Is flexibility the same as unpredictability?

Posted on April 8, 2014 by rtushnet

Thought on the anti-fair use meme being used, mostly, to oppose the introduction of fair use in other countries: the criticism is that fair use’s flexibility means that it’s inherently and undesirably unpredictable. (See, e.g., the Kernochan Center’s submission to the Australian copyright inquiry.) But those aren’t synonyms. My elbow is flexible, not unpredictable. Only if the overall system is in trouble is flexibility also unpredictability. As numerous scholars such as Pam Samuelson, Mike Madison, and Matt Sag have shown, there are strong patterns in fair use cases on which reasonable people can rely.

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in http://schemas.google.com/blogger/2008/kind#post | Leave a comment

dispute over reliability of state of the art goes to trial

Posted on April 8, 2014 by rtushnet

Nellcor Puritan Bennett LLC v. CAS Medical Systems, Inc., No. 2:11–cv–15697, 2014 WL 1304428 (E.D. Mich. Mar. 28, 2014)

The parties compete to sell cerebral oximeters, used by surgeons and anesthesiologists to monitor the oxygen saturation level of blood in a region of the brain.  Nellcor alleged that CAS falsely advertised that its oximeter was more accurate than Nellcor’s, in violation of the Lanham Act and state law.  CAS’s claim was based on studies that compared readings from competing cerebral oximeters to an estimate of the average oxygen saturation level of blood in the entire brain called “field saturation.” Nellcor’s main argument was that this was deceptive because field saturation is only a rough estimate about the entire brain, not a measurement of the saturation level of the relevant brain region.  Nellcor submitted “strong evidence” that field saturation differed from regional saturation, while CAS submitted evidence that field saturation was sufficiently accurate; though Nellcor’s evidence was stronger, the court found that there was still an issue of fact for trial.  The court did grant summary judgment (1) against CAS for its res judicata defense and (2) for CAS as to various smaller claims about the study’s unreliability, as well as claims about a page on CAS’s website that said it linked to summaries of recent studies involving CAS’s product when three of the ten studies were of Nellcor’s product.  (This last misdescription was changed soon after the lawsuit was filed.)

CAS’s claim was a “tests prove” or establishment claim. It can be falsified by showing (1) that the defendant’s test or study was not sufficiently reliable to permit one to conclude with reasonable certainty that it establishes the proposition for which it was cited, or (2) that the test, while sufficiently reliable, does not establish the proposition claimed in defendant’s advertising.  As noted above, Nellcor’s core argument was that field saturation wasn’t accurate or valid enough to compare the accuracy of cerebral oximeters; without a correct reference value, it’s impossible to do accurate comparative accuracy testing.  CAS argued that field saturation was the best available reference value, and that the FDA used it too.  Nellcor responded that the FDA accepted calculations using field saturation, but didn’t require or condone field saturation’s use as a reference.

The court found that a factfinder could find that field saturation is not an accepted or accurate reference value to compare the accuracy of cerebral oximeters; current measurements are just estimates, and in any event field saturation is different from regional saturation and oxygen levels may differ in different regions.  But a factfinder could also accept CAS’s evidence that, in healthy people, field saturation would be the same as regional saturation, and that the measurement was accurate enough to rely on.  CAS’s primary witness had a Ph.D. in electrical engineering, not medicine or physiology.  Another CAS witness published an article in 2012 that appeared to support Nellcor’s position; the court “look[ed] forward” to hearing him explain himself at trial and undergo cross-examination. Credibility determinations were for trial, though. (Or, hint hint, settlement.)

The court did reject several of Nellcorp’s criticisms of CAS-commissioned studies.  None of the alleged flaws made the studies unreliable.  It was not enough that the doctor running the study dropped some participants for unknown reasons, or that CAS provided draft abstracts and reviewed data calculations, when the doctor decided the final content.  Some issues of reliability could be explored at trial, such as whether studies on healthy patients could be extrapolated to the patients actually in need of oximeters.

As for the incorrect reference to studies on CAS’s webpage, the articles and their summaries all concluded that use of cerebral oximeters could improve patient outcomes; they weren’t comparative.  Nellcor didn’t show that the false attribution was material to a consumer’s purchasing decisions, “given the short amount of time the material was on the web site and the fact that articles only generally relate to cerebral oximetry.”

As for res judicata, CAS argued that the claims were barred because Nellcor filed and dismissed with prejudice an earlier false advertising case. The court disagreed: the claims were based on advertising after the case was dismissed, and thus could not have been brought earlier. Though one of the studies at issue was around earlier, it didn’t make the disputed “accuracy” statements (though CAS subsequently relied on it to do so). 

CAS also sought summary judgment on damages for lost profits.  CAS argued that its purchasers were sophisticated buyers who didn’t rely on marketing or advertising, but rather on their own evaluations in the field.  (Then why advertise?)  Taking the evidence in the light most favorable to Nellcor, Nellcor submitted sufficient circumstantial evidence of lost sales: it went from 100% of the market down to 80-85%, with 10-15% now CAS’s (and another company at 2-5%). Nellcor’s evidence was that CAS’s marketing strategy was to gain market share and get doctors’ and hospitals’ attention by making comparative accuracy claims as the key selling point.

Nellcor also sought corrective advertising damages. CAS argued that Nellcor should already have engaged in corrective advertising, because a plaintiff seeking such damages must timely counteradvertise unless financially incapable of doing so.  The Sixth Circuit hasn’t addressed the issue, but the Ninth Circuit hasn’t required counteradvertising around the time of the false advertising.  The Sixth Circuit has allowed separate recovery of counteradvertising expenses as reasonable business responses to false advertising.  Here, the court denied summary judgment.  If successful, “Nellcor is entitled to recover the amount of money necessary to engage in a corrective advertising campaign to correct for any damage to Nellcor’s goodwill proved to be caused by CAS’s false advertising.”
http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in damages, http://schemas.google.com/blogger/2008/kind#post | Leave a comment

Juxtaposed claims can produce literal falsity

Posted on April 8, 2014 by rtushnet

Groupe SEB USA, Inc. v. Euro–Pro Operating LLC, No. 14–137, 2014 WL 1316039 (W.D. Pa. Apr. 1, 2014) (magistrate judge)

The parties compete to sell household steam irons.  Plaintiff’s are sold under the name Rowenta, allegedly the top sellers by dollar value.  Defendant’s are sold under the name Shark.  Plaintiff alleged that the Shark 405 and 505’s packaging made literally false claims about Rowenta models. Both packages said: (1) “# 1 Most Powerful Steam* ” in the upper-right corner and (2) “More Powerful Steam v. Rowena®† at half the price” in the lower-right corner. (2) also appears on hang tags.  The first one was clarified on the bottom of the package with “offers more grams per minute (extended steam burst mode before water spots appear) when compared to leading competition in the same price range, at time of printing.” The second was likewise clarified with “††based on independent comparative steam burst testing to Rowenta [model number] (grams/shot).”

