Category Archives: Business and Economy

Selling a car by selling Detroit

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The troubles of Detroit have been well documented and discussed in the American media in recent years (see here and here). So why would Chrysler mount a full advertising campaign (and I see this commercial almost every commercial break at times) based on Detroit  for its new 200 model? See the long-form (2:03) video here.

The entire campaign seems to be built around this idea that Detroit is something different: the ad says it is not New York, Chicago, or Las Vegas. While we get some typical shots, of a high school team running and a woman ice skating, the emphasis is on their hard work. The scenes on the street are at night with steam coming out of manhole covers as the 200 rolls along. The longer ad features Eminen, perhaps the only celebrity known to most Americans as being from Detroit (does Kid Rock count?). And all of this is driven home by the tagline: “Imported from Detroit.”

Perhaps the strategy is this: why not take all of this talk about Detroit’s darker side (and the commercial mentions that this is a “town that has been to hell and back”) and turn it around so that the commercial makes a positive point about this gritty, tough, and edgy car. Will this explicit linking to Detroit, a city on the decline, boost sales of a particular car model? Do Detroit residents see this commercial as positive and representative of their city?

The billable value of humility

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In a previous post, I linked to an IBM executive who claimed that Watson’s success on Jeopardy! might revolutionize the legal profession.  Gary Kasparov, the chess champion who was defeated by IBM’s Deep Blue in 1997, makes an interesting observation over at the Atlantic:

My concern about its utility, and I read they would like it to answer medical questions, is that Watson’s performance reminded me of chess computers. They play fantastically well in maybe 90% of positions, but there is a selection of positions they do not understand at all….A strong human Jeopardy! player, or a human doctor, may get the answer wrong, but he is unlikely to make a huge blunder or category error—at least not without being aware of his own doubts. We are also good at judging our own level of certainty…but I would not like to be the patient who discovers the medical equivalent of answering “Toronto” in the “US Cities” category, as Watson did.

It would be ironic (in the extreme!) if what saved the legal profession from being taken over by computers was lawyers’ own humility.  In a world where machines can process far more data far faster than human minds, perhaps our weakness is also our greatest asset:  we know our limits.

Searching for a safe harbor

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TorrentFreak reported a few days ago that Google has filed an amicus brief in the appeals case against torrent search engine isoHunt:

Google has been keeping an eye on the legal battle between the MPAA and isoHunt as last week, out of nowhere, the company unexpectedly got involved in the motion for summary judgment appeal. The search giant, which has always stayed far away from these types of cases, filed an amicus cuiae brief (third party testimony) at the Appeal Court.

“This cases raises issues about the interpretation and application of the safe-harbor provisions of the Digital Millennium Copyright Act, 17 U.S.C. § 512 et seq. (“DMCA”) and common-law rules governing claims for secondary copyright infringement. Google has a strong interest in both issues,” Google’s counsel writes.

Talk about understatement.  You can read Google’s 39-page brief for yourself over on Scribd — thanks to PaidContent for posting.

TechDirt posted additional commentary late yesterday suggesting that Google’s stance in the isoHunt appeal is mostly about its own ongoing litigation with Viacom:

Google argues that as long as YouTube took down any content it received a takedown notice on, it was in compliance and protected by safe harbors. Viacom leaned heavily on the IsoHunt ruling, to claim that the DMCA doesn’t just cover takedown notice responses, but also requires a response to “red flag” infringement.

However, Google knows that the IsoHunt ruling is basically the only legal precedent out there that reads the DMCA in this manner. So, from Google’s perspective, dumping that reasoning is key. So its amicus brief still argues that IsoHunt is guilty of contributory infringement, a la the Grokster standard, but not because of red flag infringement.

The last thing Google wants is to be liable for copyright infringement under the DMCA every time there is a “red flag” that infringement is taking place; that would be the end of Internet search engines as we know them.

Of course, Google’s business strategy isn’t merely to file amicus briefs and hope for the best; the search giant has also recently taken proactive steps to reduce its liability, including turning off autocomplete results for torrent-related searches.  I guess this is what the Intellectual Property Enforcement Coordinator (IPEC) meant by “dialogue”, as detailed in her recent report:

the IPEC has facilitated and encouraged dialogue among the different private sector Internet intermediaries that contribute to the dynamic nature and functioning of the Internet, including payment processors, search engines and domain name registrars and registries. These entities are uniquely positioned to enhance efforts of rightholders and law enforcement to combat infringing activity and help reduce the distribution of infringing content in a manner consistent with our commitment to the principles of fair process, freedom of expression and other important public policy concerns. We believe that most companies share the view that providing services to infringing sites is inconsistent with good corporate business practice and we are beginning to see several companies take the lead in pursuing voluntary cooperative action.

