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Comedy Central’s South Park has opened the door for “fair use” copyright defenses to shut down infringement lawsuits before they saddle defendants with discovery expenses or force a settlement for cost reasons.
The U.S. Court of Appeals for the 7th Circuit in Chicago ruled just weeks ago that the cartoon’s parody of a popular Internet video — if you watch South Park, you know which one — was a protected parody. The episode “Canada on Strike” lampoons the juxtaposition of viral videos’ popularity with their typically paltry financial returns through advertising and licensing. Brownmark Films, which owns the copyright on the original video, sued Comedy Central and network owner Viacom for infringement. (Incidentally, both music videos were posted on You Tube, the same company that Viacom had sued for a billion dollars in March 2007 for alleged copyright infringement.) The appeals panel unanimously agreed that the South Park video was “obvious” fair use, “providing commentary on the ridiculousness of the original video and the viral nature of certain YouTube videos,” and upheld the suit’s dismissal.
Fair use under copyright law occurs when an earlier work is used by a latter work for commentary, parody, education or some other purpose whose main goal is not to secure financial gain. Recognizing the essential nature of South Park as a mature, adult-oriented animated series, the 7th Circuit emphasized that “[t]he show centers on the adventures of foul-mouthed fourth graders in the small town of South Park, Colorado. It is notorious for its distinct animation style and scatological humor [and] frequently provides commentary on current events and pop-culture through parody and satire.” Yet without getting into all the procedural wrinkles, the court also broke new legal ground in its discussion of the role of early dismissal of “weak claims” and disposition based on a fair use claim alone, in fighting against the “chilling effects” of First Amendment-related litigation.
Despite Brownmark’s assertions to the contrary, the only two pieces of evidence needed to decide the question of fair use in this case are the original version of [the viral video at issue] and the [South Park] episode at issue… We think it makes eminently good sense to extend the [incorporate by reference] doctrine to cover such works, especially in light of technological changes that have occasioned widespread production of audio-visual works. The expense of discovery … looms over this suit. Ruinous discovery heightens the incentive to settle rather than defend these frivolous suits. [Thus,] district courts need not, and indeed ought not, allow discovery when it is clear that the case turns on facts already in evidence.
An unusually frank and colorful opinion by long-time Circuit Judge Richard Cudahy (first appointed by President Jimmy Carter in 1979) provides some comedy itself. Brownmark could have offered its own evidence to defeat the fair use defense but chose not to, Cudahy wrote. Its “broad” discovery request made Brownmark look like a “copyright troll” and would allow “expensive e-discovery of emails or other internal communications.” Brownmark’s only plausible copyright claim could be be that the parody harmed the market for its original video, but “as the South Park episode aptly points out, there is no ‘Internet money’ for the video itself on YouTube, only advertising dollars that correlate with the number of views the video has had.” Cudahy concluded “[i]t seems to this court that” the parody video’s “likely effect, ironically, would only increase ad revenue.”
Sometimes the courts actually do get it when technology is involved, although we have no idea whether Judge Cudahy himself watches South Park. As the Electronic Frontier Foundation, which submitted an amicus brief on behalf of Comedy Central, explained:
The opinion joins a growing body of precedent affirming that it’s proper to dismiss some copyright cases early, and that it’s possible in appropriate cases to determine whether a use is noninfringing without engaging in lengthy discovery. These rulings are important not only to protect speech, but also in fighting back against copyright trolls. Trolls depend on the threat of legal costs to encourage people to settle cases even though they might have legitimate defenses.
Of course, “trolls” are in the eye of the beholder. Like terrorists, one person’s troll may be another’s “freedom fighter.” So whether or not particular litigants merit that somewhat pejorative description, it’s clear that the costs and burdens associated with defending copyright claims — including but not only for Internet-distributed video — just went down a whole lot. While Brownmark involved a seemingly easy fair use case in the defendants’ favor, it will be interesting to see whether future courts will grant motions to dismiss where the fair use analysis is less obvious. In any event, copyright infringement plaintiffs should be aware that the road to discovery where a defendant raises a fair use defense is not be quite as smooth as it used to be.
As to judicial comedy, we express no opinion, but do like the district judge’s tact. “For as remarkable and fascinating the parties and issues surrounding this litigation are, this order, which will resolve a pending motion to dismiss will be, by comparison, frankly quite dry.”
The legal issues [in this case] are hardly the sort of subject that would create millions of fans, as the work of all of the parties before the court did. Nonetheless, while the court has a ‘tough job,’ ‘someone has to do it,’ and, ‘with shoulder to the wheel,’ this court ‘forge[s] on’ to resolve the pending motion. Janky v. Lake County Convention & Visitors Bureau, 576 F.3d 356, 358 (7th Cir. 2009).
Note: Originally written for and reposted with permission of my law firm’s Information Intersection blog.
At the DisCo Project, we naturally focus on the current, dynamic technology marketplace and the disruption it is continuing to cause to brick-and-mortar and other “legacy” industries. But disruptive innovation is not new and not unique to high-tech. It’s been around for hundreds of years and serves as a key driver of both economic growth and social evolution.
Let’s start with the poster child of disruption, buggy whip manufacturers. In the late 19th century there were some 13,000 companies involved in the horse-drawn carriage (buggy) industry. Most failed to recognize that the era of raw horsepower was giving way to that of internal combustion engines and the automobile. Buggy whips, once a proud, artisan craft, essentially became relegated to S&M purveyors. Read Theodore Levitt’s influential 1960 book Marketing Myopiafor a more detailed look.
Not everyone was obsoleted by Henry Ford. Timken & Co., which had developed roller bearings for buggies to smooth the ride of wooden wheels, prospered into the industrial age by making the transition to a market characterized as “personal transportation” rather than buggies. Likewise carriage interior manufacturers, who successfully supplied customized leather-clad seats and accessories to Detroit.
