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Ironically, this DRM push comes just as the US courts and regulators have begun to erode the US's own extreme rules on the subject. Or perhaps this isn't so surprising: in the past, the US copyright lobby has torpedoed the courts and Congress by getting USA to commit to international agreements that went far beyond the rules that they could push through on their own at home.
Given the history of ACTA leaks, to no one's surprise, the latest version of the draft agreement was leaked last night on Knowledge Ecology International's website. The new version - which reflects changes made during an intense week of negotiations last month in Washington - shows a draft agreement that is much closer to becoming reality. Square brackets [ed: these indicate areas where there is still debate] have been removed from many sections, leaving the core issue of scope of the agreement [ed: that is, whether the treaty will cover things like EU-style trademark rules that would prohibit calling it "cheddar cheese" if it's not made in Cheddar, England] as the biggest issue to be resolved when the next round of negotiations begins in a few weeks in Japan. Perhaps the most important story of the latest draft is how the countries are close to agreement on the Internet enforcement chapter. The Internet enforcement chapter has been among the most contentious since the U.S. first proposed draft language that would have globalized the DMCA and raised the prospect of three strikes and you're out. In the face of opposition, the U.S. has dropped its demands on secondary liability [ed: that is, forcing ISPs and online services to police and censor their users or face prosecution] but is still holding out hope of establishing digital lock rules that go beyond the WIPO Internet treaties and were even rejected by its own courts.
Perhaps the most important story of the latest draft is how the countries are close to agreement on the Internet enforcement chapter. The Internet enforcement chapter has been among the most contentious since the U.S. first proposed draft language that would have globalized the DMCA and raised the prospect of three strikes and you're out. In the face of opposition, the U.S. has dropped its demands on secondary liability [ed: that is, forcing ISPs and online services to police and censor their users or face prosecution] but is still holding out hope of establishing digital lock rules that go beyond the WIPO Internet treaties and were even rejected by its own courts.
It’s Not Stealing When They Do It
Even the very best “beat the system” plan is going to need a little hardware.
Richard Branson, the billionaire, started out smuggling records into England. By the time he was arrested in 1971, he was rich enough to afford the fine. Now he’s got a knighthood and an airline. THIS COULD BE YOU!
But don’t think it’s easy to become a white-collar criminal. You need to be brave, clever, sneaky, and also have that initial startup capital. Like, if you were going to exploit the spirit of fair use by releasing a movie as hundreds of ten second clips (each sold separately) you’d want to first buy a JVC Everio HD Camcorder.
The JVC Everio HD Camcorder is very portable, meaning you can sneak it in places where one would normally not expect a camera to be. It’s also got an LED video light built right in, so dark places can be well lit. Use that 20x optical zoom and the Konica Minolta HD lens to make a 1920 x 1080 Full HD recording, and save all those ten second clips to a SD/SDHC Memory Card (not included) in one of the two card slots and pow! You’re ready to go!
If Branson can make an empire out of selling cut-outs from the back of his car, surely YOU can make millions using a JVC Everio HD Camcorder to collect the very latest fair-use blockbusters. Even better: what about releasing just the good parts? Imagine an hour-long collection of ten second clips with nothing but the explosions and the sex scenes. Hey, if Hollywood doesn’t care about a logical plot, why should you? Just be sure to charge a small “assembly fee” to cover the cost of your JVC Everio HD Camcorder and put a little bit aside each day.
After all, if you can cover the fine, you’re no longer a pirate. You’re a maverick businessman!
Warranty: 90 Day JVC
Condition: Refurbished
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Inset credit: nickwebb
Inset credit: shankbone
Inset credit: daly3d
Today I sent an invoice on a cake to People.com. I'm demanding $500 from them after my Cake of Resignation photo was used without permission and without payment. Here's a timeline: On August 10 this year I received an e-mail from an employee of People Magazine requesting permission to use my cake resignation photo in an article. This is shortly after the Jet Blue Steward event, prompting many 'Weird ways people have quit their jobs' news stories. I replied to People and said they needed a license to use my photo - meaning they have to pay me to use it. I did not receive a reply. On August 11 my image was used without authorization and without payment on People.com, in an article titled "Take This Job and Shove It! 8 Memorable Quitters". I sent a cease-and-desist letter demanding my image be removed from their website. Six days later I receive an e-mail stating my image had been removed from their website. I received an offer at that time of $75 for the use of my image. That may have been reasonable if my photo's copyright had not been willfully infringed and used for six days. So, today I sent the photo director an invoice for a usage license of my cake resignation photo. This cake was delivered today, September 3rd.
Here's a timeline:
On August 10 this year I received an e-mail from an employee of People Magazine requesting permission to use my cake resignation photo in an article. This is shortly after the Jet Blue Steward event, prompting many 'Weird ways people have quit their jobs' news stories.
