a snapshot, but doesn’t tell us about the effect of brand strategies on individual consumers and thus doesn’t help with search cost theory. Second, studies looking at how consumers react to branded products v. nonbranded—typically qualitative, but some attempts to quantify.

“Brand premium”: incremental increase in price, market share, sales volume enjoyed by the branded product that wouldn’t be enjoyed by an identical product without the brand. If the traditional law & econ model is correct, the brand premium would approach the cost of the consumer to searching for information. Any economic surplus created by the differential would be captured by the producer. Producers have incentive to provide whatever info will maximize the premium. Assuming (perfect) competition, consumers should have the optimal amount of information.

But what’s the content of the info? The model assumes that doesn’t matter. Brand equity literature identifies various types of info: brand awareness—recognition or unaided recall. Brand associations—concepts associated with the brand in memory: attributes, features, fitness for use, affective response, status signalling, etc. Brand loyalty: tendency to stick with brand.

Brand associations: There’s a debate over whether emotional associations are efficient/normatively desireable as a basis for purchase. Standard economic argument: as long as quality is objectively ascertainable from use, the market will correct for any distortions, and more generally, if people are willing to pay more, that subjective utility is an unarguable economic value.

But the other categories are not amenable to that dismissal: awareness and loyalty influence decisions because we prefer familiar to unfamiliar even if there is no other basis for decision. This is why it’s almost impossible to displace a market leading brand from its dominance. Thus, rather than giving consumers information, producers expend resources to get a foothold in the consumer’s mind, and they can still get a reward. Mere familiarity lasts longer than specific associations, even good/bad quality, so it’s more useful to marketers. Brand awareness is the most significant contributor to brand equity.

Protection of brand equity therefore looks less like a shift to the lowest-cost information provider, and more like rent-seeking. TM owners are seeking the rent of familiarity.
What can TM do? Perhaps take ads out of the equation when assessing secondary meaning. Maybe look more at consumer sophistication. Or maybe courts are not capable of doing the needed work.

Discussants: John T. Cross, University of Louisville School of Law

Love to go on about the good points, but Peter Yu is controlling time carefully!

For Abdel-khalik: Federal statute doesn’t preempt state law, true, but state dilution statutes still set the standards. Even without statute, is the proper home “unfair competition” or is it misappropriation a la INS v. AP? The problem of INS is that it’s extremely limited.

For Dillbary: Likes the idea of different bits of information conveyed by one mark. But does the law really think the only legally relevant function of TM is to indicate source? That TMs have value, which is what your point addresses, is not the same thing as saying that TMs should generate exclusive rights.

TM as possible instruments for fraud: Ann Bartow has a really good article about this, and about when a company with a bad reputation changes its name. Also, using TM to create a false market subdivision: Coors and Coors Light were initially the same product sold under two names. (I’m pretty sure there’s a false advertising case about dog food with the same issue.)

For Liebsman: Radical in bucking the trend on assignment; we’ve relaxed the idea of assigning the goodwill along with the mark. If there are good reasons to keep the link with persons, that fits into a larger issue. Finally, ask what the effects on consumers are.

Mark D. Janis, University of Iowa College of Law

Focus on Abdel-khalik: Title provoked a number of thoughts—another myth of dilution is that there is such a thing, that it even happens. We keep trying to use this label, but it’s significant that we can’t figure out what it is. Myth #2: famous marks are the ones that need protection; in fact, they’re the ones who probably need it least, whatever “it” is.

In valuing unfair competition, you’re moving against the grain: statutory work in the US is in the other direction, attempting to confine dilution through bright-line rules. If you’re talking about unfair competition, let’s talk about it really as an alternative, and stop talking about the useless label of dilution. Then you have a lot of problems and ambiguities, but it’s a useful exercise.

On Dillbary: The courts say they only protect source identification, but Janis doesn’t think that’s descriptively true. Questions: does the model apply across all types of goods? Examples are from low-cost experience goods. Are you just talking about TM as a guarantee of quality?

In attacking search costs, do we end up taking them too seriously? Janis doesn’t think so, but he wonders whether we are venerating search costs too much.

Rebecca Tushnet, Georgetown University Law Center

Let me echo the others: Overall, TM scholarship has a richness and depth right now that makes me very excited, as demonstrated by this panel.

On Jasmine Abdel-khalik: Myths of dilution: I hate dilution, so I’m happy with narratives that close off opportunities for expansion. Note the relationship between the idea that the statute sets out the metes and bounds of dilution and First Amendment constraints feared by the drafters of the FTDA and TDRA—common law causes of action that are broader than federal dilution may be unconstitutional. “Artificial” narrowing—well, the common law is supposed to develop according to sense and experience, and if sense and experience tell us dilution is stupid, then we shouldn’t recognize it in the common law. (Note also that there isn’t some perfect past of common law: TM, and dilution, are being used to protect very different things than they were forty years ago.) Compare: INS v. AP. Learned Hand thought there was no difference between INS and Cheney Bros. v. Doris Silk, but he thought INS had to be limited to its facts or copying would be killed, and copying is generally good. Learned Hand won that battle in the common law, which meant we have to go to the legislature to derogate from the principle of free copying.

