27th Annual BTLJ-BCLT Symposium: From the DMCA to the DSA: Panel 3: Intended and Unintended Consequences of the DSA

Posted on April 7, 2023 by rtushnet

 Moderator: Pamela Samuelson, Berkeley Law School

From Notice-and-Takedown to Content Licensing and Filtering:
How the Absence of

UGC Monetization Rules Impacts Fundamental Rights       

João Quintais, University of Amsterdam with Martin
Senftleben, University of Amsterdam

Human rights impact of the new rules. When we say notice and
takedown is no longer extant in EU, that’s not entirely true—DSA has it. We
look at safe harbors not from an industry perspective—allowing them to develop
services regardless of what users upload—but from a user human rights
perspective—we allow users to upload whatever they want and correct it later.
DSA has a © interface that says insofar as there’s specific © legislation it is
lex specialis and prevails over DSA. Thus, the safe harbor comes to an end
w/r/t © content. Art. 17 instead controls for OCCSP systems. Licensing and filtering
replaces safe harbor.

That has a human rights impact. Risk of outsourcing human
rights obligation to private entities, and conceding these mechanisms by
putting responsibility for correcting excesses in hands of users. Regulator is
hiding behind other parties.

W/r/t platforms like YouTube, requirement of not allowing upload
w/o licensing is a major intrusion on user freedom, leading to public demonstrations
against upload filters that can’t distinguish b/t piracy and parody. DSA says
you have to take care of human rights in proportionate manner in
moderation/filtering. But regulator doesn’t do the job itself. Guardians of UGC
galaxy are the platforms themselves. Regulator hides behind industry and says
we’ve solved the issue.

Reliance on industry is core of Art. 17—cooperation b/t
creative industry and platform industry. One industry sends info on works that
should be filtered, and the platforms have to include that info in their
filtering systems. But regulator says that this cooperation shouldn’t result in
preventing noninfringing content—but how realistic is this? They aren’t at the
table maximizing freedom of communication; they are at the table maximizing
profit. That’s ok as a goal but these actors are not intrinsically motivated to
do the job assigned to them.

Concealment strategy: Empirical studies show that users are
not very likely to bring complaints; system excesses will stay under the radar.
Legislator suggests a best practice roundtable among big players. ECJ has
spoken in Poland decision; what the court did confirmed that this
outsourcing/concealment strategy was ok, rubberstamping the approach. The Court
says the filtering systems have to distinguish b/t lawful and unlawful content,
but that’s an assumption and not a very realistic one. The incentive to filter
more than necessary is higher than the incentive to maximize freedom of
expression. The court says the filtering is only set in motion if rightsholders
send a notification, but again the incentives are to send lots of notices.

Audit system could be a solution, involvement of member
states could be a solution, but we have to discuss the issues openly.

Monetization is an area where the issues are particularly
bad. YouTube, Instagram, TikTok are the subjects: an action of obtaining
monetary benefit/revenue from UGC provided by the user. There are restrictions
in DSA on demonetization. Most discussion has been about upload filters, but YT’s
© transparency reports show that actually most of the action is not blocking
via filtering—it’s mostly monetization through Content ID. 98.9% of claims are
through Content ID, and 90% are monetized.

Art. 17 doesn’t say anything specific about monetization; it’s
all about filtering and staydown. Provisions for fair remuneration for authors
are very difficult to apply. Lots of actions are not covered by the regulation,
especially visibility measures and monetization. DSA has two clear provisions
covering statement of reasons for in platform complaint resolution/ADR, but most
of what users can do is ex post.

Big platform practices change regularly. Content ID and
Rights Manager (Meta) are the big hitters; you can get other third party
solutions that intermediate b/t rightsholders and platforms like Audible Magic
and Pex. Legibility of access to monetization in Content ID and Rights Manager:
available only to large firms. If you take Poland decision seriously, it should
only be filtered for manifestly infringing content, but these systems are
designed to allow parameters below the legal threshold.

On the monetization side, it’s billed as ex post licensing;
as a rule this is not available to small UGC creator, though there are
exceptions. There is a lack of transparency; left to private ordering.

Human rights deficits: Misappropriation of freedom of
expression spaces & encroachment on smaller creators’ fundamental right to ©.
If a use is permissible and does not require permission, larger rightsholders
can nonetheless de facto appropriating and being given rights over content for
which they have no legal claim. Creates the illusion that there’s no expressive
harm b/c the content stays up, but there’s unjustified commercial exploitation.
UGC creator is often a © owner, with protection for that as a work. Only they
should logically be allowed to monetize. Interferes w/ UGC creator’s
fundamental right, but this is not a default option on the platform for
historical reasons, leaving them only to ex post remedies, which are weak
sauce.

Recommendations: bring these problems to light. Audit
reports should focus on these questions. Human rights safeguard clause: must
take care to protect parody, pastiche—if they pass the filter they should not
lead to monetization. Confining filtering to manifestly infringing UGC also
helps. German solution: collective licensing schemes w/a nonwaivable remuneration
right for UGC creators, not just to industry players. Inclusion of creative
users in a redesign of a more balanced monetization system.

An Economic Model of Intermediary Liability         

James Grimmelmann, Cornell Law School; Cornell Tech

Economic claims about effects of liability regimes are
common. Chilling effects; whether platforms do or don’t have sufficient
incentives to police content; claims that 230/DMCA don’t’ adequately balance free
expression with safety concerns; etc. These are statements about incentives,
but primarily policy arguments, not empirically tested. There are some
empirical studies, but our project is to create an economic model to provide a
common framework to compare arguments. This can help create predictions and visualize
the effects of different rules. Mathematical model forces us to make explicit
the assumptions on which our views rest.

Start w/question of strict liability v. blanket immunity;
look at possible regimes; map out core elements of 512, DSA, and 230. Not going
to talk about policy responses to overmoderation/must-carry obligations or
content payment obligations.

Basic model: users submit discrete items of content. Each
item is either harmful or harmless. Platform chooses to host or take down. If
hosted, platform makes some money; society gets some benefits; if the content
is harmful, third party victims suffer harm. Key: platform does not know
w/certainty whether content is harmful, only the probability that it is. These are
immensely complicated functions but we will see what simplification can do.
[What happens if harmful content is profitable/more profitable than nonharmful
content? Thinking about FB’s claim that content that is close to the line gets
the most engagement.]

A rational moderator will set a threshold. Incorporates judgments
about acceptable risk of harm in light of likelihood of being bad v benefits of
content to platform and society.

The optimal level of harmful content is not zero: false
positives and false negatives trade off. We tolerate bad content b/c it is not
sufficiently distinguishable from the good, valuable content. Users who post
and victims harmed may have lots of info about specific pieces—they know which
allegation of bribery is true and which is not—but platforms and regulators are
in positions of much greater uncertainty. Platform can’t pay investigators to
figure out who really took bribes.

Under immunity, platform will host content until it’s individually
unprofitable to do so (spam, junk, other waste of resources). This might result
in undermoderation—platform’s individual benefit is costly for society. But it’s
also possible that platform might overmoderate if platforms take stuff that’s
not profitable down but was net beneficial for society. There is no way to know
the answer in the abstract; depends on specifics of content at issue.

Focusing on undermoderation case: one common law and econ response
is strict liability. This is always less than the benefit to society—it will
always overmoderate content that would be unprofitable under strict liability
but would be beneficial to society. This is Felix Wu’s theory of collateral
censorship: good content has external benefits and is not distinguishable from bad
from outside. If those two things are true, strict liability won’t work b/c
platform only internalizes all harm, but not all benefit.

Other possible liability regimes: actual knowledge, when no
investigation is required—this allows costless distinctions between good and
bad. But does actual knowledge really mean actual knowledge or is it a
shorthand for probabilistic knowledge of some kind? Intuition is that notices
lower cost of investigation. Fly in the ointment: notices are signals conveying
information. But the signal need not be true. When investigations cost money,
many victims will send notice w/o full investigation. Turns out notices
collapse into strict liability—victims send notices for everything. Must be
costly to send false notices; 512(f) could have done this but courts gutted it.
DSA does better job with some teeth to “don’t send too many false notices.” Trusted
flagger system is another way to deal with it.

Negligence is another regime—more likely than not to be
harmful. Red flag notice under DMCA. Gives us a threshold for platform action.
Conditional immunity is different: based on total harm caused by the platform—if
too much, platform is liable for everything. This is how the repeat infringer
provisions of 512 work: if you fail to comply, you lose your safe harbor
entirely. These can be subtly different. Regulator has to set threshold
correctly: a total harm requirement requires more knowledge of the shape of the
curve b/c that affects the total harm; the discontinuity at the edge is also
different.

512 is a mix: it has a negligence provision; a financial
benefit provision—if it makes high profits from highly likely to be bad
content; repeat infringers. DSA has both actual knowledge and negligence
regimes. Art. 23 requires suspension of users who provide manifestly illegal
content, but only as a freestanding obligation—they don’t lose the safe harbor
for doing it insufficiently; they simply pay a fine. 230 is immunity across the
board, but every possible regime has been proposed. It is not always clear that
authors know they propose different things than each other—negligence and
conditional immunity look very similar if you aren’t paying attention to
details.

Although this is simplified, it makes effects of liability
rules very obvious. Content moderation is all about threshold setting.

Interventions   Rebecca
Tushnet, Harvard Law School

Three sizes fit some: Why Content Regulation Needs Test
Suites

Despite the tiers of regulation in the DSA, and very much in
Art. 17, it’s evident that the broad contours of the new rules were written
with insufficient attention to variation, using YouTube and Facebook as
shorthand for “the internet” in full. I will discuss three examples of how that
is likely to be bad for a thriving online ecosystem and offer a
suggestion. 

The first issue is the smallest but reveals the underlying
complexity of the problems of regulation. As Martin Husovec has written in The
DSA’s Scope Briefly Explained,
https://ift.tt/0iB3HSG,

Placement in some of the tiers is defined by reference to
monthly active users of the service, which explicitly extends beyond registered
users to recipients who have “engaged” with an online platform “by either
requesting the online platform to host information or being exposed to
information hosted by the online platform and disseminated through its online
interface.” Art. 3(p). While Recital 77 clarifies that multi-device use by the
same person should not count as multiple users, that leaves many other
measurement questions unsettled, and Husovec concludes that “The use of proxies
(e.g., the average number of devices per person) to calculate the final number
of unique users is thus unavoidable. Whatever the final number, it always
remains to be only a better or worse approximation of the real user base.” And
yet, as he writes, “Article 24(2) demands a number.” This obligation applies to
every service because it determines which bucket, including the small and micro
enterprise bucket, a service falls into.

This demand is itself based on assumptions about how online
services monitor their users that are simply not uniformly true, especially in
the nonprofit or public interest sector. It seems evident—though not specified
by the law—that a polity that passed the GDPR would not want services to engage
in tracking just to comply with the requirement to generate a number. As
DuckDuckGo pointed out, by design, it doesn’t “track users, create unique
cookies, or have the ability to create a search or browsing history for any
individual.” So, to approximate compliance, it used survey data to generate the
average number of searches conducted by users—despite basic underlying
uncertainties about whether surveys could ever be representative of a service
of this type—and applied it to an estimate of the total number of searches
conducted from the EU. This doesn’t seem like a bad guess, but it’s a pretty
significant amount of guessing.

Likewise, Wikipedia assumed that the average EU visitor used
more than one device, but estimated devices per person based on global values
for 2018, rather than for 2023 or for Europe specifically. Perhaps one reason
Wikipedia overestimated was because it was obviously going to be regulated no
matter what, so the benefits of reporting big numbers outweighed the costs of
doing so, as well as the stated reason that there was “uncertainty regarding
the impact of Internet-connected devices that cannot be used with our projects
(e.g. some IoT devices), or device sharing (e.g. within households or
libraries).” But it reserved the right to use different, less conservative
assumptions in the future. In addition, Wikipedia also noted uncertainty about
what qualified as a “service” or “platform” with respect to what it did—is
English Wikipedia a different service or platform for DSA purposes than Spanish
Wikipedia? That question obviously has profound implications for some services.
And Wikipedia likewise reserved the right to argue that the services should be
treated separately, though it’s still not clear whether that would make a
difference if none of Wikipedia’s projects qualify as micro or small
enterprises.