Plaintiff retained an outside lab to test using protocols from the International Electrotechnical Commission (“IEC”) and Euro–Pro’s own instructions for use.”  For each test, the Rowenta allegedly outperformed the Shark.

Euro-Pro argued that there should be an “intermediate” pleading standard for Lanham Act false advertising and that this complaint failed.  Without deciding the issue, even though there is no such thing as an intermediate pleading standard under the federal rules, the court held that the complaint would pass anyway.  It quoted the allegedly literally false statements and the disclaimers, and included photos of the packaging.  It identified industry standards for testing, and described the tests on which the falsity claim is founded. This was enough to allow Euro-Pro to defend itself.

Euro-Pro also argued that the complaint didn’t sufficiently allege literal falsity.  First, Euro-Pro argued that it had defined “steam power” on the packaging itself, so other measurements were irrelevant. But plaintiff’s tests also allegedly measured grams/minute and grams/shot, the same way the labeling did.  Of more general relevance, Euro-Pro argued that its “# 1 Most Powerful Steam” claim was made in comparison to the “leading competition in the price range,” not in comparison to Rowenta, but the complaint sufficiently alleged that the “# 1 Most Powerful Steam” statement is false because it appears “in juxtaposition” to the other statement comparing Shark to Rowenta.

This is another illustration of the rule that falsity, including literal falsity, can come from statements that are placed so close together that reasonable consumers would understand them together.  The disclaimers elsewhere on the packaging disclose that there are two different comparators, but small print disclaimers can’t fix a literally false message.

Finally, Euro-Pro argued that the complaint targeted statements it didn’t make: the complaint  “alleges that Euro–Pro ‘represents’ other claims to consumers, namely that the Euro–Pro products are ‘superior’ and ‘offer the same high-quality performance’ as SEB’s products,” but “does not identify advertising that contains these statements and therefore these allegations do not support SEB’s purported literal falsehood claim.”  However, plaintiff responded that the “more powerful steam/half the price” claim was “obviously a claim of superiority that deceives consumers into the false belief that the much lower-priced Shark steam irons offer the same high-quality performance of the Rowenta irons.” The court agreed.
http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in http://schemas.google.com/blogger/2008/kind#post | Leave a comment

failure to conform to dog breed standard isn’t literally false

Posted on April 7, 2014 by rtushnet

It’s really more of a guideline.

Wagner v. Circle W Mastiffs, No. 2:08–CV–00431, 2014 WL 1308713 (S.D. Ohio Mar. 31, 2014)

I’m skipping the many and complex defamation claims.  The Lanham Act bit: the Lanham Act plaintiffs alleged that the defendant Williamsons “falsely advertised that their maskless dogs are American Mastiffs, in derogation of the breed standard.”  In the absence of evidence of consumer deception, the question was literal falsity, and plaintiffs argued that dark masks are required according to the breed standard.  The court found no literal falsity.

A breed standard, the court found, “defines the aspirational characteristics of a particular breed of dog.”  A maskless dog might not be registrable as an American Mastiff because the absence of a mask is “relatively significant,” but an owner of that dog can still (truthfully) represent that dog as being the offspring of purebred American Mastiff dogs.  “Whether a dog may be considered an American Mastiff if it sufficiently aligns with the breeding standard, or whether it may be considered an American Mastiff simply because it is the offspring of two registered American Mastiffs, seems to the Court to be a matter of semantics and philosophy.”  Thus, advertising the offspring as an American Mastiff was not literally false, especially since it was undisputed that the Williamsons didn’t hide the masklessness of some of their dogs.
http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in http://schemas.google.com/blogger/2008/kind#post | Leave a comment

What does Lexmark mean for the "commercial advertising or promotion" test?

Posted on April 7, 2014 by rtushnet

Goodman v. Does 1–10, No. 4:13–CV–139, 2014 WL 1310310 (E.D.N.C. Mar. 28, 2014)

The first post-Lexmarkopinion I’ve seen, and a thoughtful one at that. The complaint alleged various defamation and unfair competition claims based on postings on a website, localdirtbags.com, run by defendant Lagoy.  Goodman, a licensed auto mechanic who owns a number of auto repair businesses in North Carolina, “has been the target of an extraordinarily aggressive smear campaign on the localdirtbags website,” which is “apparently devoted to ruining Goodman’s personal and business reputation.”  Accusations include overcharging customers and criminality. Many of the statements about Goodman are made in the site’s blog posts, though users can also post comments. Lagoy admitted that she created the site and authored many of the blog posts; Goodman alleged that Lagoy posted most of the comments under various pseudonyms and that any positive comments are immediately deleted.

Was this “commercial advertising or promotion”? The Fourth Circuit hasn’t explicitly ruled, but several cases within the circuit have used the Gordon & Breach four-part test: (1) commercial speech; (2) by a defendant who is in commercial competition with plaintiff; (3) for the purpose of influencing consumers to buy defendant’s goods or services (4) disseminated sufficiently to the relevant purchasing public.  “[C]onsumer or editorial comment” that might be disparaging isn’t covered, according to the legislative history.

The court suggested that concerns for protecting free speech drove the “intricate body” of prudential standing law, now eliminated “[i]n one fell swoop” by Lexmark. Because the Supreme Court expressed no opinion on “commercial advertising or promotion,” the court here stuck with the standard test, though it noted below that part (2) probably has to be modified to comport with Lexmark.

