Kowalsky v. Hewlett-Packard Co., --- F. Supp. 2d ----, 2011 WL 1466136 (N.D. Cal.)
The court reconsidered its earlier decision and dismissed this class action complaint. Kowalsky alleged that HP represented that its 8500 printer could scan and copy documents through its 50-sheet automatic document feeder at speeds of 34-35 pages per minute, but that it actually had a design defect rendering the feeder usable for only 2-3 sheets at a time. Kowalsky sued under the UCL, FAL, CLRA, and for breach of express warranty/breach of implied warranty of merchantability.
The court initially dismissed the warranty claims, along with the FAL and portions of the UCL and CLRA claims, because Kowalsky hadn’t plausibly alleged that HP knew, or should have known, of the alleged defect at the time that Plaintiff purchased his printer. However, it preserved Kowalsky’s fraudulent and unlawful UCL claims and related CLRA claims because the UCL imposes strict liability.
Now it reconsidered. It acknowledged that the UCL’s fraudulent prong requires only a showing of likely consumer deception, not of fraud (and specifically not of knowledge of falsity); that the UCL’s coverage is sweeping; and that the UCL imposes strict liability. HP argued, however, that strict liability had not been applied to product defect claims. Federal district courts in such cases “have generally required a plausible showing that the defendant knew of the alleged defect when it made the representations alleged to be deceptive.” The court was persuaded by these cases (though it didn’t explain those cases’ reasoning).
Moreover, the court agreed with HP’s distinction of California cases explictly imposing strict liability: those cases involved defendants with “knowledge of the basic facts that rendered their statements misleading at the time the statements were made.” For example, one case found that Honda ads might be misleading because they suggested that a driver could achieve a high gas mileage by driving the Civic Hybrid just as one would drive a conventional car. “In that case, Honda may not have intended to deceive consumers, and it may not have known that its advertisements would have a deceptive effect, but it knew that drivers could not achieve the gas mileage advertised without driving the Hybrid in a special manner.” Likewise, in Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir.2008),“while Gerber may not have intended to deceive consumers or known that its packaging would be misleading, it was aware of basic facts that rendered its advertisement deceptive--that its product did not contain the fruits depicted on the packaging.”
Thus, the UCL imposes strict liability only in that defendants aware of facts that render their misrepresentations misleading can be held liable regardless of their motivations or of their subjective assessment of whether their statements were deceptive. However, when a defendant lacked knowledge of the facts that rendered its representations misleading when made, the California Court of Appeal found that the "unwitting" and "unintentional" distribution of contaminated dog food did not constitute a deceptive practice under the fraudulent prong of the UCL. Klein v. Earth Elements, Inc., 59 Cal. App. 4th 965, 970, 69 Cal. Rptr. 2d 623 (Cal. Ct. App. 1997). In a footnote, the court described the “extraordinary” circumstances of Klein, wherein the defendant distributed pet food that was manufactured and tested for quality by a different corporation, the mold toxin that contaminated the pet food was difficult to detect because it was unevenly distributed in the grain, and the defendant took extensive measures to recall the contaminated pet food and reimburse consumers for any damages once it learned of the contamination, a fact on which the Klein court relied at least in part.
Other courts have been unwilling to impose liability “in cases where the defendant was unaware of critical facts at the time that allegedly misleading or deceptive statements were made,” such as when studies proving ineffectiveness were published after the defendant made the statements at issue. So, since the plaintiff didn’t adequately allege that HP knew, or through the exercise of reasonable care should have known, of the printer defect at the time it marketed and advertised the printer's capabilities, HP “lacked awareness of the basic fact that allegedly rendered its representations about the printer misleading or deceptive” and thus the UCL claim under the fraudulent prong was not sufficiently well pleaded. However, plaintiff was granted leave to amend. (The court also noted that HP may have had a duty to correct its representations once it learned or should have learned of the alleged defect.)
The CLRA claim fell for the same reasons. While a product defect may give rise to breach of warranty claims, a CLRA claim requires more, such as defendant’s awareness of the defect. “[A] representation is not ‘deceptive’ under the UCL or the CLRA simply because an unanticipated product defect calls the prior representation into question.”
Comment: while I understand the impulse to cabin strict liability, I don’t think this way of doing it is a good idea for the law, and if followed it will increase variability and unpredictability, compounded by Iqbal/Twombly issues. Consider the health claim “this supplement reduces the risks of heart disease.” Suppose a defendant has bad studies or anecdotes that it (sincerely) believes justify the claim. But, in part because reasonable consumers expect a minimum level of substantiation, the claim is misleading. I have no hesitation saying there ought to be state-law liability in such a circumstance: the burden of being wrong is on the commercial seller.
And perhaps we can work our way to that result for my supplement example under the present case’s standards: a reasonable person would have assessed the evidence objectively and should have known that the claim wasn’t substantiated. But then why can’t the plaintiff here just plead that, given that the product was a mass market product made by a major corporation, a reasonable corporation would have tested the product for its conformance with explicit claims made and that therefore the defendant should have known of the falsity? And/or plead that implicit in the statement about the printer’s capacity was the representation that HP, a major corporation with a lot more knowledge of the product than the consumer, had confirmed this capacity with reliable tests that, if done, would have disclosed the defect? The Klein case suggests that when there was nothing else the defendant could have done it should have a defense, but that’s not the same as putting the burden of ignorance on the consumer.
The deeper problem is that the court seems to be operating from a model of misleading claims (facially true claims that mislead consumers as to appropriate inferences, as with the Honda and Gerber cases), but there are also often questions of falsity. The printer either can process 50 sheets at a time, as claimed, or it can’t. We may dispute the standards for certainty on these things, but at any given level of certainty there’s likely to be an answer. And for that, California law has been pretty clear that strict liability attaches to falsity (with the Klein special circumstances exception). Under this new rule, it may be easier to impose liability for misleadingness than for falsity, which seems somewhat odd at best. And if courts start applying a knowledge standard to falsity itself, that will mark a big (and misguided) change in the law.
Wednesday, May 11, 2011
Tuesday, May 10, 2011
Bad reviews drive sales if they're spelled well
Slate story here. Interesting links to the relationship of the underlying research to the habit of some online sites of correcting grammar and spelling--could this be misleading given that it does affect purchases? And then there's the question of whether there's hidden product placement in reviews for related products--the advertiser may be promoting its speakers in reviews for speaker mounts, whether positive or negative. Presumably this falls afoul of the FTC guidelines, and competitors (and noncompetitors!) may also have something to say about it.
Blowing smoke: large battle ends with small award
So, this is my 2001st post--a better (belated) anniversary than age, I think, since posting was so sporadic when I first started out. What better than a classic business-on-business dustup to celebrate?
Neuros Co., Ltd. v. KTurbo Inc., 2011 WL 1692170 (N.D. Ill.)
The parties compete to make high-speed, direct-drive turbo blowers used in waste water treatment plants. KTurbo lost a bid to Neuros on a project in South Valley, Utah, and KTurbo’s CEO Lee accused Neuros of cheating during the bid process by submitting false data for its turbo blowers. Neuros sued KTurbo for violating the Lanham Act and the Illinois Deceptive Trade Practices Act, defamation, trade libel, and intentional interference with prospective economic relations. KTurbo counterclaimed for false advertising under the same heads, along with the Illinois Consumer Fraud and Deceptive Practices Act. The court held a bench trial.
Bids typically require the bidder to disclose the power draw for its blowers. “Manufacturers typically do not guarantee the total efficiency of their blowers, though total efficiency can be derived from the power draw, specified operating conditions, and a number of assumptions about a blower's operation. Power-draw guarantees and specification compliance are often confirmed through tests conducted before the manufacturer ships the blower to the customer.” Because turbo blowers were new to the American market, an engineer visited Neuros in 2007 on behalf of King County, one customer, to witness their performance under various conditions. King County ultimately awarded its project to Neuros.
In 2008, Neuros and KTurbo submitted bids for the South Valley project. Each was required to guarantee power draws for thirty different operating points and conditions, though they were not required to guarantee the total efficiency of their blowers. The project's consulting engineers evaluated the bids and Neuros came in first while KTurbo came in third, with the greatest difference in the area of product support.
KTurbo’s marketing manager then sent an email to an OEM accusing Neuros of providing false efficiency data in bids. Lee created a PowerPoint stating that Neuros’s efficiency guarantees to South Valley constituted a “crime” and “cheating” by claiming an impossible 82.2% efficiency. Lee arrived at this calculation by manipulating some of the data from Neuros’s South Valley bid, but it wasn’t in the bid itself, and Lee made some errors and guesses. Similar messages went out to KTurbo’s sales representatives; two recipients warned Lee against the cheating accusation. Lee nonetheless presented the slides at a meeting in the US with a number of sales reps, and they were also publicly accessible on KTurbo’s Korean-language website.
Napa Valley also sought bids, and the contract was ultimately awarded to Neuros. Napa first required a factory witness test in the presence of its consulting engineer. Lee met with the engineer and discussed his claims. The engineer then witnessed the blower tests, and he was satisfied.
Neuros sent a cease-and-desist letter, but Lee continued to make cheating/crime claims to people in the industry.
Neuros also made some comparative claims about its blowers versus KTurbo’s, including that KTurbo’s blower performance had never been confirmed by witness testing or accepted by US customers, that KTurbo has had to recall products for quality purposes, and that its financial situation was poor. The claims about KTurbo’s financial situation were based on a publicly available financial report from the Korean Information Service, Inc., which stated that KTurbo’s cash-flow was “unsatisfactory” and incapable of covering working capital and that its debt/sales ratio was nearly 110%, which was at the bottom 30% of all companies and bottom 15% of industry peers.
The court found KTurbo’s cheating/crime accusations to be literally false. There was no evidence that Neuros made any guaranteed efficiency ratings in its bids, though it did supply one customer with a third-party report for that specific project stating that total efficiency for one blower at one operating point was 74% according to a core test. The court was unwilling to find this statement attributable to Neuros or that Neuros adopted that figure as its own and used it to market its products. There was also no evidence that any customer relied on the third-party report. KTurbo didn’t prove that a prospective purchaser could easily determine efficiency data from the data in Neuros’s bid, and its related claims of falsity also failed.
As for KTurbo’s counterclaims, they also failed. KTurbo didn’t prove Neuros made false statements about its own blowers, for reasons similar to those above. Nor did it prove that Neuros’s comparative/disparaging statements about KTurbo blowers were false; for example, one of its witnesses said with respect to certain accusations of poor quality and inability to meet the schedule for one project, “I'm not saying that some of that might not be true.” Likewise, KTurbo failed to prove that the statements about its financial situation were false; even Lee had expressed concern about KTurbo’s financial situation.
Defamation: Neuros showed falsity and needed to show lack of privilege. Lee stated that he intended to “break” and “terminate” Neuros, which was sufficient evidence that his statements weren’t made in good faith and were defamatory. Neuros didn’t offer any evidence of actual damages, and thus couldn’t prevail on its defamation per quod claim. However, Neuros also argued defamation per se because of the accusation of crime/cheating. Defamation per se in cases of crime requires that the charged offense be indictable, involve moral turpitude, and be punishable by a term of imprisonment. Though Lee used “crime,” he didn’t accuse Neuros of any particular crime. The cheating accusation, however, did impugn Neuros’s business integrity. This was defamation per se.
Neuros argued that this was also product disparagement, but there was no evidence of damages as required.
Neuro’s Lanham Act claim failed because the statements didn’t constitute “commercial advertising or promotion.” In the Seventh Circuit, this has to be "promotional material disseminated to anonymous recipients." Sanderson v. Culligan Int'l Co., 415 F.3d 620, 624 (7th Cir. 2005) (quoting First Health Grp. Corp. v. BCE Emergis Corp., 269 F.3d 800, 804 (7th Cir. 2001)). Direct communications or misrepresentations to a single customer thus don’t count. Nor do communications to KTurbo’s own sales representatives. Though Neuros argued that KTurbo’s intent was for the reps to disseminate the claims, there was no evidence that this happened, and the evidence was that some reps strongly disagreed with Lee’s tactics. KTurbo’s Lanham Act counterclaims failed for the same reasons: the alleged misrepresentations were confined to individual bids.
DTPA and ICFA claims “are to be resolved according to principles set forth under the Lanham Act” and thus “rise or fall” based on the Lanham Act claims “because the legal inquiries are the same under either cause of action.” So they failed too. Note: this is compounding the unusual interpretation by which the court is bound (the Seventh Circuit is the only circuit that refuses to find that a company operating in a limited field can “advertise” or “promote”) with straight-up nonsense. It may well make sense to interpret substantive concepts such as deceptiveness the same for both state and federal claims (though note that only federal law generally has the rigid explicitly false/implicitly false divide). The case law, however, provides no justification for implying the limit “advertising or promotion” into the DTPA, which does not contain it. Indeed, though several of the numbered examples of unlawful conduct in the DTPA mention “advertising,” the law also contains a catchall prohibiting “any other conduct which similarly creates a likelihood of confusion or misunderstanding.” The facile overgeneralization that the legal inquiries are the same should be avoided—see also a “use in commerce” defense that the defendant’s conduct only took place within and affected the state.
Neuros didn’t press its intentional interference claim separately, so that also failed. KTurbo’s claim failed because mere hope for a prospective economic relationship isn’t a reasonable expectancy, and KTurbo couldn’t show more than that.
Damages: for defamation per se, plaintiffs can recover presumed damages without proof of actual damages. Presumed damages are a rough estimate of the probable extent of actual loss even though such damages couldn’t be proved. In the Seventh Circuit, the award may not be “substantial.” Though other cases upheld $1 million presumed damage awards, they involved more wide-scale conduct where the plaintiffs were able to show reputational damage though not to quantify it. Instead, the court awarded $10,000 to compensate for reputational damage and the cost of combating the reputational harm.
Neuros also requested punitive damages, available in Illinois for torts committed with fraud, actual malice, willfulness, or gross negligence indicating wanton disregard of the rights of others. The degree of reprehensibility is the most important consideration, including whether the conduct involved repeated actions and whether it was the result of intentional malice or deceit. Defendants are presumptively made whole by compensatory damages, and punitive damages should only be awarded if defendant’s conduct is so reprehensible as to deserve further punishment or deterrence. Neuros didn’t offer sufficient support for much in the way of punitive damages: no evidence of KTurbo’s assets or corporate profits and no analysis of punitive-damage awards in comparative cases. Still, “some measure of punishment is appropriate” given the false statements with malicious intent, and the fact that KTurbo continued to accuse Neuros of cheating after the cease-and-desist letter and after the lawsuit was filed. Thus, punitive damages of $50,000 were warranted.
Neither injunctive relief nor attorneys’ fees were appropriate, since the former request was tied to claims on which Neuros lost and the latter had no precedent in a defamation case.
Neuros Co., Ltd. v. KTurbo Inc., 2011 WL 1692170 (N.D. Ill.)
The parties compete to make high-speed, direct-drive turbo blowers used in waste water treatment plants. KTurbo lost a bid to Neuros on a project in South Valley, Utah, and KTurbo’s CEO Lee accused Neuros of cheating during the bid process by submitting false data for its turbo blowers. Neuros sued KTurbo for violating the Lanham Act and the Illinois Deceptive Trade Practices Act, defamation, trade libel, and intentional interference with prospective economic relations. KTurbo counterclaimed for false advertising under the same heads, along with the Illinois Consumer Fraud and Deceptive Practices Act. The court held a bench trial.
Bids typically require the bidder to disclose the power draw for its blowers. “Manufacturers typically do not guarantee the total efficiency of their blowers, though total efficiency can be derived from the power draw, specified operating conditions, and a number of assumptions about a blower's operation. Power-draw guarantees and specification compliance are often confirmed through tests conducted before the manufacturer ships the blower to the customer.” Because turbo blowers were new to the American market, an engineer visited Neuros in 2007 on behalf of King County, one customer, to witness their performance under various conditions. King County ultimately awarded its project to Neuros.
In 2008, Neuros and KTurbo submitted bids for the South Valley project. Each was required to guarantee power draws for thirty different operating points and conditions, though they were not required to guarantee the total efficiency of their blowers. The project's consulting engineers evaluated the bids and Neuros came in first while KTurbo came in third, with the greatest difference in the area of product support.
KTurbo’s marketing manager then sent an email to an OEM accusing Neuros of providing false efficiency data in bids. Lee created a PowerPoint stating that Neuros’s efficiency guarantees to South Valley constituted a “crime” and “cheating” by claiming an impossible 82.2% efficiency. Lee arrived at this calculation by manipulating some of the data from Neuros’s South Valley bid, but it wasn’t in the bid itself, and Lee made some errors and guesses. Similar messages went out to KTurbo’s sales representatives; two recipients warned Lee against the cheating accusation. Lee nonetheless presented the slides at a meeting in the US with a number of sales reps, and they were also publicly accessible on KTurbo’s Korean-language website.
Napa Valley also sought bids, and the contract was ultimately awarded to Neuros. Napa first required a factory witness test in the presence of its consulting engineer. Lee met with the engineer and discussed his claims. The engineer then witnessed the blower tests, and he was satisfied.
Neuros sent a cease-and-desist letter, but Lee continued to make cheating/crime claims to people in the industry.
Neuros also made some comparative claims about its blowers versus KTurbo’s, including that KTurbo’s blower performance had never been confirmed by witness testing or accepted by US customers, that KTurbo has had to recall products for quality purposes, and that its financial situation was poor. The claims about KTurbo’s financial situation were based on a publicly available financial report from the Korean Information Service, Inc., which stated that KTurbo’s cash-flow was “unsatisfactory” and incapable of covering working capital and that its debt/sales ratio was nearly 110%, which was at the bottom 30% of all companies and bottom 15% of industry peers.
The court found KTurbo’s cheating/crime accusations to be literally false. There was no evidence that Neuros made any guaranteed efficiency ratings in its bids, though it did supply one customer with a third-party report for that specific project stating that total efficiency for one blower at one operating point was 74% according to a core test. The court was unwilling to find this statement attributable to Neuros or that Neuros adopted that figure as its own and used it to market its products. There was also no evidence that any customer relied on the third-party report. KTurbo didn’t prove that a prospective purchaser could easily determine efficiency data from the data in Neuros’s bid, and its related claims of falsity also failed.