I’m not sure how “voluntary” this really is — or whether “fair process” and “freedom of expression” accurately describes a “dialogue” written under a Damoclesian sword of statutory copyright damages and domain name seizures.  But I will agree that ruinous lawsuits and seizures are “inconsistent with good corporate business practice”.

Hat tip to Keith Lowery for sending me the link to the original TorrentFreak story.

Taking enforcement to the next dimension

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Get ready for the next avalanche in copyright infringement lawsuits:  3D printing!

[L]ast week, Ulrich Schwanitz figured out how to print the “impossible” Penrose Triangle,” a well-known optical illusion. He released a video of the shape and challenged others to see how it might have been done. 3D modeller Artur Tchoukanov promptly figured it out, designed a 3D shape that accomplished the same thing, and uploaded his shape’s specifications to Thingiverse, a repository for 3D designs….Schwanitz sent Thingiverse a DMCA notice — essentially, a threat to name Thinigverse as a party in any copyright lawsuit against Tchoukanov unless Thingiverse took the shape down immediately.Whereupon Schwanitz became the inventor of something much more substantial than a 3D Penrose Triangle — he became the inventor of copyright threats over open 3D repositories. A weekend’s worth of acrimony followed — with lots of speculation about the copyrightability of Schwanitz’s design and questions about whether Tchoukanov was guilty of violating any copyright that vested in the design, and further questions about the ethics of copying designs and the ethics of sending copyright threats to Thingiverse.

As Cory Doctorow later notes in his BoingBoing post, Schwanitz has withdrawn his litigation threat, but legal wrangling of this new, third-dimensional sort is certainly not going to stop anytime soon:

[A]ggrieved optical illusion creators don’t have anything like the political and legislative clout of other potential 3D printing complexifiers. Imagine what happens when some magistrate in Alabama decides that Thingiverse is liable for hosting 3D models of sex toys (illegal in AL) and issues a bench warrant for Bre Pettis’s arrest. Or when someone from Shapeways shows up at CES in Vegas, only to discover that the state Drug Enforcement Agency has issued a warrant on the basis of a bong design available at Shapeways, violating the state’s strict anti-drug-paraphenalia laws. Or someone from i.materialise gets an EU extradition request from Germany because someone’s printed a detailed, historically accurate toy soldier with a swastika armband, violating Germany’s strict laws against Nazi paraphernalia.

And just wait until someone creates a printer that can reproduce patented pharmaceutical compounds or Monsanto’s patented life-forms! Now there are a couple of villains with a lot of resources to throw at making the whole Internet’s life miserable in order to squeeze an extra 0.05% into the quarter’s bottom line.

As the Economist’s cover study just two weeks ago indicates, the 3D printer world is already here.  As that report suggested,

Good ideas can be copied even more rapidly with 3D printing, so battles over intellectual property may become even more intense. It will be easier for imitators as well as innovators to get goods to market fast. Competitive advantages may thus be shorter-lived than ever before.

China and default

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No, I’m not talking about the U.S. defaulting on the enormous amount of debt it owes to China.  I’m talking about the relatively small matter of $2.3 billion that a California district judge levied against China as a sovereign government for copyright infringement. As part of a default judgment, no less:

About a year after Cybersitter sued the Chinese government and several Asian OEMs for allegedly copying its code to create the “Green Dam” software, a U.S. federal judge has allowed the $2.3 billion suit to proceed.

Judge Josephine Staton Tucker, a California district judge, entered a judgement of default against the People’s Republic of China on Wednesday, after PRC officials failed to respond to the ruling. Although the PRC’s embassy sent a letter to the U.S. State Department protesting Cybersitter’s suit, such a letter did not qualify as a formal response.

The National Law Journal has additional coverage here.

My guess is that this suit is going to generate a lot of headlines and go absolutely nowhere (at least against China — the co-defendants may not be so lucky).  As a matter of law, China has a powerful argument for sovereign immunity, no matter what District Judge Josephine Tucker’s interpretation of the U.S.’ own Foreign Sovereign Immunities Act (FSIA) is.  And practically speaking, there’s pretty much no way that Cybersitter is going to be able to collect on this default judgment.  No doubt it will be tossed back and forth in official diplomatic communications for a while, but it’s quite doubtful that any money will ever change hands.  Unless, of course, one speaks of the money China will continue to pay the U.S. for Treasuries.