I replied to People and said they needed a license to use my photo - meaning they have to pay me to use it. I did not receive a reply.
On August 11 my image was used without authorization and without payment on People.com, in an article titled "Take This Job and Shove It! 8 Memorable Quitters".
I sent a cease-and-desist letter demanding my image be removed from their website. Six days later I receive an e-mail stating my image had been removed from their website. I received an offer at that time of $75 for the use of my image. That may have been reasonable if my photo's copyright had not been willfully infringed and used for six days.
So, today I sent the photo director an invoice for a usage license of my cake resignation photo. This cake was delivered today, September 3rd.
Here's my perspective: the purpose of any cultural policy or regulation should be to encourage a diversity of both participation and works (that is: more people making art, and more kinds of art being made). ISTM that your assertion amounts to: "Whatever forms of participation that come into existence as a result of the capitalization opportunities that accrue in an exclusive rights regime, they are dwarfed by the works that lurk in potentia should such a regime perish." IOW: we unequivocally get *some* participation in culture as a result of exclusive rights regimes, some of which would not exist except for exclusive rights. You believe that if this regime and the works that depend on it was to vanish, the new works that would come into existence as a result would offset the losses. I don't know how either assertion could be tested. We both have firsthand experience of both modes of creativity -- I know of works that wouldn't have been capitalized absent the higher returns expected in the presence of exclusive rights; I also know of works that could only have been made in their absence.
ISTM that your assertion amounts to: "Whatever forms of participation that come into existence as a result of the capitalization opportunities that accrue in an exclusive rights regime, they are dwarfed by the works that lurk in potentia should such a regime perish."
IOW: we unequivocally get *some* participation in culture as a result of exclusive rights regimes, some of which would not exist except for exclusive rights. You believe that if this regime and the works that depend on it was to vanish, the new works that would come into existence as a result would offset the losses.
I don't know how either assertion could be tested. We both have firsthand experience of both modes of creativity -- I know of works that wouldn't have been capitalized absent the higher returns expected in the presence of exclusive rights; I also know of works that could only have been made in their absence.
Any ethical claim to ownership over a scan of a public domain work should be treated with utmost suspicion, not least because of all the people with stronger claims than the scanner! To be consistent with the ethical principle that one should never use another's work without permission (regardless of the law or the public domain), every scanner would have a duty to ask, at the very least, the corporations whose products are advertised in these old chestnuts (the very best of them are for brands that persist to today, since these vividly illustrate the way that our world has changed - for example, see the very frank Lysol douche ad). For if scanning a work confers an ownership interest, then surely paying for the ad's production offers an even more compelling claim! And the publishers of the magazines and the newspapers - to scan is one thing, but what about the firm that paid to physically print the edition that we make the scan from? And then there are the copywriters and illustrators and their heirs - if scanning an ad confers a proprietary interest, then surely creating the ad should give rise to an even greater claim? We do acknowledge these claims, at least a little. A good archivist notes the source. A good critic notes the creator. But that is the extent of the claim's legitimacy. If we afford descendants and publishers and printers and commissioners their own little pocket of customary right-of-refusal over their works, we would eliminate the ability to keep these works alive in our culture. For these owed courtesies multiply geometrically - think of the challenge of getting all of Dickens' or Twains' far-flung heirs to grant permission to do anything with their ancestors' works. What a lopsided world it would be if ten seconds' scanner work with the public domain demanded 100 hours' correspondence and permission-begging to be ''polite!''
And the publishers of the magazines and the newspapers - to scan is one thing, but what about the firm that paid to physically print the edition that we make the scan from? And then there are the copywriters and illustrators and their heirs - if scanning an ad confers a proprietary interest, then surely creating the ad should give rise to an even greater claim?
We do acknowledge these claims, at least a little. A good archivist notes the source. A good critic notes the creator. But that is the extent of the claim's legitimacy. If we afford descendants and publishers and printers and commissioners their own little pocket of customary right-of-refusal over their works, we would eliminate the ability to keep these works alive in our culture. For these owed courtesies multiply geometrically - think of the challenge of getting all of Dickens' or Twains' far-flung heirs to grant permission to do anything with their ancestors' works. What a lopsided world it would be if ten seconds' scanner work with the public domain demanded 100 hours' correspondence and permission-begging to be ''polite!''
Copyright trolls are nothing new, and Righthaven is just the latest group of lawyers to try to turn copyright litigation into a business model. What these lawyers have in common is that they seek to take advantage of copyright's draconian damages in order to bully Internet users into forking over money. To anyone who has watched the file-sharing lawsuits of the last few years or the current BitTorrent cases brought by a DC law firm, the Righthaven saga is developing into a familiar, unfortunate story. It also has some especially troubling twists.