As for KTurbo’s counterclaims, they also failed. KTurbo didn’t prove Neuros made false statements about its own blowers, for reasons similar to those above. Nor did it prove that Neuros’s comparative/disparaging statements about KTurbo blowers were false; for example, one of its witnesses said with respect to certain accusations of poor quality and inability to meet the schedule for one project, “I'm not saying that some of that might not be true.” Likewise, KTurbo failed to prove that the statements about its financial situation were false; even Lee had expressed concern about KTurbo’s financial situation.
Defamation: Neuros showed falsity and needed to show lack of privilege. Lee stated that he intended to “break” and “terminate” Neuros, which was sufficient evidence that his statements weren’t made in good faith and were defamatory. Neuros didn’t offer any evidence of actual damages, and thus couldn’t prevail on its defamation per quod claim. However, Neuros also argued defamation per se because of the accusation of crime/cheating. Defamation per se in cases of crime requires that the charged offense be indictable, involve moral turpitude, and be punishable by a term of imprisonment. Though Lee used “crime,” he didn’t accuse Neuros of any particular crime. The cheating accusation, however, did impugn Neuros’s business integrity. This was defamation per se.
Neuros argued that this was also product disparagement, but there was no evidence of damages as required.
Neuro’s Lanham Act claim failed because the statements didn’t constitute “commercial advertising or promotion.” In the Seventh Circuit, this has to be "promotional material disseminated to anonymous recipients." Sanderson v. Culligan Int'l Co., 415 F.3d 620, 624 (7th Cir. 2005) (quoting First Health Grp. Corp. v. BCE Emergis Corp., 269 F.3d 800, 804 (7th Cir. 2001)). Direct communications or misrepresentations to a single customer thus don’t count. Nor do communications to KTurbo’s own sales representatives. Though Neuros argued that KTurbo’s intent was for the reps to disseminate the claims, there was no evidence that this happened, and the evidence was that some reps strongly disagreed with Lee’s tactics. KTurbo’s Lanham Act counterclaims failed for the same reasons: the alleged misrepresentations were confined to individual bids.
DTPA and ICFA claims “are to be resolved according to principles set forth under the Lanham Act” and thus “rise or fall” based on the Lanham Act claims “because the legal inquiries are the same under either cause of action.” So they failed too. Note: this is compounding the unusual interpretation by which the court is bound (the Seventh Circuit is the only circuit that refuses to find that a company operating in a limited field can “advertise” or “promote”) with straight-up nonsense. It may well make sense to interpret substantive concepts such as deceptiveness the same for both state and federal claims (though note that only federal law generally has the rigid explicitly false/implicitly false divide). The case law, however, provides no justification for implying the limit “advertising or promotion” into the DTPA, which does not contain it. Indeed, though several of the numbered examples of unlawful conduct in the DTPA mention “advertising,” the law also contains a catchall prohibiting “any other conduct which similarly creates a likelihood of confusion or misunderstanding.” The facile overgeneralization that the legal inquiries are the same should be avoided—see also a “use in commerce” defense that the defendant’s conduct only took place within and affected the state.
Neuros didn’t press its intentional interference claim separately, so that also failed. KTurbo’s claim failed because mere hope for a prospective economic relationship isn’t a reasonable expectancy, and KTurbo couldn’t show more than that.
Damages: for defamation per se, plaintiffs can recover presumed damages without proof of actual damages. Presumed damages are a rough estimate of the probable extent of actual loss even though such damages couldn’t be proved. In the Seventh Circuit, the award may not be “substantial.” Though other cases upheld $1 million presumed damage awards, they involved more wide-scale conduct where the plaintiffs were able to show reputational damage though not to quantify it. Instead, the court awarded $10,000 to compensate for reputational damage and the cost of combating the reputational harm.
Neuros also requested punitive damages, available in Illinois for torts committed with fraud, actual malice, willfulness, or gross negligence indicating wanton disregard of the rights of others. The degree of reprehensibility is the most important consideration, including whether the conduct involved repeated actions and whether it was the result of intentional malice or deceit. Defendants are presumptively made whole by compensatory damages, and punitive damages should only be awarded if defendant’s conduct is so reprehensible as to deserve further punishment or deterrence. Neuros didn’t offer sufficient support for much in the way of punitive damages: no evidence of KTurbo’s assets or corporate profits and no analysis of punitive-damage awards in comparative cases. Still, “some measure of punishment is appropriate” given the false statements with malicious intent, and the fact that KTurbo continued to accuse Neuros of cheating after the cease-and-desist letter and after the lawsuit was filed. Thus, punitive damages of $50,000 were warranted.
Neither injunctive relief nor attorneys’ fees were appropriate, since the former request was tied to claims on which Neuros lost and the latter had no precedent in a defamation case.
Monday, May 09, 2011
Rikos v. Procter & Gamble Co., --- F. Supp. 2d ----, 2011 WL 1707209 (S.D. Ohio)
Rikos brought a putative class action under California law based on PG’s alleged misrepresentations about a daily food supplement, Align, which P&G claims is made of a special formulation of "probiotic" bacteria that builds and maintains a healthy digestive system, restores natural digestive balance, and protects against digestive upsets. P&G allegedly falsely represents that these benefits are clinically and scientifically proven, using the tagline “Great digestion through science,” along with statements such as "Recommended by Gastroenterologists" and "Proof: Bifantis has been the subject of several clinical studies and has been featured in peer-reviewed journals. Please see Bifantis.com for full details." The website contains scientific information and data.
P&G allegedly makes these claims prominently and conspicuously on every Align package, and emphasizes and repeats them through a variety of advertising media including television commercials, point of sale displays, and the Internet. Rikos alleged that the claims are false and misleading; for example, P&G’s own clinical trial found no statistically significant differences between the Bifantis group and the control group. Other clinical data analyzed patients with irritable bowel syndrome, and not Align's target audience, the general population, tested endpoints irrelevant to the advertised claims and amounts of the bacteria materially different from those in a serving of Align. And so on.
As the court summarized, Rikos alleged that Align is nothing but sugar-filled capsules with a small amount of unremarkable bacteria that nonetheless cost more than $1 per pill.
P&G argued that Rikos failed to satisfy Twombly and Iqbal, because Rikos was only alleging that its claims aren’t adequately substantiated. The court disagreed. Rikos alleged that the statements at issue (which included explicit “tests prove” claims) are false and misleading, just as required.
P&G also argued that the complaint should be dismissed under the primary jurisdiction doctrine, letting the FDA go first. The court disagreed because no agency expertise was required to resolve the legal claims here. This was not a case of an issue of first impression or a particularly complicated issue committed in the first instance to a regulatory agency, but a case about whether P&G’s ads are likely to deceive reasonable consumers, the type of judgment courts make every day. Further, there was no evidence that the FDA actually had any interest in investigating the claims here; also, state law false advertising claims would not necessarily be resolved by an FDA ruling.
P&G had slightly more success with its Article III standing argument. Rikos alleged injury in fact, here economic injury: he bought Align in reliance on P&G’s claims for a health benefit. P&G argued that buying a product isn’t sufficient economic injury, but Rikos properly alleged that he relied on false claims to buy the product, thus losing money that he should be able to get back. However, P&G succeeded in kicking out the injunctive relief request, because despite the broad availability of injunctive relief under California law in California courts, Rikos doesn’t need injunctive relief—he now knows the product is bunk—and he can’t assert other class members’ interests under federal precedents. This seems bizarre to me.
Here’s the quoted case: Hodgers-Durgin v. de la Vina, 199 F.3d 1037, 1045 (9th Cir.1999) ("Unless the named plaintiffs are themselves entitled to seek injunctive relief, they may not represent a class seeking that relief. Any injury unnamed members of this proposed class may have suffered is simply irrelevant to the question whether the named plaintiffs are entitled to the injunctive relief they seek."). However, Hodgers-Durgin was a case seeking only injunctive relief via a declaratory judgment; it seems to me that Rikos’s valid damages claim, which concededly gives him Article III standing (and at this stage entitle him to purport to represent a class for damages purposes), should entitle him to seek other forms of relief for the same set of people. I was under the impression that Article III standing was about who could sue, and that if a plaintiff’s injury is sufficiently like others’ s/he could ask for remedies on behalf of a class. The court thought that the express language of the California law appeared to give Rikos the right to seek an injunction on behalf of the class, but “the case law appears clear on its face, and Plaintiff fails to produce any authority to the contrary.” Thus, a plaintiff might have standing to seek an injunction in California state court and not in federal court.
Anyway, P&G also challenged standing under the California statute based on the injury in fact/lost money or property requirement of the UCL. Plaintiffs who can truthfully allege that they were deceived into spending money to buy a product they wouldn’t have bought otherwise have lost money or property within the meaning of the law. P&G argued that Rikos didn’t lose money if he received the benefit of the bargain, but courts have rejected this reasoning, and in any event, Rikos alleged that he didn’t receive the product he paid for: a product that would provide proven digestive health benefits.
A plaintiff must also plead reliance: a causal connection between exposure to the false claims and purchase of the products. An inference of reliance arises when a reasonable person would attach importance to a misrepresentation in deciding what to do. Rikos alleged that he read and relied on the Align label before he bought. P&G argued that this was insufficient because he needed to identify specific representations on the label. (Rikos also attached 10 pictures of Align packaging/labeling with the relevant language to the complaint.) The court concluded that it was unclear whether reliance had to be pled with specificity, and in any event the allegations were specific enough to give P&G sufficient notice of the claim and lay out the causal connection between reading the label and buying the product, given that Rikos attached the actual label on which he relied.
P&G then tried to cut down on the scope of the claims by arguing that Rikos could only challenge the label and not other ads. The court was skeptical of the idea that every class action needs a representative for every type of ad—radio, TV, internet, newspaper, etc. Here, Rikos alleged that all the Align ads carried the same message. P&G argued that the packaging changed over time, but at the pleading stage that didn’t defeat the allegations that all the ads carried the same message.
Note: compare the NJ Supreme Court’s ruling in Lee v. Carter-Reed. From the court’s discussion, it seems that digestive benefits are the only benefits promised by the product. On the Lee logic, if that’s the case, then falsity of the digestive benefits claims means that all consumers are properly included in the class, since no matter what they saw and what they relied on, all the reasons offered to buy the product are false.
False advertising claims under the UCL and CLRA sound in fraud and thus must meet Rule 9(b)’s heightened standard. The heightened standard requires fair notice, not super-exacting detail. Here, Rikos attached the ads he relied on to the complaint, alleged when and where they were made ("Internet, in-store sampling, point of sale displays, and on the Align probiotic supplement's labels and labeling," starting March 2009 and continuing until the filing date), and explained why the statements were likely to deceive the reasonable consumer—they were unsubstantiated. Additional details were the appropriate subject of discovery.
The UCL borrows violations of other laws and makes them independently actionable. Here, violation of the California Health & Safety Code (misbranding) was sufficient. What about a violation of the FDCA? The FDCA doesn’t itself provide for private enforcement. And courts can’t decide issues that require FDA determination in the first instance. But allegations that ads are literally false and misleading don’t depend on FDCA interpretations, and thus the FDCA could provide a predicate for the UCL. So could claims for fraud and deceit.
Rikos sought restitution and disgorgement under the CLRA, but didn’t comply with the prefiling notice requirements needed to seek damages under the CLRA. The court agreed that restitution and disgorgement are not “damages” under the CLRA, and thus notice was not required. Also, in what seems like a move that’s becoming standardized, Rikos notified P&G of the CLRA violations along with the original complaint, requested that they be rectified, and notified P&G that the complaint would be amended to seek damages if P&G didn’t agree to correct the violations within 30 days. Rikos then did as promised. The court was okay with that.
The court also refused to dismiss the breach of express warranty claim. The elements: (1) the seller's statement constitutes an affirmation of fact or promise, or a description of the goods; (2) the statement was part of the basis of the bargain; and (3) the warranty was breached. Reliance is not an element. P&G argued that Rikos failed to identify the express affirmations of fact or the breach. The court disagreed: Rikos alleged that the promises were made on the Align product labels and ads and became part of a standardized contract between P&G and the class members.
Finally, P&G argued that Rikos couldn’t pursue California claims on behalf of a proposed class that includes out-of-state residents. “California statutory remedies may be invoked by out-of-state parties, but only when they are harmed by conduct occurring in California. The complaint does not contain any allegations that P&G's alleged conduct occurred in California ….” The court thought this argument appeared meritorious on its face, but it was premature to rule on the issue without a motion for class certification and related briefing.
Rikos brought a putative class action under California law based on PG’s alleged misrepresentations about a daily food supplement, Align, which P&G claims is made of a special formulation of "probiotic" bacteria that builds and maintains a healthy digestive system, restores natural digestive balance, and protects against digestive upsets. P&G allegedly falsely represents that these benefits are clinically and scientifically proven, using the tagline “Great digestion through science,” along with statements such as "Recommended by Gastroenterologists" and "Proof: Bifantis has been the subject of several clinical studies and has been featured in peer-reviewed journals. Please see Bifantis.com for full details." The website contains scientific information and data.
P&G allegedly makes these claims prominently and conspicuously on every Align package, and emphasizes and repeats them through a variety of advertising media including television commercials, point of sale displays, and the Internet. Rikos alleged that the claims are false and misleading; for example, P&G’s own clinical trial found no statistically significant differences between the Bifantis group and the control group. Other clinical data analyzed patients with irritable bowel syndrome, and not Align's target audience, the general population, tested endpoints irrelevant to the advertised claims and amounts of the bacteria materially different from those in a serving of Align. And so on.
As the court summarized, Rikos alleged that Align is nothing but sugar-filled capsules with a small amount of unremarkable bacteria that nonetheless cost more than $1 per pill.
P&G argued that Rikos failed to satisfy Twombly and Iqbal, because Rikos was only alleging that its claims aren’t adequately substantiated. The court disagreed. Rikos alleged that the statements at issue (which included explicit “tests prove” claims) are false and misleading, just as required.
P&G also argued that the complaint should be dismissed under the primary jurisdiction doctrine, letting the FDA go first. The court disagreed because no agency expertise was required to resolve the legal claims here. This was not a case of an issue of first impression or a particularly complicated issue committed in the first instance to a regulatory agency, but a case about whether P&G’s ads are likely to deceive reasonable consumers, the type of judgment courts make every day. Further, there was no evidence that the FDA actually had any interest in investigating the claims here; also, state law false advertising claims would not necessarily be resolved by an FDA ruling.
P&G had slightly more success with its Article III standing argument. Rikos alleged injury in fact, here economic injury: he bought Align in reliance on P&G’s claims for a health benefit. P&G argued that buying a product isn’t sufficient economic injury, but Rikos properly alleged that he relied on false claims to buy the product, thus losing money that he should be able to get back. However, P&G succeeded in kicking out the injunctive relief request, because despite the broad availability of injunctive relief under California law in California courts, Rikos doesn’t need injunctive relief—he now knows the product is bunk—and he can’t assert other class members’ interests under federal precedents. This seems bizarre to me.
Here’s the quoted case: Hodgers-Durgin v. de la Vina, 199 F.3d 1037, 1045 (9th Cir.1999) ("Unless the named plaintiffs are themselves entitled to seek injunctive relief, they may not represent a class seeking that relief. Any injury unnamed members of this proposed class may have suffered is simply irrelevant to the question whether the named plaintiffs are entitled to the injunctive relief they seek."). However, Hodgers-Durgin was a case seeking only injunctive relief via a declaratory judgment; it seems to me that Rikos’s valid damages claim, which concededly gives him Article III standing (and at this stage entitle him to purport to represent a class for damages purposes), should entitle him to seek other forms of relief for the same set of people. I was under the impression that Article III standing was about who could sue, and that if a plaintiff’s injury is sufficiently like others’ s/he could ask for remedies on behalf of a class. The court thought that the express language of the California law appeared to give Rikos the right to seek an injunction on behalf of the class, but “the case law appears clear on its face, and Plaintiff fails to produce any authority to the contrary.” Thus, a plaintiff might have standing to seek an injunction in California state court and not in federal court.
Anyway, P&G also challenged standing under the California statute based on the injury in fact/lost money or property requirement of the UCL. Plaintiffs who can truthfully allege that they were deceived into spending money to buy a product they wouldn’t have bought otherwise have lost money or property within the meaning of the law. P&G argued that Rikos didn’t lose money if he received the benefit of the bargain, but courts have rejected this reasoning, and in any event, Rikos alleged that he didn’t receive the product he paid for: a product that would provide proven digestive health benefits.
A plaintiff must also plead reliance: a causal connection between exposure to the false claims and purchase of the products. An inference of reliance arises when a reasonable person would attach importance to a misrepresentation in deciding what to do. Rikos alleged that he read and relied on the Align label before he bought. P&G argued that this was insufficient because he needed to identify specific representations on the label. (Rikos also attached 10 pictures of Align packaging/labeling with the relevant language to the complaint.) The court concluded that it was unclear whether reliance had to be pled with specificity, and in any event the allegations were specific enough to give P&G sufficient notice of the claim and lay out the causal connection between reading the label and buying the product, given that Rikos attached the actual label on which he relied.
P&G then tried to cut down on the scope of the claims by arguing that Rikos could only challenge the label and not other ads. The court was skeptical of the idea that every class action needs a representative for every type of ad—radio, TV, internet, newspaper, etc. Here, Rikos alleged that all the Align ads carried the same message. P&G argued that the packaging changed over time, but at the pleading stage that didn’t defeat the allegations that all the ads carried the same message.
Note: compare the NJ Supreme Court’s ruling in Lee v. Carter-Reed. From the court’s discussion, it seems that digestive benefits are the only benefits promised by the product. On the Lee logic, if that’s the case, then falsity of the digestive benefits claims means that all consumers are properly included in the class, since no matter what they saw and what they relied on, all the reasons offered to buy the product are false.
False advertising claims under the UCL and CLRA sound in fraud and thus must meet Rule 9(b)’s heightened standard. The heightened standard requires fair notice, not super-exacting detail. Here, Rikos attached the ads he relied on to the complaint, alleged when and where they were made ("Internet, in-store sampling, point of sale displays, and on the Align probiotic supplement's labels and labeling," starting March 2009 and continuing until the filing date), and explained why the statements were likely to deceive the reasonable consumer—they were unsubstantiated. Additional details were the appropriate subject of discovery.