Oh wait…

Law jobs in Jeopardy

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There’s been a lot of talk this week about Watson’s appearance on Jeopardy! — and its win.  Now, the pundits are trying to digest what the implications will be now that Watson has already been hired as a physician’s assistant.

What, specifically, does this mean for lawyers?  Robert C. Weber, a senior VP and general counsel at IBM, breaks it down for us over at over at the National Law Journal:

Imagine a new kind of legal research system that can gather much of the information you need to do your job — a digital associate, if you will. With the technology underlying Watson, called Deep QA, you could have a vast, self-contained database loaded with all of the internal and external information related to your daily tasks, whether you’re preparing for litigation, protecting intellectual property, writing contracts or negotiating an acquisition. Pose a question and, in milliseconds, Deep QA can analyze hundreds of millions of pages of content and mine them for facts and conclusions — in about the time it takes to answer a question on a quiz show.

But won’t this mean fewer jobs for lawyers?  Oh no, reassures Mr. Weber:

Deep QA won’t ever replace attorneys; after all, the essence of good lawyering is mature and sound reasoning, and there’s simply no way a machine can match the knowledge and ability to reason of a smart, well-educated and deeply experienced human being. But the technology can unquestionably extend our capabilities and help us perform better.

Humanity — I mean — lawyers win, huh?  This is great!  Where can I put Watson to work?

The technology might even come in handy, near real-time, in the courtroom. If a witness says something that doesn’t seem credible, you can have an associate check it for accuracy on the spot.

Wait a minute — I thought you said that we’ll always need lawyers?  But if using Watson/Deep QA is just as easy as running a Google search against a witness on the stand, why do you need to have an associate perform it?  Associates are expensive, or, at least, used to be.  Why not a paralegal?  Why not someone even cheaper, with even less training?  Are you sure it has to be an actual lawyer?  (Besides, Weber also tells us that “We’re pretty sure [Watson] would do quite well in a multistate bar exam!”)

Perhaps when he said Watson “won’t ever replace attorneys,” Mr. Weber meant that Watson won’t ever replace someone like himself:  a successful, established, general counsel at a Fortune 500.  You know, the sort of person who passes off his “research” to an “associate.”  Or whomever.  Or whatever.

I’m not buying it, Weber (neither is Above the Law, for whatever that’s worth).  Watson is going to put a lot of lawyers out on the street, which is precisely the conclusion that Andy Kessler comes to over at the Wall Street Journal.  In Kessler’s colorful employment taxonomy, lawyers are classified as “sponges”:

Sponges are those who earned their jobs by passing a test meant to limit supply. According to [the WSJ], 23% of U.S. workers now need a state license….All this does is legally bar others from doing the same job, so existing workers can charge more and sponge off the rest of us.

But eDiscovery is the hottest thing right now in corporate legal departments. The software scans documents and looks for important keywords and phrases, displacing lawyers and paralegals who charge hundreds of dollars per hour to read the often millions of litigation documents. Lawyers, understandably, hate eDiscovery.

We can argue whether this is a good for society overall (or not).  But come on, Weber.  Don’t say that Watson “won’t ever replace attorneys” when what you really mean is that “I personally am going to be able to keep my job.”

Dressing up a terrible idea

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Early last week, NPR’s Morning Edition ran a story about the Mardis Gras Indians (Wikipedia backgrounder) who are attempting to copyright their costumes in order to collect money from photographers who take pictures of the festivities in New Orleans.  In the words of Howard Miller of the Creole Wild West Mardi Gras Indians:

For years we had the fear that we have been exploited. They [the photographers] had been taking advantage of us and coming in and snapping pictures. In selling the pictures, we see them everywhere – magazines, even in art galleries being sold and we are not getting anything from it.

Enter Ashlye Keaton, an adjunct law professor at Tulane Law School, who is representing Mr. Miller:

[The costumes] fall under copyright protection as works of art, as sculptures because the designs are sewn onto canvas and other materials and they are worn not as costumes, but they’re worn over clothing. So they’re not functional, which qualifies them for copyright protection as a sculptural work of art pursuant to the copyright act.

Mike Masnick over at TechDirt picked up on this story this morning.  Like me, he thinks this is a terrible idea:

[T]his whole thing goes against the very purpose of copyright law, which was to provide an incentive to create. But these guys have plenty of incentives to create that have nothing to do with copyright. Basically, they’re just upset that someone, somewhere might make money selling a calendar of Mardi Gras photos without paying them first….In the interview, the Mardi Gras Indian they interview makes no argument at all about incentives to create. Instead, he goes with the “I think that’s fair” argument for why photographers should pay him. Well, those photographers don’t think it’s fair — and copyright law is not about what someone thinks is fair. It’s about the incentive to create, and it makes no sense in this context.