One might suspect this industrial myopia has been confined to small markets with few dominant players. But not hardly. One of the more famous series of patent cases in history were the battles between Western Union and Alexander Graham Bell in the 1870s, where the telegraph giant (along with scores of others) vainly tried to contest Bell’s U.S. patents on the telephone. Ironically, the telephone was initially rejected by Western Union, the leading telecommunications company of the 1800s, because it could carry a signal only three miles. The Bell telephone therefore took root as a local communications service simple enough to be used by everyday people. Little by little, the telephone’s range improved until it supplanted Western Union and its telegraph operators altogether.
Apart from scurrilous character assassination suggesting Bell had bribed U.S. Patent and Trademark Office clerks to stamp his patent application first, the telephone patent cases are best remembered for their eventual 1879 settlement. Western Union assigned all telephone rights to the nascent Bell System with the caveat that Bell would not compete in the lucrative telegraphy market. After all, Western Union surmised, no one wanted to have their peaceful homes invaded by ringing monsters from the stressful outside world. Check out this verbatim 1876 internal memo from Western Union:
Messrs. Hubbard and Bell want to install one of their “telephone devices” in every city. The idea is idiotic on the face of it. Furthermore, why would any person want to use this ungainly and impractical device when he can send a messenger to the telegraph office and have a clear written message sent to any large city in the United States?
Epically wrong! But that, of course, is the challenge of disruptive innovation. It forces market participants to rethink their premises and reimagine the business they are in. Those who get it wrong will be lost in the dustbin (or buggy whip rack) of history. Those who get it right typically enjoy a window of success until the next inflection point arrives. Were barbers out of business when, some 200 years ago, doctors began to curtail the practice of bleeding patients, eventually usurping barbers as providers of health care? No, because barbershops moved from medicine to personal grooming.
Disruptive technologies create major new growth in the industries they penetrate — even when they cause traditionally entrenched firms to fail — by allowing less-skilled and less-affluent people to do things previously done only by expensive specialists in centralized, inconvenient locations. In effect, they offer consumers products and services that are cheaper, better, and more convenient than ever before. Disruption, a core microeconomic driver of macroeconomic growth, has played a fundamental role as the American economy has become more efficient and productive.
There are hundreds or thousands more examples we can discuss. Polaroid and Kodak, both innovators in their own right, have faced bankruptcy and virtual irrelevance over the past few years because they could not cope with rapid disintermediation of their photography businesses by digital technologies. Walgreens, CVS and camera shops, meanwhile, have retained a solid photography revenue stream by supporting photo printing from SD cards and even Facebook photo collections.
Some businesses get it and some do not. Disruptive competition drives out those whose world view tries quixotically to preserve the past or to protect economic and social customs from technology-driven change. Disruption is of course not a panacea for all social ills; New Yorkers, for instance, complained as much about the filth and stench of cobblestoned city streets filled with horse droppings in the 19th century as they did about the filth and stench of paved streets filled with cars and CO2 fumes in the 20th century. As an economic and competitive matter, however, disruption is a process of continually “out with the old and in with the new.” And it’s been that way for as long as anyone can remember.
5. Don’t Touch My Junk: Who Owns This Social Media Sh#t Anyway?
This is a presentation I made in June 2011 at the 140 Characters Conference in New York. It focuses on copyright and content ownership in social media.
Jeff Pulver: My friend the lawyer who is coming up next. I’ve known Glenn Manishin for like 15 years. He was one of the guys that worked with me and help revolutionized the world of communications. He’s focusing a lot on social and I asked him to come to the conference and share some prospective on copyright and an understanding of use of information — because what we think is ours may not always be ours. Without giving any of his talk away, Glenn please come up on stage, Glenn come on out.
Glenn Manishin: Well thanks for having me. I’m not going to give a typical lawyer talk. This is more of a rant. It’s a little bit hard to rant at 9:40 in the morning, but you’ll see that I changed the title slightly. I made it a little more family friendly for the Web but it really is: Who Owns This Social Media Sh#t Anyway.
(a) Introduction. Jeff calls this the “state of now.” Yet the law doesn’t like the state of now. The law works in history and tradition and precedent, and the most important legal issues affecting the social Web are things that are probably of no consequence to the rest of the world. That is, I’m not going to discuss how lawyers can engage in legal marketing using Twitter or Facebook, where you’ll see just a huge number of DUI defense attorneys and personal injury attorneys wanting to sign you up for their Mesothelioma cases. I’m not going to talk about which law controls because this is a global medium that affects anyone, everywhere. Your location is completely indifferent because it’s just an IP address; the courts have been struggling for 15 years with whether it’s the law of the US or the UK or Australia that controls and where you can have jurisdiction over all these people. Finally, the law doesn’t like what Jeff called a “social revolution.” The law is conservative institution, it protects vested interest, it doesn’t protect new interests.
(b) A Hierarchy of Laws. So with that intro: A hierarchy of laws. Now, obviously, the most important law is from the creator, the almighty, but here in the US it goes as follows. The Constitution is the supreme law of the land. Followed by statutes, those are laws either by Congress or the states. Then cases, decisions by judges and courts. After that contracts. A contract is a law because it decides rights between two people or two organizations. And then terms of service. You all know them, those things you don’t read and click through when it says “I accept,” but they define your rights as against Facebook, your rights as against Twitter. If you go back to 09, you’ll see there have been revolutions on Facebook periodically when the users object to new changes in terms of service, usually because some lawyer had some legalities that were’nt explained very well.
@glennm ha! cheers, Glenn. You were the most entertaining lawyer I've ever heard! And who doesn't love Robin Williams?
Well these things aren’t particularly important because God is agnostic to ownership interest — unless it’s your neighbor’s ass or tabernacles, he cares about those. The Constitution is indifferent to ownership, it protects property rights but doesn’t define what property is. Statutes are non-existent; there are no statutes about social media, even crimes like cyberbullying on Facebook, which is a very serious social problem. (I got a call last week from someone whose daughter almost committed suicide because of Facebook comments.) There are no statutes covering it, although some states have proposed it. Cases, as you’ll see are just dumb. Judges don’t get it, the lawyers who argue them don’t get it, and there haven’t been that many cases in any event. There have been a few cases about Twittersquatting — stealing of Twitter names. Contracts are rare because normally the question isn’t whether it’s me or you who owns the stuff, is it someone else? Now, if we’re going to talk about terms of service, as we will see they are irrelevant. Twitter says you own what you post. Facebook says you give us a license to do whatever we want with it, except to sell it.