The UCL borrows violations of other laws and makes them independently actionable. Here, violation of the California Health & Safety Code (misbranding) was sufficient. What about a violation of the FDCA? The FDCA doesn’t itself provide for private enforcement. And courts can’t decide issues that require FDA determination in the first instance. But allegations that ads are literally false and misleading don’t depend on FDCA interpretations, and thus the FDCA could provide a predicate for the UCL. So could claims for fraud and deceit.
Rikos sought restitution and disgorgement under the CLRA, but didn’t comply with the prefiling notice requirements needed to seek damages under the CLRA. The court agreed that restitution and disgorgement are not “damages” under the CLRA, and thus notice was not required. Also, in what seems like a move that’s becoming standardized, Rikos notified P&G of the CLRA violations along with the original complaint, requested that they be rectified, and notified P&G that the complaint would be amended to seek damages if P&G didn’t agree to correct the violations within 30 days. Rikos then did as promised. The court was okay with that.
The court also refused to dismiss the breach of express warranty claim. The elements: (1) the seller's statement constitutes an affirmation of fact or promise, or a description of the goods; (2) the statement was part of the basis of the bargain; and (3) the warranty was breached. Reliance is not an element. P&G argued that Rikos failed to identify the express affirmations of fact or the breach. The court disagreed: Rikos alleged that the promises were made on the Align product labels and ads and became part of a standardized contract between P&G and the class members.
Finally, P&G argued that Rikos couldn’t pursue California claims on behalf of a proposed class that includes out-of-state residents. “California statutory remedies may be invoked by out-of-state parties, but only when they are harmed by conduct occurring in California. The complaint does not contain any allegations that P&G's alleged conduct occurred in California ….” The court thought this argument appeared meritorious on its face, but it was premature to rule on the issue without a motion for class certification and related briefing.
Saturday, May 07, 2011
NYU platforms conference part 4
Platforms as Social Spaces
Moderator: Kathy Strandburg
Facilitators: Ryan Calo
Platforms mediate communications and the ways we parse interactions. How can this be manipulated? Studies the social psychology literature around design (really neat paper!): can we solve legal problems through design or reduce them? Example: FB designs its website so you’ll share as much as possible. Persuasive computing: at a granular level, incentivize sharing. When Twitter came around, “update” became more prominent—both questions and commands because some people respond better to one and some to another. The way they now prepopulate your comments, as if you’re already participating. This is no accident.
We get the benefits of disclosure immediately, but costs are less obvious/farther off. Disclosure arbitrage is taking place. We respond better to people who look like us—research suggests that if you morph someone’s face with that of the intended audience, the target likes the speaker better. Interface design has a huge impact on how conversation unfolds: do you feel like you’re talking to a person or just throwing it out? People will write less offensive comments on blogs depending on the font you use for their comments.
Increasing numbers of interactions aren’t with humans at all, though they seem to be. Bots interact online. Example: bot priced a book at $23 million on Amazon because it got into an interaction with another bot bidding up the price. That’s fine for a book, but we’ve seen stock crashes triggered by bot v. bot, and that is a problem.
Miriam Cherry
Distinctions between work and play online—not as neat as traditional categories might have been. Leisure space/work space have been divided; now the line between factory and home is blurring across many methods of production, combined with platforms.
Platforms can connect people looking for workers and people looking for work. Questions of labor/value arbitrage, what wages are being paid, and whether the platform has any responsibility for things like minimum wage. Mechanical Turk and other crowdsourcing platforms: take big tasks and break them down into small tasks and then put the results together—can be used for tagging websites, gathering news. Other ways of working: contests, which can require midlevel or very sophisticated skills. People are inspired/incentivized to produce in response. Other types of work: gold farmers in virtual worlds. The value they produce is often tradeable outside or inside the game; has a commodifiable time value. Other forms of work in virtual worlds have more traditional analogues: accounting in Second Life, similar to accounting using a phone call.
Normative concerns arise as well as opportunities. Drawing people from across the world offers a chance to get the most efficient business and get the best from globalization/creativity. Questions: does the work feel like work? Huffington Post and SSRN—are these supposed to be commercialized? Is that wrong? What are users’ expectations, and can this be handled by a clickthrough license? Such licenses are often criticized and may not be helpful for navigating the work/play divide. Where does the possibility for exploitation seem higher?
Dan Hunter
Metaphors affect policy: the consequences of the narrative of place for the internet. Hard to get a purchase on platform as metaphor. To him, a platform doesn’t generate much in the way of implications. Some are private, others public.
Games: game designers are anxious/angry about the idea that people outside the magic circle come in and say “thou shalt not do this”—what if I want to create a game about Nazi concentration camps? Well, what about a child porn game? At what point is the barrier between the magic circle and the outside world breached? Same question as when should we say that the private regulatory regime of FB is something that leaches out into the rest of the world.
So the problem is the same: a consensually adopted ruleset has implications outside of that space, and we will always have issues of mediating between those within and those outside the community. Play and hanging out with friends are connected. The metaphor, thin though it might be, of platforms demonstrates the connections between WoW and FB.
Beth Noveck
Inverse: government as platform—a popular theme from, among others, Tim O’Reilly. The state has always been a platform—an organizer of a set of consensual social norms. But institutions/regulators aren’t good at making decisions. They can co-convene meetings; how can they promote innovation in making public life? Platforms are another term for this idea of the hybrid between the institution and the network.
Notion of building sociotechnical platforms was essential strategy for cultural transformation within government. Data.gov, usaspending.gov, challenge.gov to condition human behavior/effect change using tools that weren’t previously available. Open platforms go from law about transparency to transparency in action. Transparency not for its own sake but to use raw data to foster co-creation. National Archives and GPO: printed the Federal Register in the same way since Roosevelt in 3-column PDF. Some guys download 10 years of raw data; they’ve made it searchable, with pictures, making it more transparent and fostering cocreation between citizens and government to make government work better.
Platforms put questions of design front and center: how do we design better collaborative governance platforms? FOIA sets up an adversarial relationship between government and citizens; our legal regimes are not designed for gov’t to be convening platform around ideas/expertise. Limited range of opportunities for only a few citizens. APA based rulemaking involves very few people, very poorly designed—notice and spam (“type here to comment”). Policymaking on Twitter—really good way to get information out, not so good on getting information in.
Strandberg: surveillance is ever more pervasive as we walk around—our footprints are easier to track. Makes the magic circle concept harder to sustain.
Zarsky: Design as tools to set defaults—reminds him of Sunstein and Thaler on Nudging/libertarian paternalism. For the government to manipulate us into making correct choices is really scary. Literature on setting defaults: should we set a default on what people want or on what is normatively correct, and if the latter how will we decide? Even in the supposedly easy case of privacy, if the FTC thinks a set of defaults is normatively preferable, should the government’s opinion determine that? “What people usually want” is also problematic.
Calo: scares him too. S and T’s response is that if the choice architect would feel comfortable disclosing the manipulation to everyone, there’s no problem, though the principle doesn’t require actual disclosure. His point: he wants disclosures to be consistent with what actually happens on a website. The model we use to convey that information has been written text that no one ever reads or understands. His proposal: let’s put nonlinguistic contracting on the table. If you want people to behave like it’s a church, make it look like a church. That works better than saying “speak softly, no shorts.” Competency: FTC has economists and lawyers who don’t understand human-computer interactions. But it’s still promising, and isn’t the same as government manipulating us.
Zarsky: but if you tell websites “you have to do this,” there’s no such thing as neutral, just bias in a different direction. (Not clear to me why it’s good to leave this to private actors, then.)
Calo: study: a picture of eyes induces people to pay more for coffee than a sign asking them to pay. Power of design to realign expectations with actual practice.
Pasquale: concerned about astroturfing of regs. Virtual workers: proposes that workers should know the projects they’re working on—imagine being asked to identify a person from a photo and you’re actually working for Mubarak.
Hunter: there seems to be a trend about to hit about the coopting of our enjoyment within various contexts—we also need to be aware of the way in which we’re being influenced. One of the ways of dealing with Mechanical Turk is being aware of what it’s being used for, but what if it’s still fun? Gamification—use of games in non-game settings. Marketers love this. Same thing will happen with gamification as with privacy, where people are theoretically interested but don’t change their behavior.
Strandburg: this volunteer stuff is great in one sense but then we start to get queasy. Users innovate and then companies find ways to get the users to give them the innovations. The assumed distinction between amateurs and professionals may not hold.
Nissenbaum: when people are letting you down, the excuses we give usually involve suffering—the reason I missed this deadline was that something unpleasant happened. Rarely do they say “I was having too much fun at the coffee shop to leave.” Fascinating question of what we call work. Leads into questions about cocreation and how technology opens up categories of work that are not suffering. To take UGC and start to call it labor, and to talk about exploitation, starts to bleed categories into one another. Is there a normative reason to counting classes of activities as work, even if people are tricked into having fun?
Cherry: we’ve never really paid people based on hedonic benefit and whether they’re enjoying themselves. There is typically a leisure/work distinction, but it’s not hard and fast. Some kinds of positions can be improved with gamification. Jobs that involve drudgery/data entry, where having it be a contest could be fun. In other instances, that would be stressful/terrible. In general, tricking people is bad, and maybe we need a disclosure norm. But there’s no general problem with work as fun or fun as work. The more we see work being deskilled or paid very badly, though (e.g., developing countries pulled into Mechanical Turk), the more we have to worry. But it’s very hard to tell who’s a volunteer, who’s doing this for fun, who’s doing this to survive.
Citron: Crowdsourcing can be problematic for policy reasons. Gov’t increasingly using third-party sites—you can friend the president on FB—but gov’t isn’t doing a good job with the privacy concerns raised thereby.
Noveck: use of third-party sites is phenomenally positive, given how hard it is to procure new tech in government. First federal government blog was in 2008, and now the Secret Service has a Twitter account (though it shows up as having 0 followers). Privacy protections are different in the contracts the government signs with FB and Twitter; modified cookie policy in place and some limits on the use of analytics. We need more tools: create an environment to encourage asking specific questions and providing specific answers voluntarily; that improves our ability to create/exchange expertise.
Frischmann: is there anything wrongful about free riding on others’ play? As long as there’s no deception. In copyright, we give enough incentive to create and then after that copying/free riding is fine. Maybe the objection is not consequential, but then what is it that makes “exploitation” bad?
Calo: distinguish normative point from technical point: these people are not making minimum wage. If they’re working, then that is a violation of the law.
Gillespie: that’s only if you think of it as work—if you’re walking across the park, you’re not violating the law.
Calo: but no one gives you a dollar an hour to walk across the park.
Cherry: blurs the line between commodification of labor and noncommodification. FB asked its users to translate the site into other languages; most sites would pay for translation. A lot of volunteers objected—this is the kind of thing you should pay for and that we don’t want to volunteer for. Minimum wage: we worry about wages being undercut. We know how to handle the factory, but not hybrid work/leisure.
Hunter: most recent criticism comes from Ian Bogost on Exploitationware. Not in agreement that gamification is bad, but he does have a negative reaction to FB’s privacy policies, and in both cases individuals experience more of the gains than the costs.
Strandburg: we have a lot of norms about when monetization is ok (Viviana Zelizer!)—think SSRN. OK to advertise, but she didn’t like it when they decided to sell bound copies. We don’t have good theories of this because it was all handled by social norms before. No one feels it’s terrible that a nightclub profits because we enjoy going out, but it feels different on an online platform.
Lastowka: “if value, then property” concept—if you’re the one providing the value then you feel shut out.
Gillespie: if people are comfortable with the bargain, then the norm will settle. Different theories of why we pay: drudgery in the factory satisfies all the reasons we might pay someone—it’s hard, it produces value, people need to live. But other cases are different because they force disaggregation: do we pay because it’s the right thing to do, for their time, because it produces value, or some other reason/some combination?
(I feel weird about this conversation since no one asks very well-paid big firm lawyers and law professors, not to mention hedge fund managers and other Wall Street types, to give up money given how fun many parts of our jobs can be. Instead we consider our payments to reflect our value, which we often take to be inherent. But we as a society are apparently willing to tell teachers, along with the people we’ve been talking about here, that they should be content with the moral satisfaction/fun of their jobs. This seems to me to be part of the greater acceptance of inequality that is so pervasive now. The commodification forehand—if this were valuable, you’d get paid—and the commodification backhand—if you’re not getting paid, you must not be valuable—go together.)
Hunter: the market sets the price within a capitalist system. (Well, that and the capture of the tax system by people who succeed in getting their compensation taxed at the lower capital gains rate; and the people who succeed in getting government bailouts so that the big banks can record record profits and pay out record bonuses; and so on.) Here, the excess money goes to the shareholders if you save $1 million not hiring staff for call centers since people will provide customer service for Verizon for free. CAPTCHAs: ID yourself as a human being, but also process information for OCR.
Noveck: we need more microdemocracy: something for everyone to do. In 2008, you could engage by driving someone to the polls, blogging, etc. But after the election opportunities to participation just don’t exist. Challenge.gov: intended to give people ways to participate other than responding to a rulemaking—reach out to wider skills/interests. A platform for agencies to list problems, ask questions.
Moderator: Kathy Strandburg
Facilitators: Ryan Calo
Platforms mediate communications and the ways we parse interactions. How can this be manipulated? Studies the social psychology literature around design (really neat paper!): can we solve legal problems through design or reduce them? Example: FB designs its website so you’ll share as much as possible. Persuasive computing: at a granular level, incentivize sharing. When Twitter came around, “update” became more prominent—both questions and commands because some people respond better to one and some to another. The way they now prepopulate your comments, as if you’re already participating. This is no accident.
We get the benefits of disclosure immediately, but costs are less obvious/farther off. Disclosure arbitrage is taking place. We respond better to people who look like us—research suggests that if you morph someone’s face with that of the intended audience, the target likes the speaker better. Interface design has a huge impact on how conversation unfolds: do you feel like you’re talking to a person or just throwing it out? People will write less offensive comments on blogs depending on the font you use for their comments.
Increasing numbers of interactions aren’t with humans at all, though they seem to be. Bots interact online. Example: bot priced a book at $23 million on Amazon because it got into an interaction with another bot bidding up the price. That’s fine for a book, but we’ve seen stock crashes triggered by bot v. bot, and that is a problem.
Miriam Cherry
Distinctions between work and play online—not as neat as traditional categories might have been. Leisure space/work space have been divided; now the line between factory and home is blurring across many methods of production, combined with platforms.
Platforms can connect people looking for workers and people looking for work. Questions of labor/value arbitrage, what wages are being paid, and whether the platform has any responsibility for things like minimum wage. Mechanical Turk and other crowdsourcing platforms: take big tasks and break them down into small tasks and then put the results together—can be used for tagging websites, gathering news. Other ways of working: contests, which can require midlevel or very sophisticated skills. People are inspired/incentivized to produce in response. Other types of work: gold farmers in virtual worlds. The value they produce is often tradeable outside or inside the game; has a commodifiable time value. Other forms of work in virtual worlds have more traditional analogues: accounting in Second Life, similar to accounting using a phone call.
Normative concerns arise as well as opportunities. Drawing people from across the world offers a chance to get the most efficient business and get the best from globalization/creativity. Questions: does the work feel like work? Huffington Post and SSRN—are these supposed to be commercialized? Is that wrong? What are users’ expectations, and can this be handled by a clickthrough license? Such licenses are often criticized and may not be helpful for navigating the work/play divide. Where does the possibility for exploitation seem higher?
Dan Hunter
Metaphors affect policy: the consequences of the narrative of place for the internet. Hard to get a purchase on platform as metaphor. To him, a platform doesn’t generate much in the way of implications. Some are private, others public.
Games: game designers are anxious/angry about the idea that people outside the magic circle come in and say “thou shalt not do this”—what if I want to create a game about Nazi concentration camps? Well, what about a child porn game? At what point is the barrier between the magic circle and the outside world breached? Same question as when should we say that the private regulatory regime of FB is something that leaches out into the rest of the world.
So the problem is the same: a consensually adopted ruleset has implications outside of that space, and we will always have issues of mediating between those within and those outside the community. Play and hanging out with friends are connected. The metaphor, thin though it might be, of platforms demonstrates the connections between WoW and FB.
Beth Noveck
Inverse: government as platform—a popular theme from, among others, Tim O’Reilly. The state has always been a platform—an organizer of a set of consensual social norms. But institutions/regulators aren’t good at making decisions. They can co-convene meetings; how can they promote innovation in making public life? Platforms are another term for this idea of the hybrid between the institution and the network.
Notion of building sociotechnical platforms was essential strategy for cultural transformation within government. Data.gov, usaspending.gov, challenge.gov to condition human behavior/effect change using tools that weren’t previously available. Open platforms go from law about transparency to transparency in action. Transparency not for its own sake but to use raw data to foster co-creation. National Archives and GPO: printed the Federal Register in the same way since Roosevelt in 3-column PDF. Some guys download 10 years of raw data; they’ve made it searchable, with pictures, making it more transparent and fostering cocreation between citizens and government to make government work better.
Platforms put questions of design front and center: how do we design better collaborative governance platforms? FOIA sets up an adversarial relationship between government and citizens; our legal regimes are not designed for gov’t to be convening platform around ideas/expertise. Limited range of opportunities for only a few citizens. APA based rulemaking involves very few people, very poorly designed—notice and spam (“type here to comment”). Policymaking on Twitter—really good way to get information out, not so good on getting information in.
Strandberg: surveillance is ever more pervasive as we walk around—our footprints are easier to track. Makes the magic circle concept harder to sustain.
Zarsky: Design as tools to set defaults—reminds him of Sunstein and Thaler on Nudging/libertarian paternalism. For the government to manipulate us into making correct choices is really scary. Literature on setting defaults: should we set a default on what people want or on what is normatively correct, and if the latter how will we decide? Even in the supposedly easy case of privacy, if the FTC thinks a set of defaults is normatively preferable, should the government’s opinion determine that? “What people usually want” is also problematic.
Calo: scares him too. S and T’s response is that if the choice architect would feel comfortable disclosing the manipulation to everyone, there’s no problem, though the principle doesn’t require actual disclosure. His point: he wants disclosures to be consistent with what actually happens on a website. The model we use to convey that information has been written text that no one ever reads or understands. His proposal: let’s put nonlinguistic contracting on the table. If you want people to behave like it’s a church, make it look like a church. That works better than saying “speak softly, no shorts.” Competency: FTC has economists and lawyers who don’t understand human-computer interactions. But it’s still promising, and isn’t the same as government manipulating us.