The basic pattern: Righthaven has brought over a hundred lawsuits in Nevada federal court claiming copyright infringement. They find cases by (a) scouring the Internet for parts of newspaper stories posted online by individuals, nonprofits, and others, (b) buying the copyright to that particular newspaper story, and then (c) proceeding to sue the poster for copyright infringement. Like the RIAA and USCG before them, Righthaven is relying on the fact that their victims may face huge legal bills through crippling statutory damages and the prospect of paying Righthaven's legal fees if they lose the case. Consequently, many victims will settle with Righthaven for a few thousand dollars regardless of their innocence, their right to fair use, or other potential legal defenses.
However, Righthaven is unlike other copyright trolls in some key ways:
Righthaven is claiming that its activities are intended to have a "deterrent effect" on the reposting of news stories online, but it's hard to resist viewing Righthaven's actions as purely business-related. In addition to the sharp legal tactics discussed above, Righthaven appears to only buy copyrights that it believes can be used for lawsuits and otherwise has no involvement in the practice of journalism.
Righthaven also appears to be soliciting other newspapers to sign on with it. But newspaper publishers who think that suing bloggers a story at a time will save journalism are sorely mistaken. Newspaper publishers have actually been having meaningful discussions about innovative business models to support real journalism. Sadly, Righthaven -- if it continues to attract clients -- threatens to derail those conversations with a sideshow proven to distract from progress.
But no matter where a newspaper may stand on the debate about journalism's future, we think it is abundantly clear that a "sue the audience" tactic is nowhere near worth considering. Newspapers should resist the temptation to put themselves into the same position as the music industry circa 2004, where futile lawsuits distracted them from the incorporating new technology and creating new ways to market product to fans.
EFF is watching Righthaven and other copyright trolls closely for overbroad tactics that hurt free speech and fair use, and abuse the legal system. We're looking for good cases to defend and will deliver more news and analysis as the issue develops.
[Update: This post was featured on Slashdot.]
[Update: There are two discrete ways of asking whether a court decision is "correct." The first is to ask: is the law being applied the same way here as it has been applied in other cases? We can call this first question the "legal question." The second is to ask: what is the relevant social or policy goal from a normative standpoint (say, technological progress) and does the court decision advance that goal? We can call this second question "the policy question." Eric Felten, who addressed my August 31st post at length in his article in the Wall Street Journal (Video Game Tort: You Made Me Play You), is clearly addressing the policy question. He describes "[t]he proliferation of annoying and obnoxious license agreements" as having great social utility because they prevent customers from "abusing" software companies. What Mr. Felten fails to grasp, however, is that I have not weighed in on the policy question at all. My point is much simpler. My point addressed only the legal question and set forth the (apparently controversial) proposition that courts should be faithful to the law. In the case of EULAs, that means applying the same standards, the same doctrines, and the same rules as the courts have applied to analogous consumer contracts in the brick and mortar world. Is that too much to ask? Apparently it was not too much to ask of the federal court in Smallwood, because that was exactly how the court proceeded. Mr. Felten's only discussion of why the Smallwood decision may be legally incorrect involves the question of whether or not "physical" injury occurred. Although this is an interesting factual question with respect to the plaintiff's "Negligent Infliction of Emotional Distress" claim (count 7), the court found it irrelevant with respect to the plain-old negligence and gross negligence claims (counts 4 and 5). These were the counts that my original blog post primarily addressed. It's hard to parse Prof. Zittrain's precise legal reasoning from the quotes in Mr. Felten's article, but it's possible that the two of us would agree on the law. In any event, Mr. Felten is content to basically bypass the legal questions and merely fulminate--superficially, I might add--on the policy question.]
The case law governing software license agreements has evolved dramatically over the past 20 years as cataloged by Doug Phillips in his book The Software License Unveiled. One of the recent trends in this evolution, as correctly noted by Phillips, is that courts will often honor contractual limitations of liability which appear in these agreements, which seek to insulate the software company from various claims and categories of damages, notwithstanding the lack of bargaining power on the part of the user. The case law has been animated, in large part, by the normative economics of Judges associated with the University of Chicago. Certain courts, as a result, could be fairly criticized as being institutionally hostile to the user public at large. Phillips notes that a New York appellate court, in Moore v. Microsoft Corp., 741 N.Y.S.2d 91 (N.Y. App. Div. 2002), went so far as to hold that a contractual limitation of liability barred pursuit of claims for deceptive trade practices. Although the general rule is that deceit-based claims, as well as intentional torts, cannot be contractually waived in advance, there are various doctrines, exceptions, and findings that a court might use (or misuse) to sidestep the general rule. Such rulings are unsurprising at this point, because the user, as chronicled by Phillips, has been dying a slow death under the decisional law, with software license agreements routinely interpreted in favor of software companies on any number of issues.