(c) If You Give It Away, You Don’t Own It. Yet both instances are places where there is one simple rule. If you give it away, you don’t own it. Okay?
What is the nature of social media? It’s putting up posts or content of short duration or, if it’s a photograph like on TwitPic, content that you make available to the world. Now there are ways to limit that. As a sophisticated audience you know you can do a Twitter DM — it doesn’t grant ownership if you Tweet a picture of your shaved chest to your paramour, but it can get you into political trouble. It’s still private, you haven’t given it to the whole world. If you make your Facebook photos available only to friends no one else can look at them, but if just post something on Twitter, anyone in the entire world can read it, can download it, can embed it— they don’t need to know you, they don’t need to ask your permission.
What does that mean? That means, in my view, that you have abandoned any claim to ownership. If you post your video on YouTube anyone can download it. If you post your pictures to Flickr, you can enable a function that says download prohibited, all rights reserved. Then you could claim ownership to it because you haven’t given it to the world.
(d) AFP v. Morel. So let’s look at one case which is interesting. It’s called Agence France Presse, I think I pronounced that correctly, versus Daniel Morel. Morel was a photographer in Haiti during the big earthquake. He snapped some pictures, realized they had publicity value, put them on Twitter immediately — created a Twitter account and called it Photo Moral — and put a little copyright symbol next to it. But he didn’t go to Flickr and make them non-downloadable, he didn’t put a copyright symbol on the photograph itself and he didn’t even say, in his Tweets that went with the photographs, these are my copyrighted pictures. He just gave them away. Well, Agence France Presse, to its shame, took the pictures and put their own copyright on them and sold them to news organizations across the world. Tthat created the dilemma, who owned the pictures?
The court looked at the terms of service of Twitter and said Twitter grants a sublicense to third parties, their partners, and other viewers to look at photos but it doesn’t give them the right to publish themselves. Therefore, the terms of service don’t extend to Agence France Presse. Well, that’s silly because terms of service can’t create ownership rights. They could recognize them but if I have a Web site with you, I can’t decide who owns things for third parties. I don’t have any deals with the third parties. And the court never addressed the more important issue. The one I just talked about. Whether there is an implied license or have they abandoned ownership. Again, if Morel would have put this stuff on Flickr, right, or put a copyright watermark on it, there would be no question, but he gave it away to the world. So, as you can see, he took his pictures down. Smart man.
(e) Social Media Law & the French. It all gets into the French. Now as Gore Vidal said — I think this is a great quote — “It is a nation devoted to a false hypothesis on which it then builds marvelously logical.” Well whether or not French culture is dead, I think this case epitomizes some bad things about France. They have outlawed Islamic head coverings, they insist that Napa Valley can’t use the word champagne, they have a three-strike law for peer-to-peer downloaders. Meaning that if you download three files you could have your Internet service terminated unilaterally. They criminally prosecuted Yahoo as a war crimes defendant for allowing Nazi memorabilia to be sold on a Yahoo auction site — something that is absurd in American jurisprudence — and then they came here and tried to enforce the judgment against Yahoo. The US Court said no way. And of course you have the incident that I just told you with Agence France-Presse. The biggest news organization in France, just takes something that may or may not belong to them and decides that they own it.
If I’m right, that it doesn’t belong to anyone, they’re clearly liable for having put their copyright on it, but that’s not what the court was deciding. The court was deciding whether they enjoyed an ownership right because of Twitter. So, the bottom line is, that if we rely on the French to decide who owns our social media shit we are in big blan#&y trouble.
(e) English Pig Dog. With that I want to end up with my favorite quote about France. It’s from Robin Williams, courtesy of my son, who loved it when he was about six years old. He would be very proud of me by saying that with regard to the French, “I spit in your general direction, you English pig dog!”
In Part VI of this series, we will explore the effect of social media on employment law, including the privacy rights of employees. More to come!
With reality television all the rage, viewers may wonder why there’s been no reality series about the inbred high-tech ecosystem of Silicon Valley. There should be, because the reality of how our technology bastion really competes today — namely by patent litigation and acquisitions — is astonishing.
Last year Google, Apple, Intel and other leading Silicon Valley companies were targeted by federal antitrust enforcers for tacitly agreeing not to hire each other’s key employees. Such a conspiracy could have landed top executives in jail. This year Apple, Samsung, Google, Nokia and others have all been battling over back-and-forth claims that smartphones and wireless tablets infringe each others’ U.S. patents. Now, just weeks after Google’s general counsel objected that patents are gumming up innovation, the search behemoth has announced its own $12.6 billion acquisition of Motorola Mobility, and with it their own portfolio of wireless patents, just a fortnight after purchasing a relatively few (“only” 1,000 or so ) wireless patents from IBM.
While the executives at Google have nothing to fear personally from these patent wars, others seem to have a lot at risk. That is because, according to the Wall Street Journal, the U.S. Justice Department’s Antitrust Division is investigating another possible conspiracy among Silicon Valley companies. This one arises out of the collective bid in the late spring of nearly every wireless phone operating system manufacturer, except Google, for a portfolio of 6,000 cell phone patents formerly held by bankrupt Canadian company Nortel. Simply put, Google started the bidding at about $1 billion, but the others joined forces to lift the price to an astounding $4.5 billion and win the prize.
That’s the legal background to Google’s just-announced Motorola Mobility acquisition, and it’s one that could have serious anticompetitive consequences. If the curiously named “Rockstar Bidco” consortium — which includes Microsoft, Apple, RIM, EMC, Ericsson and Sony — refuses to license the erstwhile Nortel patents to Google for its Android wireless operating system, they will be agreeing as “horizontal” competitors not to deal with a rival. Classically such group boycotts are treated as a serious antitrust no-no, and a criminal offense. If the group licenses the patents, on the other hand, they could be guilty of price fixing (also a possible criminal offense), since a common royalty price was not essential to the joint bid and would eliminate competition among the members for licensing fees.
