Wednesday, November 24, 2010

Oracle v. SAP AG: A Chilling Effect? Not Likely

On this chilly day before Thanksgiving, Oracle Corporation got a holiday present when a federal jury in Oakland awarded the company $1.3 billion in damages for its copyright infringement suit against German software giant SAP AG. The case focused on the intentional copying and use of Oracle’s software by TomorrowNow, a former division of SAP. TomorrowNow offered maintenance services and support software for customers of companies Oracle had acquired. Turns out in order to perform those services; TomorrowNow had downloaded, without Oracle’s permission, Oracle software – a clear and unambiguous copyright infringement.

Oracle sued, and before trial began, SAP admitted the copying and liability for infringement, which left only the amount of damages as the focus of the trial. Oracle sought $2.3 billion, SAP claimed the award should be limited to 40 million. So it appears the jury compromised and awarded damages in the middle of the range at issue.

Some commentators are concerned that this verdict, the largest in 2010 and, according to the San Francisco Chronicle story about the case, the 23rd largest verdict of all time, may have a chilling effect on companies seeking to develop new innovations in software, because of concern about being sued for infringement.

I’m dubious about that concern. This was, from all accounts, an egregious, indefensible case of blatant infringement. Companies that engage in this kind of conduct, when caught in the act, should indeed be concerned that they will be tagged with a big judgment against them. However, many jurisdictions allow for intermediate copying to occur as a company develops new products, provided the copied software is not used in any way in the product ultimately developed. Even in those jurisdictions that preclude intermediate copying, a fair use defense may still aid a defendant.

Given the nature of the conduct of SAP in this case, while the award sets a record, its importance as precedent is more likely to be limited.

Sunday, November 14, 2010

Digital History – Are We All Public Figures?

In his The Public Editor column in the November 14, 2010 New York Times, writer Arthur S. Brisbane casts a critical eye on the a bicycle/pedestrian accident in which 87-year old Claire Menagh was recently knocked down and injured on a quiet New York City street. The operators of the two bicycles which ran into her were a four-year old girl and a five-year old boy. Media reports of the incident named each of the children, and their parents, after Ms. Menagh’s Estate (she died three months after the accident, of unrelated causes) sued the children for damages resulting from negligence, and their parents (also named in the media) for negligent supervision.

Mr. Brisbane, in his Public Editor role, asks whether the Times was right to publish the children’s names. He posed this question to various editors with the Times, who noted that the names were in the public record via the lawsuit, and that other news organizations had previously listed the names in their reporting. They also pointed out that since the case didn’t deal with criminal law claims, nor did it deal with the sexual exploitation of children, the prohibitions on naming children that those instances trigger did not apply to this story.

Critics of the Times’ decision, also profiled by Mr. Brisbane, note that once these children’s names appear in the online universe in this context, this public record is never erased, and will dog them for the rest of their life. “When we stigmatize them by using their names, we say that childhood in America ends at 4-years old”, says the Rev. Emma Jordan-Simpson, Executive director of the Children’s Defense Fund-New York.

Therese Bottomly, managing editor for readership and standards at The Oregonian in Portland, summarizes the impact the digital revolution has on the decision whether to publish children’s names in these cases:

“I used to think short-term about what effect coverage might have on a child returning the next week to a classroom, say, and whether that should be a consideration. Now, we think about the ramifications if a would-be employer or college admissions counselor searches for a kid 10 years down the road”.

This case is directly relevant to the issue of privacy protection versus a shared life approach – the latter being a lifestyle choice many people have chosen in the Facebook and related social network milieu many live in today. While I, and other academics who teach in the area of Internet and related hi-tech law, routinely counsel students to be careful what they upload to social network sites because employers now regularly do Google and Facebook searches, even we fail, I think, to consider the long term impact of this digitally open and recorded lifestyle. The idea of re-inventing yourself to move past youthful indiscretions or poor choices may become less available in a world where your digital history becomes inescapable. This is an effect of these shared lives that many of us, with our eye only on the next month or year, may come to regret only when it is too late. Will we come to a tipping point where we realize we have offered, as some call it, TMI (Too Much Information)?