See also Mark Lemley’s observation about TM owners who think “unfair competition” means “competition.” Abdel-Khalik thinks “unfair competition” means “unfair.” But, detached even from competition, what on earth does unfair mean?

Shahar Dillbary on what TM does: Illustrates that search costs are only one component of an economic analysis of TM law. Something the paper probably deals with in detail: For Starbucks, the TM doesn’t say anything about caffeine content! You have to commit additional resources, and then you can attach that information to your mental model of the TM and follow the standard search costs model. Also, as Dillbary notes, this feature is highly subject to manipulation: not only is Splenda already in several lawsuits over whether “made from sugar” is deceptive, Subway has high-calorie entrees.

This is from a recent study of people who were eating an entrée, a side dish, and a drink at McDonald’s and Subway:
The Subway diners thought their meal had 151 calories less than it actually had -- a 21% underestimation.
Chandon and Wansink also offered 46 undergraduates a coupon for a Subway 12-inch Italian BMT sandwich or a McDonald's Big Mac.
When asked what they wanted with their sandwich, the Subway diners were more likely to pick high-calorie side orders. Perhaps they thought their sandwich was a caloric bargain (even though it actually had 900 calories, compared with the 600-calorie Big Mac), the researchers suggest.

Yvette: Fascinating story—I wouldn’t have thought courts enforced such restrictions so early on! But I want to hear more about enforcement of these agreements against noncompeting uses—these examples of enforcement all seem to involve at least related markets. Have the broader agreements been tested? (What are the sellers supposed to do with themselves?)

Sheff on search costs: I love the project. But what can TM do is the big question: distinguishing the effects of familiarity from the actually useful quality guaranteeing functions may be difficult. Consumer protection law might be one place to look for a model; or even producer protection law—consider a European model of quality protection, where regulators don’t think that minimizing price or even maximizing individual consumer choice is the greatest good.

Abdel-khalik responds to comments about what the common law actually was: She doesn’t think the common law caselaw is significantly developed before Schechter. He focuses on a German case, not US law. But the early cases can be hard to sort out: they’d often say something about consumer protection/confusion, but it was a dilution type justification: protecting consumers’ automatic recognition of a mark is a benefit to consumers as well as producers. Reference to consumers was a way to change the law without being too obvious. It’s hard to reconstruct how the common law would have developed without statutes, but Ohio at least provides an example of that.

She thinks dilution stinks as it is, but still wants to reform it.

Dillbary: Loves the Coors/Coors Light example. When is it ok to change the product? The paper goes into this in detail—when it’s not material to consumers. (Though if we’re looking at emotional connections now, materiality will be harder to figure out.)

Sandeen: Unfair competititon lawyers were really worried about Erie’s effect on the common law, and there were multiple repeated attempts midcentury to amend the Lanham Act to include unfair competition principles, but in her recollection dilution was never considered part of that.

Madison: for Yvette: Example of Steve Herrell, who sold Steve’s Ice Cream and decided he wanted back into the ice cream business: Herrell’s, now in Harvard Square. What would happen to him now? (Comment: Yum. Bought two jars of hot fudge there on my last trip; they were nearly seized at security on the way home until I convinced the screeners that Herrell’s hot fudge was, at room temperature, a solid.)

IP Scholars Roundtable at Drake 2

Panel 2: Patents and Science
Christopher M. Holman, UMKC School of Law ―University Patent Litigation

Are universities good guys or bad guys in patent? Mark Lemley asks whether they’re patent trolls. Surveys suggest academic researchers ignore patents all the time; are they being sued? Basic research has never been subject to suit, but most of the questionable enforcement, like patents on diagnostic testing or basic research, it’s always a university who’s the patentee.

He searched filings in US district court, and Federal Circuit just for interferences, 2000-2009. Universities accused of infringement: 3 athletics, 3 instructional/administrative software, 3 hospital—one involved software for monitoring OTC drugs provided to state health departments; a declaratory judgment action brought because they thought they were going to be sued. One university sued for selling crop seeds, and another sued for working with NOAA, were dismissed from the case on 11th Amendment grounds. Only 3 others after 2002, and they don’t seem to have involved basic research. Interferences: 10 appeals, 2 intra-university; 7 university victories; 6 biotech, others pharma, medical device, unknown. Also a lot of inventorship disputes, when a collaboration went bad; 2 intra-university, and one suit against HHS/NIH. Nine were internal relationships: mostly omitted graduate students and research fellows. Claims: biotech, pharma, medical devices, vaccine, and three non-pharmaceuticals. Pharma is what the universities invest in.

139 suits were filed by a university joining exclusive licensee; some exclusive licensees are NPEs. This fits the Bayh-Dole paradigm. But they may also be troll-like. 51 suits filed by the university alone, sometimes against a current or former licensee; no one needed to be an exclusive licensee to invest, because the companies were developing the tech without a patent. Sometimes the universities are suing a whole industry, troll-like.