The nonprofit I work with, the Organization for
Transformative Works (“OTW”) was established in 2007 to protect and defend fans
and fanworks from commercial exploitation and legal challenge. Our members make
and share works commenting on and transforming existing works, adding new
meaning and insights—from reworking a film from the perspective of the
“villain,” to using storytelling to explore racial dynamics in media, to
retelling the story as if a woman, instead of a man, were the hero. The OTW’s
nonprofit, volunteer-operated website hosting transformative, noncommercial
works, the Archive of Our Own, as of late 2022 had over 4.7 million registered
users, hosted over 9.3 million unique works, and received approximately two
billion page views per month—on a budget of well under a million dollars. Like
DuckDuckGo, we don’t collect anything like the kind of information that the DSA
assumes we have at hand, even for registered users (which, again, are not the
appropriate group for counting users for DSA purposes). The DSA is written with
the assumption that platforms will be extensively tracking users; if that isn’t
true, because a service isn’t trying to monetize them or incentivize them to
stay on the site, it’s not clear what regulatory purpose is served by imposing
many DSA obligations on that site. The dynamics that led to the bad behavior
targeted by the DSA can generally be traced to the profit motive and to
particular choices about how to monetize engagement. Although DuckDuckGo does
try to make money, it doesn’t do so in the kinds of ways that make platforms
seem different from ordinary publishers. Likewises, as a nonprofit, the Archive
of Our Own doesn’t try to make itself sticky for users or advertisers even
though it has registered accounts.

Our tracking can tell us how many page views or requests
we’re getting a minute and how many of our page views come from which browsers,
since those things can affect site performance. We can also get information on
which sorts of pages or areas of the code see the most use, which we can use to
figure out where to put our energy when optimizing the code/fixing bugs. But we
can’t match that up to internal information about user behavior. We don’t even
track when a logged in account is using the site—we just record the date of
every initial login, and even if we could track average logins per month, a
login can cover many, many visits across months. The users who talk to us
regularly say they use the site multiple times a day; we could divide the
number of visits from the EU by some number in order to gesture at a number of
monthly average users, but that number is only a rough estimate of the proper
order of magnitude. Our struggles are perhaps extreme but they are clearly not
unique in platform metrics, even though counting average users must have
sounded simple to policymakers. Perhaps the drafters didn’t worry too much
because they wanted to impose heavy obligations on almost everyone, but it
seems odd to have important regulatory classes without a reliable way to tell
who’s in which one.

These challenges in even initially sorting platforms into
DSA categories illustrates why regulation often generates more
regulation—Husovec suggests that, “[g]oing forward, the companies should
publish actual numbers, not just statements of being above or below the 45
million user threshold, and also their actual methodology.” But even that, as
Wikipedia and DuckDuckGo’s experiences show, would not necessarily be very
illuminating. And the key question would remain: why is this important? What
are we afraid of DuckDuckGo doing and is it even capable of doing those things
if it doesn’t collect this information? Imaginary metrics lead to imaginary
results—Husovec objects to porn sites saying they have low MAUs, but if you
choose a metric that doesn’t have an actual definition it’s unsurprising that
the results are manipulable.

My second example of one size fits some design draws on the
work of LLM student Philip Schreurs in his paper, Differentiating Due Process
In Content Moderation: Along with requiring hosting services to accompany each
content moderation action affecting individual recipients of the service with
statements of reasons (Art. 17), platforms that aren’t micro or small
enterprises have due process obligations, not just for account suspension or
removal, but for acts that demonetize or downgrade any specific piece of
content.

Article 20 DSA requires online platform service providers to
provide recipients of their services with access to an effective internal
complaint-handling system; although there’s no notification requirement before
acting against high-volume commercial spam, even for high-volume commercial
spam, platforms have to provide redress systems. Platforms’ decisions on
complaints can’t be based solely on automated means.

Article 21 DSA allows users affected by a platform decision
to select any certified out-of-court dispute settlement body to resolve
disputes relating to those decisions. Platforms must bear all the fees charged
by the out-of-court dispute settlement body if the latter decides the dispute
in favor of the user, while the user does not have to reimburse any of the
platforms’ fees or expenses if they lose, unless the user manifestly acted in
bad faith. Nor are there other constraints on bad-faith notification, since
Article 23 prescribes a specific method to address the problem of repeat
offenders who submit manifestly unfounded notices: a temporary suspension after
a prior warning explaining the reasons for the suspension.  The platform must provide the notifier with
the possibilities for redress identified in the DSA. Although platforms may
“establish stricter measures in case of manifestly illegal content related to
serious crimes,” they still have to provide these procedural rights.

This means that due process requirements are the same for
removing a one-word comment as for removing a 1 hour video: for removing a
politician’s entire account and for downranking a single post by a private
figure that uses a slur. Schreurs suggests that the process due should instead
be more flexible, depending on the user, violation, remedy, and type of
platform.

The existing inflexibility is a problem because every anti
abuse measure is also a mechanism of abuse. There seem already to be
significant demographic differences in who appeals a moderation decision, and
this opens up the possibility of use of the system to harass other users and
burden platforms, discouraging them from moderating lawful but awful content,
by filing notices and appealing the denial of notices despite the supposed
limits on bad faith. Even with legitimate complaints about removals, there will
be variances in who feels entitled to contest the decision and who can afford
to pay the initial fee and wait to be reimbursed. That will not be universally
or equitably available. The system can easily be weaponized by online
misogynists who already coordinate attempts to get content from sex-positive
feminists removed or demonetized. We’ve already seen someone willing to spend
$44 billion to get the moderation he wants, and although that’s an outlier there
is a spectrum of willingness to use procedural mechanisms including to harass.

One result is that providers’ incentives may well be to cut
back on moderation of lawful but awful content, the expenses of which can be
avoided by not prohibiting it in the terms of service or not identifying
violations, in favor of putatively illegal content. But forcing providers to
focus on decisions about, for example, what claims about politicians are false
and which are merely rhetorical political speech may prove unsatisfactory; the
difficulty of those decisions suggests that increased focus may not help
without a full-on judicial apparatus.

Relatedly, the expansiveness of DSA remedies may water down
their realistic availability in practice—reviewers or dispute resolution
providers may sit in front of computers all day, technically giving human
review to automated violation detection but in practice just agreeing that the
computer found what it found, thus allowing the human to complete thousands of
reviews per day as Propublica has found with respect to human doctor review of
insurance denials at certain US insurance companies.

And, of course, the usual anticompetitive problems of
mandating one size fits all due process are present: full due process for every
moderation decision benefits larger companies and hinders new market entrants.
Such a system may also encourage designs that steer users away from
complaining, like BeReal’s intense focus on selfies or Tiktok’s continuous flow
system that emphasizes showing users more like what they’ve already seen and
liked—if someone is reporting large amounts of content, perhaps they should
just not be shown that kind of content any more. The existing provisions for
excluding services that are only ancillary to some other kind of product—like
comments sections on newspaper sites, for example—are partial at best, since it
will often be unclear what regulators will consider to be merely ancillary. And
the exclusion for ancillary services enhances, rather than limits, the problem
of design incentives: it will be much easier to launch a new Netflix competitor
than a new Facebook competitor as a result.

© specific rules are not unique: subject to same problem of
legislating for YouTube as if YouTube were the internet. Assumes that all
OSSCPs are subject to same risks. But Ravelry—a site focused on the fiber
arts—is not YouTube. Cost benefit analysis is very different for a site that is
for uploading patterns and pictures of knitting projects than for a site that
is not subject-specific. Negotiating with photographers for licensing is very
different than negotiating with the music labels, but the framework assumes
that the licensing bodies will be functioning pretty much the same no matter
what type of work is involved. Sites like the Archive of Our Own receive very
few valid © claims per works uploaded, per time period, per any metric you want
to consider, and so the relative burden of requiring YouTube-like licensing is
both higher and less justified. My understanding is that the framework may be
flexible enough to allow a service to decide that it doesn’t have enough of a
problem with a particular kind of content to require licensing negotiations,
but only if the authorities agree that the service is a “good guy.” And it’s
worth noting, since both Ravelry and the Archive of Our Own are heavily used by
women and nonbinary people, that the concept of a “good guy” is likely both
gendered and racially coded, which makes me worry about its application.

Suggestion: Proportionality is much harder to achieve than
just saying “we are regulating more than Google, and we will make special
provisions for startups.” To an American like me, the claim that the DSA has
lots of checks and balances seems in tension with the claim yesterday that the
DSA looks for good guys and bad guys—a system that works only if you have very
high trust that the definitions of same will be shared.

Regulators who are concerned with targeting specific
behaviors, rather than just decreasing the number of online services, should
make extensive use of test suites. Daphne Keller
of Stanford and Mike
Masnick of Techdirt proposed this two years ago. Because regulators write
with the giant names they know in mind, they tend to assume that all services
have those same features and problems—they just add TikTok to their
consideration set along with Google and Facebook. But Ravelry has very
different problems than Facebook or even Reddit. Wikipedia was big enough to make
it into the DSA discussions, but the other platforms burdened most because they
haven’t built the automated systems that the DSA essentially requires are now
required to do things that Facebook and Google weren’t able to do until they
were much, much bigger.

A few examples of services that many people use but not in
the same way they use Facebook or Google, whose design wasn’t obviously
considered: Zoom, Shopify, Patreon, Reddit, Yelp, Substack, Stack Overflow,
Bumble, Ravelry, Bandcamp, LibraryThing, Archive of Our Own, Etsy.

The more complex the regulation, the more regulatory
interactions need to be managed. Thinking about fifty or so different models,
and considering how and indeed whether they should be part of this regulatory
system, could have substantially improved the DSA. Not all process should be
the same just like not all websites should be the same, unless we want our only
options to be Meta and YouTube.

Q: Another factor: how do we define harm and who defines it—that’s
a key that’s being left out. Someone stealing formula from Walgreens is harmful
but wage theft isn’t perceived as the same harm.

Grimmelmann: Agree entirely. Model takes as a given that regulator
has a definition of harm, and that’s actually hugely significant and contested.
Distribution of harms is also very important—who realizes harm and under what
conditions.

Q: Monetization on YT: for 6-7 years, there’s been
monetization during dispute. If rightsholder claim seems wrong to user, content
stays monetized until dispute is resolved. We might still be concerned over claims
that should never have been made in the first place. YT has a policy about
manual claims made in Content ID. Automatic matching doesn’t make de minimis
claims; YT changed policy for manual claims so they had to designate start and
stop of content experience and that designation had to be at least 10 seconds
long. A rightsholder who believes that 9 seconds is too much can submit a
takedown, but not monetize. Uploaders that sing cover songs have long been able
to share revenue w/© owners.

Quintais: the paper goes into more detail, but it’s not
clear that these policies are ok under new EU law. [Pastiche/parody is the
obvious problem since it tends to last more than 10 seconds.] Skeptical about
the monetization claims from YT; YT says there are almost no counterclaims. If
the system can’t recognize contextual uses, which are the ones that are
required by law to be carried/monetized by the uploader? A lot of monetization
claims are allegedly incorrect and not contested. Main incentive of YT is
pressure from rightsholders w/access to the system further facilitated by Art.
17.

Q: platforms do have incentives to care about fundamental
rights of users. We wouldn’t need a team at YT to evaluate claims if we just
took stuff down every time there was a claim. [You also wouldn’t have a service—your
incentives are to keep some stuff up, to be sure, but user demand creates
a gap as Grimmelmann’s paper suggests.]

Quintais: don’t fundamentally disagree, but Art. 17 leaves
you in a difficult position.

Hughes to Grimmelmann: Why assume that when harm goes up,
societal benefit goes down? Maybe as harm to individual goes up so does
societal benefit (e.g. nude pictures of celebrities).

A: disagrees w/example, but could profitably put a
consideration of that in model.

from Blogger http://tushnet.blogspot.com/2023/04/27th-annual-btlj-bclt-symposium-from_5.html

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27th Annual BTLJ-BCLT Symposium: From the DMCA to the DSA: Shira Perlmutter, Register of Copyrights, Keynote on emerging tech

Posted on April 7, 2023 by rtushnet

Shira Perlmutter

AI detection and AI generation of content: CO has role to
play in applications for registration and as advisors to Congress/exec branch
on © law and policy.

Use of tech measures to detect works online: we published a
long report on 512 concluding that it has become unbalanced and should be
updated, including definitions for standard technical measures (STMs). Service
providers have an obligation to accommodate and not interfere w/STMs; they hadn’t
yet been figured out yet and providers shouldn’t have to use them but should
also not interfere w/their use. 512(i) provided that they had to be developed
in a fair, multistakeholder process and had to be available fairly and w/o
undue burden on providers. But not a single tech has been designated as an STM;
we could make the vision a reality. [Ah yes, get the nerds on it.] We conducted
a public study on STMs and also panels on voluntary tech measures. We
recommended three changes to the statute: clarifying that the terms “broad consensus”
and “multi-industry” require substantial consensus and not unanimity, and only
w/r/t industries in question. Replace “developed by a broad consensus” w/ “designated
by a broad consensus” even if they were initially developed by a narrow group.
Set out factors for determining whether there were substantial costs or burdens
on service providers. We didn’t recommend gov’t designation process or repealing
512(i) entirely. Given complexities of evolving tech, weren’t convinced gov’t
process would work, but an improved consensus-based framework could play a role
in curbing infringement, but still an open question about getting everyone to
table.