If the Rockstar Bidco companies decide to enforce the patents by bringing infringement litigation against Google, things could be even worse. Patent suits themselves, unless totally bogus, are usually protected from antitrust liability so as not to deter legitimate protection of intellectual property assets. (That does not mean they’re competitively good, since patent suits are often just a means of keeping rivals out of the marketplace.) Nonetheless, a multi-plaintiff lawsuit by common owners of patents would have those same horizontal competitors agreeing on lots of joint conduct, well beyond mere license rates. For starters, is the objective of such an initiative to kill Android by impeding its market share expansion? That’s a valid competitive strategy, standing alone, for any one company; it takes on a totally different dimension when firms collectively controlling a dominant share of the market gang up on one specific rival.
Google’s broader complaint that patent litigation in the United States is too expensive, too uncertain and too long may well be right. This bigger issue is being debated in Washington, DC as part of what insiders call “patent reform.” The high-stakes competitive battles being waged today in the wireless space under the guise of esoteric patent law issues like “anticipation” by “prior art” suggest a thoroughly Machiavellian approach to the legal process, just as war is merely diplomacy by other means. They inevitably color the perspective of policy makers, who watch with regret as a system designed to foster innovation gets progressively buried with expensive suits, devious procedural maneuvering and legalized judicial blackmail.
Even the biggest companies, though, would find it hard to compete if their largest rivals were allowed to form a members-only club around essential technologies to which only they had access. Microsoft’s own general counsel countered two weeks ago that Google was invited to join an earlier consortium bid but declined before the Nortel auction. Embarrassing, yes; dispositive, no. If the offer were still open, now that it is clear Google’s principal wireless rivals are all members, things would be different. Indeed, there’s even an opposite problem of antitrust over-inclusiveness where patents and patent pools are concerned. If everyone in an industry shares joint ownership of the same basic inventions, where’s the innovation competition? Google’s defensive purchase of Motorola is a desperate, catch-up move that does not really change this “everyone-but-Android” reality.
Silicon Valley’s patent wars are for good reason not nearly as popular as Bridezillas or So You Think You Can Dance. Yet they are far more important, economically, to Americans addicted today to their smartphones and spending hundreds of dollars monthly on wireless apps and services. Whether the Justice Department will challenge the Rockstar Bidco consortium or give it a free pass remains to be seen. From a legal perspective, it is just a shame the subject is too arcane, and certainly way too dull, to make a reality TV series.
The battle to beat Google’s Android mobile phone OS is quickly turning into a legal bonanza. Apple is suing HTC, Samsung and Motorola, all makers of wireless phones with the Android platform. Oracle is seeking up to $6.1 billion in a patent lawsuit against Google, alleging Android infringes Oracle’s Java patents. And Microsoft is suing Motorola over its Android line.
That’s all perfectly fine from an antitrust and competition standpoint — leaving aside the harder policy question of whether using patent infringement litigation to block competition should be permissible. Enforcing property rights is a legitimate and rational business activity that, absent “sham” lawsuits, is not second-guessed by antitrust enforcement agencies or courts. There can be exclusionary consequences, but they are a result of the patent laws in the first instance, not of themselves anything anticompetitive by the patent holder.
A much more troubling aspect of the increasing IP (or “IPR” as they say across the pond) battles surrounding Android is the recent sale of Nortel’s 6,000 or so wireless patents at a bankruptcy auction in Canada to a collection of bidders including Apple, Microsoft, RIM, EMC, Ericsson and Sony. How Apple Led The High-Stakes Patent Poker Win Against Google, Sealing Ballmer’s Promise | TechCrunch. The winning consortium bid more than $4.5 billion — some five times Google’s opening bid and, according to some pundits, far more than the portfolio was worth — to gain control of the patents.
“Why is the portfolio worth five times more to this group collectively than it is to Google?” said Robert Skitol, an antitrust lawyer at the Drinker Biddle firm. “Why are three horizontal competitors being allowed to collaborate and cooperate and join hands together in this, rather than competing against each other?”
These are good questions. Patent “pools,” which are collections of horizontal competitors sharing patent licenses among themselves, are today generally considered procompetitive under the antitrust laws where they (a) are limited to technologically essential or “blocking” patents, and (b) do not contain ancillary restraints, such as resale price-setting or restrictions on participant use of alternative technologies. (MPEG, WiFi, LTE and other communications technologies are prime examples of patent pools.) The theory is that, with price effects eliminated, the cross-licensing of patents that might otherwise be used to block entry into a market reduces barriers to entry and increases efficiency.
Yet the consortium which won the Nortel wireless portfolio, revealing dubbed “Rockstar Bidco,” includes nearly everyone in the mobile phone and wireless OS businesses except Google. If these players agreed among themselves not to license their own patents to Google, that would be a per se illegal group boycott (also known as a concerted horizontal refusal to deal). Competitors cannot allocate markets or conspire to keep a rival out of the marketplace. It is unclear whether Google was invited to join Rockstar Bidco, but unless Larry, Sergey and Eric turned down such an offer, it seems a fair case can be made that the consortium bid was in effect an implicit horizontal agreement not to include Google. Post-auction, the reality of licenses will clearly tell us whether the joint ownership structure was a pretext to cover a refusal to deal. No one knows what the consortium intends to do with the Nortel patent portfolio; they won’t say. Microsoft, RIM And Partners Mum On Plans For Nortel Patents | Forbes.
This author happens not to be a fan of Android; I’m a very happy iPhone user since day one of the Apple wireless revolution. This does not mean, though, that I can agree with a business strategy in which all of the other players in the mobile phone industry gang up on Google. (It is unclear were Nokia fits into all of this, but given the steadily decreasing share for its Symbian OS, I suspect the inclusion or not of Nokia will not be dispositive.)
The antitrust issue this presents is a thorny one, which frequently comes up in connection with trade associations and technical standards. When competitors collaborate, is under-inclusiveness or over-inclusiveness worse? Which is the bigger threat to competition? That is, if a trade group opens a collective buying consortium, for instance, is it better from an antitrust perspective to require that it be open to all — so that some rivals are not deprived of the scale economies — or that the consortium includes less than all firms in the market — so that competition in purchasing will drive down input prices?
