Oregon SCt rules on "ascertainable loss" in false discount case

Clark v. Eddie Bauer LLC, 371 Or. 177, --- P.3d ----, SC S069438 (Jun. 29, 2023)

Under Oregon’s Unlawful Trade Practices Act (UTPA), a person who suffers an “ascertainable loss of money or property” as a result of another person’s violation of the UTPA may maintain a private action against that person. The Ninth Circuit certified to the state supreme court the question whether a consumer can suffer an “ascertainable loss” under the UTPA when she buys items at an outlet store that have been advertised as being sold at a substantial discount but that have never been sold at that or any other location at the “list,” or non-sale price, and when she would not have purchased at that price but for the false advertising of a sale price. The state supreme court answered yes, that was an ascertainable loss.

Under the facts as stated in the certification order, more than 90 percent of the products offered at Eddie Bauer outlet stores are manufactured solely for sale at the outlet stores and are not sold elsewhere:

Defendants advertise clothing at the Eddie Bauer Outlet stores as being sold at a substantial discount, typically between 40 percent and 70 percent off. However, with limited exceptions, the clothing is never sold—at the outlet stores or anywhere else—at the “list” price, i.e., the price shown on each product’s original tag; the clothing sold at the outlet stores is only ever sold at “discounted” prices.

State law bars, among other things, false or misleading representations of fact concerning the reasons for, existence of, or amounts of price reductions and advertising price comparisons without conspicuously identifying the origin of the price the seller is comparing to the current price. The plaintiff alleged that she wouldn’t have made her purchases if she’d known that the goods weren’t in fact being sold at a discount.

Defendants argued that plaintiff had received exactly the products that she believed she was buying, and that their value at the time of sale was at least what plaintiff had paid. They noted that plaintiff had not alleged, for example, that the Fleece Zip [she bought] was worth less than the $19.99 sale price or that it did not possess the features or quality that plaintiff had expected it to have.

Thus, they argued, there was no ascertainable loss. The district court granted defendants’ motion to dismiss on the ground that the complaint didn’t allege that defendants had made false representations about the character or quality of the garments that plaintiff bought, which the district court understood to be essential under the state supreme court’s decision in Pearson v. Philip Morris, Inc., 361 P.3d 3 (2015). On appeal, plaintiff noted that many of the provisions of the consumer protection law prohibit deception in ways that do not relate to the quality or characteristics of a product, and argued that she’d suffered an ascertainable loss in various ways, including price inflation from the putative bargain.

“Ascertainable loss” means, generally, “any determinable loss,” even a loss that cannot be measured exactly. Only economic losses may be recovered, although even if “[t]he private loss … may be so small that the common law likely would reject it as grounds for relief, yet it will support an action under the statute.” And, given the legislature’s consumer-protection concerns, it was appropriate to take a broad view of “ascertainable loss.”

The court here addressed only the theory that the plaintiff wouldn’t have purchased at the price that she actually paid had she known the truth, not other theories of injury (such as that the overall market price was inflated by the even higher reference prices).

“[P]laintiff only was required to allege that, as a result of any practice prohibited under the UTPA, she suffered an ascertainable loss—that is, a loss capable of being observed or determined, however small.” Where the product was not what was bargained for, it doesn’t matter that there’s no outside, objective measure of market value.

In plaintiff’s case, what she wanted was items of clothing whose selling price had, at some earlier time, been what defendants’ false price list-ings indicated. What she received, on the other hand, was merchandise that had never been offered for sale at those prices. Thus, whether or not those items ever sold at those higher price points, and whether or not defendants’ alleged pricing scheme can be viewed as representing that the items previously had retail or market values equivalent to the prices shown on their product tags, plaintiff paid money to defendants for articles of clothing that she would not have bought had she known their true price history. The money that plaintiff is out as a result is her “loss.”…

As the Connecticut Supreme Court observed in discussing that state’s statute, it should not matter that a person unlawfully led to believe that she was buying one thing ultimately received another thing of equal or even greater value. Hinchliffe, 184 Conn at 614, 440 A2d at 814 (“To the consumer who wishes to purchase an energy saving subcompact, for example, it is no answer to say that he should be satisfied with a more valuable gas guzzler.”).

The alternative holding would leave citizens without a remedy where the legislature declared a practice unlawful and provided for a private remedy, and we don’t live in a world of perfect efficiency where the plaintiff could resell the product without transaction costs for exactly the price she paid.  Thus, the court rejected the idea that “a person does not suffer an ascertainable loss so long as she receives something of equal or greater value than the money she was deceived into giving up for it.”

Although other courts interpreting other laws have reached the opposite conclusion, reasoning that deception alone can’t be injury, that’s not what’s going on. The injury is loss of money the consumer would have retained if the defendant had not unlawfully deceived her (as opposed to a situation where she saw the allegedly fake sale price, believed it and thus was deceived, but still didn’t buy, where there would be no loss).  

 

no predominance of common issues where many consumers would still have taken the drug at issue

Painters & Allied Trades District Council 82 Health Care Fund v. Takeda Pharm. Co., 2023 WL 4191651, -- F. Supp. 3d --, No. 2:17-cv-07223-JWH-AS (C.D. Cal. May 24, 2023)

I tell my students that probabilistic claims are easier for competitors to bring than directly harmed consumers themselves, because competitors can aggregate harm, whereas if a court thinks that only 45% of consumers were deceived it may well reject a direct consumer protection claim. This case illustrates that principle well, though in a slightly different configuration. Here, a national third-party payer class was certified, but not a California consumer class.

The claims relate to the drug Actos and allege RICO violations and violations of state consumer protection laws because defendants conspired to market Actos fraudulently by concealing the association between its use and its users’ subsequent development of bladder cancer. Defendants allegedly misled the FDA regarding the risk of bladder cancer by generating false studies, manipulating study results, and controlling the messaging about Actos to conceal aspects of the drug’s mechanism that could have raised concerns, and also misled prescribing physicians, consumers, and third-party payors into believing that Actos did not create an increased risk of bladder cancer. A group of patients who developed bladder cancer sued and a jury returned a verdict in favor of bellwether plaintiffs.

Painters alleged that it “reimbursed a significant number of claims at potentially elevated prices for Actos” that would not have been reimbursed “but for the fraud. Emails, testimony, and internal marketing studies suggested that defendants were aware that language linking Actos to bladder cancer would reduce sales of Actos, and sales of Actos indeed began to decline when the FDA announced that it would investigate Actos for bladder cancer risk. Sales dropped even more precipitously after a bladder cancer warning was added to the Actos label. Plaintiffs’ expert found that, had a bladder cancer warning been issued from the beginning, third-party payors would have paid for 56% fewer Actos prescriptions during the class period.

The expert estimated that around 40% of the Actos prescriptions would have still been written (and, thus, would have been reimbursed), even if there was full awareness of the bladder cancer risks, while 56.77% were fraudulently induced. Only third-party payors who paid for at least five Actos prescriptions would be part of the class; the odds were thus that any TPP that paid for at least five Actos prescriptions had, statistically, a 98.5% chance of suffering an injury; that 1.5% chance didn’t defeat predominance. And other data indicated that only about 4% of patients switched from Actos to an equally or more expensive drug, which again wasn’t enough to defeat predominance for the TPPs.

But there was no predominance for the consumer class, because the individual plaintiffs would vary so much in whether they still would have taken the drug if they’d known the true risks. There was “some compelling common evidence of materiality,” such as a “wave” of physician contacts in the wake of the actual risk disclosures, and one defendant’s concession that bladder cancer risks would be a “serious thing” for a healthcare professional.

Nonetheless,

the materiality of that bladder cancer risk to patients’ diabetes prognoses is highly individualized. Moreover, some medicines and treatment regimens would be ineffective; some patients would have no other option other than Actos, notwithstanding the bladder cancer risks. Those determinations necessarily reside with the patients and their physicians. Even Comanor recognized that reality. Therefore, the question of whether Takeda or Lilly’s omissions were material to the choices of any physician-patient tandem is an individualized one.