Here, Goodman failed sufficiently to allege that the posts constituted commercial speech or that they were made by a defendant in competition with Goodman. The only factual allegation relevant to commerciality was that the website operator put the defamatory content up “in order to drive traffic to the blog, and increase the monetary value of the blog, in a collective effort to promote and sell the blog to a third party.” That’s plainly insufficient to make it commercial speech.  “As can be seen from even a cursory review of the comments and articles discussed above, the statements do not propose a commercial transaction in any traditional sense of that phrase and the court cannot reasonably infer that the statements relate solely to the speaker and his audience’s economic interests.”  While the content might be defamatory, it’s not plausibly commercial speech.

The complaint also failed to allege that any defamatory statements came from Goodman’s competitors, who would have an economic interest in disparaging Goodman’s businesses.  A pure competition requirement was “somewhat in question” after the Lexmark, which held that direct competition isn’t required for standing; “unfair competition” isn’t limited to actions between competitors.  But that doesn’t mean that a lawsuit like this one is ok under the Lanham Act, since the complaint failed to allege “any reasonable commercial interest in the content of the postings.”  Lexmark doesn’t eliminate the commerciality requirement.  The court couldn’t reasonably infer that the posts reflected commercial competitors’ statements; on their face, they purported to be consumer reviews by parties with no commercial interest in the postings themselves.  “Goodman essentially concedes as much by alleging that the Defendants’ commercial interest in this case is in driving traffic to the website, not diverting business from Goodman to his competitors.”

The issue was complicated because Goodman didn’t know the identities of the defendants.  It was possible—though not plausible—that some of the postings were from commercial competitors. None of the statements alleged outright encouraged readers to take business to a specific competitor.  “Although in general a commercial advertisement under the Lanham Act does not need to contain a business solicitation, the fact that no competitor solicitations occur in any of the numerous postings on the website cuts against any potential inference that these postings come from competitors.”

The court dismissed the Lanham Act claim with prejudice:

Allowing leave to amend on the remote possibility that discovery will reveal that Goodman’s competitors are responsible for the postings would allow a plaintiff to maintain a false advertising claim against virtually any website that allows users to post negative online reviews. Mindful of the limited jurisdiction of the federal courts, the court is concerned about setting a precedent where a plaintiff can manufacture federal jurisdiction on the questionable allegations presented by these particular facts.

The court specified, however, that if it were presented with a case in which a plaintiff had a good faith belief that anonymous posters were competitors (citing NTP Marble as an example), it would be open to allowing that claim to proceed. Also, “nothing in this ruling precludes Goodman from later asserting a Lanham Act claim, should he become aware of facts which cause him to have a good faith belief that the anonymous posters were competitors.” But under the circumstances, the court declined to exercise supplemental jurisdiction over the state law claims.
http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in commercial speech, defamation, http://schemas.google.com/blogger/2008/kind#post, standing | Leave a comment

Transformative work of the day?

Posted on April 7, 2014 by rtushnet

Browser plug-in that swaps Daily Mail headlines with reader comments.  Nearly complete identity but for the arrangement, but also commentary, and this reaction shows how the two are intertwined: “This plugin is definitely funny, but there’s something illuminating about it too. In the first place, they don’t feel too dissimilar from one another. Second, it strikes not only at the information that The Daily Mail would like to convey to readers, but also what readers choose to focus on.” Similarity plus difference…

(Of course there is the doctrinal question of whether rearranging users’ views in a predictable way constitutes creation of a derivative work.  We’ve all pretty much agreed to ignore that with respect to ad blockers and the like, despite a bunch of commentary, maybe because very few copyright owners end up wanting to call their customers primary infringers.  See Aereo.  But this plugin goes a bit further, with a decision one might call minimally original.  Still, it’s possible that the plugin is transformative of meaning without sufficiently transforming the work to trigger copyright.)

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in http://schemas.google.com/blogger/2008/kind#post | Leave a comment

Reading list: judging similarity in copyright

Posted on April 7, 2014 by rtushnet

Shyamkrishna Balganesh, Irina D. Manta, & Tess Wilkinson-Ryan, Judging Similarity, 100 Iowa L. Rev. (forthcoming 2014)

Our first study reveals that basic knowledge about the act of copying, meaning that one work was copied from the other, greatly influences individuals’ assessments of similarity. And since substantial similarity is presented as a question to the jury once copying as a factual matter is shown to exist, the substantial similarity question is structurally skewed in favor of a jury’s finding greater—i.e., substantial—similarity between the two works. Our second study shows that in addition to simple knowledge about the copying, additional information about the creator’s efforts in producing the work also trigger individuals’ intuitions that cause them to find a greater amount of similarity between two works. In some ways, this finding is perhaps more troubling for copyright law because it suggests that juries, who are the decisionmakers on the similarity question, are likely introducing variables into the analysis/comparison that copyright law’s devices have over the years worked hard to eliminate from consideration altogether. A creator’s labor/effort is one such prominent consideration, which copyright jurisprudence in the United States has uniformly jettisoned as irrelevant.

Also, the second study tested information about a negative/substitutionary effect on the market and found that such information didn’t significantly increase judgments of similarity, which I find equally intriguing.

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in http://schemas.google.com/blogger/2008/kind#post, reading list | Leave a comment

Reading list: false advertising and prior restraint

Posted on April 7, 2014 by rtushnet

Corinne Stuart, The Applicability of the Prior Restraint Doctrine to False Advertising Law(Winter v. Natural Resources Defense Council, Inc., 129 S. Ct. 365, 2008), 21 Geo. Mason L. Rev. 531-555 (2014).  Argues that prior restraint doctrine should be applied to preliminary injunctions in false advertising cases because truthful commercial speech is valuable.  Not trademark cases?

My own reaction: By hypothesis, some hopefully small percentage of preliminary injunctions is wrongly granted, meaning that truthful commercial speech was halted.  Under Central Hudson, does the government’s interest in halting false commercial speech—which is both unprotected and potentially highly damaging to consumers and competitors—justify the resulting burden on truthful commercial speech?  I’d say yes, since the interest is significant and the general standard for preliminary relief is a well-established way of managing the risk of error.