Another concern is that, by excluding Google, the Rockstar consortium allows the other competitors to utilize the patents without paying license fees (since they now own them), leaving Google alone to need licenses for its Android OS. Does Nortel Patent Sale Make Google An Antitrust Victim? | TechFlash. That is a variant of “raising rivals’ costs” (here one rival only), which has over the past three decades become a recognized basis for assessing the anticompetitive nature of unilateral, single-firm conduct. When a group includes horizontal competitors who collectively control a huge share of the market, raising rivals’ costs supplies the anticompetitive “purpose or effect” needed to make out a rule of reason antitrust claim, even if the group boycott concern is misplaced or ameliorated. Here the intent to slow down Android is clear; whether that is anticompetitive, exclusionary or not is more ambiguous. Apple, Microsoft Patent Consortium Trying to Kill Android | eWeek.com.
There are precious few judicial decisions in this area and the IP licensing guidelines from DOJ/FTC do not really speak to the question. For that reason alone, the Rockstar Bidco venture, in my view, merits a very close look by the U.S. competition agencies. Allowing Google’s mobile phone competitors to do indirectly, with joint patent ownership, what they could not do indirectly, by agreeing not to license to Google, would be an incongruous result. On the other hand, a remedy may be worse than the harm. In standards, for example, it is often the case that antitrust risks are mitigated by requiring the holder of an essential patent to agree to so-called FRAND licensing (fair, reasonable and non-discriminatory terms and conditions). That’s an appropriate remedy where under-inclusiveness is the problem, so long as there’s a market measure for a “fair” license (royalty) price. Where the licensor, as in this instance, is everyone except the licensee, I for one fear there would be no objective way to assess whether license rates were reasonable.
DOJ's Christine Varney
The lack of an effective remedy for a competition problem does not, of course, require that the transaction involved be blocked. At the same time, where a problem cannot be fixed, that is a good enforcement policy reason not to allow the structural market conditions giving rise to the issue in the first place. Put another way — a slight modification of an old aphorism — if there’s no remedy, maybe there should be no right. Whether the viability of the Rockstar consortium is decided by outgoing Assistant Attorney General Christine Varney or her September successor, the forthcoming answer should be interesting.
There has been much discussion recently about the movie industry’s efforts to maintain its product release “windows,” so that theatrical performances precede pay-per-view, followed by DVD sales, pay TV (HBO, etc.) and finally advertiser-supported television. My view is that these folks are shooting themselves in the foot, because DVD sales actually declined in 2009 for the first time. The lesson is not that DVDs are being sold OR rented “too early,” rather that technological convergence is making more and more options available to consumers, so building a library of physical DVDs is relatively unimportant, and certainly no longer a priority.
But as usual — see their opposition to the VCR — Hollywood has this all backwards. Again.
In a ground-breaking deal for the online movie renting, Netflix and Warner Bros. Home Entertainment announced Wednesday that they have reached a deal that calls for Netflix to get access to more of the studio’s catalog content.In exchange, Netflix agreed to do something it has never done before. Netflix won’t offer new releases from the studio on DVD and Blu-ray for a period of 28 days after they go on sale.
In my view, the second sentence here is the most important. If one posts material viewable by the entire world, the author implicitly licenses anyone to use the content-—in other words, no copyright applies, and the author does not “own” his or her user-generated content. The necessary corollary is that when the whole world can see your stuff, the government does not need permission, let alone a warrant, to look too.
Privacy law was largely created in the pre-Internet age, and new rules are needed to keep up with the ways people communicate today. Much of what occurs online, like blog posting, is intended to be an open declaration to the world, and law enforcement is within its rights to read and act on what is written. Other kinds of communication, particularly in a closed network, may come with an expectation of privacy. If government agents are joining social networks under false pretenses to spy without a court order, for example, that might be crossing a line.
Of course, where a social network allows users to restrict access, to friends or followers, the opposite conclusion holds. For instance, unless Facebook wall posts are made available to “everyone” in the user’s privacy settings, then there remain both legitimate ownership and privacy interests, such that the government can’t monitor that content without both probable cause and a warrant.
Let’s assume, for purposes of discussion, that social media content — not limited to Tweets — cannot be trademarked. Whether that is correct will be ultimately determined, at some point, by a combination of the PTO and the U.S. Court of Appeals for the Federal Circuit. What that (reasonable) assumption indicates is that trademark law is far more important for existing trademark holders who either (a) venture into the social stream and real-time Web in order to market and promote their brands, or (b) are confronted with third-parties using their trademarks, whether for commentary or profit, without consent, than it is for social media users generally.
(a) The Aspirin of Social Media. Trademarks are property rights, both under US common law and pursuant to federal statute, the validity of which often hinges on two discrete issues — first use and “genericness.” People tend to forget that Bayer AG first invented aspirin in 1897 but lost its rights to the brand name in the United States by allowing it to escape into the public domain, i.e., go generic or commit “genericide,” a tragic commercial fate shared famously by Duncan Yo-Yo Co. (yo-yo) and Otis Elevator Corp. (escalator), among others. Generic terms of course cannot be trademarked. As a result, such companies and products as varied as Xerox (photocopying), Kleenex (facial tissue) and Johnson & Johnson (band-aid) have stepped up outreach and litigation efforts to curtail use of the trademarked brands as nouns and to constrain their own usage, for instance by changing advertising jingles to add “brand” to the name (going from “I’m stuck on Band-Aids, ’cause Band-Aid’s stuck on me” to “I’m stuck on Band-Aid brand, ’cause Band-Aid’s stuck on me.”)
Welcome to Web 2.0, corporate IP police! Your task in protecting against genericide has become an order of magnitude harder because social media is immediate, difficult to search and presents such massive volume of content that periodic review of even a portion of it is clearly impossible. But as the historic lessons show, doing nothing risks colloquial usage of marks in ways that conflict with trademark holders’ long-term interests. There is no substitute for perseverance, hard as it may be in the context of real-time social streams.