Zarsky: but if you tell websites “you have to do this,” there’s no such thing as neutral, just bias in a different direction. (Not clear to me why it’s good to leave this to private actors, then.)
Calo: study: a picture of eyes induces people to pay more for coffee than a sign asking them to pay. Power of design to realign expectations with actual practice.
Pasquale: concerned about astroturfing of regs. Virtual workers: proposes that workers should know the projects they’re working on—imagine being asked to identify a person from a photo and you’re actually working for Mubarak.
Hunter: there seems to be a trend about to hit about the coopting of our enjoyment within various contexts—we also need to be aware of the way in which we’re being influenced. One of the ways of dealing with Mechanical Turk is being aware of what it’s being used for, but what if it’s still fun? Gamification—use of games in non-game settings. Marketers love this. Same thing will happen with gamification as with privacy, where people are theoretically interested but don’t change their behavior.
Strandburg: this volunteer stuff is great in one sense but then we start to get queasy. Users innovate and then companies find ways to get the users to give them the innovations. The assumed distinction between amateurs and professionals may not hold.
Nissenbaum: when people are letting you down, the excuses we give usually involve suffering—the reason I missed this deadline was that something unpleasant happened. Rarely do they say “I was having too much fun at the coffee shop to leave.” Fascinating question of what we call work. Leads into questions about cocreation and how technology opens up categories of work that are not suffering. To take UGC and start to call it labor, and to talk about exploitation, starts to bleed categories into one another. Is there a normative reason to counting classes of activities as work, even if people are tricked into having fun?
Cherry: we’ve never really paid people based on hedonic benefit and whether they’re enjoying themselves. There is typically a leisure/work distinction, but it’s not hard and fast. Some kinds of positions can be improved with gamification. Jobs that involve drudgery/data entry, where having it be a contest could be fun. In other instances, that would be stressful/terrible. In general, tricking people is bad, and maybe we need a disclosure norm. But there’s no general problem with work as fun or fun as work. The more we see work being deskilled or paid very badly, though (e.g., developing countries pulled into Mechanical Turk), the more we have to worry. But it’s very hard to tell who’s a volunteer, who’s doing this for fun, who’s doing this to survive.
Citron: Crowdsourcing can be problematic for policy reasons. Gov’t increasingly using third-party sites—you can friend the president on FB—but gov’t isn’t doing a good job with the privacy concerns raised thereby.
Noveck: use of third-party sites is phenomenally positive, given how hard it is to procure new tech in government. First federal government blog was in 2008, and now the Secret Service has a Twitter account (though it shows up as having 0 followers). Privacy protections are different in the contracts the government signs with FB and Twitter; modified cookie policy in place and some limits on the use of analytics. We need more tools: create an environment to encourage asking specific questions and providing specific answers voluntarily; that improves our ability to create/exchange expertise.
Frischmann: is there anything wrongful about free riding on others’ play? As long as there’s no deception. In copyright, we give enough incentive to create and then after that copying/free riding is fine. Maybe the objection is not consequential, but then what is it that makes “exploitation” bad?
Calo: distinguish normative point from technical point: these people are not making minimum wage. If they’re working, then that is a violation of the law.
Gillespie: that’s only if you think of it as work—if you’re walking across the park, you’re not violating the law.
Calo: but no one gives you a dollar an hour to walk across the park.
Cherry: blurs the line between commodification of labor and noncommodification. FB asked its users to translate the site into other languages; most sites would pay for translation. A lot of volunteers objected—this is the kind of thing you should pay for and that we don’t want to volunteer for. Minimum wage: we worry about wages being undercut. We know how to handle the factory, but not hybrid work/leisure.
Hunter: most recent criticism comes from Ian Bogost on Exploitationware. Not in agreement that gamification is bad, but he does have a negative reaction to FB’s privacy policies, and in both cases individuals experience more of the gains than the costs.
Strandburg: we have a lot of norms about when monetization is ok (Viviana Zelizer!)—think SSRN. OK to advertise, but she didn’t like it when they decided to sell bound copies. We don’t have good theories of this because it was all handled by social norms before. No one feels it’s terrible that a nightclub profits because we enjoy going out, but it feels different on an online platform.
Lastowka: “if value, then property” concept—if you’re the one providing the value then you feel shut out.
Gillespie: if people are comfortable with the bargain, then the norm will settle. Different theories of why we pay: drudgery in the factory satisfies all the reasons we might pay someone—it’s hard, it produces value, people need to live. But other cases are different because they force disaggregation: do we pay because it’s the right thing to do, for their time, because it produces value, or some other reason/some combination?
(I feel weird about this conversation since no one asks very well-paid big firm lawyers and law professors, not to mention hedge fund managers and other Wall Street types, to give up money given how fun many parts of our jobs can be. Instead we consider our payments to reflect our value, which we often take to be inherent. But we as a society are apparently willing to tell teachers, along with the people we’ve been talking about here, that they should be content with the moral satisfaction/fun of their jobs. This seems to me to be part of the greater acceptance of inequality that is so pervasive now. The commodification forehand—if this were valuable, you’d get paid—and the commodification backhand—if you’re not getting paid, you must not be valuable—go together.)
Hunter: the market sets the price within a capitalist system. (Well, that and the capture of the tax system by people who succeed in getting their compensation taxed at the lower capital gains rate; and the people who succeed in getting government bailouts so that the big banks can record record profits and pay out record bonuses; and so on.) Here, the excess money goes to the shareholders if you save $1 million not hiring staff for call centers since people will provide customer service for Verizon for free. CAPTCHAs: ID yourself as a human being, but also process information for OCR.
Noveck: we need more microdemocracy: something for everyone to do. In 2008, you could engage by driving someone to the polls, blogging, etc. But after the election opportunities to participation just don’t exist. Challenge.gov: intended to give people ways to participate other than responding to a rulemaking—reach out to wider skills/interests. A platform for agencies to list problems, ask questions.
NYU platforms conference part 3
Platforms as Regulators
Moderator: Florencia Marotta-Wurgler
Facilitators: Danielle Citron
Wants to develop the harm of online hate speech including its impact on participation by targeted groups. Paper: Urge intermediaries to be more transparent about how they define and enforce hate speech. Urge intermediaries to be cautious because their spaces are spaces of civic engagement.
Increasingly seeing on mainstream sites: hate against individuals and groups. FB: “Kill a Jew Day.” Told them “you know what to do,” and showed Nazi paraphernalia; thousands of members. Similarly YT had videos on how to kill [slurs]. Hate speech undermines civic engagement and intimidates people to go offline. Children are particularly vulnerable to this. Law only covers true threats and intentional infliction of emotional distress. But intermediaries/platforms are not state actors and aren’t bound by the First Amendment. Some sites don’t police hate speech and even encourage it, but many mainstream intermediaries do prohibit it in the ToS, often with very vague terms.
Counterspeech is difficult at this scale. Whack-a-mole is also a problem. Platforms ought to target hate sites aimed at children. Similar to Google’s explanation of the results for “Jew.” Hate site: martinlutherking.org is a rabidly racist site that spreads falsehoods about MLK pitched to children. Will come up on the first page of a search, but that’s a terrific opportunity for counterspeech through ads or other responses. How do we marshal communities to respond? (I recall Yochai Benkler talking a lot about kuro5hin; these days there are a lot of rate comments up/down.)
Sean Flynn
Why was it the right thing for Google to do to post the counterspeech? Is it because Google is a private entity with rights to editorialize, or because Google is in fact a quasi-public entity with a duty to combat hate speech? Citron is using more of the public mode. Intermediary has a more private connotation, but platform, carrier, commons, FB as a country, electric grid, etc. connote public entities. What are the implications? Consumer protection model: enforce consumer expectations about the platform. Tort model: hate speech might fit into this. Public entity model: the problems are supposed to be solved with participation/voice—work on Wikipedia’s due process dispute resolution procedures fits into this.
Could give legal benefits for acting in the public model: noncommercial entities might get special copyright treatment. Transparency/disclosure—allowing consumers to exit (with their data, I assume)—might also be regulated to require a certain kind of due process. Public service obligations: floors for services, ceilings for cost, universal access norms. Those might fit into a category of platforms-as-public.
Private side: policy accepts the private editorial role. The more platforms filter content and editorialize, the more we might subject them to the rules for a TV broadcaster with an editorial role. Intermediary liability/tailored safe harbors would come in there.
Michael Geist
Wikileaks: note use of financial platforms to try to starve Wikileaks. Credit card companies ceased accepting donations; PayPal cut off donations as well. Interesting question: whether done at US government’s request. Companies drop lines of business with threat of regulation.
If a commercial site offers potentially infringing activities—zediva, which streams DVDs—imagine that the copyright owners want financial intermediaries to stop taking payments for the site. This is quite powerful as a threat. So are attempts to remove the site/make it inaccessible—Amazon’s cloud dropped Wikileaks very quickly. Easier to deal with because there are a lot of cloud providers out there, and others were able to resist DDOS attacks.
.xxx: at a platform level, countries are discussing blocking that top-level extension entirely. Another form of regulation: channeling (as if people won’t be able to get porn). Platforms are obvious sources of regulation from the government, which raises important questions of transparency and due process.
Ian Kerr
Distinguishing platforms from people: same idea that’s behind “code is law.” But the so called technological platform and the ethical/legal/social is complex and interwoven.
He participated in a discussion of lawyers on FB—law firms want to be able to know everything a candidate has ever done on FB, as if that were a matter of national security. His role: say shame on you. 3 different law students showed him waivers for summer jobs, in each case asking for waivers allowing massive disclosures, asking for usernames and password data in some circumstances. At least you can change your password after that; one version of the waiver was to allow a third-party provider to scrub FB data, including stuff from years past. In one instance it was a private sector firm, and the other 2 were government organizations. Response from people in the insurance industry: of course we’re not interested in a broad ability to cull information; that would be counter to valuable uses we want to make. The next day, a story broke in Canada about a woman who’d posted pictures of herself on vacation in Mexico and was unilaterally denied short term disability funds because they found the pictures on FB. She had carefully set her privacy settings to friends only for everything; somebody working for the insurer found a way to become her friend. The pictures were in the paper because she sued.
So there are a lot of relationships between platform and regulator. In Canada and the US, we see this arising in private litigation on any subject: is there anything on FB people can pull up to aid them? Approach adopted in a series of Canadian cases has in essence been that the rules of civil procedure in most jurisdictions allow discovery of any document deemed relevant. Linchpin: courts have generally decided that FB should be understood as a document. As soon as you understand FB as a document, all the attention on the platform as surveillance becomes very different.
Ira Rubinstein
Privacy issues: emphasis on do not track is a platform debate. Also important not to conclude from this that privacy issues are limited to platforms. FTC approach: let industry try self-regulation first. This approach fails to seize a moment when Congress seems poised to enact baseline privacy regulation, which is necessary to create principles that allow us to regulate platforms for privacy.
Tension between regulation and self-regulation: threat of regulation isn’t enough to get a baseline. Carrots and sticks: private right of action for privacy violations unless a firm is covered by a safe harbor. That’s the kind of law that could keep platforms honest in developing self-regulatory codes, which they’re already experimenting with.
Glenn Brown (Twitter): Since these aren’t squarely legal questions, there’s no external guide for making a judgment. YT would have lawyers and nonlawyers engaging in a rulemaking process, sort of like a court of appeals, trying to set precedent; interesting area for research. For Citron: How could you get platforms to have training in rulemaking/jurisprudence? Saddam Hussein execution cellphone videos ended up on YT: lawyers and policy people had to decide what to do. Difficulty of dealing with a userbase that is so large and so sophisticated at finding the line of how much sexual content and how much copyrighted content is allowed.
Citron: there’s a yearning for ALI-type principles. That would be helpful, but if you have a strong sense of the harms you want to avoid, you can manage that in a more principled way.
Nissenbaum: to what extent can users negotiate with the platform? TrackMeNot—a lot of discussion about whether this was legal for users to change the terms of interaction. Platforms protect themselves by ToS; question is whether any kind of term the platform wants to erect is okay.
Kerr: EULAs are the rule; the only time that’s tweaked is when users backlash sufficiently. When UOttawa students launched a privacy complaint against FB and FB agreed to change the settings, that was briefly a victory but FB turned that to its advantage by setting the defaults in a way that it knew that 92% of users would never change. Computer programmers are the authors of their own universe. If there’s no legal power over that, then it’s tough to do anything other than hope for backlash.
Geist: Not optimistic about user backlash. FB says that 30% objection by users would mean FB would revisit a ToS change; that’s ridiculous—200 million would have to actively object. FB has been responsive to regulators in Canada, and to the prospect of US legislators looking under the hood. Increased the level of encryption when Tunisia was using an ISP to examine everything going back and forth.
Gillespie: Distinguish between platforms that want to regulate, platforms that feel pressure from governments to regulate, and platforms that are forced by law to regulate. Related to whether/how we think of platforms as public actors. The public extreme: they shouldn’t do anything they’re not required by law to do. The private extreme: they should do anything they want. We need to think about parallels—public street, shopping mall—to figure out where we want them to stand, especially since the people actually making the decisions to pull content are not going to be trained in jurisprudence. Note that entities cutting ties to Wikileaks used the justification “we don’t support illegal content” well in advance of any determination that what Wikileaks did was illegal.
Frischmann: Worthwhile to distinguish between layers—very uncomfortable with asking network connection ISPs to make any judgments about what to carry, less uncomfortable with FB.
Citron: Agreed. Think of censorship by proxy or surveillance by proxy as important and different question from providers making decisions on their own. Regulation should aim not at treating them as public actors but at ensuring transparency.
Flynn: consider the international dimension. In copyright: developed countries’ attempts to lower costs of enforcement and raise the penalties for infringement until perfect enforcement is achieved. Effects on developing countries: big problems for access. Most educational texts cost the same in poor countries as in rich; students can’t afford them, and thus they go to online sites that share those texts. If you have perfect enforcement with international agreement that every intermediary liable for any infringing content, you could take down entire ISPs. This has huge consequences for poorer countries.
Gillespie: If we ask platforms to regulate on behalf of a law (which we do), they either succeed or fail. We make them regulate for child pornography. But then we get into discretion—should YT remove the Hussein videos, or should Apple remove alternative medicine/religion apps? There’s no choice but to make a decision: either the content is allowed or it isn’t. Once we start to shape whether you can access Wikileaks, every choice is consequential; every choice is a regulation by the platform.
Strandburg: Suppose FB decided to be totally transparent about which pictures were allowed—administrative rulemaking with comments allowed. Should I be happy with that? In the government context, that’s not sufficient for First Amendment-protected speech—it’s still protected even if there’s a procedurally fair vote to suppress it. When does an entity become large enough to say that it can’t pick its mechanism of content curation? It’s easy to agree with Citron that some content shouldn’t be on FB, but who decides?
Geist: we do have evidence of what transparency in following legal requirements could look like: the DMCA, and then chillingeffects.org helps make it transparent for Google and other contributors; chillingeffects.org has also recorded when some hate speech came down in Canada. Twitter disclosed requests for info about Wikileaks; how many other entities have received such requests and not said anything?
Citron: Notes that FB has ways of notifying you content has been taken down, at least for some time.
Gillespie: FB also has Draw a Muslim day, invisible to people in Pakistan. Does it solve the problem to create an archive that is invisible to you? It’s there for many other people. Tweaking the archive for different users seems clean but may be very problematic: if you believe the content should/shouldn’t be there, then having it there and not there at the same time is not satisfying.
Flynn: Once you start editing, you look more like you should be liable in the way that other content deciders are for things like defamation/copyright infringement. It’s hard to filter the hate speech and not be required to filter the copyright infringing material. (Absent some governing legislation, which we have in the US though it’s the other way around.)
Rubinstein: if users can influence the platform, disclosure may be satisfactory. For something like privacy, disclosure is a failed model. Have to specify the regulatory goals.
Moderator: Florencia Marotta-Wurgler
Facilitators: Danielle Citron
Wants to develop the harm of online hate speech including its impact on participation by targeted groups. Paper: Urge intermediaries to be more transparent about how they define and enforce hate speech. Urge intermediaries to be cautious because their spaces are spaces of civic engagement.
Increasingly seeing on mainstream sites: hate against individuals and groups. FB: “Kill a Jew Day.” Told them “you know what to do,” and showed Nazi paraphernalia; thousands of members. Similarly YT had videos on how to kill [slurs]. Hate speech undermines civic engagement and intimidates people to go offline. Children are particularly vulnerable to this. Law only covers true threats and intentional infliction of emotional distress. But intermediaries/platforms are not state actors and aren’t bound by the First Amendment. Some sites don’t police hate speech and even encourage it, but many mainstream intermediaries do prohibit it in the ToS, often with very vague terms.
Counterspeech is difficult at this scale. Whack-a-mole is also a problem. Platforms ought to target hate sites aimed at children. Similar to Google’s explanation of the results for “Jew.” Hate site: martinlutherking.org is a rabidly racist site that spreads falsehoods about MLK pitched to children. Will come up on the first page of a search, but that’s a terrific opportunity for counterspeech through ads or other responses. How do we marshal communities to respond? (I recall Yochai Benkler talking a lot about kuro5hin; these days there are a lot of rate comments up/down.)
Sean Flynn
Why was it the right thing for Google to do to post the counterspeech? Is it because Google is a private entity with rights to editorialize, or because Google is in fact a quasi-public entity with a duty to combat hate speech? Citron is using more of the public mode. Intermediary has a more private connotation, but platform, carrier, commons, FB as a country, electric grid, etc. connote public entities. What are the implications? Consumer protection model: enforce consumer expectations about the platform. Tort model: hate speech might fit into this. Public entity model: the problems are supposed to be solved with participation/voice—work on Wikipedia’s due process dispute resolution procedures fits into this.
Could give legal benefits for acting in the public model: noncommercial entities might get special copyright treatment. Transparency/disclosure—allowing consumers to exit (with their data, I assume)—might also be regulated to require a certain kind of due process. Public service obligations: floors for services, ceilings for cost, universal access norms. Those might fit into a category of platforms-as-public.
Private side: policy accepts the private editorial role. The more platforms filter content and editorialize, the more we might subject them to the rules for a TV broadcaster with an editorial role. Intermediary liability/tailored safe harbors would come in there.