California’s ordinary presumption of reliance from material deceptiveness was insufficient, because doctors consider so many patient-specific factors in prescribing. Although the bladder cancer risks here were “ones that most reasonable physicians and patients would evaluate before choosing an appropriate healthcare regimen,” materiality exists only where the omission of those risks “would have been important to the decision-making process.” And that was individualized.

The Court is loath to insert itself into the doctor’s office and impose its judgment onto physicians and their patients, blanketly concluding on behalf of all “reasonable persons” that some risks matter (i.e., bladder cancer risk) and that some do not (i.e., untreated or mismanaged diabetes). … And indeed, [plaintiffs’ expert’s] own model suggests that 40% of Actos purchases would have been made even if full information of the risks was known. Forty percent is not a trivial amount ….

This also meant that there were individualized questions of actual injury (for the CLRA claim) that predominated over common issues. The court also thought the damages model wasn’t sufficiently explained, compared to the damages model for the TPPs.

odd 2d Circuit case about misleadingness versus confusion

Gibson v. SCE Gp. Inc., 2023 WL 4229913, No. 22-916 (2d Cir. Jun. 28, 2023)

Another models (and one model’s sister) v. nightclubs case. Gibson et al. appealed partial summary judgment against them on on their claims for false endorsement under section 43(a) of the Lanham Act, and violations of New York Civil Rights Law sections 50 and 51. Appellant Burciaga also appealed a judgment awarding her $5,000. The court of appeals affirmed.

The “falsity of the implied association” between plaintiffs and defendant didn’t relieve plaintiffs of the burden of showing likely confusion. (As I’ve said before, it’s worth noting that the FTC generally thinks that appearing in what is obviously an ad does not itself constitute an endorsement, consistent with this outcome.)

Somewhat oddly, the court then says:

To the extent that this approach to the false endorsement claim diverges from our caselaw involving false advertising, that result is consistent with the fact that the two types of claims are distinct. See Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 122 (2014) (explaining that false association and false advertising claims under the Lanham Act are distinct). Whereas the text of the Lanham Act’s false association provision requires that the false or misleading representation of fact be “likely to cause confusion,” its false advertising provision requires only that a person “misrepresent[ ].” Compare 15 U.S.C. § 1125(a)(1)(A), with id. § 1125(a)(1)(B).

This is one reason people don’t like unpublished opinions; false advertising cases have also required resulting deception, but presumed it in cases of literal falsity—not implied falsity.

This seems like unthinking textualism which future courts will rightly not take seriously. How do you know if something is a misrepresentation (as opposed to literally false) without looking at likely deception?

conclusory allegations of confusion don't allege statutory standing for TM claim

Blacks in Technology Int’l v. Greenlee, 2023 WL 4186376, No. 3:20-CV-3008-X (N.D. Tex. Jun. 26, 2023)

On one side: Blacks in Technology International (BIT International), Blacks United in Leading Technology International (BUILT), and Blacks in Technology, Texas (BIT Texas). On the other: Blacks in Technology, LLC (BIT LLC) and two individual defendants, Greenlee and Schultz. After much back and forth, BIT LLC had trademark/unfair competition claims against the BIT International, BUILT, and BIT Texas; I’ll ignore the other claims.

Perhaps because the litigation seems to have been otherwise painful, the court actually gave some attention to the harm story and found that BIT LLC failed to allege that it had standing to bring its trademark claims.

BIT LLC wasn’t the registrant for one of the marks at issue, BLACKS IN TECHNOLOGY, but it could establish that it owned the mark by showing it used the mark as a source identifier, but it made only conclusory assertions that it did so. Under §43(a), it didn’t have to own the mark (or the other asserted registered mark, a “Blacks in Technology” logo) as long as it satisfied the zone of interests and proximate cause tests.

Even if BIT LLC fell within the Lanham Act’s zone of interests, it failed to allege proximate causation of injury. The “paradigmatic direct injury” is “diversion of sales to a direct competitor”; other recognized injuries may include “harm[ing] a plaintiff’s reputation by casting aspersions on its business,” “denigrat[ing] a plaintiff’s product by name,” “damag[ing] the product’s reputation by, for example, equating it with an inferior product,” or “seek[ing] to promote [the defendant’s] own interests by telling a known falsehood to or about the plaintiff or his product.” BIT LLC made only conclusory assertions of likely confusion and resulting damage. “BIT LLC then includes what appears to be a screenshot from a nondescript social media chat forum in which five participants discuss the similarity between BUILT’s logo and BIT LLC’s logo.” And it alleged that the putative “infringement will also lessen the ability of [the Mark and the Logo] to identify and distinguish BIT[ ] LLC’s goods and services, thereby causing harm to BIT[ ] LLC.”

That wasn’t enough.

BIT LLC has failed to allege any economic or reputational injury “flowing directly from the deception wrought by” the advertising of BIT International or BIT Texas. Its complaint makes no mention of any specific advertising by these two parties whatsoever. And BIT LLC’s screenshot demonstrating the apparent confusion of five anonymous users of an unidentified social media chat forum—all of whom were able to distinguish the two logos, and none of whom referred to anything indicating reputational or economic harm—is insufficient to plausibly allege that BUILT proximately caused any injury to BIT LLC via infringement.

Claim dismissed without prejudice.

Inter American Convention allows claims that Lanham Act makes dubious after Abitron; but what about Article III?

Industria De Alimentos Zenu S.A.S. v. Latinfood U.S. Corp., No. 16-6576 (KM) (MAH), 2023 WL 4200169, -- F. Supp. 3d --- (D.N.J. Jun. 27, 2023)

 Industria sued Latinfood for trademark and copyright infringement; Latinfood counterclaimed for tortious interference against Industria and another counterdefendant Cordialsa. The court granted summary judgment against Latinfood on the counterclaims, and gave partial victories to both sides on the main claims. Notable for use of the Inter American Convention to protect foreign marks in the US—Christine Haight Farley has explored this once-forgotten treaty that seems to be undergoing a revival.

Industria, based on Colombia, produces and distributes food products under two relevant brand names: Zenú and Ranchera. They’re successful brands: approximately $300,000,000 annually in sales of Zenú products and $100,000,000 in sales of Ranchera products. But Industria does not advertise or sell its Zenú or Ranchera products in the United States and there are no market surveys specific to the United States for Zenú or Ranchera.

Industria has never had a registration for Ranchera; its application was opposed by an unrelated third party and has been suspended; a prior registration for Zenú was cancelled and Industria never sold any Zenú or Ranchera products in the United States when it owned that registered trademark.

Latinfood’s predecessor in interest was founded by Zuluaga, who lived in Colombia until he was approximately 17 years old. Zuluaga claimed first use of Zenú in 2011; the predecessor company applied to register the mark in 2013, with specimens using actual images of Industria’s products (though Zuluaga claimed lack of knowledge either of Industria or the specimens filed on its behalf by a filing service). The mark was registered in 2013; nearly two years later, Zuluaga told the filing service that “we need to replace / change the pic of the specimen loaded in the application.... [T]he one showed in the application is not mine.”

Zuluaga told a designer to look at Industria’s website when creating Latinfood’s packaging designs for Zenú and Ranchera and brought one of Industria’s Ranchera labels to the designer’s office. I have tried to sort plaintiff and defendant’s labels based on what the court says, but I might be wrong (which is clearly the point).

 I believe these four images are Industria's Ranchera:

I believe this is Latinfood's Ranchera:

Industria's Zenú (again, I think):

Latinfood Zenú (I think):

Latinfood did ultimately change the Zenú logo.

Also:

Some of Latinfood’s Zenú and Ranchera product labels state that the product is manufactured or distributed by “Zenú Products US, Inc.”; display the web address www.zenu.us.com; and contain the phrase “Linea de Exportacion,” which translates to “exportation line.” Latinfood does not export its Zenú or Ranchera products outside the United States. In 2016, the Latinfood website contained the phrase “We have products from” followed by marks of imported brands, among which was an image of Industria’s Zenú mark. Advertisements made for Latinfood Zenú products used the phrase “una deliciosa tradición,” which translates to “a delicious tradition.”