Perhaps most vexing is that these very risks can be presented by a company’s best customers, its “fans.” As PR specialist Rob Clark of the SMG Group notes:
So we all know the story. Imagine, a group of faithful enthusiasts falls in love with Super-Duper Brand (for the purposes of this illustration I’m using a fictitious name). They start a forum at superduperrocks.com, the maintenance of which they cover by selling superduperrocks t-shirts and other merchandise. A lawyer for Super Duper stumbles upon the site and fires off a standard cease and desist letter to attend to the trademark infringement. The community freaks out, both in terror of what a visit to court may cost and in anger of being turned on by the brand they adored and revered. The pundits point a spotlight on the issue and chuckle over what a stumble, what a gaffe, “who could possibly be foolish enough to attack your greatest evangelists?” Those who rail against the new media tools will waggle their fingers and declare, “These interwebs will doom us all.”
That’s a debacle in the making. The IP lawyer was obviously correct, but crowd-sourced demand letters will likely do more to alienate fans than protect the mark. The balance between heavy-handed legal cease-and-desist letters, litigation and consensual licensing of permissible uses represents a major challenge to trademark holders in the emerging era of social media.
(b) Safe Harbors, Impersonation and Infringement. So if that’s not bad enough, take the question of how trademark holders can prevent others from infringing (or diluting) their marks by scarfing up the words as profile identifiers on social media sites. The short answer is, like all mark protection activities, vigilance. Yet as addressed in this section, at present the law is still developing and the statutory rules established to deal with improper use of protected trademarks on the Internet — mainly in the domain name and copyrighted content (music, movies, etc.) contexts — do not squarely apply to social media and the real-time Web.
It would be a pleasure, for my ISP and Web site clients, to report that the statutory safe harbor granted to Internet access providers — commonly known as “notice-and-takedown” — protects them against litigation for trademark infringement by social media users. But that’s not necessarily the case at all.
First, the immunity provided to interactive computer services under the Communications Decency Act (47 U.S.C. § 230) applies only to screening and blocking of child pornography and other offensive Internet content, while the DMCA safe harbor in 17 U.S.C. § 512 is inapplicable if a “service provider” receives any “financial benefit directly attributable to the infringing activity” and “has the right and ability to control such activity.” Whether the courts will construe these terms expansively is unclear. Yet it is clear that at least some social media providers both receive financial gain (which may not mean profitability, by the way), including advertising revenues, and have the ability to arrest infringing conduct by users. So while removing allegedly infringing UGC or profiles is a good business practice, it does not mean legal liability is eliminated.
Second, the provisions of the Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d), limit the protection accorded vis-a-vis trademark holders to entities assigning “domain names,” defined narrowly as “alphanumeric designation which is registered with or assigned by any domain name registrar, domain name registry, or other domain name registration authority as part of an electronic address on the Internet.” Social media profiles do not yet fall under this statute, at least facially.
So even in the case of simple “Twitterquatting” — the allocation by a social media network provider of a user name to someone who is either not the real person or who is using a trademarked phrase without permission — there is no compelling case to be made today for statutory immunity. Recall that, in the early days of the commercial Web, Network Solutions (now VeriSign) was sued frequently by trademark holders under contributory infringement, conversion, negligence, unfair competition and other traditional causes of action for registering trademarks as domain names to people without legal rights to the marks. See, e.g.,Lockheed Martin Corp. v. Network Solutions, Inc.,193 F.39 980 (9th Cir. 1997). And more recently, Google has litigated a series of cases in which famous brands (Vuitton, etc.) have alleged, with mixed results, that its AdWords program represents use by Google, as opposed to the advertisers paying for such keywords, of a protected mark in commerce, thus exposing Google to potential damages liability. (I personally don’t agree with this legal theory, but the fact is that it has been accepted by a minority of courts.)
All of these theories, which parallel the claims brought by AOL and other ISPs against spammers before Congress made unsolicited commercial email illegal with the CAN-SPAM Act of 2003, can be asserted unless and until legislation is passed creating a national standard and preempting state law. For instance, in his well-publicized (but later withdrawn) lawsuit against Twitter, Tony La Russa claimed that use of his name by another Twitter member constituted Lanham Act violations (trademark infringement, false designation of origin, dilution of a famous trademark), invasion of privacy under California Civil Code § 3344 and misappropriation of name and likeness.
It is no wonder, then, both Twitter and Facebook have established means by which rights holders can protect their trademarks from unauthorized use. For Facebook, these include:
Filing their trademark(s) online with Facebook, which will prevent any third-party users from acquiring the filed trademark as a username. (Filing requires the name of the company, the trademark to protect, the federal registration number of the mark and the filer’s title and email address.)
Not authorizing transfer or sale of user names in the hope that this will eliminate squatting or profit-driven transfers.
Maintaining an online IP Infringement form which allows rights holders to protest after-the-fact unauthorized uses of their intellectual property.
Not unusually (see Part II), Twitter does things a little differently. The Twitter terms of service (ToS) grant it the right to remove or suspend unilaterally any account that appears to or is claimed to violate another’s trademark rights. These notice-and-takedown provisions are based on a “clear intent to mislead people” as the test for suspending unauthorized accounts. However, they explicitly allows parody impersonation, using a standard of whether a “a reasonable person be aware that it’s a joke” as the criterion for a parody. (The fact that the La Russa impersonator prominently labeled his profile as a fake plainly did noting to deter litigation, of course.) And those same guidelines have not stopped corporations from suing Twitter when they suspect others are “diluting” their marks, even before response to a takedown demand. Twitter has also responded as a business matter with a so-called “verified account” program for public figures.
Now on the substance of parody or so-called “gripe” users, trademark law is gradually becoming clearer, and works to favor the social media site rather than the personality. There are numerous obstacles with use of federal trademark law to prosecute a gripe user. Trademark infringement claims require that the defendant use the plaintiff’s mark, without consent,”in commerce” — a term that generally refers to the sale of a product. Parodies and product criticisms may use a plaintiff’s name or mark,but typically not to sell anything, rather to complain about or poke fun at the company. Trademark claims also demand that the defendant’s unapproved use of the mark must have confused reasonable consumers. However, because such third-party sites and content typically attack or lampoon the trademark holder, there is little risk that consumers could ever reasonably believe that such a site was operated by the trademark owner.