Michael Geist
Wikileaks: note use of financial platforms to try to starve Wikileaks. Credit card companies ceased accepting donations; PayPal cut off donations as well. Interesting question: whether done at US government’s request. Companies drop lines of business with threat of regulation.
If a commercial site offers potentially infringing activities—zediva, which streams DVDs—imagine that the copyright owners want financial intermediaries to stop taking payments for the site. This is quite powerful as a threat. So are attempts to remove the site/make it inaccessible—Amazon’s cloud dropped Wikileaks very quickly. Easier to deal with because there are a lot of cloud providers out there, and others were able to resist DDOS attacks.
.xxx: at a platform level, countries are discussing blocking that top-level extension entirely. Another form of regulation: channeling (as if people won’t be able to get porn). Platforms are obvious sources of regulation from the government, which raises important questions of transparency and due process.
Ian Kerr
Distinguishing platforms from people: same idea that’s behind “code is law.” But the so called technological platform and the ethical/legal/social is complex and interwoven.
He participated in a discussion of lawyers on FB—law firms want to be able to know everything a candidate has ever done on FB, as if that were a matter of national security. His role: say shame on you. 3 different law students showed him waivers for summer jobs, in each case asking for waivers allowing massive disclosures, asking for usernames and password data in some circumstances. At least you can change your password after that; one version of the waiver was to allow a third-party provider to scrub FB data, including stuff from years past. In one instance it was a private sector firm, and the other 2 were government organizations. Response from people in the insurance industry: of course we’re not interested in a broad ability to cull information; that would be counter to valuable uses we want to make. The next day, a story broke in Canada about a woman who’d posted pictures of herself on vacation in Mexico and was unilaterally denied short term disability funds because they found the pictures on FB. She had carefully set her privacy settings to friends only for everything; somebody working for the insurer found a way to become her friend. The pictures were in the paper because she sued.
So there are a lot of relationships between platform and regulator. In Canada and the US, we see this arising in private litigation on any subject: is there anything on FB people can pull up to aid them? Approach adopted in a series of Canadian cases has in essence been that the rules of civil procedure in most jurisdictions allow discovery of any document deemed relevant. Linchpin: courts have generally decided that FB should be understood as a document. As soon as you understand FB as a document, all the attention on the platform as surveillance becomes very different.
Ira Rubinstein
Privacy issues: emphasis on do not track is a platform debate. Also important not to conclude from this that privacy issues are limited to platforms. FTC approach: let industry try self-regulation first. This approach fails to seize a moment when Congress seems poised to enact baseline privacy regulation, which is necessary to create principles that allow us to regulate platforms for privacy.
Tension between regulation and self-regulation: threat of regulation isn’t enough to get a baseline. Carrots and sticks: private right of action for privacy violations unless a firm is covered by a safe harbor. That’s the kind of law that could keep platforms honest in developing self-regulatory codes, which they’re already experimenting with.
Glenn Brown (Twitter): Since these aren’t squarely legal questions, there’s no external guide for making a judgment. YT would have lawyers and nonlawyers engaging in a rulemaking process, sort of like a court of appeals, trying to set precedent; interesting area for research. For Citron: How could you get platforms to have training in rulemaking/jurisprudence? Saddam Hussein execution cellphone videos ended up on YT: lawyers and policy people had to decide what to do. Difficulty of dealing with a userbase that is so large and so sophisticated at finding the line of how much sexual content and how much copyrighted content is allowed.
Citron: there’s a yearning for ALI-type principles. That would be helpful, but if you have a strong sense of the harms you want to avoid, you can manage that in a more principled way.
Nissenbaum: to what extent can users negotiate with the platform? TrackMeNot—a lot of discussion about whether this was legal for users to change the terms of interaction. Platforms protect themselves by ToS; question is whether any kind of term the platform wants to erect is okay.
Kerr: EULAs are the rule; the only time that’s tweaked is when users backlash sufficiently. When UOttawa students launched a privacy complaint against FB and FB agreed to change the settings, that was briefly a victory but FB turned that to its advantage by setting the defaults in a way that it knew that 92% of users would never change. Computer programmers are the authors of their own universe. If there’s no legal power over that, then it’s tough to do anything other than hope for backlash.
Geist: Not optimistic about user backlash. FB says that 30% objection by users would mean FB would revisit a ToS change; that’s ridiculous—200 million would have to actively object. FB has been responsive to regulators in Canada, and to the prospect of US legislators looking under the hood. Increased the level of encryption when Tunisia was using an ISP to examine everything going back and forth.
Gillespie: Distinguish between platforms that want to regulate, platforms that feel pressure from governments to regulate, and platforms that are forced by law to regulate. Related to whether/how we think of platforms as public actors. The public extreme: they shouldn’t do anything they’re not required by law to do. The private extreme: they should do anything they want. We need to think about parallels—public street, shopping mall—to figure out where we want them to stand, especially since the people actually making the decisions to pull content are not going to be trained in jurisprudence. Note that entities cutting ties to Wikileaks used the justification “we don’t support illegal content” well in advance of any determination that what Wikileaks did was illegal.
Frischmann: Worthwhile to distinguish between layers—very uncomfortable with asking network connection ISPs to make any judgments about what to carry, less uncomfortable with FB.
Citron: Agreed. Think of censorship by proxy or surveillance by proxy as important and different question from providers making decisions on their own. Regulation should aim not at treating them as public actors but at ensuring transparency.
Flynn: consider the international dimension. In copyright: developed countries’ attempts to lower costs of enforcement and raise the penalties for infringement until perfect enforcement is achieved. Effects on developing countries: big problems for access. Most educational texts cost the same in poor countries as in rich; students can’t afford them, and thus they go to online sites that share those texts. If you have perfect enforcement with international agreement that every intermediary liable for any infringing content, you could take down entire ISPs. This has huge consequences for poorer countries.
Gillespie: If we ask platforms to regulate on behalf of a law (which we do), they either succeed or fail. We make them regulate for child pornography. But then we get into discretion—should YT remove the Hussein videos, or should Apple remove alternative medicine/religion apps? There’s no choice but to make a decision: either the content is allowed or it isn’t. Once we start to shape whether you can access Wikileaks, every choice is consequential; every choice is a regulation by the platform.
Strandburg: Suppose FB decided to be totally transparent about which pictures were allowed—administrative rulemaking with comments allowed. Should I be happy with that? In the government context, that’s not sufficient for First Amendment-protected speech—it’s still protected even if there’s a procedurally fair vote to suppress it. When does an entity become large enough to say that it can’t pick its mechanism of content curation? It’s easy to agree with Citron that some content shouldn’t be on FB, but who decides?
Geist: we do have evidence of what transparency in following legal requirements could look like: the DMCA, and then chillingeffects.org helps make it transparent for Google and other contributors; chillingeffects.org has also recorded when some hate speech came down in Canada. Twitter disclosed requests for info about Wikileaks; how many other entities have received such requests and not said anything?
Citron: Notes that FB has ways of notifying you content has been taken down, at least for some time.
Gillespie: FB also has Draw a Muslim day, invisible to people in Pakistan. Does it solve the problem to create an archive that is invisible to you? It’s there for many other people. Tweaking the archive for different users seems clean but may be very problematic: if you believe the content should/shouldn’t be there, then having it there and not there at the same time is not satisfying.
Flynn: Once you start editing, you look more like you should be liable in the way that other content deciders are for things like defamation/copyright infringement. It’s hard to filter the hate speech and not be required to filter the copyright infringing material. (Absent some governing legislation, which we have in the US though it’s the other way around.)
Rubinstein: if users can influence the platform, disclosure may be satisfactory. For something like privacy, disclosure is a failed model. Have to specify the regulatory goals.
Friday, May 06, 2011
NYU platforms conference part 2
Platforms as Co-Creators
Moderator: Barton Beebe
Ideal types of creators/communities, e.g., romantic communities of vidders who create for noneconomic reasons, who are now being driven out by other groups? What’s the relation of platforms to creators?
Facilitators:
Greg Lastowka
His book is about virtual worlds. Some of the most valuable forms of creation aren’t creativity per se but labor. Artificial scarcity often due to organization as games—currency is a form of content creation; creative ways of making virtual currency are prohibited (like Beebe’s recent piece on the sumptuary code—these are artificially created ways of distinguishing status).
Copyright in virtual worlds is complex because the software is copyrighted and the images/audio are copyrighted; everything is created, even things that appear metaphorically natural. But users are also creating content—most interesting things are usually other players and how they use the affordances of the environment to entertain each other. Versus platform: user will always lose because they have no ability to resist the license, no ability to monetize creativity; platform can oust the user at any time for no reason. Little traction for content creator trying to benefit from investments in platform. If the contract didn’t mandate that result in all cases, would be fascinating question of how the copyright ownership would be understood. Every machinima in Second Life is arguably a derivative work; incorporating structures other people have built. Second Life ToS has covenants to virtual land dictating filming rights in virtual environment. Presumptive license to take pictures of places you visit. But not to take videos—need license from others. Blizzard has machinima licenses for WoW for noncommercial purposes. Private ordering is creating more room for content creation by users than the ToS might lead you to think were required. (Though they can cut those off at any time and will if you annoy the gods enough.) A feudal environment: control, but mutual duties of loyalty and good faith, which the virtual owners can enforce largely as they please. Users are largely satisfied with current relations. There will be injustices, lack of due process, but in the main things are going pretty well. (This is why relations of dependency are troubling—by treating freedom to operate as a matter of grace, you get participants who generally accept their dependency and feel like they owe the owners fealty/lack of criticism, though they also occasionally set out in open rebellion at which point others turn on them and call them ingrates rather than participants.) Problem: too tentative about allowing users to create new content—fear becoming target of Viacom if they give vibrant tools to users. So the tools are locked down. Second Life is a litigation magnet, while WoW avoids lawsuits by limiting expression.
Nari Lee: from a non-native speaker’s perspective, a platform is open—no barriers to getting on it, and you stand on it and use it to do something/draw attention to yourself. Can an object be a co-creator? Her perspective: background in open innovation. Pfizer is now talking about its open innovation practices. What does it mean when a word becomes a catchall for marketing rhetoric? What information is hidden by the term?
Different models: Creative works can’t be claimed by one user alone on Wikipedia. This creates a certain culture of joint contribution/control. YT is different: the type of creative work is individual-oriented and consumption-oriented. Users are under the impression that they can’t influence the structure/configuration of the platform and seem to accept what they’re given. They work with it. (Consider the current YT Copyright School video, where the only response seems to be to try to create a counternarrative, but there’s no certainty that people forced to watch YT’s copyright video will get another, more fair-use oriented perspective on the law.) As long as the rulemaking is transparent, users seem to accept the legitimacy of the rules or at least follow them.
As a regulator, how to react to these different types of platforms? In certain situations, private ordering may be better. As platforms differ, the context may matter to the appropriate rules. Users’ information is the most important factor so they know whether they have the choice of influencing the structure.
Salil Mehra
Has studied Wikipedia’s dispute resolution procedure. Not sure the lessons apply to all platforms. Downstream effects—not just a transaction between two parties. Where does the investment come from? Wikipedia has a lot of user investment and they really want other people to use it. Initial idea on Wikipedia was technolibertarianism: resolve things through consensus/lack of rules—but that doesn’t scale up. So they began an arbitration procedure.
Wikipedia was a poster child for social production for fun, joy, altruism. But there’s also a lot of painful work. 100s of people were involved in the arbitration system, its enforcement—this isn’t fun, but there was a larger dedication to the project that made them willing to do this. Begins to look like civic organizations, NGOs: dedication to goal makes people willing to do scutwork. Also, there’s a lot of exclusion: dispute resolution was there to weed out bad actors and weed in actors who weren’t that bad. If you were antisocial or impersonating people, you’d likely be banned. If you were editing in violation of Neutral Point of View, you were less likely to get banned. If you were antisocial or impersonating and violating NPOV, you were less likely to get banned than if you were simply antisocial/impersonating—they wanted to preserve and generate community energy. There were some disputes that were minor (what’s a notable fact) but others about political/religious topics that get people exercised. The system isn’t geared to resolve factual disputes but to perpetuate energy to keep the community going.
Wikipedia is built on a notion of conflict. Are there other groups that can do this kind of conflict?
Dotan Oliar
How platforms affect the type of things that are created on the platform. Likes the ecosystem metaphor. Law and norms may work as institutions, and thus as platforms—set of rules/relations between people like infringement and defenses that gives incentives and disincentives. Our law benefits commercial parties and disincentivizes noncommercial creators, e.g., with term extension that helps Disney vis-Ã -vis independent creators without a backlog of works and who don’t work for profit and can’t sustain increased cost of inputs from propertization. Creative Commons: use law as a platform to achieve a different purpose.
Different rules affect not just how much is being created, but also what. Social norms among stand-up comedians: copyright law is not very effective in protecting jokes because of idea/expression, independent creations, and cost of enforcement. Who creates is intertwined with the norms and rules. Many stand-up comedians make $30,000-40,000 a year if they’re doing well. $25 a night at a comedy club in NYC. Edgy content, sometimes countercultural or offensive. Reputation is the form of regulation, not law. Club owners might not book you if you have a reputation for stealing jokes (they’re often former stand-ups themselves or love the art). Other people may not want to share a bill with you if you have a reputation for theft. Threats of physical violence also occur, not surprising if there’s no legal way to settle disputes.
Could we make law worthwhile to use? Fee shifting, supracompensatory damages, end of idea/expression and independent creation. In this hypothetical world, clubs would need to protect themselves; there’d be commercial parties like entertainment chains that could achieve economies of scale in clearing material. Lawyer would be behind show; show would be cleaner, more family-friendly. Different type of comedy than what exists now. Co-authorship norms in comedy are different: person who comes up with the premise owns the joke, not the person who provides the punchline, unlike copyright’s co-authorship. This is because without law you need a simple allocation rule so that if you see someone telling a joke after someone else did you know the second one “stole” it. Given the audience, the system can’t recognize joint ownership without frustrating enforcement possibilities.
These are different ways of regulating, each with advantages and disadvantages. Current norms produce a certain kind of humor, but old norms were more participatory (retell a joke you heard/share it with other people). No concept of fair use among comedians.
Rebecca Tushnet
First, I want to contest Beebe’s definition of what’s going on with vidders (brief definition)—romantic authorship has historically been understood to be individual; by bringing in communities and particularly communities organized around making transformative works, explicitly relying on what’s gone before, you’re already changing the individualist model, though there is always the temptation to celebrate particular auteurs because some vids are more fun to watch than others.
What particular kinds of expressive content and economic value do platforms tend to produce or not produce? I talked about the Organization for Transformative Works and its mission to defend and preserve noncommercial transformative works, not just legally, but also against commercialization, with its zero-sum games (contests/rewards for most popular authors). Commercial platforms pose risks of change that aren’t in users’ interests: YT bragging that it’s succeeding because user-generated content is a decreasing percentage of the video on the site; delic.io.us’s new owners have different ToS that allow removal of offensive content, much broader than the old terms.
Contrast to the Archive of Our Own, one of the two largest majority-female open source projects online. Not zero-sum; designed to be noncommercial and with a preservation mission; designed to follow creators’ desires for tagging, bookmarking, but within a social context—folksonomy that is also curated. Also, given our users’ concerns for managing and siloing reputation, we think differently about pseudonymity—no to government names, yes to persistent identities—and privacy: separation of fannish identity from government identity. Allow orphaning works without removing them so that identity maintenance can take place without destroying the stories.
Beebe: are you idealizing the small/noncommercial platform? The author may not be acting alone, but now we’re romanticizing the community/the folk, weirdly premodern though highly teched-up. Is it scalable? What gives it its charge is that it’s not scalable but can generate authentic human voice. HuffingtonPost seemed to be groovy, then openly sold out—what will happen to all those people who saw their world change dramatically in a day? Were they chumps? Same with SSRN: it’s a for-profit institution, publishing your stuff without your permission; delete the link to a paper offsite if it’s in your abstract.
RT: I agree that we shouldn’t idealize the small/noncommercial platform because most people can’t live there. Strategically it can be important to show really artistically pleasing examples of what you can get when you allow creative freedom, but we need to worry about the 14-year-olds who put not necessarily very good stuff on YT because that’s where we get participation (cultural and political) and where we get our great artists as they develop out of a whole group of people. The Archive of Our Own is not a counternarrative but a story of what we lose in these highly regulated commercial spaces.
Citron: Jeanne Fromer has a paper on the expressive value of giving people credit and how law should accommodate that. SSRN does give credit.
Frischmann: why not romanticize the distributed ability to be creative? Maybe we gain value by doing that; we certainly romanticize commerciality/the market on the other side.
Beebe: fair enough. But there’s a sort of priesthood where we celebrate insular communities. Is there a way to scale that?
RT: We can scale the law by turning the nondiscrimination principle into a tool: copyright now discriminates against a certain set of creators and it shouldn’t. This worked in the DMCA hearings.
Lastowka: He’s an unrepentant folksonomist—the law institutionally discriminates right now against noncommercial activity.
Nissenbaum: idea that Microsoft might claim ownership rights in things created using Word strikes us as crazy, so why is it different when you play the game? Noncommercial/for-profit is not necessarily the right dividing line for platforms.
Michael Geist: highlights the fact that law alone won’t solve this. Copyright bill in Canada had a user-generated content provision designed to protect not just the user but also the platform. The bill died; those who supported it thought it was a great way to solve the issue of legal risk, but the discussion highlights that the commercial risks from advertisers, or whatever your business model is, are also important.
Pasquale: What are the ideal forms of interaction and is law stopping them?
Mehra: we think of these places as spaces of their own, but some structures result from the fear of law. WoW is very sterile, Lastowka says, because of fear of lawsuits. Wikipedia discussants were also concerned about facing legal action and needed to find a way to get the community under control. Chose instead of sterilizing it to adopt an arbitration. Need to rethink copyright to address its tilt against these communities.
RT: We could adopt the Canadian provision!
Gillespie: Two questions: is copyright working, and is noncommercial/commercial the right distinction? Commercial is fundamentally different from his perspective. Copyright is not only too big (universalizing) for these communities, but commerciality also has an effect on becoming outsized—HuffPo wants to get big and sell out; YT is also pressured to grow larger to take advantage of network effects/eyeballs for advertisers. Medium size, focal mission, user participation in governance, workable norms are all in tension with the commercial imperative to grow. LiveJournal tried user participation in governance and let it wither away and the commercial model is a part of that. If we propagate only commercial structures, we discriminate against certain models of governance.