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in commercial speech, first amendment, http://schemas.google.com/blogger/2008/kind#post, reading list | Leave a comment

Next Great Copyright Act Conference, reform

Posted on April 4, 2014 by rtushnet

Modes and Venues for Reform

Moderator: Nancy E. Weiss, U.S. Institute of Museum and Library Services (IMLS)

Troy Dow, The Walt Disney Company

Need to ensure meaningful and not merely symbolic protection to authors as well as users; otherwise it’s not a copyright law at all. Goodlatte announced review: not necessarily reform. Proceeding section by section through the code. Easy to kill legislation, hard to get something done. All the more true in increasingly partisan environment, though copyright is mainly nonpartisan. Rules of Republican caucus place term limits on committee chairman; this colors the ambition/agenda of any given committee and weighs against longer term projects.  Too often there’s a focus on users without regard for authors, or authors without regard for users. 

Concerned about difficulty of finding a proposal not immediately labeled “son of SOPA.”  Two weeks ago 25 tech companies wrote to chair of finance committee, urging opposition to trade authority—anti-TPP.  Said it was first step to internet censorship/pressures ISPs to monitor users.  Democracy will cease to exist. You might wonder what’s so cataclysmic: the claim was that takedown and ask questions later will chill innovation. This is reference to the same DMCA safe harbor provisions described yesterday as foundation of internet as we know it, with calls to leave it alone. So which is it?  (RT: Excluded middle?) EFF says that the TPP insists on notice and takedown, while intermediaries ought to just pass on notices. We can debate approach, but 512 is notice and takedown and EFF is still calling for opposition to TPP to prevent slow erosion of rights on the internet.

Dep’t of Commerce’s Green Paper was balanced stock-taking exercise with a number of recommendations, and no sooner had it been released than White House received a Stop SOPA 2013 petition, reference to administration’s continued support of provision that would close a gap in criminal provisions that don’t provide for criminal penalties for streaming.  Fear of revived SOPA; this isn’t true but it’s in the petition and now has enough signatures for a White House response.  So has a Stop SOPA 2104 petition, in response to the DMCA stakeholder meeting.

We need to have a discussion where we discuss shared objectives.  Not suggesting that this stream flows in only one direction. Needs no reminder about Jack Valenti. Not assigning blame, but we need to have a conversation.  (If I were a suspicious person, I might hear this as: you put down your biggest weapon, which is the occasional ability to mobilize the public, and we will … continue to not be popular with the public, though we will keep our checkbooks.  Sounds fair, right?)

Our experience with UGC principles: sat down (with whom? Hint: big content, big ISPs, not so much “users”) and agree on set of principles.  Shared set of common goals.  We all agreed: ideally, we’d support a robust, legitimate UGC environment free from infringement. If there were commercially reasonable, technologically effective means to achieve that, we would work together to implement it. Foundation for discussions that led to UGC principles. We wouldn’t have gotten to the end if we hadn’t put ourselves in each other’s shoes.  (And will you stand in my shoes if I agree to stand in yours?)

Judge Mary Margaret McKeown, Ninth Circuit Court of Appeals

Dance between Congress and courts goes way back. Courts sometimes have stepped in first in looking at new tech, and Congress followed: Justice Holmes, 1911, Court extended copyright to motion pictures.  Piano roll case: not like sheet music, reasoning by analogy, metaphor, and example. Congress fixed that.  Fast forward to late 60s/early 70s. Court wrote about “drastic technological change”: retransmission of TV broadcast without permission.  Sound familiar?  Courts found no infringement, but Congress quickly blunted that ruling with compulsory licensing.

In most of the early cases, courts wring their hands about the tech, make a decision, then almost invite Congress to step in if they’re wrong.  Doesn’t see that much in recent years—there’s always handwringing about tech change and judicial uncertainty, but you don’t see courts asking Congress for help. Courts are letting chips fall where they may. Doesn’t think it’s because Congress doesn’t know how to step in when it wants to—Lily Ledbetter case about calculating the statute of limitations, Congress quickly responded to Justice Ginsburg’s eloquent dissent. But perhaps as Lessig intimated, copyright doesn’t have the same policy appeal as other social issues.

When Congress leads: 1976 Act has been amended/supplemented at a staggering rate. Reflects modern industrial policy, set out in alphabet soup terms (NET Act, DMCA, SOPA/PIPA). Congress has stepped out incrementally in many ways.  Stepped out in terms of congressional authority—Eldred; Golan.  But there have been very few SCt cases on copyright, aside from Eldred and Golan, which are more about constitutional authority. The remainder is very few cases that tell courts how copyright ought to be interpreted—Kirtsaeng is an exception. Despite tech change and circuit splits, little guidance. Action has been in the “inferior” courts.

Courts as a venue for the next act. Courts will remain in the vanguard because inevitably there will be statutory, contractual, and other disputes needing resolution.  There is a danger of courts learning tech outside the record; we need instruction from lawyers. Deal with change through metaphors; also look at privacy and 4thAmendment cases, because many more of those cases involve tech.  At some point you will have a post-Napster judiciary.

Courts have a skewed docket. Many key issues are resolved by business deals, settlement, or otherwise. A single technology may be at issue (Betamax, Grokster, Aereo), but we decide and lawyers/subsequent courts are left to extrapolate.  Fair use will continue to dominate some legal battles.  We need not the judgment of Solomon but the dexterity of Houdini.

Jennifer Rothman, Loyola Law School, Los Angeles

Four types of private ordering: licenses, fair use guidelines, alternative copyright regimes, and private agreements. 

Clearance culture/reliance on risk avoidance. Many corporate counsel always recommend licensing; even EFF says that if you’re risk averse. Can make sense in individual cases even with good fair use defenses, but Rothman is concerned that courts incorporate these risk averse customs into their legal analysis—example from Ringgold v. BET, where Ringgold’s art appeared for less than 30 seconds, never as a focal point, and court found no fair use in large part because of industry custom to license background scenery. §107 should make explicit that the existence of licensing markets should not weigh against fair use, correcting an error of relying on clearance culture.