Voluntary measures received 6000 public comments. No real
surprises. Diversity of online marketplace has generated increasingly wide
variety, precluding one size fits all. Effective tech measures share:
inclusivity; collaboration; communication; and transparency. Many participants
expressed frustration when these elements were missing. Future initiatives
would benefit from ensuring these attributes. As in EU discussions, other areas
of divergence related to resources and access—resource intensive measures
remain problematic for small rightsowners and small services. Small service
providers, including startups, don’t have capital to invest in expensive
technical measures. But others respond that limits on size and resources
shouldn’t excuse putting in place protections if the platform is distributing
content to the public. [Sadly, they don’t mean “if the platform is distributing
infringing content.”] Access was also controversial w/individual rights holders
who were frustrated at not being included in discussions; but there is also a
risk of intentional or unintentional misuse.

NFTs: we’re conducting a joint study w/PTO on IP issues.
Participants in roundtable didn’t ask for statutory change specific to ©;
automated royalties for token resale were exciting. But unclear if it’s
enforceable downstream particularly if it moves b/t markets. And a purported
transfer of © can be difficult if there are off-chain terms and conditions.
Sending a takedown notice to a marketplace can block sale, but doesn’t get rid
of the actual putatively infringing content. And there are jurisdictional
challenges and challenges in identifying source of content.

Current hottest area is AI. Does Act restrict authorship to
humans? Fed Cir said inventors had to be human; Thaler is arguing that © should
recognize AI authors. We don’t think we acted arbitrarily and capriciously in
so holding. What about works produced through a combination of human and machine?
What type of human contribution is enough? Comic book case: we registered the
work based on an application identifying a single human author that didn’t
disclose use of Midjourney. When registrant claimed publicly that it was
AI-generated, we asked for more information, and determined that, b/c of the
way the tech works, the individual images lacked sufficient human authorship,
but issued a more limited registration that covered the human-authored
elements: text and selection/coordination/arrangement of the images. Given the
increasing number of applications for AI works, additional guidance was needed,
so we issued a clarifying statement. Our goal was to help people avoid problems
w/validity of registration. Affirms the human authorship requirement and
instructs applicants of duty to disclose inclusion of significant AI generated
content and provide brief explanation of human author’s contributions. Further questions
will be addressed on a case by case basis since new hypotheticals keep coming
up. This is not the end of our guidance.

How do we distinguish b/t use of AI as tool, like Photoshop,
and AI-generated content? Continued work!

AI datasets trained on © images scraped from websites: is
that ok? Getty has sued Stability AI in Delaware and UK alleging that it
scraped 12 million images to train Stable Diffusion; also a proposed class
action. Key question is whether exceptions apply—text and data mining exceptions
in many countries, and fair use in US. Result will likely depend on nature of
output and effect on market; courts may view ingestion for research differently
than ingestion for producing content that competes in the market. Spectrum: output
is substantially similar; output is similar style; output appeals to same
audience—courts may treat differently. Who would be held responsible for any
infringement? Owner of computer, programmer, prompter?

We’re not done even if we clarify existing law: need to
consider whether existing law should be changed. Would it promote progress, as
Thaler says, to grant rights in AI generated content? What about the fact that
the Clause specifies granting rights to Authors as the means to promote
progress? It’s hard to incentivize a machine; do we need to incentivize the
machine’s owners more than they already are? Can “authors” include machines?
Can some other constitutional clause form the basis for sui generis rights? To
the extent that fair use or another exception applies, should there be
accommodation for human creators of the works, if not authorization then
attribution or remuneration? Certain services have established voluntary
remuneration of some kind. Questions are always easier than answers, but we’ll
be looking at all of these. Launched broader AI initiative to address scope of ©
and also legal status/implications of ingesting © works in training AI, holding
listening sessions with creators, lawyers, technologists. Will hold informational
webinars over summer and publish notice of inquiry afterwards intended to
inform a report/series of reports analyzing the issues.

from Blogger http://tushnet.blogspot.com/2023/04/27th-annual-btlj-bclt-symposium-from_71.html

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27th Annual BTLJ-BCLT Symposium: From the DMCA to the DSA: Panel 2: Will the DSA Achieve a “Brussels Effect”?

Posted on April 7, 2023 by rtushnet

 Moderator: Martin Senftleben, University of Amsterdam

Copyright Law and/or/vs. a ‘Brussels Effect’ for the Digital
Services Act

Jennifer Urban, Berkeley Law School

The Brussels Effect claim is descriptive, not predictive—can
it apply to the DSA? Criteria favoring a Brussels Effect are market size
controlled by regulator—a lot of firms want to compete there; regulatory
capacity/institutional expertise; stringent standards. Most likely to happen
when the EU standard is the most stringent. That ties to nondivisibility—firm’s
choice based on incentives/cost benefit analysis to treat their activities as
nondivisible/nongeofenced. Inelastic targets are another factor: © holders,
members of the public, potential infringers.

Consider here stringent standards and nondivisibility.

Bradford’s four examples of the Brussels Effect v.
copyright: (1) Food/chemicals (physicality, unlike ©; easy to establish
stringent rules b/c it’s allowed v. disallowed or level of chemical is allowed
but not more; generally good observability/enforceability; first mover tends to
be clear, though who it is can vary—banning hydrogenated oils in certain kinds
of foods); (2) privacy (like ©, lacks physicality; not binary but complex and
nuanced; first mover clear: EU competing against regimes that were
comparatively much less developed, creating a comparative vacuum that could be
filled; strong first mover effect creates obvious stringency differential
initially even with nuance and balance-seeking; this could change later and
depends on stickiness of baseline regime). (3) competition and (4) digital
economy—copyright is potentially an aspect of both of those; DSA also relevant.

Copyright lacks physicality; isn’t binary, complex, nuanced,
balancing—what even is stringency in this context? Highly developed,
longstanding sectoral systems put in place over hundreds of years.
Traditionally supported a highly segmented, explicitly territorial market approach
by multinationals. Very sticky. EU has been first mover on some things and not
others (Art. 17 v notice and takedown).

A service provider decides what it must do under 512 and the
DSA/Art. 17—figures out where it fits in the ecosystem of regulated actors. Then
figures out what it must do: in US, don’t engage in primary or secondary
infringement. In EU: do not directly infringe; DSA obligations—T&Cs,
transparency, notice & action, statement of reasons, allow
complaint/appeal, ADR, trusted flaggers, etc. Then figures out what it can
do: choose to comply w/512’s detailed rules, deciding details of implementation
and making removal decisions. In EU, they get the safe harbor no matter what,
and they decide terms of service, details of implementation, make removal
decisions.

Which regime to choose? DMCA is a post-office model: you just
respond to notices and send to users, just passing things on. DSA: they’re
designer, adjudicator, rights protector, systemic risk avoider—much more detailed,
rule-oriented role if they choose DSA path. If we think most stringent rule is
more likely adopted worldwide, looking good for DSA. DSA into account many
lessons from notice and takedown system and intermediary liability in US and
other countries—balance, notification to complainer whether something came
down, dispute resolution processes. Both more stringent to benefit of
users/public and to benefit of © owners in some important ways; many big
services do these things already.

Complications: what does stringency mean in this context?
Infringement/infringers? Inaccurate/abusive © claims/complainants? Who are we
protecting/benefiting? Copyright holders/fair users? Incentives for new
copyright protected expression? Innovation and follow on creativity?

Nondivisibility: voluntary adoption of second jurisdiction’s
rules where standardization is attractive/incentivize. Must consider entire
regime: downside risk, directionality of risk—structural and practical bias
towards takedown under 512 remains; downside risk is disproportionately from
one direction—downside of false/inaccurate takedowns or filters is much lower
than downsides of mistaken stay-ups. This is a form of stringency and affects
incentives for non-divisibility, especially given US statutory damages and
injunctions. No balancing required—recognizing fair use is not required for
platforms, nor is giving users much procedure. Stringency can thus be non
obvious, contested/contestable, and downside risk matters.

Guess: many service providers will therefore stick with 512;
US wins, but maybe for the wrong reasons.

The DSA Trusted Flagger Regime and Its Interplay with
Article 17 DSMD in the Aftermath of CJEU, Poland – A Promising Model?

Eleonora Rosati, Stockholm University

Trusted flaggers moved from practice to statutory
regulation, and are relevant to Art. 17. YT had it since 2012; now only NGOs
and gov’t agencies. YT for 2022: most removals were automated (5.2 million),
250,000 from users, 51,000 from organization, a few from gov’t.

DSA institutionalized trusted flaggers in Art. 22: rationale
to make action against illegal content quicker/more reliable. Eligibility:
entities w/expertise and competence in detecting, identifying and notifying
illegal content, in a way that’s diligent, accurate and objective; independence
from platform; private entities and individuals can conclude bilateral agreements
w/platforms. Recognition by DS Coordinator of member state where established;
must be recognized by all platforms targeted by DSA. Obliged to do annual
reporting at least on types of notices to whom, for what, and resulting action;
suspension of trusted flagger status possible during investigation from
significant number of imprecise/inaccurate/unsubstantiated notices.

At least in certain sectors, trusted flaggers will play a
significant role in ©/Art. 17 for acting expeditiously in response to notice.
CJEU Poland: one limit the court focused on is that rightsholders have to
provide relevant and necessary information. Maybe helpful in creating a global
standard. But there is a targeting approach—you don’t need to be in the EU to
be covered by the DSA if you target the territory—this can come from language
used, currency, possibility of ordering products or services, relevant
top-level domain, can you purchase/download app from local app store, local
advertising or advertising in a EU language, customer relations including
language used. [I wonder what other Spanish- and Portuguese-speaking and
Francophone countries think of this.]

The Global Internet and Its Workable, Bespoke, Patchwork
Regulation     

Justin Hughes, Loyola University Los Angeles

John Perry Barlow’s Declaration of Independence of
Cyberspace: a full repudiation of the lack of gov’t authority or moral right to
rule cyberspace. DSA: Admirable technocrats’ work, even with much that is
unknown or could have been done differently. So many working parts have been
brought together, requiring consultation and compromise. Although we’re here to
bury the Ecommerce directive, not to praise it, it was easy and fun for
students, and he’s not sure how or if the DSA can be taught, except on its own.

He’s always advocated a local, evolutionary approach
w/convergence in legal norms, as w/notice and takedown. Still happening in some
areas. But Art. 17 made it obvious that defection from 2000s consensus on
intermediary liability was happening, and DSA is next step in ending that global
consensus. Brussels effect is a decision to conform private behavior to a single
standard v. uncoordinated legal regimes following other regimes to convergence.

Assuming there’s a difference b/t notice and takedown and notice
and action, will it go to the US? Prediction: no. Content owners won’t agree to
a revision of 512, at least w/o a long period of seeing what platforms will do.
1A will also complicate any efforts to adopt many DSA elements.

Imagine an EU domiciliary uploads © work belonging to an
American that’s not an OCCSS under Art. 17 or VLOP under DSA. Sender sends DMCA
notice. What does the platform do? We don’t have any court decisions saying what
the outer limits of expeditious takedown are. Maybe platform adjusts by complying
with both regimes—could have a quiet, virtually hidden effect on DMCA compliance.
But it’s not hard to immediately disable access to all US IP addresses while
taking a bit longer to, per DSA, take a decision in respect of the information
to which the notice relates in a timely, diligent and non-arbitrary manner. Indeed,
this might be a good way for a platform to show that it was taking DSA seriously.
Don’t assume that Brussels and California effect that occurs w/privacy also
occurs when corps can adjust tech granularly.

Globally speaking, car manufacturing is a big business
dominated by 20 companies in 8 countries. Despite that, 35% of world’s population
still drives on the wrong side of the road; private actors can deal w/different
regimes where tech allows.

Search engines: just as w/Ecommerce directive, there’s no
safe harbor/notice and action provisions for search engines. There were
proposals in DSA but no ultimate obligation. But there’s still 512(d). Should
we assume that DMCA 512(d), used by © holders around the world, will keep
working the way it has been working? Seems to be used mostly by highly automated
trusted flaggers. 4 of top senders are the entities that will undoubtedly
become trusted flaggers.

Transparency will either exacerbate arms race w/bad guys if
there’s too much disclosure; or it will produce vague disclosures and not have
that much impact.

Unintended effects: major content owners will employ
multiple trusted flaggers b/c of the mechanism for suspending trusted flaggers,
and no major content owner can afford to have its trusted flagger suspended even
for a bit.

Will the DSA Achieve a “Brussels Effect”?

Anupam Chander, Georgetown Law School

Imagine the DSA of Brazil, India, Nigeria, or Putin. Roche-Laguna
wants to think that the DSA passes the Putin test. Does it?

Companies could adopt DSA-compliant practices worldwide, or
EU itself might promote DSA as a legal model including in its free trade
agreements. Governments might also find much to envy in DSA. Disinformation,
hate speech, communal violence, and election interference are acute in many
countries in the Global South. But institutional capacity and resources can be
more limited and civil society institutions/independent press more fragile. States
are often at grave risks of democratic backsliding or already have
authoritarian tendencies w/serious risks for free expression.