One supermarket sold Latinfood’s products in an aisle designated for “Hispanic and Latin imported goods,” despite having another aisle designated for similar goods made in the U.S. After a sales manager for Cordialsa visited the supermarket and told the manager that he was “surprised to find” Zenú-marked products at the store, it ceased carrying Latinfood’s products, though the reason was unclear.

The extent of Industria’s plans for US sales and the reason for Industria’s decision not to import its products was “heavily disputed” by the parties. Prior import plans in 2010-11 were paused. Industria became aware of Latinfood’s Zenú and Ranchera products sometime between October 2013 and September 2014. Its cancellation petition for Zenú has been suspended during this litigation.

Inter American Convention for Trademark and Commercial Protection: Industria sought cancellation of the registration and priority in the US under the IAC, as well as an injunction against “unfair competition.” [I’m not sure how we should think about Article III standing for purposes of injunctive relief—it seems clear there’s standing to contest the registration, but is there sufficient injury/redressability for an injunction if there’s no pending use in the US?]

Latinfood argued that the IAC claims were barred by territoriality. “Here, the U.S. has purposely breached the territoriality principle by entering into mutual treaty obligations with certain foreign nations. The IAC is a self-executing treaty, having the force of law by virtue of its enactment. The IAC has thus been recognized as an exception to the territoriality principle.” And it creates a private cause of action. Industria didn’t need to comply with §44(d) in order to claim rights under the IAC.

Latinfood won summary judgment on the claim under Article 7, whose sole remedy is to grant priority. Industria clearly conceded that its IAC claims weren’t based on a claim of priority rights in the US.  Also, because Latinfood registered the Zenú mark in the U.S., Industria was barred from using Article 7 to gain priority over the Zenú mark for itself.

Article 8 grants the owner of a mark the “right to apply for and obtain the cancellation or annulment of the interfering mark.” This relevantly requires that the owner had legal protection for its mark in another state and the other party knew of the owner’s use for the specific goods to which it applied the mark before it adopted the mark. (There’s another route, not available here, when the mark owner was already trading in marked goods in the country in which cancellation was sought.)

Summary judgment for Industria was appropriate: It showed legal protection in Colombia prior to Latinfood’s application, and the evidence of knowledge of use on the same goods was “overwhelming and one-sided.” “Latinfood cannot shirk responsibility by simply stating that Mr. Zuluaga was unaware of the contents of the application he signed.” (There was other evidence of knowledge too.) The same goods requirement was satisfied even though the parties’ lists of food items didn’t correspond “precisely” or “item-for-item.” “Latinfood’s registration covers various meat and fish products, which would fall within the plain meaning of ‘meat, fish, poultry and game’ covered by Industria’s registration.”

The order was temporarily stayed pending full authentication of the Colombian registrations.

Under Article 17 of the IAC, Industria needed to show, relevantly, that Latinfood’s interfering mark “may lead to error or confusion in the mind of the consumer” with respect to Industria’s commercial name. The court found an issue of fact and denied summary judgment on likely confusion (see below).

Article 18 grants the right to “apply for and obtain an injunction against the use of any commercial name or the cancellation of the registration or deposit of any trade mark.” (The injunction-against-use provision is where there may be an Article III problem, it seems to me.)   This relevantly requires a showing that Latinfood’s interfering name or trademark is “identical with or deceptively similar to” Industria’s commercial name “already legally adopted and previously used in [Colombia] in the manufacture, sale or production of articles of the same class”; and prior to Latinfood’s use or adoption of the name or mark, Industria used and continues to use the “commercial name adopted and previously used” for the “same products” in Colombia. But it does not seem to require harm. Still, the court granted summary judgment for Industria (conditional on authenticating the registration).

Lanham Act (and parallel NJ Fair Trade Act): Here too there may be standing problems. The TM part of this might need revisiting in light of Abitron; the court earlier held that use of a mark in the US wasn’t required to bring Lanham Act claims, but subsequently Meenaxi Enterprise, Inc. v. Coca-Cola Company, 38 F.4th 1067 (Fed. Cir. 2022), demanded injury to sales or reputation in the US and held that “nebulous future plans for U.S. sales cannot be the basis for a Lanham Act claim.” [Dawn Donut, but for extraterritorial use.]

So, did Industria satisfy Lexmark? There were genuine issues of fact on (1) whether Industria had concrete plans to enter the United States market; and (2) whether Industria’s commercial injury was proximately caused by Latinfood’s actions. There was insufficient evidence of reputational injury as an alternative theory; Industria didn’t provide any evidence even showing that it had any particular US reputation to be harmed.

Industria argued that Latinfood blocked its entry into the US market, and a jury could credit its evidence, but there was also evidence that it couldn’t enter the US market because of various regulations.

False advertising: Industria argued that deception could be presumed from literally false statements that Zuluaga “convinced a major product manufacturer in Colombia to sign an exclusive distribution and importing rights agreement for the tri-state area”;  his statement to a supermarket sales associate that he had Colombian products; and Latinfood’s website stating in substance that it offered Industria’s Zenú products. For the first two, Industria failed to show literal falsity. Among other things, the sales associate testified that Zuluaga did not mention the names of the Colombian products (is that even commercial advertising or promotion?). But the third statement was literally false.

As evidence of deception, Industria submitted evidence that one of Latinfood’s distributors believed that Latinfood’s products were associated with Industria’s products. Also, a Twitter user sent a message to Industria’s Twitter account with a picture of Latinfood’s Zenú and Ranchera products and asked whether Industria had “a sales franchise for beer sausage and ranchera sausage that they are selling in New York and New Jersey and Florida, as so-called Colombian sausages.” Industria’s advertising agency manager, responded that the products are not Industria’s, to which the alleged customer replied “So why are they using your brand? This makes Colombians abroad get tricked.” A supermarket sales associate testified at deposition that Latinfood’s products were sold in a store aisle with other Hispanic or Latin-sourced products, rather than in an aisle with products made in the U.S. A supermarket store manager testified that Zuluaga had a reputation for selling Colombian products and that Zuluaga told him that Zenú was a brand known in Colombia. And of course, Latinfood’s packaging resembles and implies an affiliation with Industria. The packaging also includes the line “Linea De Exportacion,” which translates to “exportation line.”

The court found that Industria’s argument for false advertising “falls on the wrong side of the line between a false association claim and a false advertising claim. On these facts, any mistaken belief that Latinfood’s products were Industria’s products depends on evidence of a false association between the brands, which is distinct from a false advertising claim.”

The use of “exportation line” was arguably the exception, but “[o]ne country’s exportation … is another’s importation, and the meaning is unclear.” There was no evidence of a tendency to deceive.

What about injury? To get injunctive relief, a plaintiff has to prove likely injury. But there was no evidence that the only actionable statement—Latinfood’s use of Imdustria’s logo on its website in 2016—was likely to cause injury. “[N]o reasonable jury in 2023 could conclude that Latinfood’s use of Industria’s logo in 2016 is likely to cause damage to Industria in the future.” Summary judgment for Latinfood.

Trade dress infringement: Summary judgment denied; I’m going to skip most of the discussion because, sadly for the hardworking district court, I think Abitron does require revisiting it, even if the trade dress is inherently distinctive and was copied. Without a reputation in the US, I don’t see how there can be confusion in the US.

On strength, Industria conceded that it didn’t actively advertise in the US, but submitted evidence that its trade dress had been “seen” by US residents and that its websites have been visited by US users “thousands” of times 2012-2017, which “may indicate at least some commercial strength of its trade dress.” (Later, the court noted, “there are no products for sale on those websites and there is no indication that Industria sells products to United States consumers either through its websites or in stores.”) In light of the size of the food market, that’s a bit hard to credit. Citing domestic precedent, however, the court reasoned that “the mark’s strength in other markets is relevant.”

Other evidence of actual confusion, besides that noted above, was that, sometime in or after 2014, a Facebook user posted in a group titled “WikiWomen in Medellin” that she purchased “ranchera sausages” at an unidentified location in the United States and that “they say” that “Zenú set up a plant in New York for the Colombia market in the U.S.A.” And the copying here could also lead to an inference of deception.  “The fact finder might also find it significant, however, that for a relevant period of eight years, Industria was able to provide only three somewhat equivocal instances of customer confusion.”