Formalized trade practices/agreements.  Classroom Guidelines: Publishers and authors sat down, with minimal representation of universities, teachers, no voice for students. Universities/libraries all opposed the guidelines, but they were put in legislative history, and courts subsequently looked at them for fairness—violation of guidelines which were supposed to be floors/safe harbors but courts treated them as ceilings. Need more representative group, and make clear that these are safe harbors whose violation doesn’t reflect negatively on anyone claiming fair use.  Also, more informal guidelines developed in valiant effort to give use communities guidance and encouragement to assert fair use: many out of Center for Social Media. Helpful to many who are lost and ideally insulating them from willful infringement. Despite the positive value, there are reasons to discourage codification/judicial reliance on them as the standard of fair use.  Many statements were developed without particularly representative groups, like large content providers, and sometimes overclaim fair use; other times underclaim fair use (e.g., statements about photos; suggesting that one can’t edit to the beat or spill over in a documentary, or fashion a documentary about a copyrighted work). Legislation could clarify that private guidelines don’t affect the scope of fair use; consider broader educational guidelines.

Regimes that overlay copyright. Creative Commons: greater freedom than the default. David Byrne; White House; Al Jazeera have all used them. Should largely not interfere with them in legislative process, but some areas for intervention. Attribution is ubiquitous desire, now standard. This preference for attribution is across the board and users want to do it.  Shouldn’t make failure to attribute dispositive, but put thumb on the scale in factor two or factor three.  Another potential legislative reform: what happens when a private license is violated? Some courts might view violation as weighing against fair use; particularly concerned about this with ShareAlike license, where commercial documentarians might want to use a work—should clarify that violation of license should also not affect fair use.

Use of contracts to go beyond copyright/fair use.  Private agreements about technology, e.g. Content ID used to take down works despite fair use.  Build into legislation restriction on ability to limit through contract or tech the ability to assert fair use. Preemption might also be an area to address this. Fair use isn’t an evil to be tolerated. Copyright should continue to provide breathing room, perhaps codify some more safe harbors; private ordering has often been generated by uncertainty—more safe harbors for news, documentaries, UGC would help.

Legislation could address downside of private ordering/clearance culture, and push back against obsolescence of fair use in the face of contracts/tech.

Plan B: if courts consider customs in fair use, customs should be certain and not disputed; representative of different groups; not create slippery slopes (filesharing); motivated by efforts to establish appropriate boundaries (not by fear).

Pamela Samuelson, UC Berkeley School of Law, BCLT

Some things only Congress can do (term), but not the only actor. Courts’ role: more modest reforms, such as inconsistency in liability standard for nonliteral infringement. Copyright Office: more role for focus on economics—need a Chief Economist, as PTO has—or at least see how an economist would think about it. Likewise a chief technologist or tech fellow; Pallante stumbled on testimony about SOPA because she didn’t appreciate some things about the tech. More rulemaking could be good, though raises delicate constitutional question, and she’s also enthusiastic about small claims potential. Would like to revive Office of Technology Assessment, which could talk to stakeholders, but that’s not going to happen.

Scholarship: we have to hope someone will pay attention, though mostly they don’t. Treatises however have served as a mode of copyright reform where the law is unclear. Copyright is impenetrable; judges are unsure what it means; normative basis is not evident from reading the statute; judges assume that treatise authors have analyzed the cases and thought about them, and sometimes treatises can point law in one direction or another. Aereo: that may matter. Pet peeves: sometimes treatises contribute to overturning clear expressions of congressional intent, as with Baker/§102(b). But who elected Nimmer and Goldstein? Why do they get to say what the law is when the rest of us have something to say?

National Academy of Sciences: evidence based policy making is a good idea. American Law Institute does principles on a regular basis; ALI has brought people together on various controversial issues before. High standards for review/good processes, so ALI might be good at distilling some core principles. This could help sit on top of the statute and make it more consistent, then over time evolve into the basis for new legislation.

Social norms: also part of what’s happening. Norms have evolved a lot.  Effort at K-12 copyright education—she doesn’t think that will go very far, nor will DRM. Relaxation about Web 2.0 UGC, fan fiction, etc.: things that might have looked infringing 10 years ago are less stressful now. Darwin: not the strongest or smartest or even the ones with best lobbyists who survive; it’s the ones who can adapt.  There are more of them than there are of us. We may be the past; they are the future. How does copyright survive?  (I think in this statement I am the “them.”  In honor of that and of Samuelson’s Darwin adaptation, here’s a fantastic mashup vid using the same Darwin quote; it’s Battlestar Galactica/Terminator: The Sarah Connor Chronicles.)

New act won’t be soon, but it’s time to start imagining it.

Q: anything achievable in near future?

Dow: depends on how you define it.  Not necessarily 20-year revision process. Pallante mentioned things in the system for some time.

Andrew Bridges: agrees we should seek more moderate language. But one of the hyperbolic debates you discussed, TPP as new SOPA, seemed a pretty accurate characterization because they feel like juggernauts that feel impossible to stop—SOPA came without hearings.  Do you know what’s in TPP? Can you tell us?

Dow: I haven’t visited the USTR to look at it, but many people on all sides have done that.  What he’s seen is what most have seen, which is text that was distributed.  Know generally.

Bridges: all I know is that I don’t know what’s in it and I have to rely on someone else. We’re talking about a trade system that binds the US to norms being negotiated in secret.  Calls for an up and down vote on restrictions on what Congress can do. Is Congress even relevant if trade agreements restrict what Congress does? What is the role of trade agreements as engine/obstacle for copyright reform?

Dow: ongoing discussion, and members of Congress may know more than you or I. They are relevant.  I’m more concerned about characterization of substance than I am about substance.  (I bet you are!)

Samuelson: given lack of transparency about TPP/ACTA, many of us are worried. Leaked provisions didn’t seem to be about counterfeiting but about strengthening rules in ways that would tie Congress’s hands. Usually in treatymaking you at least get to see drafts; transparency adds legitimacy. The idea that for a trade negotiator to tell the Euro. Parliament about the treaty would violate national security is ridiculous.  That doesn’t add legitimacy to copyright conversations.