Consider Digital Services Coordinator. Not just a
“coordinator”: DSC chooses trusted flaggers w/significant privileges, certifies
dispute settlement bodies—decides who the judges are. Can also demand info from
platforms related to suspected infringement of DSA, including power to conduct
onsite investigations and seize information regardless of storage medium; DSC
can also seek a judicial order to temporarily suspend a platform.

Demands to control social media—take down posts from
political rivals, block full services—are common around the world.

Commission powers: mitigation measures for risks the
platforms may create; crisis protocols. These powers translated into new jurisdictions
might be less trustworthy. Nigeria and Twitter got into a standoff—Twitter deleted
some tweets from Nigeria’s president for stoking violence/civil war. Gov’t
banned Twitter for 6 months; Twitter negotiated a return on undisclosed terms,
which could be characterized as mitigation measures for the risks the gov’t
thought Twitter posed to the Nigerian people. [Consider how many countries—including
some in the EU—think that “promotion” of LGBTQ+ identities constitutes a risk
to the public.]

What about the checks and balances? DSC is supposed to be independent,
and powers exercised in conformity w/EU charter of rights; crisis protocol must
include safeguards to protect charter rights; no filtering obligations and
conditions for being a trusted flagger. But overall there is great fear of
corporations in this and not much fear of gov’t; consider how it might be
weaponized. When we think about fundamental rights, we must always keep in mind
protecting fundamental rights both against private corporations and the state.
The distinction b/t safe harbor and liability might exist for an individual
piece of content, but the DSA has a very substantial liability regime of 6% of
global turnover, 50% higher than GDPR max, that is available to the state. That
itself might be attractive to many govts across the world across the economy.

Q: interaction w/ localization of user data requirements to
facilitate law enforcement?

Urban: parallels to DSA/512. Where a company is making a
decision about which regime to apply voluntarily, that applies to
extraterritorial information. If Russia requires localized data, then the Q of
whether one regime is more efficient doesn’t come up in the same way.

Keller: Americans don’t much trust regulations or regulators,
and we have scar tissue around litigation—if the rule is a little bit ambiguous
someone will litigate and that will cost a lot of money. This causes Americans
to be freaked out by the DSA; Europeans think that it would be fine for other
countries to implement the DSA but maybe that’s not true b/c of the differences
in legal cultures.

Hughes: this is a well-known difference in population, but
not legal community—distrust of gov’t and undue trust for corporations until
recently. Reversed in EU, but that’s more popular culture than legal community.
In the latter, a very large percentage of lawyers have worked in gov’t and have
more trust in the process. [Not sure that characterizes the former gov’t
lawyers I know, especially given the state/federal divide.]

Rosati: EU motto is “United in Diversity.” Sensitivities are
very different country to country. Not a uniform bloc; in the end it was a
compromise.

Senftleben: don’t ask people about their national gov’ts—a completely
different story to trust in the EU.

Q: what will happen in Hungary? What safeguards will keep
Hungarian authorities from abusing their power under the DSA? American right-wing
populists are watching Orban closely for inspiration, and DeSantis is using his
playbook. Ken Paxton has weaponized investigative powers against tech
companies, and Orban is smart enough to see that. Who cares who the population
trusts? The legal question is what can be done to weaponize these powers and
what safeguards exist against abuse?

Chander: We need to be cautious—the EU project doesn’t have
competence over everything; DSA repeatedly defers to national laws including in
definitions of illegality. Charter is supposed to be followed, but the dispute
settlement system in the Charter has an enormous backlog of cases.

Senftleben: A real risk b/c we know that Hungary is different
from other EU states, but it’s a regulation, so the text of the framework is
beyond the reach of national gov’ts. The competencies are embedded in a European
framework. System would be able to react to extreme tendencies in individual
gov’ts better than previous framework. [But the trusted flagger system now
blesses the idea of deputizing entities to do takedowns—I think the particular
risk is clearly to LGBTQ+ content.]

from Blogger http://tushnet.blogspot.com/2023/04/27th-annual-btlj-bclt-symposium-from_86.html

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27th Annual BTLJ-BCLT Symposium: From the DMCA to the DSA: Keynote and copyright interactions

Posted on April 7, 2023 by rtushnet

Opening Keynote by Irene Roche-Laguna of the European
Commission’s DGCONNECT group on origins and aspirations for the DSA

People thought it couldn’t be done; didn’t know whether it would
be a directive or a regulation. But took only 6 months to agree and 22 months
to be adopted. We also managed to keep the substance—3 red lines: country of
origin, safe harbors, prohibition of general monitoring obligations—widely acknowledged
for its balance. Council often turns a beautiful baby into a Frankenstein’s
monster; it was very close to being much worse. In Council, we had proposals
for staydown; Netherlands asked for a modest duty of care; Germans wanted a
24-hour deadline copying NetzDG; Parliament wanted liability exemption for marketplaces
except for illegality; staydown; and prohibition of automated filtering that
would have prevented spam filters.

Now the EU is ahead of the US—in Gonzalez, SCOTUS is being
asked about recommendation systems; but we’ve already answered that.
Recommending videos on the basis of user behavior is not enough to show
specific knowledge of illegality. Twitter: does a platform that scans for
terrorist activity become liable merely b/c it could have taken more aggressive
action? EU has answered in eBay case, no, it has to have actual knowledge,
usually triggered by a valid notice. “Good Samaritan”: implementation of
measures detecting content that may infringe the law does not constitute
knowledge and control over that which escapes deception. We win!

DSA improvements on Ecommerce directive: new, clarified and
linked to due diligence obligations.

New is important b/c it’s a democratic endorsement. Qs: “These
companies know everything about us; how can they not know what’s illegal? How
can they not know when illegal content is reposted? They make money from third
party content and should be responsible for it. The Ecommerce Directive you
point to is so old, adopted when the internet was new.” This legal ageism was
the last resort of critics. Although it was opening Pandora’s box, a hornet’s
nest, and a can of worms at the same time, it was worth redoing. Fortunately
the red lines were respected as the democratic mandate of the safe harbors was
respected. This was not easy—the first question asked in committee was what
about staydown. But Art. 8 prohibits general monitoring obligations, which is a
success.

Clarified and a regulation instead of a directive: That’s
important b/c a directive is transposed into national law, w/27 potential
different means. Some member states would define actual knowledge to be limited
to manifestly illegal content; some wouldn’t; some would have notice and takedown,
others didn’t; etc. They tried to get DSA to be directive, but it’s not—the end
of legal fragmentation. And the rules are clarified by incorporating longstanding
caselaw in relation to safe harbors over 22 years of application/interpretation,
especially about when a provider plays an active role leading to knowledge and
control. Active/passive is not an important distinction; notice has to show
content is manifestly illegal w/o need of detailed legal examination. Suspicion
of illegality is not sufficient.

Liability exemptions are independent of a full set of due
diligence obligations. This is the major DSA regulatory contribution—splitting due
diligence from liability for third party content. National courts have pushed against
safe harbors to get platforms to do something—immense pressure on the safe
harbors. Liability and social responsibility were mixed in debates. National
courts had to impose duty of care or accept safe harbors as hands-off approach.
But DSA allows protection for third-party content while expecting the platform
to act diligently. And it’s fully harmonized, meaning that states can’t try to “top
up” the DSA. If the platform is diligent, it is protected from liability even
if the content is illegal. There were attempts to make safe harbors conditional
on due diligence, but they were not accepted. Judges will not be auditors of
DSA compliance.

Due diligence obligations focus on procedures, not on
content—what is illegal. No admin oversight of content. The majority of
moderation decisions are not about removal, and not about illegality. Users
also need redress/transparency about those decisions.

Three characteristics of DSA that are building blocks: (1)
single market nature, (2) proportionality, (3) process effect. Single market
effect: harmonization of national rules, like US federal preemption. Helps
service providers pay engineers instead of lawyers; uses country of origin
provision where they’re subject to compliance only in that member state. Legal
fragmentation is bad for businesses and legal certainty. Easier said than done,
but DSA centralizes and neutralizes enforcement against systemic risks posed by
VLOPs and VLOSEs.

Balanced approach: if we regulate only with Google in mind,
we will only have Google, so rules needed to be proportionate to size and
capacity of providers. Higher responsibilities for services that are higher in
the food chain—infrastructure providers are different than consumer-facing
providers; this creates the distinction between transmission and hosting and
VLOPs. And startups/small providers have more protections.

Brussels effect: is this worth exporting? GDPR was taken
with skepticism, caution, and then emulated around the world. DSA could be the
same. Could be worth exporting even to less democratic countries b/c of the
checks and balances and judicial control. [This seems in tension with the claim
yesterday that the DSA looks for good guys and bad guys—a system that works
only if you have very high trust that the definitions of same will be shared.]

Panel 1: How the DSA Shifts Responsibilities of Online
Service Platforms

Moderator: Erik Stallman, Berkeley Law School

Designing Rules for Content Moderation: The Shift from
Liability to Accountability in Europe       

Martin Husovec, London School of Economics

Principles that could be useful in trans-Atlantic dialogue:
Many provisions are too European for US, like risk mitigation. [Ouch.]
Framework was validated over time as right one: liability safe harbors is a success
story for the internet b/c it created breathing space for expression and new
services. Ecommerce directive was regulating the member states, not the
services—trying to coordinate how they could regulate in their own
jurisdictions; national regulation and self-regulation was the intent. Second
generation in DSA: try to turn previously unregulated industry into regulated, especially
the largest subset.

What are the building blocks that could be useful abroad?
Four principles:

(1)  
DSA has horizontal rules, not sectoral
fragmentation; covers all areas of law. [But see yesterday’s discussion of ©.]
That made it easier to adopt. Art. 17 does interact, but DSA creates safeguards
that member states might not have wanted to enact. Avoids problems of
regulatory arbitrage. 230 v. DMCA—one set of horizontal rules avoids that. And
proportionate rules are easier b/c they look at all sides, not just complaints
of one industry. Risk mitigation allows you to think both about overblocking
and grievances of © owners.

(2)  
Builds on liability safe harbors: we regulate by
allocating responsibility and sharing burden, not pinning blame on one actor. Victims
are partly responsible for mitigation of harms, providers, and users. DSA
renews democratic support for this, which is not a small thing among publics
and courts.

(3)  
Look at ecosystem, not platform; everyone should
be part of the solution. Users, providers, notifiers, and more need tools. DSA
promises priority for high quality notifications, and notifiers that misbehave
can be suspended. Instead of focusing on damages, we’re focusing only on
suspensions and giving both carrots and sticks.

(4)  
Separating new regulatory expectations from underlying
social contract around liability. In DMCA, repeat infringer policy is connected
to liability protection; in DSA it is not. DSA prioritizes taking action over
compensation. Lack of statutory damages/attorneys fees is an improvement.

US caselaw was instrumental in early days, as were DMCA
notification standards. At this point the EU approach has matured and many DSA
tools can’t be transplanted into the US First Amendment environment, but these
four principles could help guide thought about reform.

“Human review” as the New Panacea of European Platform Law
and Beyond? The Emerging European Standards for the Interplay of Algorithmic
Systems and Human Review in the DSM-Directive, the DSA and the proposed AI Act   

Matthias Leistner, LMU Munich Faculty of Law

Algorithms are strong at pattern recognition and identifying
protecting content and to a certain extent the degree of similarity to
protected content. Encourage best possible human/AI models; we know too little
to decisively regulate. Need to keep it flexible and encourage competition.

Art. 17 was problematic due to heavy political lobbying. DSA
stands a chance building on transparency obligations. Red flag: maximum
transparency isn’t optimal—information overload and maximum transparency in
content moderation can lead to users gaming the system and create a battle of
algorithms. Some transparency is needed for users, others for researchers and
auditors. Notice and action mechanism/internal complaint handling system
requirements of DSA relate to algorithms.

Proposed AI Act is a sector-specific regulation of AI
techniques that might overlay onto the DSA; also GDPR might have an impact.

Art. 17: on the one hand, accepted algorithmic blocking, on
the other, tried to make sure wouldn’t affect legit users but only by way of
the redress mechanism which often comes too late. German implementation: manifestly
illegal, blocking; if unclear, notice and delayed take/staydown—only ex post. This
is easier where we have a remuneration provision for content owners when the
content remains online. Easier for music than movies which depend on
exclusivity (well, whole movies).

DSA starts from premise that algorithms will be used; notice
and action can be purely algorithmic, w/o human review, just statement of
reasons. But internal complaint-handling must be taken under supervision of
appropriately qualified staff and not solely on the basis of automated means.
Human content moderation isn’t necessarily better: of course the audits can
also relate to the status and situation and role of human content moderators.
So noticeàdelayed
blocking/staydown, while algorithmic decisions can lead to blocking first.
Problem of belated complaint handling in regard to dynamic, potentially viral
content is ignored.