As is often the case with the excesses of technology in the digital age, there is a social tendency to look to the law and the legal system for a fix for this problem. However, there are some concerns the law is poorly suited to address, and I suspect this is one of them. Attempting to ban or limit, through legal strictures, user-generated content is a losing battle. It is far more likely that it will take many more cases like the Menagh case before the battle for people’s hearts and minds on these privacy issues may be won, and the value of limiting what people share will begin to be embraced, perhaps by a generation yet to come.

Sunday, November 7, 2010

Report on the GGU IPLC Annual Conference

On Friday November 5th, the Golden Gate University IP Law Center presented our 9th Annual Conference on Recent Developments in IP Law and Policy. The day long conference, held in Room 2201, attracted over 70 participants. Highlights included an electrifying presentation by U.C. Davis Professor Madhavi Sunder based on her upcoming work “IP: YouTube, MySpace, Our Culture”, and an engrossing panel of online gaming attorneys from Electronic Arts, Zynga and NAMCO BANDAI Games America.

Center Co-Directors Bill Gallahger and I, joined by Assoc. Prof Chester Chuang, our third IP Law faculty member, wish to acknowledge and thank the Townsend law firm for its generous financial support of the conference. Thanks are also due to Dean Ramey and the Dean’s Office administrative staff for its support. Our presenters and panelists, some of whom traveled from Irvine, Los Angeles and Davis, gave generously of their time and expertise, which is also greatly appreciated. Grad Law program coordinators Natascha Fastabend, Brad Lai and Tiptira Rammaniya provided valuable support as well. A special thanks is reserved for Justin Reid, Administrative Assistant for the IP Program – he did an exceptional job handling the myriad administrative tasks critical to making the conference a success. And lastly, we tip our hats to the twenty student volunteers who worked long and hard to make the event the success it was.

Planning for next year’s conference begins Monday!

Sunday, October 31, 2010

Upcoming Events and Blogs (Shameless Plugs Category – Low-Cost, High Quality MCLE!)

The IP Law Center at Golden Gate presents the Ninth Annual Recent Developments in IP Law and Policy Conference at Golden Gate University all day (9-5 p.m.) Friday, November 5th, at the GGU campus at 536 Mission Street in San Francisco. The Conference features panels on recent developments in trademark and patent law, an hour of ethics for IP practitioners, and a cutting edge panel on online gaming, featuring panelists from Zynga and Electronic Arts, and moderated by veteran copyright lawyer Neil Smith. The program offers 6 hours of MCLE credit for $75 for attorneys, $35 for GGU alums, and $15 for current students (which just about covers the box lunch cost!)
Tickets can be purchased online at https://www.brownpapertickets.com/event/132795, or on the day of the event. For further information, email Justin Reid at jreid@ggu.edu.

Ninth Circuit Chief Judge Alex Kozinski speaks on April 11th, 2011. The IP Law Center at Golden Gate University School of Law is pleased to present to the Bay Area IP law community a rare opportunity to hear remarks by Ninth Circuit Chief Judge Alex Kozinski regarding IP law and important trends in federal IP law jurisprudence. Judge Kozinski will present these remarks as the third speaker in the IPLC’s Distinguished IP Law Speaker series, in a program free to the public, held at the GGU campus from 6:30-7:30 on April 11th. This is a not-to-be-missed opportunity to hear from one of the leading jurists in the nation, whose probing and sometimes caustic commentary on IP issues routinely makes headlines and is studied by academics and practitioners alike.

Last but not least, two new blog posts follow this one, and I’ve got a few more in the works. Its’ been a bit of a blogging dry spell since my September posts, but with the planning of the IP Conference now completed, I can now address a backlog of blog topics that have been waiting patiently on my desk – including commentary about the violence in video games case (Schwarzenegger v. Entertainment Merchants Assoc.), and the future of copyright, including my review of the fascinating analysis and proposals included in a forthcoming article on this subject by a consortium of contributors assembled by Berkeley Prof. Pamela Samuelson, and a discussion of the SFIPLA panel on the subject, in which Mark Radcliffe and I offered divergent forecasts. Stay tuned!