McKeown: depends also on whether it’s self-executing.

Q: Leval says we should eliminate the fair use factors, and say fair use isn’t infringement, leaving the rest to the courts.  What is the role of judicial discretion in copyright law/reform?

McKeown: discretion unbounded is tyranny. But you could figure out which factors make sense and which have required courts to go further. Courts are incremental. We have multiple infringement tests, and at a minimum the SCt ought to step in to harmonize.  Look to the past for what courts have done as a foundation for fair use going forward.  Courts are supposed to take the law we have, not reform. 

Q: what’s the role of big players in litigation? Samuelson has criticized Rule 23 as copyright reform/class action as de facto way of making reform when Congress is paralyzed (I believe Qer means the Google Books settlement). What confidence should we have when major players are the ones making copyright law/policy for the rest of us? We’ve heard from photographers without as much representation (Qer says “skin in the game” but I think Mopsik thinks they’ve got nothing but skin in the game, along with plenty of abrasions).

McKeown: there’s definitely dominance in plaintiffs. But simply because you have a dominant plaintiff doesn’t mean they make policy. Many interesting decisions out of very small cases.  (*cough*Garcia*cough*.) There are areas of uncertainty, and the more cases you bring the more issues you will tease out. But access to the courts generally is a huge issue. ADR is encouraging.

Samuelson: this is another area where statutory damages are really of concern. Google Books: 3 authors from the Authors Guild tried to represent all authors of scanned books. Judge Chin certified the class; reversed; it will be difficult for one small group to adequately represent interests of all authors/creators, but it’s statutory damages that makes everything toxic.  If $750 is the statutory members, where there’s more than a small number of works, that gets really big really quick, and especially tech companies are at enormous risk because they make products that interact with bunches of works.  Sometimes big Ps do us a big favor though—yay for Perfect 10 bringing so many suits. Google was able to defend where colleges/universities couldn’t take on that risk.

Peter Jaszi: a bit about best practices.  Doesn’t want anyone who’s unfamiliar with this to come away with the impression that it’s an attempt to replicate negotiated classroom guidelines. Couldn’t agree more with Rothman’s critique of that failed process. Best practices are different: try to document the real and aspirational values of practice communities around fair use and make sure info is conveyed both to members of the community, who sometimes find it liberatory, and to other actors in the system. Can’t go into detail on theory, but there are many examples of ways in which these documents do seem to have liberated scholarship, teaching, filmmaking. We’ve tried extraordinarily hard to avoid lock-in or any suggestion that what communities can agree on is an outer limit on fair use. Does Rothman have examples of instances in which projects she regards as fair use have been foregone because of anything in best practices?

Rothman: She thinks it’s a great project in pushing back on some clearance culture—likes its aspirational nature. But based on looking on larger body of industry practices and social norms, and how courts react, she concludes that some courts react by incorporating those practices as limits on fair use. It’s that context which concerns her: if they were codified or used as reason to reject/find fair use without independent scrutiny. Librarians disagree about some things, too—we could ask whether different user groups were adequately represented.  Jaszi says the Classroom Guidelines weren’t representative and not valuable; but best practices doesn’t represent everyone either.  (I suspect Jaszi would say that’s why the best practices define themselves as the best practices of the user communities.)
http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in copyright, http://schemas.google.com/blogger/2008/kind#post | Leave a comment

Next Great Copyright Act Conference, remedies

Posted on April 4, 2014 by rtushnet

Remedies and Enforcement

Moderator: Mitchell Zimmerman, Fenwick & West LLP

To copyright maximalists, the entire population of the world seems to be Holmes’ bad man.

Corynne McSherry, Electronic Frontier Foundation

Broad agreement on need to fix, even if we don’t agree how. Statutory damages are out of whack with reality/real harm.  Other kinds of harms and how we punish them: if you shoplift 6 CDs or 4 DVDs in MA, your fine is $250.  If you evade a subway fare in NYC, $100.  If you sell tobacco to a minor, the fine is $200. Speeding, up to $300. These cause real harm. Campaign finance laws—harm to democracy—fine is $1000, if any such laws are left. These are bad things; it makes sense to deter them.  If you set a kitten on fire, you can be fined up to $2000.  We can agree that this is a very bad thing to do. But if we go by the fines, sharing a song without permission is worse than all of these together.  Up to $8000 per work—the statute says up to $150,000, but a jury has awarded that in Capitol Records v. Thomas.

Filesharing is what helped general public understand a bit about copyright and statutory damages. The amount was enough to get the judge in the case to plead with Congress to fix the law—pretty rare. 

RIAA called off its campaign, but other lawyers not constrained by public reaction decided that this looked like a good business model, and started sending out letters threatening lawsuit unless $3000 payment made; used statutory damages and result in Thomasas part of the threat.  Trolls have made millions doing this, at least according to a lead troll.

Strange, disproportionate, unnecessary, and causing harm beyond the filesharing context. Irrational penalties deter people with valid fair use claims from pursuing them, even when EFF is willing to take the case. No matter how many times she reassures them about the smallness of the downside risk, as soon as she says $150,000 they are too afraid to continue even with free lawyers. Chills innovation—if you have no rational way to evaluate magnitude of risk, you need quite a warchest.  Irrational penalties exacerbate other problems.  If you guess wrong—put up an orphan work and you’re not a library, your downside risk is too big.

Copyright’s purpose is not to chill innovation/speech; also they don’t work as deterrents. Consider filesharing. The scary damage awards did not stop filesharing, according to all reports.  Deters lawful uses, but not pirates.

Proposals: (1) No penalties with reasonable good faith belief that what you did wasn’t infringing; (2) get some ties to actual harm—minimal unless showing of actual harm; (3) no financial penalties for commercial/personal use; (4) clear reasonable guidelines on range, not just what judge or jury thinks is just.

Annemarie Bridy, University of Idaho Law School

Less is better: narrower scope/penalties could get us more deterrence and more public commitment to enforcement of IP rights.  History repeats: New/disruptive tech leads to panic among copyright owners; pressure to do something fast; criminal infringement liability expands.