DSA covers all illegal content without prioritization, but
there might be greater/lesser ones. There is a flexible standard for reaction
times—expeditious/timely. The only prioritization is for trusted flaggers, but
how to specify those standards and roles? Need to prioritize certain policy
issues, but DSA doesn’t seem to allow this. Is there leeway to limit trusted
flaggers to offenses of certain substantiality? Art. 22 says that trusted
status “shall be awarded” on certain conditions; raises possibility of trolling
business models.

Proposed AI Act: risk-based approach; based on sector of use—critical
infrastructure, access to essential services, law enforcement, health services.
But also tech based: stricter w/r/t to biometric identification and categorization
of natural persons. Requires human supervision which might interfere w/automated
systems for, e.g., identifying a person. That interferes w/DSA system.

Interventions  

Xiyin Tang, UCLA Law School

230 reform has also focused on accountability, human review,
and transparency. Most content that is taken down is for copyright reasons: why
not talk about copyright along with other content moderation? In part b/c of
agreements b/t large platforms and large © owners. These agreements are highly
confidential, which makes it unclear what counts as “infringement” under this
privatized system. When we think about platforms engaging in content
moderation, they don’t have carte blanche: when there are © claims, legit or
otherwise, there are other claimants setting policy, then passed down to users
through platform as intermediary. When Art 17 was adopted, including good faith
efforts to get authorization from © owners, the largest platforms had already
done so. [As I say, the copyright industries hated Content ID so much they made
it a universal law.] They’re rewriting © policy altogether.

Big problem for transparency. During covid, when live tours
were cancelled, artists broadcasted themselves from their bedrooms. FB Live let
users do this for a minute or two at the time, then user accounts were blocked
or suspended; Instagram, in a rare act of transparency, disclosed that Meta had
agreements with large content owners requiring this blocking. But it didn’t
disclose any guidelines—we can’t tell you what they say; use less music, but we
can’t say what the threshold is. Leaked agreements online show the deal parameters
at which a user is deemed to be a bad faith actor leading to suspension,
muting, blocking. But no party wants to disclose those terms. Transparency
requires us to decide how much platforms are required to disclose. E.g., what
constitutes a clear infringement? Copyright owners don’t want to transpose public
law; what would be the point of private ordering otherwise? So they rewrite the
law. Crops up in the US w/fair use—rightsholders don’t like the idea of fair
uses. The Sony presumption of commercial use being unfair was rolled
back in Campbell, but privatized © agreements override Campbell.
Delineate b/t users that can pay and users that can’t. Rightsholders allow
latter to be covered by large lump sum from platforms; no one was going to pay
anyway. But commercial users, in the leaked agreements, had their uses blocked/put
into commercial review queue to allow rightsholders to go into system and
identify high-value users who could afford a license. Substitutes for fair use.

Eric Goldman, Santa Clara Law School

Implications of DSA on legacy © industries—unintentional benefit.
DSA is written w/expectation that companies will keep doing what they’re doing today,
but level up certain practices. But laws have unintended consequences; what will
change? Seems obvious that platforms will change their behavior, b/c DSA
increases costs of doing business. Minor changes: cost of ADR, cost of audits.
Content moderation is no-win since you can’t make anyone happy; appellate
rights are structural costs, as are transparency mandates. How will services
decrease these costs?

Community of “authors” and “readers”: people flip between
those statuses, but only a small percentage of people who have accounts act as authors
consistently. General rule: 10-20% of content creates 80-90% of revenue. The
DSA will affect the treatment of the long tail.

As practical matter, most authors are in long tail w/ relatively
small audiences that aren’t commercially valuable. Increased costs of catering
to them makes their content less profitable or even unprofitable. Obvious
reaction: cut off long tail. Alternative: charge authors to contribute b/c we
can’t make money in existing business model—Musk’s moves w/Twitter Blue.

Over the long term, hits come from pro producers, despite
occasional viral hits. So services will look for hits; will structurally shift
from prioritizing amateur content to professional content.

His predicted countermoves: web was predicated on amateur
content; producers who lacked mechanism to reach an audience would provide that
content for free—massive databases of free content that could be ad-supported
b/c it didn’t cost much to obtain. DSA shoves that model towards professionally
produced content, making services need something more than ad-supported
business, resulting in more paywalls.

Why does Hollywood oppose 230? Systemic battle to reduce the
overall amateur content ecosystem. That’s why they supported FOSTA—changing the
overall ecosystem.

Losers: niche communities. Fewer places to talk to one
another; hits will focus on majority interests.

Stallman: Statements of reasons for certain types of
takedowns—will that help? [Who doesn’t do that already? Even if you find current
statements vague, the DSA mandate doesn’t seem to create anything new.]

Leistner: these statements will be algorithm-written and thus
at a rather high level. Sometimes this makes sense so the system can’t be
played. The algorithm will just come up with the part of the policy that was
violated, and if the list is long that won’t help much. Still an improvement
b/c the platforms don’t do anything more than they have to. Compare FB/Google
to Amazon: Amazon is efficient on TM but not ©, whereas FB/Google are efficient
w/© and not TM—might be more accountability. [Isn’t this justified by the kinds
of harm that the different services are more likely to cause? That seems like
good resource allocation, not bad.] No standardized complaint procedure/no
human to speak to—the jury is still out on whether the DSA will help.

Goldman: statements of reasons are great example of
accuracy/precision tradeoff. Services will emphasize simplicity over accuracy.
Have seen lawsuits over explanations, so services will want to be as generic as
possible. Appellate options: for every good faith actor who might be appealing,
we should expect X bad faith actors to use the appellate process to hope that
they can reverse a decision by draining service resources. For more precise
explanations, assume that bad faith actors will exploit them; explanations for
them just drain resources.  

Justin Hughes: don’t understand why long tail content would
disappear—assuming a person puts unauthorized long tail content online, that
won’t be as common by hypothesis, but why would it decrease authorized long
tail content?

Goldman: turn off authorship capacity for many existing
users. Twitter has taken away my blue check b/c I’m not of sufficient status to
retain the blue check & I’m not willing to pay. More of those kinds of
moves will be made by more services. Don’t think that existing userbase will keep
authorship/reach powers.

Tang: Art. 17: more money in authors’ pockets by requiring
licenses is the aim. But that concentrates money and which authors get paid.
Makes legacy © holders stronger; creates antitrust problems.

Husovec: Would resist Goldman’s view. Companies that produce
externalities are being asked to pay for them where others are paying now. When
FB doesn’t do proper content moderation, creates externalities for users, so
newspaper has to moderate the comment section on its FB page. Forcing FB to
internalize the costs just means a different entity is paying. [I think that’s
Goldman’s point: FB will try to reassert its position and if it can it will make
the newspaper pay directly.] We might go towards more subscription products,
but not necessarily only b/c of regulation but also b/c we’ve reached the
limits of an ad-supported model.

Q: What about misuse/trolling? Will Art. 23 of DSA address
this? Allows temporary suspension for abuse of process. If you as rightsholder
already have access to Content ID, will you have an incentive to become a
trusted flagger/subject yourself to this regime?

Husovec: DSA is just a bunch of tools; outcomes are up to
the actors. Does have tools to disincentivize—suspensions are superior to
damages. Also applies to appeals, and collective action for consumer
organizations if companies don’t terminate repeat offenders. The problem is
whether the supervision of this will be sufficient. Regulator’s role is obvious—can
strip trusted flaggers of status if not good, but will they be monitored? If
services don’t tell regulators b/c of private ordering, or if they don’t become
trusted flaggers b/c they already have Content ID, then it won’t wore

Leistner: questions are interlinked: if the trusted flagger system
is rigorously policed, it’s less attractive to rightsholders. In theory we want
a Lenz type system with human review for exceptions, but maybe they’ll
be more comfortable with private system. NetzDG was of limited effect b/c just
adapts existing policies; maybe privatized systems remain preferable to this
regulated system, but may offer opportunities to those beyond © like human rights
organizations—should be more opportunities for non-© owners to achieve same
results. Small © owners are relatively disadvantaged where large © owners have
access to monetization and they don’t—we already have this problem.

Tang: Songwriters have complained that authors get worse
outcomes through direct licensing. Under consent decrees, they have to report
to authors first. Under direct licensing w/platforms, large publishers skim off
the top first.

Leistner: extended collective licensing would be the European
answer. [My understanding is that those also overallocate to the top of the
distribution.] Would increase costs, but introduce more fairness. Doesn’t fly
right now b/c lack of supranational ECL. But he’s certain Europe will look into
this b/c the link is so obvious. But that would also mean that every post could
cost money.

from Blogger http://tushnet.blogspot.com/2023/04/27th-annual-btlj-bclt-symposium-from_7.html

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27th Annual BTLJ-BCLT Symposium: From the DMCA to the DSA—A Transatlantic Dialogue on Online Platform Liability and Copyright Law

Posted on April 7, 2023 by rtushnet

Tutorial “The EU Digital Services Act – Overview and Central
Features”

General DSA Architecture and Approach     

Martin Senftleben, University of Amsterdam

Formally, the safe harbor system is still in place for mere
conduit, caching and hosting services for third-party information they transmit
and store. For ©, voluntary own initiative investigations done in good faith
shouldn’t lead to more liability. More intermediary services are covered under
DSA. Points of contact for authorities/legal representatives are existing
obligations but new are terms of service/content moderation policies and tools
disclosure requirements, including algorithmic decision-making and human
review, as well as rules of procedure of internal complaint handling. How much
information must be disclosed? Must be balanced against trade secrets. Another new
obligation: diligent, objective and proportionate application to safeguard
fundamental rights. Obligation is on the service provider.

Transparency: reports on content moderation, including
judicial orders, notices, number and type of content moderation, use of automated
means and related training, and number of complaints.

Special rules for hosting providers, including online platforms;
online platforms, including distance contracts, and very large online platforms
and very large online search engines.

What about the copyright interface w/ the DSA? Art. 2(4):
this is all w/o prejudice to rules laiid down by the © laws. So on top of all
those distinctions, there are OCSSP obligations from Art. 17: online content
sharing services. So where the © regime is silent, use the DSA. And there’s where
the safe harbors have been gotten rid of: using the Art. 17 rules of required
licensing—there’s direct liability if you’re unlicensed, but you can decrease
the risks by using filtering to police the borders of your licensing deals.

OCSSPs are a controversial category in itself. YouTube is an
OCSSP, but other than that much is unclear—are all different types of social
media OCSSPs? We don’t have definite caselaw.

DSA requires VLOPs and VLOSES to have reasonable,
proportionate and effective mitigation measures tailored to specific systematic
risks w/particular consideration to the impacts on fundamental rights. Art. 17
is more specific and thus a further addition to DSA requirements.

“Sufficiently substantiated notice from the rightsholders”
and rightsholders should “duly justify the reasons” for their requests—opening for
more specific requirements like Art. 16 of DSA which say that notices have to
be sufficiently precise/adequately substantiated; so to statements of reasons
must be “clear and specific.”

DSA Art. 23: suspend, for reasonable period of time, and
after warning, users who have violated rules; so too processing of notices and
complaints by complainants that frequently submit notices or complaints that
are manifestly unfounded—not present in © framework so additive to it. Also Art.
22 requirement to ensure that notices submitted by trusted flaggers w/in their
designated area of expertise, should be processed w/o undue delay. Must comply
w/quality standards—status awarded by Digital Services Coordinator of Member State
if flagger has particular expertise of detecting/notifying illegal content; is
independent of any provider of online platforms (but does not need to be
independent of © rightsholders); and carries out its activities diligently,
accurately and objectively.

DSA also requires VLOPs and VLOSEs to get annual independent
audit opinions, reporting to Commission, potential for fines, so they can’t just
wait for court cases to identify whether they’re doing it right.

Fred von Lohmann: For enforcement: other than the
intervention of the Commission through the audit process—how will enforcement
be done? Private rights of action?

A: DSA enforcement is very much by the Commission itself in
his understanding. Drafter of DSA, Irene Roche-Laguna: it depends on the kind
of platform—hosting service, platform, or VLOP. EC has exclusive powers for
enforcement of obligations that apply only to VLOPs/VLOSEs—auditing/risk
assessment. But content moderation requirements for platforms in general are
for country of establishment (if in Europe) and where the legal representative
is (if not). If a platform neglects notices it becomes a systemic issue; the
Commission can jump in. [I wasn’t sure whether she meant that was true even for
non-VLOPs.]

Q: can a recipient of the service receive money damages for
violation of these obligations? Is that governed by Member State law?

A: In DSA 54, there is an avenue for private actors to bring
damage claims to complement audit-based or other executive activities.

Pam Samuelson: will audits be publicly available?

Roche-Laguna: Audit reports will be published w/transparency
reports every 6 months, and audit implementation reports have to be published.
They will have a bit of time to respond.

A: given the transparency requirements, the audit report
should be able to provide more insights, but we don’t know for sure yet.

Q: what makes an online platform?