Digital Sweatshops: A New Global Labor Law Challenge

In his Digital Domain column in the October 31, 2010 Business Section of the New York Times, Silicon Valley author and business professor Randall Stross writes about the growing business of widely distributed repetitive task work in the online universe. Pioneered in 2005 by Amazon.com’s Mechanical Turk service, the business involves software apps which, per Stross, “carve a given task into microscopically small pieces, like transcribing a hand-written four-digit number in a tiny rectangle on a form”, a task which Stross points out presents a problem for text-recognition software, and thus is more efficient if performed by hand.

Such work is referred to as “microtasking”, and businesses pay a few cents per completed task, such as 2 cents for finding the contract information for 7500 hotels, or 3 cents for each answer regarding an inventory of about 9,400 toys. CloudCrowd in San Francisco offers work for “garble hunters” who find translation errors and are paid 20-25 cents per word.

Law professor Miriam A. Cherry has written of this practice, and has a new article forthcoming in the Georgia Law Review, entitled A Taxonomy of Virtual Work, in which she raises concerns about this kind of “virtual work”, and how it will raise new issues, and renew old issues, for labor unions and employers. In an earlier article on this subject she notes that Chinese “gold farmers” who are hired to play online games for long hours to earn “gold”, forms of virtual currency that allow gamers to move up levels, are paid low wages for the effort, and for whom the “game” is anything but fun.

This is once again an example of how developments in the online universe continue to present, in new contexts, legal issues that require the IP legal community to analyze their contexts, to see if existing law can address the issues, or if sui generis approaches are needed. Stay tuned…we are just touching the surface of this issue.

Viacom v. YouTube: Further Thoughts on DMCA Section (512(c)(3)(A)(ii), the Representative List Dilemma, and a Solution

Whew! What a long title – admittedly clunky, but accurate. At this weekend’s State Bar of California IP Law Section’s 35th Annual Intellectual Property Institute, I attended an excellent panel with a similarly long title: UGC on a Global Stage: International Update on Secondary Liability for Copyright Infringement. Moderated by James Nguyen of the Beverly Hills office of Wildman Harrold Allen & Dixon, the panel’s focus was on how secondary liability for UGC (user generated content) was being addressed in countries throughout the world. The discussion began with an insightful presentation by Melinda Mehringer, Senior Vice-President, Content Protection Litigation, Fox Entertainment Group, which summarized the UGC issues in the U.S., exemplified principally by the decision in the Viacom v. Google, YouTube et al. litigation.

I have previously discussed this case (see my July 1, 2010 blog posts) and voiced my concern that the DMCA notice and takedown process was a poor fit for UGC comprised of multiple uploads of the same or similar content. The inability of ISPs to locate posts via the “Representative List” process offered by DMCA Section (512(c)(3)(A)(ii) left content providers in the difficult situation of having to identify, by individual URL, each infringing post – a burdensome task when a work is posted and reposted multiple times. In subsequent commentary about the case that I offered on a panel at the Fall ABA conference in San Francisco, I noted that the use of hash marks as a form of pre-upload filtering was not much of a solution, since the hash marking systems only worked for identical content – which meant that any YouTube posting that added or mashed up content would escape detection.

I was reassured, and a bit horrified, to find Ms. Mehringer reaffirming the view that the notice and takedown system wasn’t working in the UGC context. She noted that in the first half of 2010, Fox Entertainment had sent out seven million (7,000,000) takedown notices! This is a staggering number of notices, and makes it abundantly clear that we need a better system to allow content owners to protect their work. Ms. Mehringer noted, in a conversation we had following her presentation, that the entire suite of different types of pre-upload filtering systems now in use by YouTube and other ISPs are allowing content owners to identify up to 85% of infringing content, but the burden of sending out notices, particularly in the kinds of numbers she cited, remains untenable.

All of this puts me to mind of Prof. Lawrence Lessig’s discussion, in the first version of his book, Code, and Other Laws of Cyberspace, that to effect change in the online universe, four different modalities must be involved: Code (or architecture), Law, The Market, and Social Normative change. While filtering systems and threats of legal enforcement may help address UGC infringement issues, the absence of any economic consequences, and more importantly, the failure to convince users that infringement is a social harm, likely means that this battle will continue, to the detriment of the creative community.