Did intentional copying show intent to confuse? A jury could go either way.

Trademark infringement/false association: There wasn’t sufficient evidence that Industria owned the Zenú or Ranchera marks for purposes of the trademark infringement claim. (I don’t quite get how it could show ownership of the trade dress in the US but not ownership of the word marks.) Summary judgment for Latinfood.

Cancellation for fraud: Industria wasn’t required to establish United States trademark rights to petition for cancellation of Latinfood’s Zenú mark. A trademark application is a “legitimate commercial interest,” which satisfies the “real interest” requirement, and “blocking” an application can satisfy the belief of damage requirement. It was entitled to summary judgment because Zuluaga knew that Industria had a prior right. (This is inconsistent with the holding above that Industria didn’t have US rights: Zuluaga signed a declaration stating “to the best of his/her knowledge and belief, no other person, firm, corporation, or association has the right to use the mark in commerce, either in the identical form thereof or in such near resemblance thereto as to be likely when used on or in connection with the goods/services of such other person, to cause confusion, or to cause mistake, or to deceive.” We know this means US commerce, so his knowledge of the Colombian rights wouldn’t matter.)

But there was also fraud in using Industria’s products in photos purporting to show Latinfood’s use. Industria showed that Latinfood never used the Zenú mark in commerce prior to filing its application.

Copyright: The Third Circuit applies the discovery rule to the limitations period of three years. Industria filed its copyright infringement claims on April 21, 2017. Its witness testified that Industria found out about Latinfood’s use of the Zenú mark in or around October of 2013. It was put on notice of the need to investigate and the limitations period began to run then for those claims, but copyright infringement is a continuing violation so it could reach back three years prior to filing, and also Latinfood didn’t show it was entitled to summary judgment on the limitations period as to the Ranchera mark. (Not clear from this discussion if the copyright claims are really for copyright in the logos or cover the labels.)

The tortious interference counterclaim failed; it related to one supermarket that removed Latinfood’s Zenú products. Assuming that Industria’s assertion of its trademark rights led to this removal, Industria had a substantial basis for its claims, such that “even if its position is not ultimately borne out, it does not meet the high bar of malice.”

Transatlantic Dialogue Workshop, Institute for Information Law (IViR), Amsterdam Law School Part 5: Beyond the DSA

Chair: João Quintais

Samuelson: Joel Reidenberg’s Lex Informatica is a foundational text worth revisiting. Riffs off of the concept of law of trade; what happened was that people engaged in inter-area commerce made up sales law through their practices. Informal rules became law; he was thinking that Lex Mercatoria was a metaphor for Lex Informatica, where similarly we need to think about new tools. Commission has tried to invent these new tools.

Proposed AI Act disclosure of data—if you don’t want us to cough up every URL on the internet, what do you want? “We used Common Crawler”? What is the purpose for which disclosure is sought? Whether you want a map the size of the territory depends on the goal—is it collective licensing? [Would that even help get the money to the right people? I guess that’s rarely the big concern of people demanding collective licensing.]

Eleonora Rosati: EU Parliament wants to get AI Act to finish line in 2023. Goal: framework for trustworthy AI. Continues on lines of transparency/disclosure. But also can’t exist w/o thinking of other frameworks; shows how fragmentary EU law is. Consider: deepfakes and training data. Original EC proposal provided training material disclosure, but didn’t clarify what permission was needed (if any). Now refers to “without prejudice to applicable © rules.” No mention of whether permission is required for deepfakes.

Justin Hughes: you can have deepfakes about floods and tornadoes, not just about people. In effort to address free expression they’ve also added unnecessary bangs and whistles. Current proposal: Deepfakes are defined as things that falsely appear to be authentic or truthful, which requires disclosure, except if they’re evidently created satirical, artistic, or fictional (which seems like it wouldn’t falsely appear authentic or truthful). “Sufficiently detailed” summary of use of training data protected by © is required, but as/more interesting is requirement of generative AI to have adequate safeguards against generation of content in breach of EU law (which means ©). [I assume they also mean CSAM and other things to be named later.] Art. 27 of DSA is recommender system transparency; are they high-risk AI systems w/in the meaning of the AI Act? Yes in Parliament’s version. That means direct overlap in rules. His view: some recommender systems should be prohibited AI, if social media use is addictive.

Sebastian Schwemer: Understand where it comes from—new legislative framework for product regulation. Talk to those who followed the broader process.

Sean O’Connor: training and outputs may need different safeguards. Each has different relationships to ©.

Eric Goldman: dictating how content is published is the fundamental framework of the Act—we’re going for the idea that gov’t will dictate that, which he dislikes extremely.

Quintais: they realized that they hadn’t clearly covered generative AI and panicked and started introducing new rules.

Daphne Keller: Such a mistake to add generative AI—the policy questions around AI for criminal sentencing, whether you get a loan, etc. are so important and deserve attention—would be better to deal with content generation/speech separately. Use in content moderation—deciding what to take down—v. using in recommendation—do you have to guard against addiction in recommendation?

Quintais: Drafters didn’t talk to the people doing the DSA or the overlaps. Depending on what happens next, there might be real overlap.

Matthias Leistner: if you take measures to avoid substantial similarity in the models, you might stave off fundamental challenges to © principles that show up only in case law—no protection for ideas or style, though protection for characters. Taking measures to limit the models might be a good strategy to deal with the long-term danger of loss of those principles. Use of existing works to train is a separate issue.

Quintais: for the first time, have heard © lawyers say there’s a need to protect style—not a good development.

Hughes: doesn’t think that AI output is speech.

Goldman: does. Collect information, organize it, disseminate it. AI does those things which are what makes a publication.

Hughes: expression is by humans.

Goldman: makes a different choice.

Keller: readers have a right to read what they’re interested in.

Niva Elkin-Koren: when I prompt ChatGPT and interact w/it, that is speech.

Hughes: if an algorithm suggests content written by human, there’s still human participation in the underlying creation. Recommendation automation itself shouldn’t be speech b/c it’s not human.

Elkin-Koren: ranking search results should be considered speech b/c it reflects an opinion about how to rank information implemented by code.

Samuelson: explainability as a different factor—if it’s not possible to explain this stuff, generative AI may not have much of a future in Europe. [Of course “the sorting principle is stuff I like” is not really explainable either, even if there is in fact a deterministic physical source in my brain. But scale may make a difference.] “As explainable as possible” might work.

Keep in mind that standard-setting also favors power: who can afford to go to all the meetings and participate throughout. Delegating public authorities to private entities. Different regulatory structures for different entities—when telcos became broadband providers, had to decide where they would be regulated, which is similar to the Qs raised by definitions of covered AI—regulatory arbitrage.

Senftleben: use of collecting societies/levies can be a better regulatory answer than a cascade of opt-out and then a transparency rule to control whether opt-out is honored and then litigation on whether it’s sufficiently explained. If we’re afraid we might lose freedom of style/concepts, telling © owners to accept a right of remuneration is an option.

Matthias Leistner: don’t give in too soon—remuneration already frames this as something requiring compensation if not control, but that’s not obvious. Note that Japan just enacted a very strong right for use for machine learning, and the anime/comics industries didn’t object to it apparently.

Van Hoboken: May need new speech doctrines for, e.g., incorporating generative AI into political speech.

Schwemer: we might want special access to data for purposes of debiasing AI as a uniquely good justification for, e.g., copying for training.

Bernt Hugenholtz: these companies want to move forward, and if they can get certainty by paying off rightsholders they will do so; probably not collective licensing although the societies would like that; they don’t have mandates. Instead firms will get rid of uncertainty through cutting big private deals.

Senftleben: we can give a collective licensing mandate if we choose—the only way to get money to individuals.

Hugenholtz: but levy systems take forever to introduce too. We’ve never had a levy regulation.

Elkin-Koren: Google already has an enormous advantage over newcomers; making everyone who enters pay a levy would kill competition forever. [I also wonder about what a levy would mean for all the individual projects that use additional datasets with existing models to refine them.]