A: central aspect is dissemination of information. [Husovec’s piece
says Blogger and WordPress aren’t platforms, which seems bizarre to me.] What
is a public? It may not have to be a large public. In © we accept that
dissemination to a circle like 12 or 50 people can already be a public, so
would that also apply under the DSA? The Court of Justice could set a
relatively low threshold.

Roche-Laguna: there is a gray area. A hosting service that
disseminates to the public as ancillary feature, like a comments section on a
website, that wouldn’t be a platform. But we have questions about messenger
services with open chats/groups—100,000 people in chat. Or music service that
has licensed content and user-uploaded content: what is the platform part? [That
doesn’t seem to answer questions like, is email dissemination to the public?]

Q: do platform rules have to be observed for the ancillary
service? It’s a lawyer’s paradise. [Roche-Laguna is laughing but I’m not
finding it funny that they actually can’t seem to answer those questions.]

Rules for Hosting Providers, Online Platforms and Very Large
Online Platforms  

Martin Husovec, London School of Economics

DSA is about content moderation, construed very broadly. Not
just removal of content as w/© infringement but decisions about violations that
aren’t based on legality but are purely contractual—FB and breastfeeding images;
suspending individual users. Also about institutions lower in the stack like app
stores. Hiding/demonetizing content is also covered. DSA covers almost
everyone, though advertising providers and payment providers are touched only
tangentially. Infrastructure providers like access providers, transit services,
DNS/VPN services, domain registrars and registers, generally have very few obligations
other than transparency. But distribution and content layer have more
obligations.

Part of the second generation that replaced the first
generation like section 230 designed to create breathing space for speech and
industries; focus on is regulation of risks posed by services.

For content moderation: fairness in design ex ante, due
process in implementation, transparency, and risk management. Due process
constrains the moderation of both illegal content and contractual breaches.
Risk management for very large players: required to think about product design
and operations; w/some risk management obligations for smaller platforms.

Online platforms are covered if 50+ employees/EU turnover of
10 million euros. VLOPs/VLOSEs: Alphabet, Microsoft, Meta, Bytedance, Snap,
Pinterest, Twitter, Amazon, Wikipedia as the only nonprofit.

Decide what rules are; open to notification from third
parties about content that might be illegal or violate terms & conditions;
make decisions (hosting services and any-size companies); allow appeals/internal
contestation (midsize and above); allow external contestation by users (VLOP/VLOSE);
transparency. Any content restrictions has to be codified in terms and
conditions, and decisions must be made on the basis of the rules. But the rules
must be diligent, objective and proportionate, including in their design
according to the recitals. What does it mean for design of rules? His take:
only extreme outlier policies would have an issue.

Core of DSA: tries to discipline providers in how they make
decisions. They must issue a statement of reasons, including for visibility,
monetization, etc. Specific explanation of reasons required, useful enough to
allow user to argue against them. They can be automated, but DSA says you need
to provide a free opportunity to appeal where a human has to be present in some
step of the process. Internal appeal must be easy to access and user-friendly;
not solely automated; must occur in timely, diligent, and objective manner.

Who can complain or appeal? External players: trusted
flagger, regular notifier, content creator, NGOs.

Possibility of external dispute resolution/ADR: Regulators
certify entities independent of platforms and users; FB’s Oversight Board is
not independent. Content creators and notifiers and reps can use the option.
ADR provider is complainants’ choice; no need to exhaust appeals. ADR decisions
are nonbinding; platforms must engage in good faith. Plaintiff compensates
complainants who win (fees and possibly costs). Complainants that lose pay
their own fees and costs. Trying to improve quality of decisionmaking within
company.

The proceduralist approach constrains implementation more
than rule formulation. Consider: for 5 EUR a month, you can say whatever you
want on the service as long as it’s legal in your country—disinformation,
nudity, etc. all ok. Everyone else is moderated on ToS violations and illegality.
Is this a violation of art. 14(1)? No if disclosed. Art. 14(4): probably no—paying
5 EUR to be unmoderated doesn’t seem disproportionate. What if you have a list
of VIPs whose content is not moderated at all b/c they are leaders of
countries? Again, 14(1) is ok if properly described. But 14(4) would be a
problem in his view due to the impact of illegal content.

Open issues: big guys can easily automate statement of
reasons; what about small providers? Licensed content moderation solutions from
third parties? What about users of services, like newspaper’s FB page—are they
considered to be a separate entity for purposes of people whose content they
moderate? How will there be standard transparency database if different people
are sending their reports in nonstandard format and with anonymization?

Risk management for VLOPs/VLOSEs will likely not be subject
to private enforcement—mostly extended or intensified reporting obligations;
researcher data access; unique obligations for profiling-free choice on
recommender systems (whether organic or advertising), or advertising archives. Subject
to regulatory dialogue w/whole community, including national regulator, NGOs,
researchers, where main thing is to figure out what companies are doing w/r/t
certain types of risks on their platforms. Dialogue b/c of opacity of system
and info asymmetry: regulators can’t instruct on what to do w/out knowing what’s
going on. Must assess systemic risks stemming from design or functioning of
services including algorithms and use made of their services, as well as back
end governance, taking into account the risks’ severity and probability. Risks
include: illegal content; fundamental rights; public security and elections;
health and well-being (including gender-based violence, public health, minors,
physical well-being, and mental well-being). Nothing of concern to civil
society is left out. If a social network adopts ChatGPT into design, that
becomes regulated along with anything else the platform uses.

Metaphor: authorities can partly restrict how and when
protest activities take place (streets, hours, use of amplification tools) and
take measures to prevent harm to protestors or others (e.g. by boosting police
presence) but can’t select speakers or dictate content.

Q: why is business to business included here? Why can’t
Amazon say “one strike and you’re out” to a business?

A: b/c the design was about risks of hosting services, not
just harms to individuals or individuals as consumers. Advertising marketplaces
are available to the public.

Q: what about risk mitigation for humans conducting content
moderation/labor harms?

A: sure.          

Interplay with OCSSP Rules in the Directive on Copyright in
the Digital Single Market

João Quintais, University of Amsterdam

Background of lots of attempts to interpret previous rules under
InfoSoc Directive. Primary liability is harmonized. But secondary liability was
mostly unharmonized; ended up with mostly a notice and takedown regime. Court of
Justice expanded right of communication to the public to the point where there
was a Q of whether YT’s own services triggered direct liability. Poster child was
YouTube/claims of “value gap” (sigh).

Six states haven’t met the implementation deadline; still
waiting to figure out what the rules actually should be. Poland decision: CJEU said
Art. 17 was ok but had to give due regard to uploaders’ interests. OCSSPs cover
UGC platforms with large amounts of works that organize and promote them and
have a commercial/competitive effect. Exclusions: encyclopedias, ecommerce,
B2B/cloud hosting: Wikipedia and GitHub/ArXiv.org, Skype, Dropbox, and eBay are
excluded—partly down to who had good lobbyists. But you are still covered by
InfoSoc directive plus DSA. Startup provisions: under 3 years and 10 million
Euros, only notice & takedown, but if above 5 million visitors also notice
and staydown. Not much there. Could be excluded from DSA but covered by Art.
17.

A bipolar copyright system/an employment program for EU
lawyers. You might have to look service by service to figure out whether you
are an OCSSP. Etsy? WordPress?

Non-OCSSP: default no direct liability/hosting safe harbor
and moderated duties of care, based on YT case and national law. OCSSP: default
is direct liability w/exemptions tied to best efforts licensing and filtering.

Most online platforms for DSA will be OCSSPs so you have to
figure out what applies—DSA may cover things only partially, and it’s not very
clear/depends on your normative preferences. Bonanza for lawyers! If you’re a
non-OCSSP, DSA will probably apply to almost everything.

Von Lohmann: Secondary liability seems to have disappeared.
It’s not just OCSSP/non-OCSSP—there’s no harmonization for secondary liability,
and safe harbors are interpreted as not precluding injunctive relief in most
jurisdictions—so don’t you also have an entire category of secondary liability
injunctions that are outside of both of these regimes or they displaced by DSA/Art.
17?

A: you are right, there might be that category. YouTube case
is designed for YouTube, but is now covered by Art. 17: need to apply that to
other platforms, and how to do so is unclear. German courts are deciding how to
modulate duties of care and will continue to do so unless ECJ tells them to
stop. In all cases, you assess liability also on the basis of compliance
w/duties of care, but DSA duties are different: obligations regarding
user-uploaded content are about your role as platform.

Comment by Senftleben: may not be as bad as that—the CJEU
has extended primary liability so far that there’s not much room left for
platform secondary liability. The crucial question, and an open one, is what
can be expected from a reasonably diligent operator in this situation—will this
be influenced by the new DSA duties?

A: court will likely look at whether this is a good faith
player—will reason backwards to find no liability if so. The “good guy” theory
of EU copyright law: court finds a way around liability for a good faith
player, and a way for direct liability if there’s not. You can’t really get
from the text to the outcomes; the court just makes up a bunch of conditions.

Comment: primary and secondary liability are no longer
distinct categories. Now all under the umbrella of primary, but if you can’t
get authorization you have to filter, so the duty of care is now embedded in
primary liability.

Beyond Copyright Infringement: DSA Review, Moderation and
Liability Rules Compared to Previous National Review and Takedown Approaches
for Illegal Content

Matthias Leistner, LMU Munich Faculty of Law

Need to know whether national rules are preempted, and they
also provide evidence of experience that might be useful for implementing DSA.
There were differences in applying and enforcing rules; national authorities
might have leeway in applying DSA rules, which might lead to forum shopping
about where to have a company seat.

German NetzDG regulates allegedly criminal content on social
media (obvious v. non-obvious are treated differently). Austria has a similar
law; France’s law was partly invalidated b/c of extremely short blocking
periods for certain content, but it also has a law against fake news in 3
months before a national election; Italy has a law against “cybermobbing” and
dealing with parents/minors; Baltic states have their own.

NetzDG has limited scope: social networks, video sharing
platforms v. DSA’s comprehensive/four-tiered approach.

NetzDG: catalogue of substantial/hard-core criminal
offenses, continuously extended v. DSA’s all illegal content including minor violations
(including consumer protection law), plus special notification duties for criminal
acts etc.

NetzDG: persons affected in their rights can notify; DSA:
everyone can notify.

NetzDG: expeditious blocking: 7 days or 24 hours in obvious
cases; DSA: expeditious/without undue delay.

NetzDG: redress for both sides; another human in the loop;
DSA: role of complainant surprisingly unclear, no standing for the other party
in the complaint.

NetzDG: No further prioritization b/c of limited scope; DSA:
system of trusted flaggers given priority; dynamic adaptation through
provisions on misuse and suspension.

NetzDG: limited and crisp; DSA: wide and wobbly.

Provisions on transparency of user contracts are similar to
German case law; reasonable and cost-efficient b/c contracts exist anyway. But
may not be easy to implement b/c some transparency obligations relate to what
the algorithms actually do. [I think this may undersell the
difficulty of figuring out what is, for example, abusive or hateful speech,
especially for non-dominant communities.] Protection of trade secrets is also a
huge issue.

Most probably, NetzDG will be repealed in 2023, but does the
DSA entirely preempt Member State laws? Depends on the harmonized subject
matter—access for research purposes? Research access for other public policy
purposes?

Was there overblocking b/c of NetzDG? No empirical evidence
under the procedural mechanism, but a backlash to unjustified blocking under
different user policies. Was preventive blocking under user policies/community
standards perhaps indirectly due to NetzDG? Avoiding cumbersome statutory
mechanism by overcompliance? Hard to assess w/o access for research.

Indirect regulatory effects have probably worked quite well
w/o overblocking; proposed self-regulation boards for notice and takedown don’t
seem to have worked. Platforms didn’t want to cooperate and platforms have
different policies w/regard to user communities.

CJEU has responsibility for hard questions, along with
national coordination; resources and coordination are issues and GDPR
experience is disheartening though antitrust experience is better.

Q: regulations require clear and understandable rules in
terms that are neither clear nor understandable: how are platforms going to
establish such rules for billions of pieces of content?

A: it’s not new that the legislator can do things that a
private entity can’t. German FB case established certain basic standards for
typical user policies that would be easy to comply with. There must be certain
reasonable rules on what is allowed and what isn’t. DSA requires examples for
rules of what is prohibited and what is not. Pretty much about procedures. [But
people will always be able to argue that their slur is closer to the not-prohibited
side than the prohibited side, if their slur isn’t in the list of examples.
This reassurance might work for legal/illegal but it is not helpful at all for
lawful but awful.] It’s about the bad guys with self-contradictory community
policies that block without reasonability.

Midsize platforms can game the system by choosing a friendly
jurisdiction like Ireland. Carveouts don’t protect enough small providers and
will be problems for Baltic startups.

Q: it’s nice to say that Germany doesn’t require too much
detail but this is a new regime, and France is going to be different.