For over 100 years, was exclusively civil cause of action. Then criminal infringement existed but was narrow and misdemeanor only. 1976: felony penalties for repeat offenders, then 1982 to first-time for some types of works, 1992 for all types of works. Internet age has given two watershed moments: 1997’s NET act, eliminating commercial motive as a prerequisite for criminal liability, for as few as 10 unauthorized copies. Then creation of IP enforcement coordinator office in 2009, leading to significant expansion of criminal enforcement and demands for permanent stream of public money. SOPA would have extended noncommercial felonies to cover public performance right; another proposal would’ve provided 5 years of prison for streaming 10 shows over 6 month period.

What would be rightsizing?  Think of the different dimensions.  Scope of conduct and scope of penalty.  Conduct: required mental state; nature of infringement (qualitative); amount (quantitative).  We currently require willfulness—with respect to the underlying act or with respect to commission of a crime?  Do we require financial gain/how do we define financial gain? Which exclusive rights? How much more than de minimis infringement do we require, in what amount of time?

Penalties: fines, prison time, and property forfeiture.

Find the right value for each—optimize both for deterrence and fit with social norms, as well as accommodation of competing law enforcement priorities. 

Costs of expansive criminalization: noneconomic costs include public perception that law doesn’t work/doesn’t fit about small-scale private infringement. This undermines respect/compliance. Chilling effects. Enforcement costs of enforcing against small-scale infringements outstrip economic harm to property owners.

Restore requirement of commercial motive for all criminal infringement, and limit liability to larger infringements. She thinks that the 50-60 actual prosecutions per year fit this already. Be mindful that every public enforcement shifts costs of enforcement from private parties to taxpayers. What are the opportunity costs of that increased public investment?

Eugene Mopsik, ASMP

Pallante: Can safeguard free expression, due process, access, and respect for IP together. Uncontroversial: interest of authors intertwined with interest of public, not counterweight to public interest. At center of the equation. Fair return for author’s creative labor, but ultimate aim is stimulate creativity for the public good. Congress has duty to keep authors in its mind’s eye.

Professional photographers create many/most of the images the public sees every day—the public record.  Much of incentive to create would be lost without copyright.

Freelance photographers create the largest group of works but are least able to access the benefits of © because of high costs of litigation, small amounts of money at issue, and many infringers are aware of this situations and use it to their advantage. Disruption to business/emotional stress of litigation = more than most sole proprietors can afford. Most images aren’t registered before infringement, preventing statutory damages and atty’s fees from being on the table. Many infringers are beyond the law and DMCA is little deterrent; 1202 is rarely enforced; takedowns are required for each infringement instead of one notice per image.  Metadata is routinely stripped from images, either on upload or through other action.

Plus Coalition has the greatest hope for tracking orphaned images, but it’s underfunded/understaffed. Need copyright small claims court to create efficient and affordable redress of claims for a few thousand dollars or less. Copyright Office could run it; limited discovery; limited recovery; no appeal.  Constitutional questions, yes. But desire to have justice, not simply legislation, definitely.

Ability to register images from within digital asset management workflow would help.  Photographer could select images at end of shoot.  Could be deposited for ongoing identification.  Registrations should be image searchable instead of just by rightsholder or title. This would require changes in registration practice and Copyright Office database. Annual subscription fee allowing unlimited registrations for a flat fee would help. Elimination of published/unpublished would simplify registration and eliminate one of the most confounding parts of the process; already too complicated/no point.

Returning fair use to a case by case affirmative defense instead of a broadly applied right would be good too. Much of library/university community has now turned to fair use instead of orphan works.

It’s easier to steal images than to license them; people who wouldn’t shoplift think nothing of stealing intangible works. It’s next to impossible to convince them of value of digital property. They think what’s on the internet is free for taking.  Photography is a pleasant activity for sharing for many people, making the problem worse.  Visual artists want their images seen but want fair compensation—everyone has figured out how to make money from images but photographers.

Need for machine readable persistent identifiers that can’t be removed, but not currently on the horizon. Image recognition software may help, but still need to figure out what’s authorized, though 80% are unauthorized. Getty Images made 30 million images available for free: stay on Getty’s server and Getty gets info on where images appear, who views it, etc. – metadata more valuable than unmonetized images.  Getty can’t keep up with infringements; where does that leave the individual photographer? Inability to keep up makes image recognition a marginal tool.

PLUS: the picture licensing universal system. Universal glossary of trade terms that are machine readable, with customary licensing packages. Registry to connect rightsholders and info and will digitally manage automated licensing. Closer to persistent machine-actionable info than any other product on the market. Working with UK Copyright Hub, Copyright Office, and other partners. Represents rightsholders and consumers of images. It isn’t in business of licensing, though.

Extended collective licensing needs to be created to facilitate small internet uses (RT: not sure “facilitate” is the right word there, or maybe “uses” is the problem; try “monetize” or “payments” since the uses seem to be doing fine); this would contribute to income stream for rightsholders. Google & Pinterest would bear significant portion of fee burden. Patterned after SoundExchange.

Photographers are uniquely disenfranchised from their legal entitlement. Time for gov’t to step in to ensure preservation of our heritage and reasonable profit from their works.  Justice for individual rightsholders, not more legislation.

Peter Menell, UC Berkeley School of Law, BCLT

Menell points out that he couldn’t figure out how to license the picture he wanted to use—the image of a lynchpin.

Gary Becker’s seminal Crime and Punishment: An Economic Approach. If we’re trying to optimize social resources we’d use a high penalty with low enforcement, and people would be deterred. Nice idea, but may not be true.  1961: Register issued a report about damages; foundation of 1976 Act.  Traced back to 1790.  Key elements: value of copyright is by nature difficult to establish, which provides reason to depart from standard rule about actual damages. Only damages were license fee; often less than cost of enforcement; award of profits would also likely be inadequate.  Ensuring both compensation and deterrence was a problem.  Report was sure experienced jurists could balance the considerations at issue, but shouldn’t be compelled to award more than they consider reasonable just because multiple infringements are involved. 1976 Act followed that idea, and for most of the 25 years after that it didn’t present a big problem. Enabled ASCAP and BMI to go around and get people to take blanket licenses; no massive awards for failure to take licenses.