Coming up with a solution to this dilemma is a challenge for all of us in the IP community – so consider the gauntlet thrown readers – how do we solve this?

Saturday, September 11, 2010

Social Pressure and the Law: Craigslist’s “Adult Services” and Zynga’s Business Practices

Living and working in the Bay Area, a place where you can find people who care deeply about anything and everything, offers a front row view of the impact social pressure can have, often despite the legal nature of the conduct at issue. Two different online companies are experiencing that pressure now, and their response to it may reflect the power such pressure can wield.

Craigslist, the popular online resources/classified ad site, has faced a steady stream of criticism for years over listings that critics claim are thinly disguised advertisements for sex for hire services by prostitutes (both male and female). Politicians like Rep. Jackie Speier (D-Hillsborough, CA) and possible South Carolina gubernatorial candidate Henry McMaster have launched investigations and threatened lawsuits over what they characterize as websites like Craigslist being used to “facilitate criminal activity”. Craigslist’s CEO, Jim Buckmaster, points out that censoring the postings on the site, or forcing it to close down its “Adult Services” pages, won’t really address the social concerns over this kind of activity. Rather, he points out, all a closure will do is cause the companies and individuals advertising to move their ads to offshore websites, or to other sections of Craigslist, such as the “Personals” section. Critics of the closure advocates also note that ads of this nature have run for over fifty years in alternative newspapers (see the Bay Guardian and SF Weekly in Northern California for examples), without drawing similar pressure.

Despite the fact that no one claims that the First Amendment doesn’t protect these listings, and that Craigslist only starting charging for these ads when it was pressured to do so by a group of attorneys general, and that it donated the funds received to charity (until charities started publicly refusing to accept the donations), the pressure on the company continued. In the spring of 2009, Craigslist started manually reviewing all of the Adult Services postings, and reported any that seemed to indicate the involvement of underage persons to the National Center for Missing and Exploited Children. Once again, these measures didn’t appease the critics, nor did they stop the media pressure and threats of litigation and criminal charges.

Finally, last week Craigslist threw in the towel, first slapping a “censored” label over the Adult Services section, and then removing the entire section from the site.

In a similar social pressure vein, SF Weekly, one of those alternative newspapers with a prominent “Adult Entertainment” section laden with ads for escorts, phone sex, massage services and strip clubs, featured in its September 8-14 issue, a cover story by Peter Jamison about Zynga, the creator of Farmville, a hugely popular online game. The cover illustration features a farmer in overalls, wearing a black Zorro-like mask, carrying a pitchfork and a bag of money, with a pink pig looking on with a caption over the pig’s head that reads “WTF?”, a reference I assume needs no translation. The title on the cover page reads: “Zynga Has a Simple Business Formula: Steal Someone Else’s Game. Change Its Name. Make Millions. Repeat.” A pull quote in the middle of a page of the article, attributed to a former employee, reads: “Zynga’s Motto is ‘Do Evil’. I Would Venture to Say It Is One of the Most Evil Places I’ve Run Into.”

This all sounds pretty ominous. It is only deep in the article that Jamison acknowledges that nothing that Zynga is doing is illegal or constitutes copyright infringement or any other violation of intellectual property rights. Rather, the accusation is that the company is very aggressive in exploiting unprotected ideas for games developed by competitors, and essentially building a better mousetrap by focusing on the social networking appeal of these games (virtually all Farmville players play the game through their Facebook connection). Its’ hard to tell what the goal of this attack piece is – other than to assert that Zynga has committed the sin of being aggressively capitalist, instead of fostering innovation in the game universe. If the point is to attempt to get Zynga to moderate its conduct via social pressure, despite the legal nature of that conduct, it is again a bit troubling, as are the efforts of the Craigslist critics.

All participants in these conflicts, of course, have the absolute right to make their divergent viewpoints known, and to use whatever media platforms are available to them to present those views. However, when the expression of those views spills over into threats of litigation, criminal prosecution and thinly supported attacks on business reputation, despite an absence of any evidence of a violation of IP or other laws, then we begin to cross the line from free expression into coercion – a line 1st Amendment protectors need to be vigilant to preserve – always reminding critics that the 1st Amendment isn’t in place to protect speech we like – rather it is there to protect speech we don’t like.