A: agree to a certain extent; also important that some
standards are new—certainty will take 10 years and that’s not great. But the
transparency obligation doesn’t come from a vacuum—consumer protection law/transposing
concepts of standard terms to the platforms [where the subject matter of the
transaction, the user’s speech, is pretty different!]. While we were discussing
DSA, it made sense to object and discuss our concerns, but now we have it, so
it’s time to think about ways to make it workable to the extent possible. The only
way forward is to implement it.

Daphne Keller: share concerns about private litigation in
different member states, lack of harmonization. How many states might be
interested in allowing this?

A: We had this problem before, w/27 different standards—how many
of them really matter? Here we have to distinguish b/t public and private
enforcement. Public enforcement, the Commission will matter/establish standards
that might trickle down from VLOPs to smaller platforms. Germany, France,
Netherlands, Scandinavian countries will matter.

Keller: DSA is silent on question of what injunctions can
say.

A: private enforcement: new provision on damages and
injunctions might be possible; would have to look at different states’ laws.
Largest dangers are Germany and France national unfair competition laws, where
competitors might be able to sue—real problem w/GDPR that we are still
grappling with. Practically limited to Germany, France, maybe Austria and some
others. So far, Austria legislated specifically that compliance obligations don’t
qualify for injunctions, period; caused quite a number of problems in the
market.

Free Speech Challenges and Potential Risk Reduction in the
DSA

Eleonora Rosati, Stockholm University

Balancing freedom to conduct a business and the need to
protect recipients of services through transparency. Enhanced obligations for
VLOPs and special provisions for micro/small enterprises. Art. 17 tries to
protect users with certain exceptions.

Copyright and free speech: EU Charter of Fundamental Rights
is a primary source of EU law, and recognizes IP within right to property; also
recognizes free speech. Also recognizes freedom of artistic expression, freedom
to conduct a business, respect for private and family life, and protection of
personal data—not just integration of markets but integration of morals.
Balancing framework, though how the balancing is to be done is the key. Level
of protection for © needs to be high—what does that mean? High level of
protection for whom and of what? InfoSoc Directive refers to authors,
performers, producers, and culture industry alike, as well as consumers and
public at large. There are other kinds of rightsholders. ECJ has been clear
that high level of protection does not mean highest level of protection; the
goal is a fair balance of different interests. Increasingly characterized by a
fundamental rights discourse.

Many concerns about free speech from Art. 17, resulting in
action by Poland:. Resulting judgment: ECJ didn’t say Poland was wrong that it
restricted free speech—free speech is not absolute and can be restricted under
certain conditions. ECJ said there were enough safeguards: filtering tools must
be capable of adequately distinguishing b/t unlawful and lawful content; users
must have rights; rightsholders must provide relevant and necessary
information; no general monitoring obligation; procedural safeguards must
exist; and there should be stakeholder dialogue and fair balance.

Inconsistent approaches at the national transposition level,
so Art. 17 won’t be the stopping point. Also, lex specialis/lex generalis
relationship is likely not to be frictionless. CJEU will have to smooth things
out.

Comment: if you overblock, all you face is user complaints.
If you underblock, you get sued and it’s costly. That’s where the balance is.

A: mostly the remedy for overblocking is to let the thing
up; though national law might have some other remedies.

Comment: German law has a sort of must-carry obligation if a
user asserts the applicability of an exception. But it’s the minority approach.

A: Italy does the opposite—if there’s a complaint, content
must be disabled during the dispute. From platform point of view, you may have
to divide treatment of Germany and Italy/geoblock.

Q: is Italy compliant with the Poland CJEU decision?

A: neither Italy nor Germany is—you can’t have a blanket
approach. [I don’t understand what that means—I would appreciate hearing what a
provider is supposed to do.]

Exceptions and limitations might mean something different in
terms of whether they establish user rights—or maybe not! The new data mining
provisions are characterized differently from each other, but not clear whether
that makes a difference to whether, for example, one is entitled to remuneration
and one isn’t.

Comment: if you take auditing seriously, maybe there can be
changes/real examination of the practices.

Von Lohmann: but who selects and pays the auditors?

Comment: they’re supposed to be independent!

VL: that’s not the question.

Q: will this get rid of small platforms b/c all rights have
to be equally honored?

A: it depends. ECJ is adamant that fair balance depends on
circumstances of the case. Some rights might take precedence on a particular
platform; not all content is created alike. There might be situations in which
certain concerns override other types of rights. France would maybe answer your
question in the affirmative, but not all would.

Comment: situating different categorization options under
DSA, might see cases that the more you diversify the types of content you host,
the more obligations you have.

Q: for US lawyers, we look at the Texas and Florida laws
that are clearly politically motivated attempts to suppress content moderation
in favor of a political agenda. Hard time understanding how that’s going to be
handled in Europe, but the language of nondiscrimination suggests that it can
and will happen in Europe too, which also has culture wars [and backsliding democracies].

A: indeed, the concerns around © are also in line with those
concerns. The discourse is broader than ©–Afghanistan papers case, where
German gov’t attempted to repress publication of military reports about
operations of German army in Afghanistan. Used © as a tool. Advocate General
and ECJ emphasized that © can’t be used to suppress free speech and one should be
careful to limit © to its purposes.

from Blogger http://tushnet.blogspot.com/2023/04/27th-annual-btlj-bclt-symposium-from.html

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lidocaine suits find pain point as judge dismisses claim

Posted on April 4, 2023 by rtushnet

 Prescott v. Rite Aid Corp., — F.Supp.3d —-, 2023 WL
2753899, No. 22-cv-05798-VC (N.D. Cal. Apr. 3, 2023)

Breaking with several previous cases, this court holds that
Rite Aid’s “Maximum Strength Pain Relief Lidocaine Patches” with 4% aren’t
misleading even though a consumer could get a prescription from their doctor
for a 5% patch.

A reasonable consumer understands
that over-the-counter products differ from products that are available with a
prescription. … Reading the label, a reasonable consumer would understand the
patches to contain the “maximum strength” dose available at the drug store, and
they would contemplate the possibility that a stronger dose might be available
from their doctor…. Unless an over-the-counter drugmaker draws a direct
comparison between its products and those available with a prescription,
statements like “maximum strength” are generally understood as comparisons to
other over-the-counter products.

Comment: I’m not sure how the court knows these things.

from Blogger http://tushnet.blogspot.com/2023/04/lidocaine-suits-find-pain-point-as.html

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consumer survey can’t make a scientifically wrong use of a term right

Posted on April 3, 2023 by rtushnet

Gunaratna v. Dennis Gross Cosmetology LLC, No. CV
20-2311-MWF (GJSx), 2023 WL 2628620 (C.D. Cal. Mar. 15, 2023)

Plaintiff challenged defendant’s “C + Collagen” claim as
falsely indicating that its product actually contained collagen.  

Defendant wants to make this action
about whether “collagen” means “collagen” and what consumers understand
“collagen” to mean. The problem for Defendant is that “collagen,” standing on
its own, is not some undefined, amorphous term — there is a widely-accepted
scientific definition describing collagen. Even Defendant’s own expert, when
pressed, defines collagen as a protein only found in animals.

This affected the expert testimony that would be admitted.

Defendant is free to [argue] that
the label does not convey that the products contain collagen and that the
presence of collagen is not material to consumers’ purchasing decision. But
Defendant is not free to offer its own definition of “collagen” unsupported by
any reliable science in the record.

Thus, portions of expert reports that “blindly adopt the
notion that ‘plant based collagen amino acids’ exist” would be excluded.

The role of a district court in screening experts is that of
“a gatekeeper, not a fact finder.” “An expert can appropriately rely on the
opinions of others ‘if other evidence supports his opinion and the record
demonstrates that the expert conducted an independent evaluation of that
evidence.’ ” And an expert may adopt his party’s version of the disputed facts,
“unless those factual assumptions are ‘indisputably wrong.’ ”

This is a putative class action against a skincare company
that allegedly falsely advertises products labeled “Dr. Dennis Gross C +
Collagen,” because they “(admittedly) do not actually contain any collagen, as
the word is typically and scientifically understood. Rather, the products
contain vegetable-derived amino acid molecules, which Defendant claims mimic
the structure of ‘hydrolyzed’ collagen. But collagen is a protein found
exclusively in the cartilage, bone, and tissues of animals, fish, and humans,
and is not found in plants.” There’s a market for collagen-containing products
because it’s been linked to maintaining youthful skin, hair, and nails.

Defendant argued that its labels weren’t false because consumers
understand “C + Collagen” to mean that the products contain Vitamin “C” (which
it does), and Vitamin C boosts (“+”) the body’s natural production of
“Collagen.” Plaintiffs pointed out that “+” is commonly used in the industry to
indicate “and” not “boosts.”

Defendant also argued that the products actually contain
plant-sourced “collagen amino acids,” that is, amino acids derived from corn,
soy, and wheat, not from collagen, but that are 
chemically and functionally identical to amino acids from hydrolyzed
animal collagen. Plaintiffs argued that, if so, defendant should have invested
in marketing to explain to consumers that plant-based amino acids have similar
anti-aging attributes as does collagen. As long as consumers, whether logically
or not, attach value to the label “collagen,” the labels distort the available
information in the market and gives a price premium to the product.

The court accepted plaintiffs’ expert Dr. Fetzer’s opinion
that the amino acids weren’t “collagen amino acids.” This was not about
equivalence but about origin. He opined that, even if there were some
similarities between the vegetable amino acids in the products and real
collagen, calling the amino acid solution within the products as “collagen” or
“collagen amino acids” is “analogous to stating that a collection of the 26
letters of the alphabet in approximate proportions to those of Shakespeare’s
Hamlet mean that those letters must have really been from a text of Hamlet.”

To rebut this chemist’s opinion, defendant offered the
opinions of a dermatologist, but they weren’t supported by the record. Her
opinion as to the products’ overall efficacy was only relevant to the issue of
damages, not falsity or deception. Her interpretation of what “Collagen + C”
conveys was not relevant to the reasonable consumer test (and also tended to
support plaintiffs anyway). However, to the extent that defendant could show
that reasonable consumers interpret the term as meaning that the product boosts
collagen rather than containing collagen, her opinion would be relevant to show
that was true. But her opinion that the supposed vegetable collagen was
equivalent to actual hydrolyzed collagen was excluded; she was not a chemist,
has not researched equivalency of hydrolyzed solutions or plant protein
hydrolysis, and didn’t have expertise in chemical industry standards for
equivalency.

However, the court didn’t exclude her opinions as biased just
because she was an endorser and user of the products.

Both sides offered surveys; ordinarily, the court would
consider them both admissible because the objections went to the weight of the
evidence. But the defendant’s survey and its objections to plaintiffs’ survey
were based on the excluded opinions regarding the chemical composition of the
products. Defendant’s view of the facts — that it is accurate to call its solution
“plant-based collagen amino acids” — was explicitly rejected by the only expert
who is a qualified chemist and was otherwise unsupported by any admissible,
scientifically-sound evidence. Saying that a product has “plant-based collagen
amino acids” is not the same as saying it has “the equivalent” or a “synthetic”
version of collagen. It was like arguing that watches made in Japan can be sold
with a label “Made in the USA,” just because the watches are just as effective
as those made in the USA. “By saying amino acids are ‘collagen’ amino acids,
Defendant is representing that the amino acids are derived from collagen.
Otherwise, what makes the amino acids ‘collagen amino acids’?” Not any amino
acid in collagen is a “collagen amino acid,” at least by the admissible
testimony and common sense. “One cannot claim something has water in it just
because it has some amount of hydrogen.”

But the Ninth Circuit has instructed courts to be very
generous with consumer surveys. Still, there is Daubert, and “the low
bar imposed on consumer surveys has been described in contrast to novel scientific
theories,” but here the survey was the vehicle for introducing such a theory.
Thus, defendant’s survey expert’s assumption that “plant based collagen amino
acids” exist and, moreover, that this full phrase appeared on the products, “deeply
infects the results of her survey and would confuse the issues for any jury.”

Defendant has not shown by
admissible evidence that what “collagen” means is up for any real scientific
debate. While consumers and laypersons may not have a scientific understanding
of where collagen comes from – the question “what is collagen?” has but one
accurate answer, and more importantly, is not the issue in dispute at least on
the issue of falsity/deception.

Defendant challenged plaintiffs’ survey on various grounds.
The survey used respondents who had purchased personal care and beauty products
in the last 6 months and asked them whether they understood the product labels
to mean that the products contained collagen. He then asked whether, they would
be more or less satisfied with their purchase, or more or less likely to buy it
again, after learning that the products contained no collagen and only
contained amino acids. He also asked the respondents whether, after learning
that the product contained no collagen and only contained amino acids, they
would be more or less likely to purchase the product again. The expert
concluded that over 95% of respondents understood the front label to mean that
the products contain collagen, and 51.7% of respondents indicated that they
would be “much” or at least “somewhat less satisfied” if they learned
otherwise. This adequately tested deception and materiality, even if it didn’t
test reliance.