It was against this backdrop that, on August 4, 2010, a software company seeking to use a contractual limitation of liability as a basis to dismiss various tort claims, met with stunning defeat. The U.S. District Court for the District of Hawaii ruled that the plaintiff’s gross negligence claims could proceed against the software company and that the contractual limitation of liability did not foreclose a potential recovery of punitive damages based on such claims. Furthermore, the matter remains in federal court in Hawaii notwithstanding a forum selection clause (section 15 of the User Agreement) in which the user apparently agreed “that any action or proceeding instituted under this Agreement shall be brought only in State courts of Travis County, State of Texas.”
The case is Smallwood v. NCsoft Corp., and involved the massively multiplayer, subscription-based online fantasy roll-playing game “Lineage II.” The plaintiff, a subscriber, alleged that the software company failed to warn of the “danger of psychological dependence or addiction from continued play” and that he had suffered physically from an addiction to the game. The plaintiff reportedly played Lineage II for 20,000 hours from 2004 through 2009. (Is there any higher accolade for a gaming company?) The plaintiff also alleged that, in September of 2009, he was “locked out” and “banned” from the game. The plaintiff claimed that the software company had told him he was banned “for engaging in an elaborate scheme to create real money transfers.” The plaintiff, in his Second Amended Complaint, couched his claims against the software company in terms of 8 separate counts: (1) misrepresentation/deceit, (2) unfair and deceptive trace practices, (3) defamation/libel/slander, (4) negligence, (5) gross negligence, (6) intentional infliction of emotional distress, (7) negligent infliction of emotional distress and (8) punitive damages.
The software company undertook to stop the lawsuit dead in its tracks and filed a motion to dismiss all counts. The defendants argued, among other things, that Section 12 of the User Agreement, entitled “Limitation of Liability,” foreclosed essentially any recovery. The provision, which is common in the industry, purported to cap the amount of the software company’s liability at the amount of the user’s account fees, the price of additional features, or the amount paid by the user to the software company in the preceding six months, whichever was less. The provision also stated that it barred incidental, consequential, and punitive damages:
12. Limitation of Liability * * * IN NO EVENT SHALL NC INTERACTIVE . . . BE LIABLE TO YOU OR TO ANY THIRD PARTY FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES . . . REGARDLESS OF THE THEORY OF LIABILITY (INCLUDING CONTRACT, NEGLIGENCE, OR STRICT LIABILITY) ARISING OUT OF OR IN CONNECTION WITH THE SERVICE, THE SOFTWARE, YOUR ACCOUNT OR THIS AGREEMENT WHICH MAY BE INCURRED BY YOU . . . .
The Court considered the parties’ arguments and then penned a whopping 49-page decision granting the software company’s motion to dismiss, but only partially. The Court determined that the User Agreement contained a valid “choice of law” provision stating that Texas law would govern the interpretation of the contract. However, the Court then ruled that both Texas and Hawaii law did not permit people to waive in advance their ability to make gross negligence claims. The plaintiff's remaining negligence claims survived as well. The claims based on gross negligence remained viable for the full range of tort damages, including punitive damages, whereas the straight-up negligence-based claims would be subject to the contractually agreed on limitation on damages.
The fact that the gross negligence claims survived is significant in and of itself, but in reality having the right to sue for “gross negligence” is the functional equivalent of having the right to sue for straight-up negligence as well—thus radically broadening the scope of claims that (according to the court) cannot be waived in a User Agreement. Although it is true that negligence and gross negligence differ in theory (“negligence” = breach of the duty of ordinary care in the circumstances; “gross negligence” = conduct much worse than negligence), it is nearly impossible to pin down with precision the dividing line between the two concepts. Interestingly, Wikipedia notes that the Brits broadly distrust the concept of gross negligence and that, as far back as 1843, in Wilson v. Brett, Baron Rolfe “could see no difference between negligence and gross negligence; that it was the same thing, with the addition of a vituperative epithet.” True indeed.
The lack of a clear dividing line is an important tactical consideration. A plaintiff often pleads a single set of facts as supporting claims for both negligence and gross negligence and—in the absence of a contractual limitation on liability—expects both claims to survive a motion to dismiss, survive a motion for summary judgment, and make it to a jury. When the contractual limitation of liability is introduced into the mix, and the plaintiff is forced to give up the pure negligence claims, it hardly matters: the gross negligence claims—based on the exact same facts—cannot be waived (at least under Texas and Hawaii law) and therefore survive, at least up to the point of trial. Courts will not decide genuine factual disputes—that is the function of the jury. This is usually enough for the plaintiff, since the overwhelming majority of cases settle. Thus, a gross negligence claim, in most situations, is the functional equivalent of a negligence claim. For these reasons, the Smallwood decision, if it stands, may achieve some lasting significance in the software license wars.