Senftleben: his idea is to put a levy on the output.

Samuelson: but they’re demanding control of the input in the US, not the output (unless it is infringing in the conventional sense).

Frosio: In US it is obvious that training the machine is fair use; not the case in Europe. What do we do? [Some discussion of how obvious this was; consensus is that’s the way to bet although the output will still be subject to © scrutiny for substantial similarity.]

Some discussion of German case holding that, where full copies of books were in US, Germany only had authority over snippets shown in search, and those were de minimis. Frosio: French decision held Google Books violated copyright/quotation right didn’t apply. At some point some countries are going to find this infringing, and there will be a divide in the capacity to develop the tech.

Keller: Realpolitik: if platforms can be compelled to carry disinformation and hate speech, the platforms’ main defense is that they have First Amendment rights to set editorial policy through content moderation and through ranking—this was relatively uncontroversial (though is no longer!). Eugene Volokh thinks that ranking algorithms are more speechy than content moderation b/c former are written by engineers and bake in value judgments; she thinks the opposite. There’s caselaw for both, but Volokh’s version has been embraced by conservatives.

Leistner: why a levy on the output if it’s distant enough to not infringe a protected work? If you have a levy on the input, why? Results don’t reflect inputs/the model itself doesn’t contain the inputs, so people will just train the models outside Europe. So that means that you’d need to attach levies to output, but that’s just disconnected from ©--an entirely new basis.

Dussolier: If the issue is market harm from competition w/an author’s style, a levy is not compensation for that—it harms specific people and if it is actionable it should be banned, not subjected to a levy.

Elkin-Koren: if generative models destroy the market for human creativity, does that mean we pay a levy for a few years and then © ceases to exist? What is the vision here?

Frosio: another question is who is liable: if we focus on output, liability should be on end users—end users are the ones who instruct model to come up w/something substantially similar and publish the output.

Samuelson: a global levy is not feasible; also, most of the works on which the models have been trained are not from the big © owners or even from small commercial entities—it’s from bloggers/people on Reddit/etc—how would you even get money to them? [I mean, I’m easy to find 😊]

Transatlantic Dialogue Workshop, Institute for Information Law (IViR), Amsterdam Law School Part 4: Industry Impact and Industry Relationships

Chair: Daphne Keller: EU heavy compliance obligations + a bunch of other laws coming into effect right as platforms are laying off people who know how to do that—a bumpy road.

Impulse Statement: Rachel Griffin: Technocratic approach to regulation; we associate auditing with clear success metrics (did you make a lot of $ or not) versus these very political issues with no yes/no answers—what does it mean to be successful? Rhetoric of auditing, but even in finance auditing is not that objective; the problems multiply when applied to political speech. “Rituals of verification” substitute for results in lending legitimacy. What goal is the rhetoric and framework of auditing actually serving? “others doing the Commission’s job for it?” Maybe it should be to provide the minimal value of accurate information—not just making up numbers. If so, it would be more helpful to have transparency reports audited rather than risk assessment.

Are we focusing too much on auditing and too little on platforms’ internal risk assessments, which are a precondition to the audits? Realistically, any audit report will take what companies have been doing as their point of departure and give them feedback on improving.

Risk of regulatory capture by corporations. Wants to push back against civil society involvement as a solution—up to a point, but that’s not automatic or easy and has its own limitations. Civil society doesn’t represent everyone equally; it’s prone to corporate capture too.

Impulse Statement: Eric Goldman: Hypotheses about what he thinks will happen, supposed to be provocative but also sincere: Homogenization of services’ practices: companies will watch each other and figure out what satisfies the necessary audiences. Ossification of content moderation processes once blessed: it won’t change further. Cut as many corners as they can: much depends on how regulators push back on that—seen that with GDPR and will see that here given the scope for judgment calls. In the US we would know that doing the minimum would suffice, but the expectation here is that would “prompt a dialogue,” though what happens then is unclear. Many of these provisions will be outdated soon or w/in years—fighting the last war. Will see the weaponization of options—everything we’re doing is put through a partisan filter, and the longer we’re in denial about that the worse things will ultimately get. Raise the costs of the industry, rewarding big and punishing small, so we’ll see a shrinking number of players who offer UGC as a matter of economics. Switch away from UGC to professionally produced content, w/significant distributional effects.

Frosio: We already saw a number of major newspapers eliminating comment sites after liability to monitor comments sections was imposed on them.

Senftleben: A system blessed by audit will continue: is that ok? If European legislator wanted to open spaces for startups, the best thing you can do is make established broad services as boring as they can be to make space for niche services. [That assumes that the system will continue to function as content evolves, which does not track past experience.]

Comment: platform w/UGC component and walled garden component could easily make the conscious decision to grow only the latter—that’s why Spotify is so cautious with podcasts.

Discussion about what it means for content to be UGC—at the request of the recipient of the service. Monetization can still be UGC but some forms of monetization may take it out of UGC when it’s done at the request of the service itself.

Platforms likely to define risk assessment by looking at the minimum they need to do under the audit, so there are feedback loops.

Elkin-Koren: there will also be pressure to move to sites that are currently unregulated: WhatsApp viral distribution has been used in many countries, and it’s under the radar of the DSA. We should also keep an eye out for that. Generative AI may also change this as people don’t access the UGC directly. New paths of access and consumption require new thinking.

Schwemer: platforms/hosting services host content and users provide it. Netflix isn’t covered by the DSA at all—licensed content provided by the producer. Podcasts=interesting case.

[If you need an invitation to provide content, how do you count that? Radio over the internet where they select specific shows to stream, Bluesky? Is the answer how much prescreening goes into the invitation?] Answer: may need to be litigated. Key definition: Whether hosting is at the request of the user or of the service. May depend on targeting of users as well. [I can see how my pitch of content to Netflix doesn’t depend on me having my own Netflix account/being a Netflix “user,” but I wonder how that generalizes.]

Cable started out as super-open infrastructure—you could put your own content into Amsterdam cable from your own rooftop. Then the economics of consolidation took over. Happening on YouTube here—line between UGC and “professional” content are very blurry. Are they asking YT or is YT requesting them to provide content? And requiring licensing from YT providers, including individual users, blurs this further.

Keller: advertisers will also say they don’t want their content next to spam, porn, etc. That has influence over policies, usually restrictively. YT agreed not to consider fair use in content takedowns from a major movie studio—a concession that affected other users.

Samuelson: We have a more direct interest in researcher access than we have to industry reactions: in public they will say “we are doing all we can to comply,” so you have to read the public performance. The private face looks quite different—a lot of hypocrisy, understandably, because you don’t want to appear contemptuous of something even though it’s not well thought through and you don’t think you can really comply.

Keller: then other countries look and say “oh, we can impose this too because they can comply.”

Samuelson: don’t take at face value statements by the big companies. That cynicism is itself a concern for regulators. Another thing under the hood: how are the platforms redesigning their technologies and services to minimize compliance obligations? The easy one to see is eliminating comment sections. We won’t see the contracts b/t platforms and other entities, which is an issue, bypassing regulatory control.

Dussolier: sanitization rhetoric is very different from © licensing. Don’t invest too much copyright thinking into this space.

Matthias Leistner: there is at least one element w/a clear © nexus: data related issues. Inconceivable to subsume fundamental issues like creative freedom behind copyright; this is a systemic risk. If the duties also related to the practice of dealing with data from consumers, couldn’t you at least control for systemic risks in licensing data, e.g., homogenization of content? Or would that carry the idea of systemic risk too far? Journalism that tells people only what they want to hear is a known risk; so are there uses of data which you must not make?

RT: Casey Newton just wrote about Meta’s new system cards (Meta’s own post on this here):

Written to be accessible to most readers, the cards explain how Meta sources photos and videos to show you, names some of the signals it uses to make predictions, and describes how it ranks posts in the feed from there.

… The idea is to give individual users the sense that they are the ones shaping their experiences on these apps, creating their feeds indirectly by what they like, share, and comment on. If works, it might reduce the anxiety people have about Meta’s role in shaping their feeds.