Defendant argued that the respondents weren’t representative
because its consumers are high-end, sophisticated product purchasers and
therefore the population was non-representative. But it wasn’t clear why that
would be a problem, given that more sophisticated shoppers “are likely more
aware of, and perhaps specifically desire, the benefits of collagen products,”
so this just went to weight rather than admissibility.

Meanwhile, the central question in defendant’s survey was:

Q13. Based on your understanding of the product, which of
the following, if any, describes what C + Collagen means? 

(Select all that apply)

1. Product contains Vitamin C which increases collagen

2. Product contains animal collagen

3. Product contains plant-based collagen amino acids

4. Something else (Please specify): ___ 

5. None of these [EXCLUSIVE]

6. Don’t know / unsure [EXCLUSIVE]

Defendant’s expert concluded that “the majority of
purchasers [surveyed] understand that C + Collagen means the product contains
Vitamin C” (49.7% selected “Product contains Vitamin C which increases
collagen). And the “next most common interpretation of C + Collagen was that
the product contains “plant-based collagen amino acids” (37.2%), while only
26.4% indicated that C + Collagen meant that “the product contains animal
collagen.”

The survey also asked materiality questions assuming that
plant-based collagen amino acids were real, and purportedly found that 58.5% of
consumers wouldn’t care—and of those who did care, only 3% would be less likely
to buy plant-based products.

But nothing in defendant’s survey tested plaintiffs’ theory
of the case: that the label conveys that the products contain both Vitamin C
and collagen. “So, the fact that most individuals picked the answer choice
indicating that they interpreted the label to mean Vitamin C boosts collagen is
unsurprising given it is the only answer that contains both Vitamin C and
collagen.  The fatal flaw was that the survey used the junk science that the court
was supposed to keep out of the courtroom: “the questions introduce a substance
that does not exist in the real world or even appear as a phrase on the
Products’ packaging.” 

The survey “tested whether consumers understand where
collagen comes from,” but that was different from the argument that “consumers
value the word ‘collagen’ itself – whether consumers understand the science or
not,” which allowed the defendant to charge inflated prices. Thus, the expert’s
opinions and conclusions related to these questions were excluded as to falsity
and materiality, as were her critiques of other experts based on their failure
to test the concept of “plant based collagen amino acids,” The remaining
aspects of the report (such as the reliance questions/answers) were admissible.

from Blogger http://tushnet.blogspot.com/2023/04/consumer-survey-cant-make.html

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lidocaine patch, allegedly not “maximum strength,” gives Walmart some pain

Posted on April 3, 2023 by rtushnet

Rodriguez v. Walmart Inc., 2023 WL 2664134, 22-CV-2991 (JPO)
(S.D.N.Y. Mar. 28, 2023)

This is another lidocaine lawsuit finding that plaintiffs
stated a claim under New York’s GBL based on allegedly false advertising that
Walmart’s patches and creams deliver a “maximum strength” dose of lidocaine and
with respect to the patches, function as a “stay-put flexible patch” that
“lasts up to 12 hours.”

Plaintiffs alleged that other over-the-counter and
prescription lidocaine creams and patches deliver a higher concentration or
amount of lidocaine and the lidocaine patches do not contain a higher dose of
lidocaine than competing patch products without the “maximum strength” label. In
addition, the patches allegedly systematically fail “by large margins” to
adhere to users’ bodies for 12 hours; fail to continuously relieve pain during
that period because of the premature detachment; and are insufficiently
flexible to withstand daily activities such as walking, stretching, and
sleeping.

It was plausible that a reasonable consumer would understand
“maximum strength” to mean that the patch product contains the maximum amount
of lidocaine available on the market for that type of product. Walmart’s
arguments that prescription-strength patches are not proper comparators and that
plaintiffs used erroneous calculations couldn’t be resolved on a motion to dismiss.
And “max strength” was equivalent to “maximum strength.”

Whether “stay-put flexible patch” was non-actionable puffery
couldn’t be resolved at this stage. It wasn’t too vague to be actionable; “[w]hether
the patch tends to remain adhered to users’ skin and flex along with their
movements during a typical period of use is an objective question.” And the
phrase wasn’t “so patently hyperbolic that it can be deemed puffery as a matter
of law.”

Similarly, “lasts up to 12 hours” was plausibly misleading:

After reading directions that state that a user should use
one patch for “up to 12 hours,” a reasonable consumer would indeed plausibly
expect to be able to use a single patch for a period approaching 12 hours.
Further, Plaintiffs do not allege that 12 hours is a guarantee; rather, they
allege that the patches systematically fail to adhere for a time period close
to 12 hours.

Plaintiffs also plausibly alleged material omissions by
failing to disclose that the patches are “prone to even greater detachment when
[consumers] engage in moderate exercise or other regular daily
activities.”  Walmart argued that it had
no obligation to state the obvious — that is, that the patches could detach
when the user is mobile. But “[j]ustifiable reliance by the plaintiff is not an
element of [a] statutory claim” under GBL § 349 or § 350.

 

 

from Blogger http://tushnet.blogspot.com/2023/04/lidocaine-patch-allegedly-not-maximum.html

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“Paris” on makeup doesn’t itself indicate origin

Posted on March 31, 2023 by rtushnet

Eshelby v. L’Oréal USA, Inc., 2023 WL 2647958, 22 Civ. 1396
(AT) (S.D.N.Y. Mar. 27, 2023)

Eshelby sued L’Oréal over its use of “Paris” (including as
part of the brand name “L’Oréal Paris”) and French-language text in ads and on
the front of packages when the products aren’t made in France. They say in fine
print on the back or side of the packaging that they are manufactured in the
United States or Canada. She alleged that American consumers associate French
products with high quality and luxury such that consumers are willing to pay a
premium for French products, and further that other cosmetic products sold in
the United States that display the word “Paris” are manufactured in France, making
this deceptive to reasonable consumers. She brought the usual
California claims and some others, but the court dismissed them all.

Some of the accused products didn’t have other French words
on them. “As a matter of law, a mere reference to Paris is insufficient to
deceive a reasonable consumer regarding the manufacturing location of a
product.” Plus:

The word “Paris” always appears in
stylized text underneath the word “L’Oréal,” in the same font and color as the
word “L’Oréal,” such that a reasonable consumer would understand that “Paris”
is part of the brand name “L’Oréal Paris.” … And, although a reasonable
consumer may infer from the brand name that the company originated in Paris, a
reasonable consumer would not also conclude that a particular product is
manufactured in Paris, or elsewhere in France—particularly because each product
also contains a disclosure on the back label stating the manufacturing
location.

What does this mean for geographic deceptiveness or
misdescriptiveness refusals, especially in light of the greater constitutional
scrutiny given to refusals after Tam and Brunetti?

Reasonable consumers may not have to look for corrections to
misleading matter on the front of the label, “but the front label on the
products Eshelby purchased do not make any actual representations about country
of manufacture; rather, Eshelby inferred from the word ‘Paris’ and the
French-language text that the products were manufactured in France. The front
label is not so misleading that a reasonable consumer who cared about the
country of manufacture should not be expected to look at the full packaging for
a disclaimer, which was clearly and correctly provided on the labels of each
product Eshelby purchased.”

Even the addition of other French-language text was
insufficient. Although she pointed to two other products with French names that
were made in France, she didn’t allege “that the examples she points to are
comparable to the haircare and makeup products she actually purchased, i.e. in
terms of retailers, price point, or target audience.” Also, they presented
their French text differently, with product names in French, and the
French-language descriptions preceding the English translations. The L’Oréal
products use product names in English only as well as large/preceding English
descriptions, making it implausible that they were made in France for French
consumers. And there was nothing on the labels making explicit claims about
country of manufacture except the truthful disclosures on the back.

“The mere presence of words in a foreign language is
insufficient to mislead a reasonable consumer.” [Citing a case about Spanish;
is that really generalizable to all languages?]

Amending the complaint to include allegations about a survey
supporting her claims would be futile because “[a] plaintiff cannot rely solely
on consumer surveys to state a claim.” Anyway, the survey only showed
respondents the front of the product, and omitted responses stating that, based
on the front label of the product, the respondent does not know where the
product was manufactured.

from Blogger http://tushnet.blogspot.com/2023/03/paris-on-makeup-doesnt-itself-indicate.html

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(c) ownership claim allows both (c) and Lanham Act claims on motion to dismiss

Posted on March 31, 2023 by rtushnet

Estate of Henry Joseph Darger v. Lerner, 2023 WL 2664341, No.
22 C 03911 (N.D. Ill. Mar. 28, 2023)

Darger “was an artist who died in obscurity but whose work
received significant posthumous acclaim.” The Estate alleged that his copyrights
were wrongfully claimed for nearly 50 years by Darger’s landlords. The court
denied a motion to dismiss on copyright and trademark etc. claims; the latter
trouble me for obvious Dastar reasons.

Darger had a tough life, including institutionalization. “From
approximately 1930 until 1973, when he moved to a care facility and shortly
thereafter passed away, Darger lived in a room at 851 West Webster in Chicago’s
Lincoln Park neighborhood. Darger’s landlords from approximately 1960 to the
end of his life in 1973 were Nathan and Kiyoko Lerner.”

When he died intestate, he left
behind in his apartment a 15,000-page epic fantasy novel called In the Realms
of the Unreal, about a civil war between children and abusive adults, which
included approximately 300 pages of watercolor, pastel wash, pencil, and
collage illustrations. He also wrote other expansive works …. Darger’s works
posthumously became well-regarded in the genre of “outsider art” (art by
self-taught artists who have no contact with the mainstream). “His works are
known for using a vibrancy of color and vivid composition.” Today, a single
illustration from In the Realms of the Unreal regularly sells for $200,000 to
$400,000 and has been known to fetch as much as $750,000. His illustrations
have also been featured in books, teaching materials, commercials, films, and
museums around the world.

“Upon Darger’s death, the Lerners took control of his works
under the allegedly false pretense that he had gifted the physical copies of
his works and their associated copyrights to them.” They also used Darger’s
name, identity, and likeness to “exploit” his works and by registering the
domain name “officialhenrydarger.com.”

In 2022, a distant relative was appointed as administrator
of the Estate, which then sued.

Defendants’ primary argument was laches/statute of
limitations, but those are affirmative defenses usually not appropriate for a
motion to dismiss, and it was conceivable that they didn’t apply. “First, under
the separate-accrual rule which applies to the Copyright Act, the statute of
limitations runs from each successive violation.” Thus, defendants were
allegedly currently violating the Copyright Act, Landham Act, and state IUDTPA.

Second, the discovery rule might apply. It was reasonable to
infer that the Estate didn’t have a reasonable basis for learning of
defendants’ conduct until recently, given the allegations of “the difficult
circumstances of Darger’s childhood which cut him off from any extended family;
that he lived a solitary life working “menial” jobs; that he died intestate;
that his art, though posthumously well-regarded, is mainly known in the niche
genre of ‘outsider art,’; and that Sadowski was appointed administrator of the
Estate by the Cook County Probate Court in only 2022.”

Copyright ownership: At this stage, the court accepted as
true the allegation that Darger did not gift his works to the Lerners. Given
that the disputed transfer was pre-1978, it was governed by the common law. “A
transfer of a common law copyright did not need to be in writing.” Still,
though a transfer of the material object could normally evidence an intent to
transfer the underlying common law copyright, the issue was always the intent
of the transferor. Nimmer even uses a relevant example: “if author A submits a
story to editor E at a magazine for consideration … E waits decades until A
is dead; and then E publishes it under a purported grant from A, there is scant
reason to credit the necessary ingredient of A’s intent to convey copyright
ownership.”

Does copyright preempt the Estate’s equitable easement and
IUDTPA claims? The first claim sought physical access to create an alternative
master; this was a substantively different right than copyright, so not
preempted. The second was, according to the court, not a preempted reverse
passing off claim, but instead based on Kiyoko Lerner falsely holding herself
out to consumers as a representative of the Estate. “Making such a
misrepresentation about one’s affiliation, by itself, is not among the
exclusive rights enumerated in § 106 of the Copyright Act.” [But depending on
what she actually said, Dastar or conflict preemption might be quite
relevant.]

Lanham Act false designation of origin, unfair competition,
and cybersquatting: The complaint identified Henry Darger’s name as the
relevant trademark (I don’t see how the Estate can plausibly claim to own it as
a mark, but ok). “[W]hether Kiyoko Lerner has a registered trademark in
Darger’s name is outside the four corners of the Complaint and is therefore a
factual dispute and not properly considered on a motion to dismiss.” And likely
confusion can’t be assessed at the motion to dismiss stage, nor were plaintiffs
required to allege specific facts establishing bad faith for cybersquatting at
the pleading stage. Still seems to me like they’re heading for fatal Dastar
problems.

from Blogger http://tushnet.blogspot.com/2023/03/c-ownership-claim-allows-both-c-and.html

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