Strandburg: Scalability might not be the right goal. User-generated content allows you to reach down into the long tail. Means that we could try to facilitate creativity to small groups of people who are really only of interest to a small audience—that’s a good! But also: It’s a mistake to think that everyone wants to produce videos, or that everyone wants to watch videos by amateurs. The commercial model leads to different outcomes, but she doesn’t buy the normative distinction, and we don’t want every form of collaborative content to be able to scale because it doesn’t need to. (But unless you have a normative preference for commercial outcomes, if the current copyright law pushes towards commercialization that’s a problem.)
Tools vary: broad tools like drawing software and word processing programs are open, but some people won’t want to deal with that. Narrower tools may induce some people to become creative within the constraints offered.
Ryan: Assumption that nonprofit platforms are more genuine/less evil is not right. Profit platforms have generated a lot of opportunities that didn’t exist—SSRN as a repository for legal scholarship; a relatively low cost model. In the world of YouTube, there are 35 hours of video uploaded every minute. The system is very expensive and requires investment.
Beebe: Canadian scheme: wouldn’t appropriation of part of movie affect the original work?
Geist: Some large-scale copying would have an effect, but Google makes the point all the time that distribution often has a positive financial effect on the underlying work.
Beebe: but wouldn’t they claim that a licensing market for movie clips is being interfered with?
Geist: the fair dealing factors wouldn’t apply here. (I will also note that at the DMCA hearings the movie people admitted that they have no clip licensing program in place and no present prospects for doing so; one key reason is that they have in-place contracts with performers that entitle the performers to minimum payments for any license making a low-cost or ad-supported license absolutely impossible. The only thing you can get from a movie company is a no-action letter.)
Pasquale: SSRN does have problems, among other things with the tournament they’ve asked us to play in and with other downloads. If Bernie Black makes $2 million a year eventually, that will be problematic to the chumps and vassals.
Zarsky: content generated by minors—platforms can sucker people into a warm feeling of participation. What do we do about that?
RT: Courts are going to want to prevent minors from avoiding their contracts despite the theoretical right to disavow. Agree that the culture of being a vassal is destructive to citizenship; then individuals are surprised to wander into a ban/rule violation, and when they ask for due process other people tell them they have no right to complain. (And sometimes, I should say, their complaints are meritless; due process would give them no different result.)
Mehra: Lee’s paper touched on this—hard to make ex ante commitments that capture what goes on. Perfect holding of platform operators to their commitments would be very terrifying for them.
Moderator: Barton Beebe
Ideal types of creators/communities, e.g., romantic communities of vidders who create for noneconomic reasons, who are now being driven out by other groups? What’s the relation of platforms to creators?
Facilitators:
Greg Lastowka
His book is about virtual worlds. Some of the most valuable forms of creation aren’t creativity per se but labor. Artificial scarcity often due to organization as games—currency is a form of content creation; creative ways of making virtual currency are prohibited (like Beebe’s recent piece on the sumptuary code—these are artificially created ways of distinguishing status).
Copyright in virtual worlds is complex because the software is copyrighted and the images/audio are copyrighted; everything is created, even things that appear metaphorically natural. But users are also creating content—most interesting things are usually other players and how they use the affordances of the environment to entertain each other. Versus platform: user will always lose because they have no ability to resist the license, no ability to monetize creativity; platform can oust the user at any time for no reason. Little traction for content creator trying to benefit from investments in platform. If the contract didn’t mandate that result in all cases, would be fascinating question of how the copyright ownership would be understood. Every machinima in Second Life is arguably a derivative work; incorporating structures other people have built. Second Life ToS has covenants to virtual land dictating filming rights in virtual environment. Presumptive license to take pictures of places you visit. But not to take videos—need license from others. Blizzard has machinima licenses for WoW for noncommercial purposes. Private ordering is creating more room for content creation by users than the ToS might lead you to think were required. (Though they can cut those off at any time and will if you annoy the gods enough.) A feudal environment: control, but mutual duties of loyalty and good faith, which the virtual owners can enforce largely as they please. Users are largely satisfied with current relations. There will be injustices, lack of due process, but in the main things are going pretty well. (This is why relations of dependency are troubling—by treating freedom to operate as a matter of grace, you get participants who generally accept their dependency and feel like they owe the owners fealty/lack of criticism, though they also occasionally set out in open rebellion at which point others turn on them and call them ingrates rather than participants.) Problem: too tentative about allowing users to create new content—fear becoming target of Viacom if they give vibrant tools to users. So the tools are locked down. Second Life is a litigation magnet, while WoW avoids lawsuits by limiting expression.
Nari Lee: from a non-native speaker’s perspective, a platform is open—no barriers to getting on it, and you stand on it and use it to do something/draw attention to yourself. Can an object be a co-creator? Her perspective: background in open innovation. Pfizer is now talking about its open innovation practices. What does it mean when a word becomes a catchall for marketing rhetoric? What information is hidden by the term?
Different models: Creative works can’t be claimed by one user alone on Wikipedia. This creates a certain culture of joint contribution/control. YT is different: the type of creative work is individual-oriented and consumption-oriented. Users are under the impression that they can’t influence the structure/configuration of the platform and seem to accept what they’re given. They work with it. (Consider the current YT Copyright School video, where the only response seems to be to try to create a counternarrative, but there’s no certainty that people forced to watch YT’s copyright video will get another, more fair-use oriented perspective on the law.) As long as the rulemaking is transparent, users seem to accept the legitimacy of the rules or at least follow them.
As a regulator, how to react to these different types of platforms? In certain situations, private ordering may be better. As platforms differ, the context may matter to the appropriate rules. Users’ information is the most important factor so they know whether they have the choice of influencing the structure.
Salil Mehra
Has studied Wikipedia’s dispute resolution procedure. Not sure the lessons apply to all platforms. Downstream effects—not just a transaction between two parties. Where does the investment come from? Wikipedia has a lot of user investment and they really want other people to use it. Initial idea on Wikipedia was technolibertarianism: resolve things through consensus/lack of rules—but that doesn’t scale up. So they began an arbitration procedure.
Wikipedia was a poster child for social production for fun, joy, altruism. But there’s also a lot of painful work. 100s of people were involved in the arbitration system, its enforcement—this isn’t fun, but there was a larger dedication to the project that made them willing to do this. Begins to look like civic organizations, NGOs: dedication to goal makes people willing to do scutwork. Also, there’s a lot of exclusion: dispute resolution was there to weed out bad actors and weed in actors who weren’t that bad. If you were antisocial or impersonating people, you’d likely be banned. If you were editing in violation of Neutral Point of View, you were less likely to get banned. If you were antisocial or impersonating and violating NPOV, you were less likely to get banned than if you were simply antisocial/impersonating—they wanted to preserve and generate community energy. There were some disputes that were minor (what’s a notable fact) but others about political/religious topics that get people exercised. The system isn’t geared to resolve factual disputes but to perpetuate energy to keep the community going.
Wikipedia is built on a notion of conflict. Are there other groups that can do this kind of conflict?
Dotan Oliar
How platforms affect the type of things that are created on the platform. Likes the ecosystem metaphor. Law and norms may work as institutions, and thus as platforms—set of rules/relations between people like infringement and defenses that gives incentives and disincentives. Our law benefits commercial parties and disincentivizes noncommercial creators, e.g., with term extension that helps Disney vis-Ã -vis independent creators without a backlog of works and who don’t work for profit and can’t sustain increased cost of inputs from propertization. Creative Commons: use law as a platform to achieve a different purpose.
Different rules affect not just how much is being created, but also what. Social norms among stand-up comedians: copyright law is not very effective in protecting jokes because of idea/expression, independent creations, and cost of enforcement. Who creates is intertwined with the norms and rules. Many stand-up comedians make $30,000-40,000 a year if they’re doing well. $25 a night at a comedy club in NYC. Edgy content, sometimes countercultural or offensive. Reputation is the form of regulation, not law. Club owners might not book you if you have a reputation for stealing jokes (they’re often former stand-ups themselves or love the art). Other people may not want to share a bill with you if you have a reputation for theft. Threats of physical violence also occur, not surprising if there’s no legal way to settle disputes.
Could we make law worthwhile to use? Fee shifting, supracompensatory damages, end of idea/expression and independent creation. In this hypothetical world, clubs would need to protect themselves; there’d be commercial parties like entertainment chains that could achieve economies of scale in clearing material. Lawyer would be behind show; show would be cleaner, more family-friendly. Different type of comedy than what exists now. Co-authorship norms in comedy are different: person who comes up with the premise owns the joke, not the person who provides the punchline, unlike copyright’s co-authorship. This is because without law you need a simple allocation rule so that if you see someone telling a joke after someone else did you know the second one “stole” it. Given the audience, the system can’t recognize joint ownership without frustrating enforcement possibilities.
These are different ways of regulating, each with advantages and disadvantages. Current norms produce a certain kind of humor, but old norms were more participatory (retell a joke you heard/share it with other people). No concept of fair use among comedians.
Rebecca Tushnet
First, I want to contest Beebe’s definition of what’s going on with vidders (brief definition)—romantic authorship has historically been understood to be individual; by bringing in communities and particularly communities organized around making transformative works, explicitly relying on what’s gone before, you’re already changing the individualist model, though there is always the temptation to celebrate particular auteurs because some vids are more fun to watch than others.
What particular kinds of expressive content and economic value do platforms tend to produce or not produce? I talked about the Organization for Transformative Works and its mission to defend and preserve noncommercial transformative works, not just legally, but also against commercialization, with its zero-sum games (contests/rewards for most popular authors). Commercial platforms pose risks of change that aren’t in users’ interests: YT bragging that it’s succeeding because user-generated content is a decreasing percentage of the video on the site; delic.io.us’s new owners have different ToS that allow removal of offensive content, much broader than the old terms.
Contrast to the Archive of Our Own, one of the two largest majority-female open source projects online. Not zero-sum; designed to be noncommercial and with a preservation mission; designed to follow creators’ desires for tagging, bookmarking, but within a social context—folksonomy that is also curated. Also, given our users’ concerns for managing and siloing reputation, we think differently about pseudonymity—no to government names, yes to persistent identities—and privacy: separation of fannish identity from government identity. Allow orphaning works without removing them so that identity maintenance can take place without destroying the stories.
Beebe: are you idealizing the small/noncommercial platform? The author may not be acting alone, but now we’re romanticizing the community/the folk, weirdly premodern though highly teched-up. Is it scalable? What gives it its charge is that it’s not scalable but can generate authentic human voice. HuffingtonPost seemed to be groovy, then openly sold out—what will happen to all those people who saw their world change dramatically in a day? Were they chumps? Same with SSRN: it’s a for-profit institution, publishing your stuff without your permission; delete the link to a paper offsite if it’s in your abstract.
RT: I agree that we shouldn’t idealize the small/noncommercial platform because most people can’t live there. Strategically it can be important to show really artistically pleasing examples of what you can get when you allow creative freedom, but we need to worry about the 14-year-olds who put not necessarily very good stuff on YT because that’s where we get participation (cultural and political) and where we get our great artists as they develop out of a whole group of people. The Archive of Our Own is not a counternarrative but a story of what we lose in these highly regulated commercial spaces.
Citron: Jeanne Fromer has a paper on the expressive value of giving people credit and how law should accommodate that. SSRN does give credit.
Frischmann: why not romanticize the distributed ability to be creative? Maybe we gain value by doing that; we certainly romanticize commerciality/the market on the other side.
Beebe: fair enough. But there’s a sort of priesthood where we celebrate insular communities. Is there a way to scale that?
RT: We can scale the law by turning the nondiscrimination principle into a tool: copyright now discriminates against a certain set of creators and it shouldn’t. This worked in the DMCA hearings.
Lastowka: He’s an unrepentant folksonomist—the law institutionally discriminates right now against noncommercial activity.
Nissenbaum: idea that Microsoft might claim ownership rights in things created using Word strikes us as crazy, so why is it different when you play the game? Noncommercial/for-profit is not necessarily the right dividing line for platforms.
Michael Geist: highlights the fact that law alone won’t solve this. Copyright bill in Canada had a user-generated content provision designed to protect not just the user but also the platform. The bill died; those who supported it thought it was a great way to solve the issue of legal risk, but the discussion highlights that the commercial risks from advertisers, or whatever your business model is, are also important.
Pasquale: What are the ideal forms of interaction and is law stopping them?
Mehra: we think of these places as spaces of their own, but some structures result from the fear of law. WoW is very sterile, Lastowka says, because of fear of lawsuits. Wikipedia discussants were also concerned about facing legal action and needed to find a way to get the community under control. Chose instead of sterilizing it to adopt an arbitration. Need to rethink copyright to address its tilt against these communities.
RT: We could adopt the Canadian provision!
Gillespie: Two questions: is copyright working, and is noncommercial/commercial the right distinction? Commercial is fundamentally different from his perspective. Copyright is not only too big (universalizing) for these communities, but commerciality also has an effect on becoming outsized—HuffPo wants to get big and sell out; YT is also pressured to grow larger to take advantage of network effects/eyeballs for advertisers. Medium size, focal mission, user participation in governance, workable norms are all in tension with the commercial imperative to grow. LiveJournal tried user participation in governance and let it wither away and the commercial model is a part of that. If we propagate only commercial structures, we discriminate against certain models of governance.
Strandburg: Scalability might not be the right goal. User-generated content allows you to reach down into the long tail. Means that we could try to facilitate creativity to small groups of people who are really only of interest to a small audience—that’s a good! But also: It’s a mistake to think that everyone wants to produce videos, or that everyone wants to watch videos by amateurs. The commercial model leads to different outcomes, but she doesn’t buy the normative distinction, and we don’t want every form of collaborative content to be able to scale because it doesn’t need to. (But unless you have a normative preference for commercial outcomes, if the current copyright law pushes towards commercialization that’s a problem.)
Tools vary: broad tools like drawing software and word processing programs are open, but some people won’t want to deal with that. Narrower tools may induce some people to become creative within the constraints offered.
Ryan: Assumption that nonprofit platforms are more genuine/less evil is not right. Profit platforms have generated a lot of opportunities that didn’t exist—SSRN as a repository for legal scholarship; a relatively low cost model. In the world of YouTube, there are 35 hours of video uploaded every minute. The system is very expensive and requires investment.
Beebe: Canadian scheme: wouldn’t appropriation of part of movie affect the original work?
Geist: Some large-scale copying would have an effect, but Google makes the point all the time that distribution often has a positive financial effect on the underlying work.
Beebe: but wouldn’t they claim that a licensing market for movie clips is being interfered with?
Geist: the fair dealing factors wouldn’t apply here. (I will also note that at the DMCA hearings the movie people admitted that they have no clip licensing program in place and no present prospects for doing so; one key reason is that they have in-place contracts with performers that entitle the performers to minimum payments for any license making a low-cost or ad-supported license absolutely impossible. The only thing you can get from a movie company is a no-action letter.)
Pasquale: SSRN does have problems, among other things with the tournament they’ve asked us to play in and with other downloads. If Bernie Black makes $2 million a year eventually, that will be problematic to the chumps and vassals.
Zarsky: content generated by minors—platforms can sucker people into a warm feeling of participation. What do we do about that?
RT: Courts are going to want to prevent minors from avoiding their contracts despite the theoretical right to disavow. Agree that the culture of being a vassal is destructive to citizenship; then individuals are surprised to wander into a ban/rule violation, and when they ask for due process other people tell them they have no right to complain. (And sometimes, I should say, their complaints are meritless; due process would give them no different result.)
Mehra: Lee’s paper touched on this—hard to make ex ante commitments that capture what goes on. Perfect holding of platform operators to their commitments would be very terrifying for them.
NYU platforms conference
New York University School of Law, Platforms and Power Roundtable
Sponsored by the Information Law Institute, NYU School of Law & the Engelberg Center on Innovation Law & Policy, NYU School of Law
Co-Organizers: Barton Beebe, NYU School of Law; Helen Nissenbaum, Department of Media, Culture & Communication, and Department of Computer Science, NYU; Katherine Strandburg, NYU School of Law
Platforms as Fiduciaries
Moderator: Helen Nissenbaum
Values in design: how platforms shape our interactions and transactions, so we need to engage with our nature.
Facilitators: Tarleton Gillespie
Actors and categories: interested in when a term or category begins to emerge/take hold. Will not offer a taxonomy of platforms, but notes that YouTube, flickr, app stores and so on are now including the term in their own self-description. Works in a business sense and seems to take hold in popular vernacular—began to make sense to people. What’s up with that? Language is tricky. The reason why a term like platform, cloud, or portal (back in the day) makes sense in a certain moment because it does a lot of work—speaks to business objectives, legal/political discourse, promises made by companies to users. Opens up a set of services that aren’t computational platforms but are doing something else: offering everything it wants to do as a platform.
Broad swath of content generators—everyone (YT) or not everyone (app store) but still broader than the company’s own employees. Relation between producer/distributor not managed primarily through salary or shared professional norms. Managed largely through promises and expectations of a commercial info service and thin and often disregarded contractual obligations. What obligations are offered to each user? But also ask how these large scale providers who want to offer a vision of platform are not just for individual speech/tools but a platform for the public discourse itself. We hold TV networks to a certain level of public interest; here there’s no limited spectrum, but could think about obligations to the public as well. As a service steps up the role it plays and the role it claims to play, we can ask what that position is and what obligations we’re ready to impose, and that can go beyond contractual promises to the design of public conversation.
Frank Pasquale
Compare: Tim Wu using the electric grid as model—anyone can plug in, you don’t have to give the grid a cut. Battle of metaphors: Christopher Yoo comes back and says the internet is more like FedEx, where if you pay more you can expect to get more. What is the ideal theory of what these things should provide, and how should we regulate with that in mind?
Public options in health care: we could say maybe we can’t expect for-profit companies to provide universal service, but we can intervene and provide that ourselves. But we can’t expect a universal public option. Another health care analogy: some said “let Wal-Mart sell any health plan it wants—if someone wants to pay $10/month and get $100 in benefits, ok.” But that doesn’t work, so instead we have benefit minimums. He’d advocate for that kind of thing too—minimum levels of service/cost caps. Disclosure is also important.