A recent Sept. 2009 decision by U.S. District Judge T.S. Ellis in Virginia, Bernard J. Carl v. BernardJCarl.com, focused on another element of trademark law — whether an individual’s name is a protectable trademark. The general rule is that names (first or last) only qualify as trademarks if they have acquired a distinctive “secondary meaning.”
Controlling circuit authority clearly classifies the use offirst names or surnames as descriptive marks, which are inherently non-distinctive and accordingly are not protected under the Lanham Act absent a showing of distinctiveness. Thus,descriptive marks may gain the protection ofthe Lanham Act if they become distinctive by acquiring a secondary meaning within the relevant purchasing community — that is, a substantial number ofpresent and prospective consumers.
So, for instance, “Martha Stewart” probably has acquired a secondary meaning, to refer to her home decoration, gardening and food business. The same problem would arise for claims of cybersquatting, because, according to Judge Ellis, to garner protection under the ACPA a personal name must have acquired secondary meaning at the time of its registration. The implications for social media sites are obvious, namely that even if there is a legal basis to challenge so-called “Twittersquatting” for celebrity impersonation, it probably does not lie in the realm of trademark infringement.
(c) Trademarks and Deep Pockets. From the legal to the practical. All of the above is without regard to the fact that, like NSI in the 1990s, those who believe their interests or business have been damaged by use of a name, mark or other content by a social media subscriber are — as an economic imperative — inclined and very well incentivized to name as the principal defendant the company running the social network. When Hasbro had a problem with a Facebook application developer’s take off on “Scrabble” for a wildly popular Facebook game dubbed “Scrabulous,” it acted against Facebook under the DMCA, not (at least initially) against the smaller, and less well-endowed financially, developer. Likewise, when one game coder believed another had stepped on his trademark, he sued Facebook for infringement.
What these and many other anecdotes indicate is that when setting up and operating any social media site, a Web developer must take into account that it is the most visible, and some might say vulnerable, party to use of the litigation process for what I called “legalized blackmail.” (Note, I have not trademarked that phrase, so you are free to use it!) Litigation defense is a cost of doing business in modern America. And since the issue of knowledge is key to trademark defense — under the reasoning in Tiffany v. eBay Inc., social networks could be held liable for username squatting or infringement (on a contributory infringement theory), if they continue to provide services to users they know or have reason to know are engaging in infringement — programs that terminate user membership privileges at the slightest hint of unlawful use of content or marks are the best insurance.
Given the uncertainties surrounding the nascent law of social media, which as noted in Part I will most likely evolve out of the cauldron of litigation, the burden of litigation as a cost of doing business may be a steep one indeed. So as users, expect to see a whole array of self-protection measures by social media vendors. “Verified accounts” and trademark take-down complaints are just the very early start. The days of Twitter being praised for its laid-back, touchy-feely attitude towards trademarks are over, I believe, in just a short six months. And that, readers, is the speed at which things change in our world of the real-time Web!
In Part IV of this series of essays, we address the broader context of social media law, including whether there is anything really new here, or just “old wine in new bottles.”
[Part I of this series of essays can be found at this permalink].
2. Who Owns User-Generated Content?
Who owns user-generated content (UGC) posted to social media sites? This is but one of the many vexing issues presented by the emerging law of social media, albeit one of great interest to users, corporate subscribers and social networking providers alike. After all, if possession is 9/10 of the law, then the natural, lay reaction to the question of who owns social media UGC is “the Web site, of course.”
That’s not exactly correct, however. One must differentiate among the various forms of intellectual property (IP) law potentially applicable here. Copyright, a matter exclusively of federal law, is available for original expressions (with or without registration), but is always subject to “fair use.” Trademarks and their service mark complements are available for unique names, phrases and logos associated with commercial products and services, but are limited to narrow classes of expression and ordinarily — unlike copyright — must be expressly claimed. Finally, patents are available for inventions (products, processes and methods), and give the patent holder (a/k/a patentee) the power to prevent anyone else from using the protected invention, but only arise when a patent is officially issued by the Patent & Trademark Office (PTO).
(a) Social Media and IP Law. Each of these bodies of law, and the respective rights and obligations they create, has a different impact on social media generally. For instance, Twitter owns a trademark on the company’s name, but was denied registration of a trademark on “Tweet.” And in a provocative change last February, one eliciting a firestorm of user criticism, Facebook modified its terms of service (ToS) to grant the site a perpetual license on UGC even after a subscriber terminates his/her membership and removes photos and other UGC from their page. These two recent examples illustrate not only that IP law in part depends on the eye of the beholder, but more importantly that even within the social media space, there is no present consensus on just what is protected, what is public domain and what is somewhere in between.
Let’s start with the basics, then. Copyright cannot be claimed on information, only on expressions. So the information in a database or software application cannot be copyrighted, but the organization of a database and the actual code (whether in a scripting language or machine code) for a program are considered expressions subject to copyright. One would not, for instance, violate Microsoft’s copyrights by designing a word processing program that replicated functionalities of MS Word, but copying of the underlying code would be unlawful. (Don’t take this too literally, however, because the issue of software patents, including those granted to Microsoft — one of present controversy in the US — could prevent another coder from achieving the same functionality under the patent law doctrine of “equivalents,” whether or not code was actually purloined.)
Unless, that is, the copying were protected by the so-called fair use doctrine, codified at 17 U.S.C. § 107. This exception allows use of some, but not all, of an original work by another (with or without attribution), and is the basic reason why bloggers who quote portions of other posts are acting lawfully. On the other hand, lifting the entire portion of any article, whether blogged or on a traditional media site, is typically illegal without the consent (i.e., license) of the copyright holder. Yet again, if the expression itself is already in the public domain, then courts will not uphold a copyright claim, concluding either that the author “impliedly” licensed the content, abandoned any copyright in the expression, or that the material is not copyrightable in the first instance because not original.
Putting all these basic principles together yields precisely the answer posed for social media legal questions generally in Part I of this series — “it depends.” If a blogger structures his site with a full Creative Commons license, then nothing posted is subject to copyright because he has abandoned such a claim. If a Facebook user posts photographs to his or her Facebook page, and makes them available to friends, a copyright claim likely would not lie against those friends if they used the photos without permission. But, as we shall see below, these are the easy situations in which application of IP principles is (relatively) clear.