Peter Lee, UC Davis School of Law ―Toward a Distributive Commons in Patent Law

Patents on health technologies are his concern. Dynamic incentives create static inefficiencies: supracompetitive prices for medicines and diagnostics. The price of antiretrovirals decreased from thousands to hundreds on patent expiration, as did the price of Paxil. Dynamic inefficiencies: burdening sequential innovation, such as beta-carotene enriched “Golden Rice” which has 40 input patents.

How to deal? We could limit patentable subject matter, but TRIPs says no. We could try compulsory licenses, never popular in the US. We could do remedies manipulation, following eBay; don’t know whether courts will do that. Direct price regulation of pharma by states has generally failed on patent preemption grounds.

His idea: public scientific capital. Public institutions make tremendous contributions to life sciences research. Public support mitigates the need for exclusive rights, and provides public institutions with a limited public ownership stake.

Conservative approach: NIH gives $30 billion/year for research. Bayh-Dole means recipients can patent. NIH hasn’t exercised its march-in rights; it has licensing guidelines, but they apply to research tools, and don’t govern what universities can do with end products. Rationales: worry about chilling research, fear over technical competence.

Aggressive approach: California Instititute for Regenerative Medicine: funds research, allows patents, but prefers nonexclusive licenses to increase output. Exclusive licenses require “access plans” and price discounts for individuals receiving public assistance. NIH’s Office of Tech Transfer: for NIH’s own research, joint ventures with pharmacos were allowed, but there was a reasonable pricing requirement. Many pharmacos protested and the pricing requirement was abandoned after a few years. University tech transfer: individual negotiations with licensees; humanitarian licensing.

Obstacles: Distributive claims must be proportional to contributions. NIH is too far upstream to place constraints on pharmacos. Universities are closer. Price discrimination is a more viable strategy than uniform price reductions. Allow patentee to recoup investments, but allow preferential pricing for a specialized group, and prevent arbitrage. Technical competence: focus on nonexclusive licensing rather than directly regulating price, which is something agencies and universities aren’t very good at.
Chidi Oguamanam, Dalhousie University Law School (Canada) ―Patent: Innovation or Market Success? Pharmaceutical R&D and Global Health Crisis

Almost 15 years after TRIPs, and 8 years after the Doha Declaration, what’s happened? There’s still no solid empirical evidence of the need for patents to spur innovation. However, patent guarantees the risk capital required for profitable innovation. Investment goes to the viable market opportunity. For every $100,000 worldwide in biomed research, $1 goes to tropical diseases. The average annual per capita private health expenditure in sub-Saharan Africa is $6; $4000 in the US and $1000 in most OECD countries, exclusive of public expenditure. 83% of the population accounts for 10% of global pharma sales.

Pharmaceutical R&D is expensive and long term; there’s a high risk of drug failure. Claim: $800 million for a new drug into the market, but that claim has been contested: there’s a public subsidy, a lax anti-trust regime, a big marketing budget that arguably shouldn’t count; transition from random screening to rational drug design; outsourcing of clinical trials leading to lower prices.

Global public goods: national governments, acting individually, can’t supply these goods. Nonmarket and coordinated efforts are necessary. Doha; UN human rights focus; other targeted interventions. Nonmarket actors, chiefly NGOs, have been working on this. Trends: collaborative models such as an advance market commitment for pharmacos; priority review guaranteed by FDA, potentially worth $321 million; prize funds; tax credits; development partnerships.

Current challenge: harmonization of approaches. Nation-by-nation ad hoc responses will no longer suffice. A global treaty on research is needed.

Greg R. Vetter, University of Houston Law Center ―Commercial Free and Open Source Software: Knowledge Production, Hybrid Appropriability and Patents

What should a court do when the entity involved in a lawsuit is entangled with FOSS? Traditional appropriation of value isn’t present. What do courts and policymakers think of free software? Appellate courts have given a positive narrative to FOSS in terms of spillovers, and Vetter wants to promote that, but he wants to know how that changes when commercial companies involve themselves with patents to increase their competitive position. FOSS companies could be involved either as plaintiffs or defendants, and that may change the injunctive relief calculus.

Discussants: Robert A. Bohrer, California Western School of Law

On universities: Integra v. Merck seemed to gut many of the worrisome patents: if data from use of a patent is intended to be submitted to the FDA, that’s not enough to infringe. Where the universities are suing on their own, do we know whether they’re nonexclusively licensing it widely? That might (or might not) be legit, if they say that everyone else is paying so the defendant should too.

Sharon K. Sandeen, Hamline University School of Law

One possibility for defending openness, as with FOSS, is to focus on industry- or sector-specific ways to convince people who want to claim IP rights about the flipside. The university, whose mission is to increase knowledge, is one example of that.

Clark Wolf, Departments of Philosophy and Political Science, Iowa State University

Query for Holman: is looking at litigation the best way to figure out how universities are dealing with patents?

For Oguamanam: The problem also extends to agricultural research—better manioc is underfunded. There are solutions proposed, but so far they’ve been entirely impractical.