Brett Frischmann
Don’t jump from platform concept to obligations—need to make the connection between the capabilities of the platform and benefit/harm we want to encourage/regulate. Maybe obligations arise because of the use of the term and what it makes people think, but that will depend on the context.
Tal Zarsky
Concerned about ability of platform to manipulate the perspective of the public. (My note: consider YT’s ability to remove various disfavored types of content from its popular lists—they might be on the site, and they might get millions of hits, but someone looking at popular videos would never find them.)
Can transparency be enough? People tend to agree to any terms provided—need to know more about this. The assumption is that there are serious problems of exit, lack of competition, response to signals. Extremely difficult to regulate these very sophisticated entities always 1-2 steps ahead of their regulators. But: Platforms are fearful of public response; fearful of competitors that don’t exist yet. Google is concerned about competitors and thus pays attention to voice—puts pressure on platforms to do what the public wants. Maybe transparency is sufficient.
Patrick Ryan
Open spectrum as an underlying issue. Government has ability to act but hasn’t done much with, e.g., tech enabling sharing of spectrum. Public trust doctrine, as developed in environmental law, might offer a model for enabling access to spectrum, because regulators are not doing anything other than planning to hand exclusive use from one company to another.
Gillespie: compare spectrum as resource (with public trust) to information as resource where the platform has had a role in collecting or encouraging the production of that information—does the generation of a resource justify a claim of public interest?
Danielle Citron: consider the metaphor of a company town. This can tie into the public trust concept. Is that a useful or too blunt of an instrument?
Michael Geist: Regulatory question is different in Canada than the US. “We” can’t always do things that “you” can do and vice versa. Live discussion in Canada: Netflix should pay into the cultural subsidies that broadcasters have long paid. How do we make Netflix do that? On the other hand, Canadian FB users have enhanced privacy protections. What happens when a regulator in another jurisdiction wants to make the platform do something we don’t like?
Cathy Strandburg: Does “platform” make a promise? Says something about one’s relationship to the platform—I’m going to use it as a tool and stand on it, and have choices about what to do. Transparency in privacy policy/ToS is just not there. Maybe we can’t regulate that because of free speech, but there are implicit promises in the discourse.
Pasquale: transparency can make matters so opaque that nobody but experts can understand. Therapeutic disclosure: force use of certain definitions of terms to use, for example, “secure” to describe your services. That can be a way around infinite complexity.
Frischmann: when discussing voice and exit, we have to recognize that there are multiple issues all at once—voice on one issue may not be enough to change if the platform can be confident you won’t really go anywhere. You have to investigate whether there is an effective market for the particular type of concern—not clear that consumer demand for privacy will be enough to lead to socially desirable result given the other things that consumers are balancing.
Zarsky: Two interconnected conversations: definition of platforms. Arguments that email was like a company town were kicked out of court easily. There’s a continuum, but you don’t really live in or get your medication from the virtual world. Are the positive externalities of health the same as online? Given the constraints on government action (budget), we have to give up on something else to regulate here. Second: details of particular platforms. Public discussion on Wikipedia goes on at the top level and then cascades down (I think he means that a few engaged users can advocate enough to get changes even if the majority are indifferent—Nissenbaum says that the question then is how do you get that dynamic activated, which it isn’t now with many issues.)
Greg Lastowka: Portal seems like a thing you move through; intermediary is a person doing transactions between two parties—a person can’t be a platform, which is a space where you actually stay, a physical object. Is cyberspace a place? Platform concept seems to assume the answer, as does the concept of a company town, or the idea that FB is a country and that environmental law provides a model. With increased geo-local info being integrated online, “platform” might reflect increasing awareness that online is space.
Me on the possibilities of regulation of implicit promises given the First Amendment: I’m going to say what I say everywhere: advertising law has a lesson for this! Under consumer protection law, you can’t take back promises you made in the body of the ad in the fine print. Consumer expectations matter no matter what the contract says, though occasionally we do let providers modify those expectations with sufficiently noisy disclosure or when the expectations are sufficiently inchoate (e.g., with respect to the duration of a warranty). We often do this through legislation rather than case-by-case analysis of what the implicit promise is—e.g., Magnusson-Moss Warranty Act. Consider the recent case involving Webloyalty’s now-banned business model of getting credit card info from a second party instead of directly from the consumer. Congress found that this was unfair and misleading to the consumer and that consumers must be required to re-enter their card information to take advantage of the third-party offer. Under the “if you could theoretically understand it, it’s not misleading” theory, then it might well be a violation of the First Amendment to prohibit the Webloyalty business model because Webloyalty’s disclosures are strictly truthful, if you read them all the way through. But if you agree with me that, at a minimum, a factfinder can find Webloyalty’s business model misleading despite the disclosures, then we have a fair amount of freedom to operate at least until the Supreme Court abolishes the commercial speech doctrine.
Gillespie: “Platform” can easily become a red herring—it’s not necessarily the word itself but the relationship/dynamic offered. Platform is definitely a shape metaphor. Has an idea of what that space is—the flatness is an important element, compared to the “through” of portal.
Kerr: what looks like the virtue of a flat space, though, has hidden characteristics that allow control by the “owners” of the platform, who aren’t the ones providing the content of/on the platform. And thus the idea of fiduciary is important—what are the obligations if any of the platform host?
Frischmann: economists use the term “platform” to immediately jump to two-sided networks which assume that the platform can perfectly intermediate if given total freedom. Who gets to define what the term means? Let’s think of platforms contextually, which might lead us to concepts of fiduciaries or co-creators.
Pasquale: Nissenbaum asks ‘what’s the worst case scenario’ for platforms? Zittrain on generativity: worst case might be locked down. Or bias v. objectivity—problem there is that platforms claim First Amendment rights to effect their own preferences with the people allowed to speak on the platforms. This gets back to the company town issue—jurisprudentially there are competing speech claims. His worst-case scenario: self-dealing/harm to competitors.
Ryan Calo: knowing the secret sauce of these platforms poses risks of government intervention: once the gov’t (or the public) knows how it works, political pressure can be exercised to stop unpopular things, which might be censorious.
Pasquale: Stealth marketing: this area of law needs more development.
Calo: but that’s a ex ante rule—you have to disclose connections. Not ex post you have to show how your whole system works.
Zarsky: but dictators are secretive—be aware of political economy. (I’m not sure this is entirely true. Many repressive regimes are public about their repression; China enlists neighbors to monitor each other.)
Oliar: Fiduciary/public trust: means there’s someone on the other side who wants to (or should want to) do you good. Shows that the platform has its own agency/interests. Fiduciaries with lawyer/client—the fiduciary should act in the client’s best interest towards the rest of the world. But platforms have multiple interests—themselves, users, advertisers—they can’t be fiduciaries of everyone. (But lawyers have similar issues; we don’t think they’re fiduciaries of their opponents, or of the owner of the building in which they’re tenants. We might have to think of conflict of interest differently, but I’m not sure this makes the idea of duties to users impossible.)
Salil Mehra: ideas of process—not just transparency, but can you review decisions that affect you? Might be important. Two-sided models of platforms are good for thinking about payment but not so much for thinking about other relationships. Consumer protection law: models we think about come from telecom/payment systems, but where value added is by the user—FB, Wikipedia—the platforms have to respond to heterogeneous perspectives/values/expectations of users.
Gillespie: Process of removing content is the kind of thing that’s hard to understand, especially in code. May be able to discuss that while recognizing heterogenous preferences about content.
Ryan: threat of regulation drives change/improvement maybe more than regulation does. Behavior in the company differs in compliance mode: compliance mode is more frozen.
Pasquale: we tend to trust technical solutions over political ones, but many of these questions, even what is spam, may be values questions which we’d really prefer to pass off to computers but probably shouldn’t. If you want to regulate, you have to think about explaining why the platform is a place for speakers and not (just) a speaker itself. Otherwise the First Amendment will cut off most regulation entirely.
Zarsky: challenge is bridging theoretical definitions and practical solutions that won’t allow players to design around the rules.
Sponsored by the Information Law Institute, NYU School of Law & the Engelberg Center on Innovation Law & Policy, NYU School of Law
Co-Organizers: Barton Beebe, NYU School of Law; Helen Nissenbaum, Department of Media, Culture & Communication, and Department of Computer Science, NYU; Katherine Strandburg, NYU School of Law
Platforms as Fiduciaries
Moderator: Helen Nissenbaum
Values in design: how platforms shape our interactions and transactions, so we need to engage with our nature.
Facilitators: Tarleton Gillespie
Actors and categories: interested in when a term or category begins to emerge/take hold. Will not offer a taxonomy of platforms, but notes that YouTube, flickr, app stores and so on are now including the term in their own self-description. Works in a business sense and seems to take hold in popular vernacular—began to make sense to people. What’s up with that? Language is tricky. The reason why a term like platform, cloud, or portal (back in the day) makes sense in a certain moment because it does a lot of work—speaks to business objectives, legal/political discourse, promises made by companies to users. Opens up a set of services that aren’t computational platforms but are doing something else: offering everything it wants to do as a platform.
Broad swath of content generators—everyone (YT) or not everyone (app store) but still broader than the company’s own employees. Relation between producer/distributor not managed primarily through salary or shared professional norms. Managed largely through promises and expectations of a commercial info service and thin and often disregarded contractual obligations. What obligations are offered to each user? But also ask how these large scale providers who want to offer a vision of platform are not just for individual speech/tools but a platform for the public discourse itself. We hold TV networks to a certain level of public interest; here there’s no limited spectrum, but could think about obligations to the public as well. As a service steps up the role it plays and the role it claims to play, we can ask what that position is and what obligations we’re ready to impose, and that can go beyond contractual promises to the design of public conversation.
Frank Pasquale
Compare: Tim Wu using the electric grid as model—anyone can plug in, you don’t have to give the grid a cut. Battle of metaphors: Christopher Yoo comes back and says the internet is more like FedEx, where if you pay more you can expect to get more. What is the ideal theory of what these things should provide, and how should we regulate with that in mind?
Public options in health care: we could say maybe we can’t expect for-profit companies to provide universal service, but we can intervene and provide that ourselves. But we can’t expect a universal public option. Another health care analogy: some said “let Wal-Mart sell any health plan it wants—if someone wants to pay $10/month and get $100 in benefits, ok.” But that doesn’t work, so instead we have benefit minimums. He’d advocate for that kind of thing too—minimum levels of service/cost caps. Disclosure is also important.
Brett Frischmann
Don’t jump from platform concept to obligations—need to make the connection between the capabilities of the platform and benefit/harm we want to encourage/regulate. Maybe obligations arise because of the use of the term and what it makes people think, but that will depend on the context.
Tal Zarsky
Concerned about ability of platform to manipulate the perspective of the public. (My note: consider YT’s ability to remove various disfavored types of content from its popular lists—they might be on the site, and they might get millions of hits, but someone looking at popular videos would never find them.)
Can transparency be enough? People tend to agree to any terms provided—need to know more about this. The assumption is that there are serious problems of exit, lack of competition, response to signals. Extremely difficult to regulate these very sophisticated entities always 1-2 steps ahead of their regulators. But: Platforms are fearful of public response; fearful of competitors that don’t exist yet. Google is concerned about competitors and thus pays attention to voice—puts pressure on platforms to do what the public wants. Maybe transparency is sufficient.
Patrick Ryan
Open spectrum as an underlying issue. Government has ability to act but hasn’t done much with, e.g., tech enabling sharing of spectrum. Public trust doctrine, as developed in environmental law, might offer a model for enabling access to spectrum, because regulators are not doing anything other than planning to hand exclusive use from one company to another.
Gillespie: compare spectrum as resource (with public trust) to information as resource where the platform has had a role in collecting or encouraging the production of that information—does the generation of a resource justify a claim of public interest?
Danielle Citron: consider the metaphor of a company town. This can tie into the public trust concept. Is that a useful or too blunt of an instrument?
Michael Geist: Regulatory question is different in Canada than the US. “We” can’t always do things that “you” can do and vice versa. Live discussion in Canada: Netflix should pay into the cultural subsidies that broadcasters have long paid. How do we make Netflix do that? On the other hand, Canadian FB users have enhanced privacy protections. What happens when a regulator in another jurisdiction wants to make the platform do something we don’t like?
Cathy Strandburg: Does “platform” make a promise? Says something about one’s relationship to the platform—I’m going to use it as a tool and stand on it, and have choices about what to do. Transparency in privacy policy/ToS is just not there. Maybe we can’t regulate that because of free speech, but there are implicit promises in the discourse.
Pasquale: transparency can make matters so opaque that nobody but experts can understand. Therapeutic disclosure: force use of certain definitions of terms to use, for example, “secure” to describe your services. That can be a way around infinite complexity.
Frischmann: when discussing voice and exit, we have to recognize that there are multiple issues all at once—voice on one issue may not be enough to change if the platform can be confident you won’t really go anywhere. You have to investigate whether there is an effective market for the particular type of concern—not clear that consumer demand for privacy will be enough to lead to socially desirable result given the other things that consumers are balancing.
Zarsky: Two interconnected conversations: definition of platforms. Arguments that email was like a company town were kicked out of court easily. There’s a continuum, but you don’t really live in or get your medication from the virtual world. Are the positive externalities of health the same as online? Given the constraints on government action (budget), we have to give up on something else to regulate here. Second: details of particular platforms. Public discussion on Wikipedia goes on at the top level and then cascades down (I think he means that a few engaged users can advocate enough to get changes even if the majority are indifferent—Nissenbaum says that the question then is how do you get that dynamic activated, which it isn’t now with many issues.)
Greg Lastowka: Portal seems like a thing you move through; intermediary is a person doing transactions between two parties—a person can’t be a platform, which is a space where you actually stay, a physical object. Is cyberspace a place? Platform concept seems to assume the answer, as does the concept of a company town, or the idea that FB is a country and that environmental law provides a model. With increased geo-local info being integrated online, “platform” might reflect increasing awareness that online is space.
Me on the possibilities of regulation of implicit promises given the First Amendment: I’m going to say what I say everywhere: advertising law has a lesson for this! Under consumer protection law, you can’t take back promises you made in the body of the ad in the fine print. Consumer expectations matter no matter what the contract says, though occasionally we do let providers modify those expectations with sufficiently noisy disclosure or when the expectations are sufficiently inchoate (e.g., with respect to the duration of a warranty). We often do this through legislation rather than case-by-case analysis of what the implicit promise is—e.g., Magnusson-Moss Warranty Act. Consider the recent case involving Webloyalty’s now-banned business model of getting credit card info from a second party instead of directly from the consumer. Congress found that this was unfair and misleading to the consumer and that consumers must be required to re-enter their card information to take advantage of the third-party offer. Under the “if you could theoretically understand it, it’s not misleading” theory, then it might well be a violation of the First Amendment to prohibit the Webloyalty business model because Webloyalty’s disclosures are strictly truthful, if you read them all the way through. But if you agree with me that, at a minimum, a factfinder can find Webloyalty’s business model misleading despite the disclosures, then we have a fair amount of freedom to operate at least until the Supreme Court abolishes the commercial speech doctrine.
Gillespie: “Platform” can easily become a red herring—it’s not necessarily the word itself but the relationship/dynamic offered. Platform is definitely a shape metaphor. Has an idea of what that space is—the flatness is an important element, compared to the “through” of portal.
Kerr: what looks like the virtue of a flat space, though, has hidden characteristics that allow control by the “owners” of the platform, who aren’t the ones providing the content of/on the platform. And thus the idea of fiduciary is important—what are the obligations if any of the platform host?
Frischmann: economists use the term “platform” to immediately jump to two-sided networks which assume that the platform can perfectly intermediate if given total freedom. Who gets to define what the term means? Let’s think of platforms contextually, which might lead us to concepts of fiduciaries or co-creators.
Pasquale: Nissenbaum asks ‘what’s the worst case scenario’ for platforms? Zittrain on generativity: worst case might be locked down. Or bias v. objectivity—problem there is that platforms claim First Amendment rights to effect their own preferences with the people allowed to speak on the platforms. This gets back to the company town issue—jurisprudentially there are competing speech claims. His worst-case scenario: self-dealing/harm to competitors.
Ryan Calo: knowing the secret sauce of these platforms poses risks of government intervention: once the gov’t (or the public) knows how it works, political pressure can be exercised to stop unpopular things, which might be censorious.
Pasquale: Stealth marketing: this area of law needs more development.
Calo: but that’s a ex ante rule—you have to disclose connections. Not ex post you have to show how your whole system works.
Zarsky: but dictators are secretive—be aware of political economy. (I’m not sure this is entirely true. Many repressive regimes are public about their repression; China enlists neighbors to monitor each other.)
Oliar: Fiduciary/public trust: means there’s someone on the other side who wants to (or should want to) do you good. Shows that the platform has its own agency/interests. Fiduciaries with lawyer/client—the fiduciary should act in the client’s best interest towards the rest of the world. But platforms have multiple interests—themselves, users, advertisers—they can’t be fiduciaries of everyone. (But lawyers have similar issues; we don’t think they’re fiduciaries of their opponents, or of the owner of the building in which they’re tenants. We might have to think of conflict of interest differently, but I’m not sure this makes the idea of duties to users impossible.)
Salil Mehra: ideas of process—not just transparency, but can you review decisions that affect you? Might be important. Two-sided models of platforms are good for thinking about payment but not so much for thinking about other relationships. Consumer protection law: models we think about come from telecom/payment systems, but where value added is by the user—FB, Wikipedia—the platforms have to respond to heterogeneous perspectives/values/expectations of users.
Gillespie: Process of removing content is the kind of thing that’s hard to understand, especially in code. May be able to discuss that while recognizing heterogenous preferences about content.
Ryan: threat of regulation drives change/improvement maybe more than regulation does. Behavior in the company differs in compliance mode: compliance mode is more frozen.
Pasquale: we tend to trust technical solutions over political ones, but many of these questions, even what is spam, may be values questions which we’d really prefer to pass off to computers but probably shouldn’t. If you want to regulate, you have to think about explaining why the platform is a place for speakers and not (just) a speaker itself. Otherwise the First Amendment will cut off most regulation entirely.
Zarsky: challenge is bridging theoretical definitions and practical solutions that won’t allow players to design around the rules.
Originality in copying?