(b) Are Tweets Copyrighted? This was the question, first posed in the blogosphere by Mark Cuban in May 2009 (“Are Tweets Copyrighted?“), addressed in part in an earlier post. To summarize, a Tweet, like any other expression, can be copyrighted if original, not public domain and not impliedly licensed. But neither Mark nor anyone else (as far as this author knows) has addressed whether a Tweet, at 140 characters, is inherently too short, i.e., too superficial, to be deemed an original expression for purposes of copyright. Compare, for instance, Pat Riley’s famous trademark in the early 1990s on “three-peat” while with the L.A. Lakers. Whether the same phrase could be copyrighted is doubtful.
The point here is that social media sites cannot create rights that otherwise do not exist in the law, but can narrow or waive rights otherwise held by users with their ToS agreements. The conclusion that because Twitter has disclaimed ownership of Tweets the tweeting user must necessarily own them is a false syllogism. In other words, the language in the Twitter ToS to the effect that “what’s yours is yours” and that ”[the Twitter account owner] profile and materials remain yours‚” is merely prcatory, as lawyers say. It doesn’t bind anyone and certainly cannot govern if the copyright claim is disputed in court.
Copyrightable contents must be original, an expression (not a fact or opinion) and not merely an idea. If the material you post through Twitter isn’t copyrightable to begin with, it will not mystically transform into protectable content merely by being Tweeted, and decidedly not because, as between Twitter and its users, Twitter has technically disclaimed ownership. Hence, as one writer cogently observed:
The long and short of it is this: if 90% of all Tweets are nothing more than recitation of facts. That means that about 90% of Tweets are not protectable. For the other 10%, we’re not done with you yet. It’s all in how those facts are stated.
Well, it’s not really “how the facts are stated” so much as whether the expression is original and not somehow “donated” to the public domain by posting on Twitter. A serious argument can be made, with which I tend to agree, that Tweets inherently cannot be copyrighted, even IF original, because the very act of posting them on Twitter means the entire world can see them, without the author’s permission. So unlike other social media sites, where access to UGC can be controlled, at first blush it seems that unless one has a “private” Twitter feed, one cannot claim copyright in Tweets because the very nature of tweeting is that the tweeter intends that anyone in the world can view, link to and use his or her Twitter UGC.
(c) Tweets and Fair Use. Indeed, the underlying rationale for according Tweets copyright protection breaks down entirely when one examines fair use. First, if copyright applies to public Tweets, then traditional media’s use of them to date — including reading or displaying in full on television — cannot be fair use because it copies the entire “expression.” Second, the accepted practice of “retweeting” (RT) contradicts the basic principles of copyright law. Because users can (and do) retweet without limitation, it is a fair conclusion that posting a Tweet is an implied copyright license, at least for duplication by others on the same site. As Mashable’s Pete Cashmore noted, taking another user’s Tweets is not “copying,” but “retweeting. And I love it..” That comes at the question from the perspective of third-parties, rather than the putative content owner, but cogently expresses the idea that application of copyright to Tweets is problematic, at best.
Now it remains true that general legal rights and obligations can be varied by agreement. And to date, courts have largely accepted the de facto use of checkboxes to indicate a user’s “acceptance” of ToS contracts, drafted entirely by Web site owners, to which they have had no input or ability to negotiate. (California recently signaled a possible change to this assumption with a controversial decision as to software “shrink wrap” agreements, however.) So, assume we are now dealing with photos instead of 140-character messages. No one would argue that photos cannot be (or generally are not) copyrightable original expressions. So then — unless the act of posting itself is abandonment of a claim of copyright — ownership of rights on photos will be determined by the ToS of the social media Web site owner.
(d) Style or Substance? Here we have an interesting contrast. Facebook, as noted, has advocated a rather different view of copyright, insisting on a royalty free, perpetual license to UGC as a condition of posting — indeed, a license that survives death or withdrawal. Absent some independent constraint, like unconscionability, those ToS licenses are valid, regardless of a user’s rights under the Copyright Act. And Facebook has a point, because once “shared” with friends on the site, photos are (or at least can be) copied to some or all friends’ pages. Twitter, in contrast, says that UGC is always the user’s property. (As careful lawyers, however, Twitter’s counsel also include an express ToS license, even though retaining the “what’s yours is yours” language.)
This license is you authorizing us to make your Tweets available to the rest of the world and to let others do the same. But what’s yours is yours — you own your content.
Yet the inherently public nature of Tweets, which are “shared” with others by posting but not (except by retweeting) cross-posted as on Facebook, means that Twitter really does not need a license to the content of Tweets, since it does nothing with them other than what the user specifically intended, namely posting them on a Web page.
In the final analysis, this difference is probably more cosmetic than substantive, more about optics than legal rights. Twitter has designs to become the real-time Web’s “utility” infrastructure, so its business model does not require, indeed conflicts with, the company’s ownership or licensing of UGC. Facebook, in contrast, is a walled community, constantly devising ways for user to spend more time (whether or not productive or addictive) on the site. So for Facebook, and especially because any element of a Facebook profile can be made private, including to all other Facebook members, its buisness needs licensing for the model to work. They are different business models, driving different views of IP law. Just like beauty, in other words, the answer is in the eyes of those with the content itself!
And, BTW, if you think the above is thorny or complex, just ponder for a moment the even more opaque question of who owns UGC after the user dies. We’ve needed living wills and medical powers of attorney for more than a decade to exert personal control critical health care decisions. Will we also need Web-proxies authorizing our medical decision-makers and heirs to access and control UGC? Yup, you know the answer — “it depends.” A week or so after I first posted this essay, in fact, Facebook announced that it will “memorialize” profiles of deceased members if their friends or family request it. Facebook Keeps Profiles of the Dead [AP]. That may not be the law, as of now, but it does suggest that social networks will increasingly be required as a practical matter to develop their own policies, based on the interests and needs of their users, on how to address death in cyberspace.
July 5th, 2012 | 
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