… Reading the card for Instagram’s feed, for example, the signals Meta takes into account when deciding what to show you include “How likely you are to spend more than 15 seconds in this session,” “How long you are predicted to spend viewing the next two posts that appear after the one you are currently viewing,” and “How long you are predicted to spend viewing content in your feed below what is displayed in the top position.”

Note what’s not here: demographics. How did it assess your likelihood of spending more than 15 seconds/watching the next two posts, etc? And did it assess others’ likelihoods differently depending on categories that humans think are relevant, like race and political orientation? By contrast, one source Meta cited in support of these “model cards” was an article that explicitly called for model cards about demographics. (My favorite bit from this Meta page: “the system applies additional rules to ensure your feed contains a wide variety of posts, and one type of content does not dominate. For instance, we’ve created a rule to show no more than three posts in a row from the same account. These rules are tested to make sure that they positively impact our users by providing diverse content that aligns with their interests.” Diversity as completely empty shell!) This is a really clear example of how they’re trying to get ahead of the regulators and shape what needs to be disclosed etc. in ways that are not actually that helpful.

Dussolier: how do we deal with two trusted flaggers, one of which is a conservative Catholic group and one a LGBTQ+ rights organization? You can trust them to represent their own positions, but what does that mean?

Keller: they have to be gov’t vetted and they can be kicked out if they submit too many invalid claims—they’re supposed to be flagging genuine violations of the platform’s TOS. But different gov’ts might approve different entities, which will create conflicts. They don’t have to honor flags. But when it goes to litigation, national courts will interpret TOS in light of fundamental rights, which will lead to potential divergence.

Senftleben: We also don’t have trusted flaggers to support content as permissible.

Keller: risk profiles don’t match statuses in system: Wikimedia is a VLOP but not 4chan or 8chan.

Griffin: who’s going to be doing this trusted flagging? It’s not something that scales very well. Assumes that civil society will be sitting there all day. What is the funding model? The answer is obvious in ©, but not elsewhere.

It’s worse than that, since in © you don’t need to be a trusted flagger b/c the © agreements are broader.

Schwemer: risks of rubber-stamping flaggers’ flags. But might be able to get more insight from transparency. National differences in Europe could be very powerful in who is designated as trusted flagger; potential crossborder effects.

Dusollier: entitled flaggers v. trusted flaggers—© owners are entitled to flag their content claims; is that the same as trusted?

DSA was thinking about security agencies/police forces as trusted flaggers—clearly the plan.

Hughes: will law enforcement agencies want to have to publish what they did and what happened, as contemplated for trusted flaggers? Would rather have side agreement w/Meta. Both pro- and anti-gay forces might be able to fundraise to participate in flagging, so maybe it’s a successful mechanism to generate flags. And putting out a report every year is a positive for them to show what funders’ money is funding.

Leistner: concerned about this—modeled on existence of active civil society w/funding—not in many member states, where there is no culture of funding proto-public functions with private $ (US has many nonprofits because it has low taxes and low public provision of goods). These may be pretty strange groups that have active members. Worst-case scenario: Orban finances a trusted flagger that floods the European market with flags that are required to be prioritized, and flaggers can flag across nations.

Hughes: does have to be illegal content.

Griffin: good point that especially many smaller EU states don’t have that kind of civil society: France and Germany are very different from Malta.

Keller: nobody knows how often flaggers accurately identify hate speech, but every current transparency report indicates that complying with more notices = improvement. We don’t know how many accurate notices v. inaccurate there are.

Quintais: It’s worse b/c of broad definition of illegal content. The definition of trusted flagger is about competence and expertise—you can have competence and expertise without sharing values. If LGBTQ+ content is illegal in one country, not clear how to prevent a trusted flagger from receiving priority throughout EU.

Schwemer: There can also be orders to remove, though they have to be territorially limited to what’s necessary to achieve the objective. Those are not voluntary.

Griffin: Using Poland/Hungary as examples is not fully explanatory. France has a lot of Islamophobic rules and isn’t getting the same pushback.

Transatlantic Dialogue Workshop, Institute for Information Law (IViR), Amsterdam Law School Part 3: Algorithms, Liability and Transparency

Chair: Martin Senftleben

Impulse Statement: Sebastian Felix Schwemer

Recommendation systems; transparency is the approach to recommender systems, which intersects with privacy/data protection. How much can we throw recommendation of information and moderation of information in the same bowl? Algorithmic recommendation/moderation: we’re interested in platforms but there’s a world beyond platforms where automation is an issue, such as the DNS. Keeping in mind that regulatory focus is platforms and VLOPs in terms of algorithmic moderation.

Transparency is a wicked question: who for and how. Not only rules in Art. 14 p. 4 but also a requirement about terms & conditions: balancing of fundamental rights when they use algorithmic content moderation. Affects decisionmaking. Obligation to report on use of automated means for content moderation—for all intermediary service providers, not just VLOPs, including accuracy and possible errors. Relates to Q of benchmarking/how do we evaluate the quality of this decisionmaking? DSA doesn’t have answers to this. Decision quality might look very different across fields: © might have a yes/no answer, but misinformation might be very tricky. Very little information on what kind of human competence is needed.

Impulse Statement: Rebecca Tushnet

Benchmarking: spam detection—interesting that until a political party got interested there was no inquiry into reliability, and still no standard for spam detection quality other than “don’t screen out political fundraising.” Related to the abject quality of real content moderation: it is literally beneath our notice and we have contempt for the people who carry out abject functions.

VLOP definition versus “sites that actually have the problems against which the DSA is directed”—not only fashion sites; nonprofits as a special issue—Wikipedia, Internet Archive, AO3 which does not recommend anything; compare to DMCA Classic and DMCA Plus, where some large entities have repeated © issues and lots of valid notices and others simply don’t—DMCA is a reasonable system for most of them: Etsy has problems, but not ones that make sense to frame in any way as Instagram’s or Parler’s.

DSA’s separation of overarching patterns from individual decisions is good if maintainable, but doesn’t fit easily into US framework—Texas and Florida laws are both indications of what politicized targeting look like and relatively unsurprising in reliance on private claims (though outsized damage awards show the targeting).

Problems with scale: inherent inconsistency. This is usually shorthanded as “we make 100 million decisions a day, so even a tiny error rate means a large absolute number of errors.” But it is more than that: inconsistency and conflicting decisions. We have to accept that—indeed, it will mostly go undetected—but we also have to accept that the existence of conflicting decisions does not mean that either one is wrong. Compare: TM applications—in the US system at least, it is an explicit principle of law that one cannot dispute a registration decision by pointing to others that seem factually similar (or even identical) but went the other way; see also: grading by school teachers.

This is related to the DSA mandatory appeals system, which does look like Texas and Florida. One size fits all for YouTube comments and entire accounts; not a great model—the same degree of due process for everything instead of allowing services to focus only on serious disputes like when someone loses an account. Significant concerns: disproportion in the demographics of who appeals moderation, already well known as an issue—men, English speakers. But inconsistency even w/in categories will also be necessary to live with.

Senftleben: Overarching issues—relationship of different things addressed in DSA—moderation and recommendation: are they comparable/pose similar problems? Are there already new problems unaddressed such as generative AI? Then getting public interest/human rights balancing into the system—who is responsible for checking this is done properly at the platform level. Consistency of decisions across countries, cultural backgrounds, appeals. [To be clear: I don’t think it’s just about cultural backgrounds or demographics: two people w/ the same background will also make different decisions on the same facts and that’s not necessarily a wrong. (Also: ought implies can and what I’m arguing is that consistency cannot be achieved at this scale.)]

Goldman: disparate impact can come from many sources, often impossible to tell what they are. Lots of evidence of disparate impact in content moderation whose causation will be disputed. Humans v. Machines: there’s a cost to having humans in the loop: worker wellness. Regulators just don’t value it and that is a problem in balancing costs and benefits.

Daphne Keller: DSA prohibits inconsistency: you have a right of appeal to resolve hard judgment calls and get to consistency. [But: ought implies can; I would think a civil law system is ok with calling each judgment a tub on its own bottom.]