Masnick makes a few other points:

  • That costumes are clothing a thus cannot be protected with copyrights.
  • That any photographs of the costumes would be a fair use because they would be “transformative” (citing a case about Grateful Dead concert posters).

I think one of the more pernicious effects of the expansion of intellectual property legal entitlements is that people now think they should be paid any time someone else makes money.  This is simply not the way the world works.  I won’t expand too much on Masnick’s points, but I would like to make a few point of my own about unsolicited benefits.

If I buy a house and put a beautiful garden in the front yard, I may well raise the property values of every house on my street.  Does the law allow me to collect any money from my neighbors?  No.

If I squeegee your windshield without being asked to while you are stuck in traffic, can I demand that you pay me?  No.

To be sure, Mardis Gras provides real benefits to lots of people, and Mr. Miller’s costume no doubt contributes to that general benefit.  As a general rule, however, the law doesn’t reward people just because they provide other people with benefits.  Why?  It’s generally unfair to foist such a responsibility on others (that’s why “squeegee men” are considered such a public nuisance.)  Moreover, it’s way too costly for courts to figure out who should pay who in what amounts after the fact.  Far better to let people strike their own bargains — to pay for communal landscaping through a homeowner’s association or to take their cars to a car wash.

If the Mardis Gras Indians want payment from their costumes, they have plenty of options.  They can:

  • collect donations.
  • look for a corporate sponsor, sell advertising, and/or give commercial endorsements.
  • sell their costumes to others.
  • perform in a private parade (with paid tickets).

What they can’t do, however, is simply take those costumes, walk down a public street in a free parade open to the public, and expect to be paid for it.  It just doesn’t work that way.

Appealing fair use

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It looks like we are headed toward more clarity on the fair use front:  Righthaven is appealing one of its fair use losses to the 9th Circuit Court of Appeals:

[U.S. District Judge] Hicks found the online posting by [defendant Michael] Nelson of the first eight sentences of a 30-sentence [Las Vegas] Review-Journal story didn’t amount to copyright infringement as it was protected by the “fair use” doctrine .

This ruling caused Righthaven to alter its litigation strategy to limit its lawsuits to entire stories, photos and graphics — rather than partial stories — that were reproduced without authorization.

This could get interesting.  The 9th Circuit is extremely pro-content industry, perhaps unsurprising given that Hollywood is located within its jurisdiction.  At least a ruling will provide additional clarity going forward.

Oh Canada

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I’ve made the point here before that the music industry inexplicably declines perfectly good revenue sources simply because they are “less” than what they are expecting.  At the risk of Monday-morning-quarterbacking their business model, here’s more proof from north of the border, courtesy of Michael Geist:

Pandora, the popular U.S. online music service filed for an initial public offering last week, provided new insight into hugely popular company that spends millions of dollars in copyright royalties. Pandora users listened to a billion hours of music in the last three months of 2010. Given U.S. laws, the Pandora prospectus notes that it paid for the privilege of having its users do so, with the company spending just over half of its revenue on copyright fees – $45 million in the first nine months of 2010.

The numbers are striking since it points to a growing source of revenue that is largely being missed in Canada. Millions of dollars are now generated from online streaming royalties in the U.S., yet many companies are avoiding the Canadian market. The reason, as Pandora explained last year, are the royalty demands of the major record labels. As Tim Westergren stated last fall, “as long as rights societies take this approach, they will prevent Pandora from launching to Canadian users.” While CRIA tried to claim that the decision to avoid the market was a function of Canadian copyright law, Pandora indicated that it is the fee demands, not the laws that are the stumbling block. With millions now being paid for streaming music in the U.S., it is notable that Canadian interests would seemingly prefer to receive nothing rather than the millions that could potentially be on the table.

A $4000 mistake

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Talk about turning lemons into lemonade.  A Canadian-based copywriting firm is attempting to parlay a very expensive mistake into favorable publicity:

“Like many other creative types in the web industry, our copywriters were not clear on image copyright laws, and we were taught an expensive lesson,” said Rick Sloboda, Senior Web Copywriter at Webcopyplus, which provides designers and businesses optimized web content. “We’re sharing our story, so others can learn from our experience and avoid the same mistake.”

In May, 2010, with the assumption Web images without copyright notices were “public domain” and free to use, a Webcopyplus copywriter used Google images to find an unmarked 400 x 300 pixel scenic photo to complement an article for a tourism client’s blog.

Webcopyplus has posted additional details on their blog, as well as some resources for obtaining stock photography in a way that won’t get one sued (including Creative Commons photos available via Flickr).