This LA Times story about a lawsuit between an antique store and Restoration Hardware seems like it's going to be hard for the antique store to win--to the extent that the complaint is that Restoration didn't do its own research to find old designs to copy, but rather bought the designs from the antique store that had carefully curated them, that seems to have a significant Dastar problem, not to mention fatal questions of materiality on the false advertising side. Restoration seems to have overreacted itself with a counterclaim for defamation, though.
Wednesday, May 04, 2011
Standing and declaratory judgment
Amazon sues booksellers association for declaratory judgment of no false advertising under the Lanham Act. Amazon.com, Inc. v. National Association of College Stores, Inc., No. 2:11-cv-00754 (W.D. Wash. filed May 3, 2011). Does the court have to evaluate the association’s Lanham Act standing to proceed? How should it do so? Also, does the threat of a referral by the NAD to the FTC after a NAD proceeding constitute enough apprehension of suit to justify declaratory judgment under the Lanham Act against the booksellers? The complaint doesn’t have much indicating a threat of direct suit. Of course filing the suit ends the NAD proceeding, so its procedural complexities are likely beside the point. H/t Eric Goldman.
Tuesday, May 03, 2011
Is copying theft?
I just read a provocative paper that, though I doubt it meant to, reinforced my sense that calling copyright “property” is unhelpful: Jonathan M. Barnett, What’s So Bad About Stealing? The paper skips straight to the proposition that any kind of unauthorized copying (including copying of ideas and expression, but also and of more present interest mechanical reproduction) is theft, then concludes that “Some positive level of tolerated theft is an essential component of any transaction structure that maximizes the social wealth generated by creative production.” I don’t quite understand how you can call copying theft without first establishing that the copied thing is owned.
As I tried to work through the reason the paper proceeds as it does, it’s that “theft” is a necessary concept in the property system, but that historically what formally counts as IP theft is highly variable. But I still don’t understand why “theft” is the right concept for copyright, since it inherently takes a normative side while Barnett simultaneously seems to want to disavow taking a normative side. It might be correct to say that slaveowners believed that runaway slaves were stealing property, but for us to adopt the language of theft as our own description of what happened would be extremely problematic without a lot of dramatic/poetic license.
What really struck me here about the language of theft (second-comer side), rather than the more apparently neutral language of property (first-comer side), was the ways in which it highlights that intellectual property isn’t about theft. Since the paper makes arguments about the Demsetzian structure of property rights in intangible goods, I think it’s fair to bring up patent: patent’s formal definition is definitely not about copying. Trademark, a cousin regime, takes copying into account, but again the fact that the defendant invented the accused mark herself is no defense. Even copyright, with its doctrine of unconscious copying, can’t really sustain the language of theft. If I take your umbrella from a restaurant, believing it’s mine, I might create a bailment (I don’t really know the law there) but it would be bizarre to call me a thief. Maybe a less tendentious term like “taking” would make it easier to see the argument, but theft is just too rich a concept for me to get past it. This is very much about spillovers/causation—even in copyright, which is about copying, the use of “theft” to describe unauthorized utility causally related to the existence of an expressive work makes very little sense to me.
There’s still an interesting argument in the paper about what norms and formal law surrounding copying of expression will look like given various interests, but I’m left puzzled what purpose the language of theft serves. I suppose the idea is to avoid the question of what the boundaries of copyright are/should be (among other things, copying of ideas, copying of facts, private copying, private performance, first sale, and all the specific exceptions in the Copyright Act are apparently legalized theft, which might be efficient, in this view), but I don’t think that can be done.
This paper is also another datum for my theory that copyright restrictionists like to talk about “readers” and maximalists like “users.” Or anyway, they like to use that name for them.
As I tried to work through the reason the paper proceeds as it does, it’s that “theft” is a necessary concept in the property system, but that historically what formally counts as IP theft is highly variable. But I still don’t understand why “theft” is the right concept for copyright, since it inherently takes a normative side while Barnett simultaneously seems to want to disavow taking a normative side. It might be correct to say that slaveowners believed that runaway slaves were stealing property, but for us to adopt the language of theft as our own description of what happened would be extremely problematic without a lot of dramatic/poetic license.
What really struck me here about the language of theft (second-comer side), rather than the more apparently neutral language of property (first-comer side), was the ways in which it highlights that intellectual property isn’t about theft. Since the paper makes arguments about the Demsetzian structure of property rights in intangible goods, I think it’s fair to bring up patent: patent’s formal definition is definitely not about copying. Trademark, a cousin regime, takes copying into account, but again the fact that the defendant invented the accused mark herself is no defense. Even copyright, with its doctrine of unconscious copying, can’t really sustain the language of theft. If I take your umbrella from a restaurant, believing it’s mine, I might create a bailment (I don’t really know the law there) but it would be bizarre to call me a thief. Maybe a less tendentious term like “taking” would make it easier to see the argument, but theft is just too rich a concept for me to get past it. This is very much about spillovers/causation—even in copyright, which is about copying, the use of “theft” to describe unauthorized utility causally related to the existence of an expressive work makes very little sense to me.
There’s still an interesting argument in the paper about what norms and formal law surrounding copying of expression will look like given various interests, but I’m left puzzled what purpose the language of theft serves. I suppose the idea is to avoid the question of what the boundaries of copyright are/should be (among other things, copying of ideas, copying of facts, private copying, private performance, first sale, and all the specific exceptions in the Copyright Act are apparently legalized theft, which might be efficient, in this view), but I don’t think that can be done.
This paper is also another datum for my theory that copyright restrictionists like to talk about “readers” and maximalists like “users.” Or anyway, they like to use that name for them.
Advertiser's republication of independent studies can be false advertising
Federal Express Corp. v. United Parcel Service, Inc., --- F.Supp.2d ----, 2010 WL 6568293 (W.D. Tenn.)
This older case just showed up in my Westclip.
UPS ran an ad featuring an actor drawing on a whiteboard, saying:
FedEx objected that the survey wasn’t a reliable basis on which to make the claim, but UPS continued to run the ad. While it was running the ad, Morgan Stanley published its April 2009 survey, now ranking FedEx Air first, UPS Ground second, UPS Air third, and FedEx Ground fourth. FedEx sent a C&D informing UPS of the new survey, but UPS continued to air the ad and show it on the UPS website.
After UPS was served with the false advertising complaint, it stopped airing the ad, which led the district judge to deny a TRO.
FedEx challenged the ad as making an improperly grounded establishment claim. The November 2008 survey was allegedly not sufficiently reliable in that (1) the margin of error was such that a claim of superior reliability could not be supported; (2) the sample size was insufficient; (3) the participants in the survey were not sufficiently screened or representative of the relevant parcel shipping market; (4) the survey questions and responses were too narrow to support the overly broad superior reliability claim; and (5) the structure and execution of the survey did not meet the minimum levels required by survey methodology to provide the necessary substantiation.
FedEx further argued that prior to the April 2009 survey’s release, the claim was literally false in that (1) UPS was not “just” ranked the most reliable, because several months had passed between the time the survey was conducted and when the commercial aired; and (2) UPS was not ranked the most reliable, because the survey asked participants to rate each individual delivery service provider on its service reliability on a scale of one to ten--not rank them in order of reliability. Separately, FedEx argued literal falsity and falsity by necessary implication because once the April 2009 survey was released ranking FedEx Air first for "Service Reliability," UPS could no longer claim that it was "just ranked the most reliable." Alternatively, FedEx alleged misleadingness, both initially and after April 2009.
To prove an establishment claim literally false, the plaintiff must prove that the tests referred to were not sufficiently reliable to conclude with reasonable certainty that they established the proposition for which they were cited.
UPS argued that the claim wasn’t an establishment claim because it simply reported a true fact about what the Morgan Stanley survey said. It contended that the Lanham Act doesn’t preclude a competitor from accurately informing the public of independent research results, and that if FedEx stated a claim then "every time a community newspaper publishes a poll identifying the best restaurant, the best bar, or the best slice of pizza, the winning establishment would have to first verify the newspaper's methodology before accurately reporting the results."
The court noted that the few courts that have addressed false advertising claims involving reports of studies or surveys have uniformly treated them as establishment claims. The court didn’t see why a distinction should be made between studies commissioned by the defendant and those performed by independent, third-party organizations. UPS also cited Suzuki Motor Corp. v. Consumers Union of U.S., 330 F.3d 1110 (9th Cir.2003) for the proposition that "[t]he public is attuned to such statements and accords them appropriate weight as a part of the advertising at issue." As the court pointed out, Suzuki was a defamation case, and thus the question there was whether a reasonable jury could find, by clear and convincing evidence, that the plaintiff had shown the defendant published disparaging statements with actual malice.
This wasn’t objective “reporting.” “A defendant cannot attempt to attract consumers by using a favorable (but unreliable) test in an advertisement, and then try to avoid Lanham Act liability by asserting that it was merely ‘reporting’ the results of the test.” While speech by noncompetitors is held to different standards and not subject to the Lanham Act, subsequent promotional uses of that speech by competitors are different. It’s not that the independent review is covered by the Lanham Act, but that the competitor’s use of the review is commercial speech covered by the Lanham Act. Gordon & Breach Science Publishers v. Am. Inst. of Physics, 859 F.Supp. 1521 (S.D.N.Y.1994)
FedEx’s allegations of falsity based on insufficient reliability stated a claim for literal falsity.
Even reliable tests can be falsely advertised, if the advertiser uses them to make claims not supported by the test results. The court, however, found that “just ranked” was not actionable prior to April 2009. “Just” is literally true or at most ambiguous. The ad identified the survey by its date. Even if the one-second super was too small to read, “just” is still ambiguous. Weirdly, and wrongly, the court also said that the November 2008 survey never purported to establish the proposition that it had “just” ranked the providers, and therefore FedEx couldn’t claim that the survey didn’t establish the proposition for which it was cited. This is backwards! The survey also didn’t purport to rank the value of the providers, which is why it would have been literally false to cite the survey to support the proposition that UPS was the better value. One whole strand of establishment claims is about reliable tests that don’t happen to support the claim the advertiser makes about them, though they’re reliable sources of other claims! But given the other rationales, this one bizarro sentence doesn’t have much impact.
FedEx’s literal falsity claim based on the use of the word “rank” also failed, “because even if the survey questionnaires asked participants to rate the providers based on service reliability, the November 2008 survey unequivocally purported to rank the providers, thus making the claim literally true.” The methodology may be challenged, but Morgan Stanley plainly did rank the parties.
What about after April 2009? FedEx argued that the ad’s use of “just” made the literally/necessarily implied claim that these were the most recent results. The court, however, concluded that FedEx still failed to state a claim because the claim was literally true or at most ambiguous, even after the April 2009 survey. The ad continued to cite the November 2008 survey, and “just” could reasonably be understood to convey different messages, “including, for example, that UPS was ranked most reliable most recently, that UPS was ranked most reliable sometime in the recent past, or that UPS was ranked most reliable in November of 2008.” This was only possibly misleading. Comment: this is an example of the fetishism of false v. misleading. Is there anyone in the world who thinks that a survey asking about this would produce anything other than overwhelming agreement that “just” means “there’s no more recent survey by the same people finding to the contrary”? Context matters, among other things to clarify ambiguity, and relevant context includes “there’s a more recent survey with different results.” This really would have been a good case for falsity by necessary implication.
Separately, FedEx alleged misleadingness: that the claim deceived consumers into believing that UPS was ranked higher than FedEx in service and reliability and had statistically better on time performance or reliability than FedEx, and that the claim deceived consumers about the rankings post-April 2009. UPS argued that FedEx merely recited the elements of a cause of action, but FedEx isn’t required to set forth evidence of actual confusion at the pleading stage. Allegations of actual consumer confusion and deception sufficed.
This older case just showed up in my Westclip.
UPS ran an ad featuring an actor drawing on a whiteboard, saying:
Alright. If you're looking for a shipping company who really understands today's economy, you'd want one that's helped customers through twenty recessions, has over 400,000 employees worldwide, over a hundred years' experience, and was just ranked the most reliable. Well that would be UPS. Because this economy is showing us something. It's time to rely on the experience of UPS. Looks like somebody has a lot of empty boxes.A one-second super appears with “just ranked the most reliable,” stating, "According to Morgan Stanley Parcel Returns Survey, November, 2008." This referred to a Morgan Stanley Research report evaluating freight transportation industry stocks for investment purposes. It ranked UPS Air first and UPS Ground second in “Service Reliability, with FedEx Air ranked third and FedEx Ground fourth. (UPS allegedly repeated the most reliable claim in letters sent to the parties’ customers.)
FedEx objected that the survey wasn’t a reliable basis on which to make the claim, but UPS continued to run the ad. While it was running the ad, Morgan Stanley published its April 2009 survey, now ranking FedEx Air first, UPS Ground second, UPS Air third, and FedEx Ground fourth. FedEx sent a C&D informing UPS of the new survey, but UPS continued to air the ad and show it on the UPS website.
After UPS was served with the false advertising complaint, it stopped airing the ad, which led the district judge to deny a TRO.
FedEx challenged the ad as making an improperly grounded establishment claim. The November 2008 survey was allegedly not sufficiently reliable in that (1) the margin of error was such that a claim of superior reliability could not be supported; (2) the sample size was insufficient; (3) the participants in the survey were not sufficiently screened or representative of the relevant parcel shipping market; (4) the survey questions and responses were too narrow to support the overly broad superior reliability claim; and (5) the structure and execution of the survey did not meet the minimum levels required by survey methodology to provide the necessary substantiation.
FedEx further argued that prior to the April 2009 survey’s release, the claim was literally false in that (1) UPS was not “just” ranked the most reliable, because several months had passed between the time the survey was conducted and when the commercial aired; and (2) UPS was not ranked the most reliable, because the survey asked participants to rate each individual delivery service provider on its service reliability on a scale of one to ten--not rank them in order of reliability. Separately, FedEx argued literal falsity and falsity by necessary implication because once the April 2009 survey was released ranking FedEx Air first for "Service Reliability," UPS could no longer claim that it was "just ranked the most reliable." Alternatively, FedEx alleged misleadingness, both initially and after April 2009.
To prove an establishment claim literally false, the plaintiff must prove that the tests referred to were not sufficiently reliable to conclude with reasonable certainty that they established the proposition for which they were cited.
UPS argued that the claim wasn’t an establishment claim because it simply reported a true fact about what the Morgan Stanley survey said. It contended that the Lanham Act doesn’t preclude a competitor from accurately informing the public of independent research results, and that if FedEx stated a claim then "every time a community newspaper publishes a poll identifying the best restaurant, the best bar, or the best slice of pizza, the winning establishment would have to first verify the newspaper's methodology before accurately reporting the results."
The court noted that the few courts that have addressed false advertising claims involving reports of studies or surveys have uniformly treated them as establishment claims. The court didn’t see why a distinction should be made between studies commissioned by the defendant and those performed by independent, third-party organizations. UPS also cited Suzuki Motor Corp. v. Consumers Union of U.S., 330 F.3d 1110 (9th Cir.2003) for the proposition that "[t]he public is attuned to such statements and accords them appropriate weight as a part of the advertising at issue." As the court pointed out, Suzuki was a defamation case, and thus the question there was whether a reasonable jury could find, by clear and convincing evidence, that the plaintiff had shown the defendant published disparaging statements with actual malice.
This wasn’t objective “reporting.” “A defendant cannot attempt to attract consumers by using a favorable (but unreliable) test in an advertisement, and then try to avoid Lanham Act liability by asserting that it was merely ‘reporting’ the results of the test.” While speech by noncompetitors is held to different standards and not subject to the Lanham Act, subsequent promotional uses of that speech by competitors are different. It’s not that the independent review is covered by the Lanham Act, but that the competitor’s use of the review is commercial speech covered by the Lanham Act. Gordon & Breach Science Publishers v. Am. Inst. of Physics, 859 F.Supp. 1521 (S.D.N.Y.1994)
FedEx’s allegations of falsity based on insufficient reliability stated a claim for literal falsity.
Even reliable tests can be falsely advertised, if the advertiser uses them to make claims not supported by the test results. The court, however, found that “just ranked” was not actionable prior to April 2009. “Just” is literally true or at most ambiguous. The ad identified the survey by its date. Even if the one-second super was too small to read, “just” is still ambiguous. Weirdly, and wrongly, the court also said that the November 2008 survey never purported to establish the proposition that it had “just” ranked the providers, and therefore FedEx couldn’t claim that the survey didn’t establish the proposition for which it was cited. This is backwards! The survey also didn’t purport to rank the value of the providers, which is why it would have been literally false to cite the survey to support the proposition that UPS was the better value. One whole strand of establishment claims is about reliable tests that don’t happen to support the claim the advertiser makes about them, though they’re reliable sources of other claims! But given the other rationales, this one bizarro sentence doesn’t have much impact.
FedEx’s literal falsity claim based on the use of the word “rank” also failed, “because even if the survey questionnaires asked participants to rate the providers based on service reliability, the November 2008 survey unequivocally purported to rank the providers, thus making the claim literally true.” The methodology may be challenged, but Morgan Stanley plainly did rank the parties.
What about after April 2009? FedEx argued that the ad’s use of “just” made the literally/necessarily implied claim that these were the most recent results. The court, however, concluded that FedEx still failed to state a claim because the claim was literally true or at most ambiguous, even after the April 2009 survey. The ad continued to cite the November 2008 survey, and “just” could reasonably be understood to convey different messages, “including, for example, that UPS was ranked most reliable most recently, that UPS was ranked most reliable sometime in the recent past, or that UPS was ranked most reliable in November of 2008.” This was only possibly misleading. Comment: this is an example of the fetishism of false v. misleading. Is there anyone in the world who thinks that a survey asking about this would produce anything other than overwhelming agreement that “just” means “there’s no more recent survey by the same people finding to the contrary”? Context matters, among other things to clarify ambiguity, and relevant context includes “there’s a more recent survey with different results.” This really would have been a good case for falsity by necessary implication.
Separately, FedEx alleged misleadingness: that the claim deceived consumers into believing that UPS was ranked higher than FedEx in service and reliability and had statistically better on time performance or reliability than FedEx, and that the claim deceived consumers about the rankings post-April 2009. UPS argued that FedEx merely recited the elements of a cause of action, but FedEx isn’t required to set forth evidence of actual confusion at the pleading stage. Allegations of actual consumer confusion and deception sufficed.
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