Leistner: in context of European court system, a small PI injunction will stay locally; there are divergent results already b/c it only goes to European courts in rare circumstances. Thus you have inconsistencies based on the same standards.

Hughes: inconsistency at first decision is not the same thing as inconsistency at the appeal level. The TTAB and PTO try to be consistent. [We disagree about this. They certainly try to have rules, but they also don’t hold that they’re required to treat the same facts the same way—there might be undisclosed differences in the facts or a different record and they don’t try to find those differences, just presume they’re there. This is aided by the fact that different TM applications will, by virtue of being different TM applications, have slightly different features from previous applications—which is also true of stuff that gets moderated. The school discipline cases also show that even when you get to the second level the variety of circumstances possible make “consistency” a hopeless ideal—the “impersonate a teacher Finsta” will play out differently at different schools so the facts will always be differentiable.]

Schwemer: Nondiscriminatory and nonarbitrary which is the DSA standard doesn’t necessarily require consistency in that strict sense.

Keller: suppose you have a rule: I will remove everything the machine learning model says is nudity, knowing it has a 10% error rate.

Van Hoboken: No—there’s a due process reconsideration requirement.

Keller: but the model will give the same result on reconsideration.

Van Hoboken: still not ok. [I take it because that’s not a fair rule to have?]

Keller: so that is a requirement for hiring people.

Rachel Griffin: Analyzing meaning in context is getting better—so will people start saying it’s ok to leave it to the machine?

Niva Elkin-Koren: We assume that a good decision by a court/oversight body on particular facts will immediately translate into the system, but that’s not true. One reason is that there is a huge gap between the algorithmic system running on everything and the decision of a panel on one removal. Translation gap: so we have to ask whether there is bias as well as compliance/error rates. Agree there’s no evidence that human in the loop improves process, but we could encourage regulators/implementors to enhance the opportunities for making humans more efficient—researchers can help with this. Avoiding humans who participate just for rubber-stamping the system itself.

Séverine Dusollier: Inconsistencies: we know as professors that we aren’t completely consistent in grading; we know that morning differs from afternoon—we fight it but it is human nature. There is something that you can’t completely analogize with machine inconsistency—we might have some randomness in both, but we are also informed by bias/political perspective/etc. The machine will also be inconsistent but perhaps in better ways, but what we have to do is rely on social science studies about how they actually show bias entrenched in machine and human decisions. The consequences are not the same: a decision on online platforms has different impacts. [I agree that we don’t know what machine inconsistency will look like; of course the inputs to the machine come from humans!]

Wikipedia doesn’t make recommendations. Sometimes the answer you get from the community is so sexist and misogynistic that it shows it’s still a system that needs intervention. [Agreed, but my point was that it doesn’t have the “algorithms” that people accuse of hurting democracy/spurring anorexia/etc. because it’s not optimized for ad-display engagement. So the mechanisms for addressing the problems will necessarily be different as will definition of the problems.]

Samuelson: Audits are really important to counteract human tendency towards inaction (and perhaps bias in who appeals), but there are no standards! Financial audits work because we have standards for the kind of activities we should and shouldn’t be doing in accounting. Right now there is an emerging new profession for computing audits; but right now the promise exceeds the capability. We need standards for what the audits should look like and what the profession that does the audits should look like.

Van Hoboken: it’s not very clear how to judge moderation especially at the level at which Art. 14 is drafted. Surface specificity, but application to many different types of services means there’s lots to do. Inconsistency is a problem of focus precisely b/c we want to see diversity in approaches to content moderation. We might want “free speech friendly” services in the mix and “safe for kids” ones. Both are good things. There are also different ways to achieve those results. Media pluralism in DSA can be broadened to say there’s value in pluralism generally: DSA doesn’t tell you how to do things. When we add in the human cost of moderation, we should accept that social media companies can’t do it all.

Senftleben: inconsistency is a pathological perspective; pluralism is a democratic one. [Although I was thinking more about whether a breastfeeding photo shows too much nipple, etc.]

Comment: just because a human is in the loop doesn’t mean they can make an easy decision. Legality of © use in the EU, under 27 different legal regimes, with lots of grey zones in parody/creative uses, is not simple for a human. You’d probably have to request a comparative © law professor. What kind of human are we talking about and what are the standards they are to apply?

Senftleben: isn’t the human value the intuition we bring? Failures and all?

Schwemer: in online framework, differentiate b/t different stages in decision process. There is no human involvement/judgment required in initial decisions. Ex post only, once there is an appeal. 2018 Commission recommendation was the blueprint for the DSA, but that talked about “oversight” rather than human review. Oversight relates to design/development/operations but “review” is ex post, which is an important difference. Desirability of human involvement in operations of first moderation, not just ex post redress. There’s a huge cost to the humans involved, which DSA overlooks. AI Act actually mentions something about training and competences of humans, but that relates to oversight of design/development, not operations.

Keller: FB conversation in which appeals resulted in reversals less often than random sampling of removal decisions for review. Transparency report: There’s about 50% success for appeals under FB’s nudity/terrorism policies and a lot lower for harassment/bullying. So our knowledge is mixed: seems unlikely that FB is wrong 50% of the time about nudity.

Big audit firms seem reluctant to sign up for content moderation auditing b/c they’re accustomed to working from standards, which don’t exist. They’re legally accountable for “reasonable” results—they’d have to vouch for way more stuff than they’re comfortable vouching for given the lack of existing standards. This is why civil society groups are more invested in being at the table: they need to be there as standards are developed, not just a conversation b/t Deloitte and Meta.

Elkin-Koren: we use the term audit but the free speech tradeoffs here are different than the tradeoffs involved in financial audits. The purpose is not to show compliance with a standard but to provide us with info we need to decide whether the system is biased against particular values or to decide what values it does and should reflect. It has to be understood as a work in progress [in a different way than financial audits].

Keller: It would be awesome if the DSA allows descriptive audits, but it’s not clear to her there’s room for that, or that there’s room for civil society to participate deeply in analyzing the information.

Samuelson: financial audits work through transparency about what GAAP are—both a procedure and a set of substantive rules. Then people in the auditing business know what they have to comply with. If Meta and Deloitte do this, they’ll do it in house and not publicize it. So another issue the Commission will have to grapple with is oversight of how standards are set.

Comment: DSA really does require an audit to assess compliance w/ due diligence obligations including risk mitigation/fundamental rights. The risk mitigation obligations are so fluffy/vague that this might define in practice what mitigation means. There is going to be a huge flavor of “compliance” here. What are you going to do when 10 audits say that Meta complied w/its obligations and there are appeals that show this might not be the case?

Van Hoboken: audit requirement was specifically linked to risk mitigation approach. In some sense: “We want other people to do our job.” Changes the character of the audit. It’s an institution-building move, European standard for algorithmic transparency—developing capacity to do that. Government-funded research can also help.

Frosio: what about lawful but awful content? Center stage in UK debates. Seems that DSA doesn’t want lawful but awful content filtered out automatically—UK Online Safety Bill seems to have retreated from obligation to remove lawful but awful content, substituted by more protections for children/new criminal offenses/more control for users over what they see in social media.

Art. 14: entry point for terms and conditions, which can restrict lawful but awful content; applies not just to illegal content but content prohibited by terms of service—services have to protect fundamental rights. But if it’s lawful but awful, what is the fundamental right at issue and how is there to be balancing with terms & conditions?

Griffin: fundamental rights are not only freedom of expression. EU regulators are concerned w/child safety, so automated moderation of nudity/pornography/self-harm may be necessary to do that effectively. Unlikely that courts/regulators will disapprove of that. Regulatory priorities are going in the opposite direction.

Frosio: Some of that will be legal/illegal. My question is more general: what should we be do with lawful but harmful content? Should we think it’s ok to block harmful content although it is lawful? What does that mean about what balancing fundamental rights means? Who’s going to decide what harmful content is? At one point, pro-democratic/revolutionary content was “harmful.” [LGBTQ+ content, and anti-LGBTQ+ content, is a vital example. What does “protecting children” mean?]