1998 case: the court agrees that statutory damages must be sufficient to deter and shouldn’t award minimum estimated losses—then district judge Sotomayor. But subsequent events dramatically changed our understanding of these issues. The perfect storm: SCt overturned congressional judgment that statutory damages should be in judges’ hands.  Combined with digital theft deterrence/copyright improvement act that ramped up damages to $150,000 work, plus Napster: beginning of natural experiment. Industry then targeted end users. Unleashed warfare: over 35,000 people were sued. Hard to characterize them as evil, just average/curious.

Bad remedies led to questionable interpretations—does the P have to prove that there was a download, not just an offer to upload?  Understandable that Judge Davis thought that interpretation made sense rather than putting Thomas through a horrible ideal, maybe there’s no liability.  Result: two trials, damages went up.  The regime is out of whack with what Congress thought in 1961; no one wanted to create a lottery system. Eventually, music industry backed away.

Over time as tech changes, we see balance shift.  What really shifted recently was social norms. Can’t think of law as Becker did; must think about backlash and response. When someone is unfairly accused of infringement, the damages aren’t enough to deter.  Even when we tried to correct abuses, we didn’t. When he goes to the Prince toddler video, he sees the comments: people who couldn’t determine which song it was; people who say copyright law is garbage; people who mock the idea of this video as substitution for a CD. When people hold law in contempt, there’s a problem.

Also, porn companies have picked up where the RIAA left off—bringing 1000s of defendants into one case, not even willing to pay multiple filing fees. They use the $150,000 number in the threat letter. Swamps the patent troll problem; hundreds of thousands of defendants.  Judge Wright called attention to the use of this threat to embarrass, and said he didn’t want to use the court as an extortion scheme. But it’s difficult because the statute exists and this is hard to distinguish from other cases.

Safe harbors: When he looks at the facts in some of these cases, where Veoh has set up a group working in Russia trying to strip porn out to protect the business—they asked “aren’t infringing videos the majority of Veoh?” Response: they’re unauthorized, but don’t use the term infringing—I’ll explain to you on the phone. Judge gave Veoh SJ; it should’ve survived, but because of statutory damages they were destroyed by their bills, even as they were trying to put tech in place. YT is a similar story with a bigger war chest.  YT: statutory damages are the elephant in the rule; judges are turned off by the prospect.

SOPA: another manifestation of an unpopular system. At this point copyright is a counterexample to Becker’s optimal enforcement scheme.

His suggestion, with something to offend everyone. In an ideal world, detecting infringement would be easy. Making available regime is a sensible rule, but we need to recalibrate damages. Small claims, without lawyers—more like traffic fines. Get people into licensing regimes. Fred Yen’s suggestion: deal with abuse too.

Once we open statutory damages, we can solve many other issues. Restore confidence; stop alienating consumers and judges; reduce litigation fees; build bridges to Silicon Valley. Why not think about notice and staydown as a trade for getting rid of statutory damages?  Truly safe harbor for building the tech, but avoiding distortions of copyright driven by fear of statutory damages. §512, orphan works, fair use all get on the table if we can talk about statutory damages.

Zimmerman: how much money does uncompensated online use cost photographers? Would these people be paying?

Mopsik: the truth is in the middle. Many members find unauthorized uses every day. There may be issues of model releases (models due compensation), or violations of exclusive licenses. Small uses by householders, blogs—he’s not particularly worried about those, but the uses with an income stream.  (I wish he’d tell the paparazzi photo trolls that they should leave blogs alone.)

Zimmerman: music industry has told us there’s a vast substitution effect, but far less clear with photos—masses wouldn’t consider paying licensing fees. What is the small claims court solving for?

Mopsik: frictionless licensing. Not interested in being punitive, but fair and reasonable compensation for usage.

Menell: copyright is about cultural norms, since Napster. No more going through turnstiles for access. Licensing is a goal. If we can’t do it, then we can move to levies, though that’s politically complicated.  Rebuild around formalities, tools, competition.  Ideally, people would gravitate towards norms of participation in a market. That’s happening now with music services. Motion pictures: shorter windows; people like some of the new services.  Being able to figure out how to license photos would be nice.

Bridy: how would blanket registration work?  Could the Office afford that?

Mopsik: our position was that we were trying to encourage registrations; it would only be for online use, not paper registrations; we were waiting for a number for what it would cost per year. Many photographers take a month’s work and register that in a single registration for one fee. Issues with independent economic value; different courts treat group registrations differently. Unique high-value images you might want to register alone. With sheer volume of images, that starts to get expensive for a sole proprietor.

Zimmerman: fee structure/financial needs of Copyright Office could be dealt with by other means.

Chris Sprigman: new occasional photographers; photographers who do it as an avocation, and are less motivated by money; wedding photographers who operate very differently than news photographers. How much is what’s going on the market under technology versus the copyright system?

Mopsik: capture/processing may be faster, but you do all the retouching etc. that used to be done by the processor—increased burden. Part of the stress photographers feel is change in business models. But there’s a difference between images created on demand to fulfill a client’s need, in the proper format, archived for client’s use—added value from photographer. Copyright is contributing to the stress. There are ways copyright and photographers could work better together, like registration API.

Q: is there a way to distinguish factual photographs and works that are more intended to be creative/more highly protected?

Mopsik: doesn’t like the form of the question—Richard Prince/appropriation artists copy ads.  To a photographer every image is unique.

McSherry: the key point isn’t the fact/fiction distinction, but grappling with the reality that we have so many copyrighted works circulating all the time, and reform should figure out how to align the law with the fact that everything is copyrighted and authors have a variety of interests, some of which involve money and others don’t. Learn from the troll problem: we don’t want a world with a lottery system.

Mopsik: our guys aren’t trolls but small individuals trying to make a living.
http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in conferences, copyright, damages, http://schemas.google.com/blogger/2008/kind#post | Leave a comment