Schwemer: if an intermediary service provider does screen lawful but awful content, it is restricted in terms and conditions both substantively and procedurally. What about spam? Spam is not illegal in Europe. That would be a case of moderating awful but not illegal content.

Transatlantic Dialogue Workshop, Institute for Information Law (IViR), Amsterdam Law School Part 2: Data Access

Impulse Statement: Christophe Geiger: Relevance to © exceptions and limitations—access to © protected work is important for this work. Research organizations have exception in © Directive and also are vital to DSA, so we must look at both. Only digital coordinator-approved researchers are allowed access, with some limited exceptions similar to fallback provisions in DSM Directive art. 4.

Impulse Statement: Sean Flynn: Data protection can be seen as protecting right to privacy but can interfere with right to research. Need balancing/narrow tailoring. Duty to protect: duty to regulate third parties—protecting both privacy rights and researchers in data held by third parties. Duty to promote right of society to benefit from research—similar to duty to create libraries—use the idea to check if we’re balancing rights correctly, regulating appropriate third parties, creating institutions to implement rights.

Europeans were less generous in concepts of “educational”/ “scientific” research than his US perspective—formal research organizations may be required. Journalists in some key categories: are they involved in scientific research? Consumer organizations?

Senftleben: Subordinated to goals of the DSA—research has to be about systemic risk (or mechanisms used by platforms to control systemic risk), which interferes with the freedom of research. If we want researchers to understand what is going on, you have to open up the data silos anyway. Thus there would have been more than enough reason to include a provision opening up data for research in general—trust the research community to formulate the questions. Not reflected in provision. Para. 12 opens up a bit b/c it goes outside the vetted researcher dynamic, but systemic risk defines what can be done with the data.

Keller: the provision formally sets out a really dumb procedure: the researcher formulates the data request without any contact w/platform, gets approval from authority, then goes to platform, which has to respond in 2 weeks. Unlikely to be a format/type of query that is immediately possible to collect, and the platform can only object on 2 enumerated grounds. So the workaround is to create a more dynamic feedback process so researchers can ask for what platforms can actually give. Hopefully an entity set up to deal w/GDPR issues can also check whether the researcher is asking for the right data/what the parameters should be. Hangs on reference to “independent advisory mechanisms” to prevent the process actually described in the DSA from happening.

Elkin-Koren: Example of studying society, not just digital platforms: studying health related factors not caused by platforms but for which platforms have tons of data. Basic/exploratory research where you don’t know the specifics of data you want or specifics of research question but would benefit from exploring what’s there. The key innovation of the DSA is turning research from a private ordering Q into one of public ordering.

Quintais: you have to be careful about who you invite into your research—if the researcher is from outside the jurisdiction they may have to be excluded from the data.

Leistner: one strategy is to interpret research as broadly as possible; another is to ask whether the exception is exclusive. NetDGZ used to have a broader scope; can a member state choose to keep/provide a new exception for research purposes, maybe it is at liberty to do so—there’s no harmonization for general access to data for research purposes. Maybe that is necessary, and it would have to transcend the various IP rights, including © and trade secrets.

Keller: note that having platforms store data in structures amenable to researchers also makes them more attractive to law enforcement. Plus, researchers are likely to find things that they think are evidence of crimes. National security claims: NATO actually indicated that it wanted to be considered a covered research organization. In the US there’s a very real 1A issue about access, but the Texas/Florida social media cases include a question about transparency mandates—not researcher access like this but not unrelated. Also 4A issues.

Comment: No explicit consideration of IP in grounds for rejection but third-party data leads to the same place.

Van Hoboken: Bringing different parts of civil society together for platform accountability for VLOPs; data access is the way to bring in researchers on these risks/mitigation measures. If this provision didn’t exist, you’d have VLOPs doing risk audits/mitigation measures but no way to compare. Some requests will be refused if the platforms say “this isn’t really a risk.” Platforms may also have incentives to deny that something is a mitigation measure to avoid research access. Mid-term value—won’t work fast and maybe will ultimately be defeated.

Goldman: What are Internet Observatory’s experiences w/benefits & threats by House Republicans?

Keller: serious internet researchers among the many academic researchers in the US targeted by various far right people including members of Congress and journalists with good relations w/Elon Musk, targeted as Democratic elite censorship apparatus: allegedly by identifying specific tweets as disinformation, they contributed to suppression of speech in some kind of collusion w/gov’t actors. About 20 lawsuits; [Goldman: subpoenas—information in researchers’ hands is being weaponized—consider this as a warning for people here. His take: they’re trying to harm the research process.] Yes, they’re trying to deter such research and punish the people who already did it, including students’ information when students have already had their parents’ homes targeted. Politicians are threatening academic speech b/c, they say, they’re worried about gov’t suppressing speech.

Goldman: consider the next steps; if you have this information, who will want it from you and what will they do with it? A threat vector for everyone doing the work.

Keller: relates to IP too—today’s academic researcher is tomorrow’s employee of your competitor or of the gov’t; researchers are not pure and nonoverlapping w/other categories.

Elkin-Koren: is the data more secure when held by the platform, though? Can subpoena the platform as well as the university.

Goldman: but you would take this risk into account in your research design, though.

Van Hoboken: At the point this is happening, you have bigger democratic problems; in Europe we are trying to avoid getting there and promote research that has a broader impact. But it’s true there are real safety and politicization issues around what questions you ask.

Goldman: bad faith interpretation of research: the made up debate over

RT: Question spurred by a paper I just read: is the putative “value gap” in © licensing on UGC platforms a systemic risk? Is Content ID a mitigation measure?

[various] Yes and no answers. One: © infringement is illegal content, so you could fit it in somewhere, but to create a problem, it would have to go beyond the legal obligations of Art. 17 b/c there’s already a specific legal obligation.

Keller: don’t you need to do the research to figure out if there’s a problem?

Yes, to study effects of content moderation you need access; can get data with appropriate questions. Could argue it’s discriminatory against independent creators, or that there is overfiltering which there isn’t supposed to be. But that’s not regulated by Art. 17.

Catch-22—you might have to first establish that Content ID is noncompliant before you can get access.

Frosio: you might need the data to test whether there is overblocking. [Which is interesting—what about big © owners who say that it’s not good enough & there’s too much underblocking? Seems like they’d have the same argument in reverse.]

Would need a very tailored argument.

Quintais Follow-up: had conversations with Meta—asked for data to assess whether there was overblocking and their response was “it’s a trade secret.”

Samuelson: Art. 40 process assumes a certain procedure for getting access. One question is can you talk to the platforms first despite the enumerated process. Some people will probably seek access w/o knowing if the data exists. There’s an obligation to at least talk to the approved researchers. But the happy story isn’t the only story: platforms could facilitate good-for-them research.

A: the requirements, if taken seriously, can guard against that—have to be a real academic in some way to be a vetted researcher; reveal funding; not have a commercial interest; underlying concept: the funder can’t have preferred access to the results. Platforms can already fund research if they want to.

Flynn: Ideological think tanks?

A: probably won’t qualify under DSA rules.

Samuelson: but the overseers of this access won’t be able to assess whether the research is well-designed, will they?

A: that’s why there’s an inbetween body that can make recommendations. They propose to provide expertise/advice.

Leistner: Art. 40 comes with a price: concentration of power in Commission, that is the executive and not even the legislature. Issues might arise where we are as scared of the Commission as US folks are of Congress at the moment. That doesn’t mean Art. 40 is bad, but there are no transparency duties on the Commission about what they have done! How the Commission fulfills this powerful role, and what checks and balances might be needed on it, needs to be addressed.

Paddy Leerssen: Comment period: US was the #1 country of response b/c US universities are very interested in access. Scraping issues: access to publicly accessible data/noninterference obligations. How far that goes (overriding contracts, © claims, TPMs) is unclear. Also unclear: who will enforce it.

Conflict with open science/reproducibility/access to data underlying research. Apparent compromise: people who want to replicate will also have to go through the data request process.

Leistner: but best journals require access to data, and giving qualified critics access to that underlying data—your agreement with Nature will say so.