Last week, Tim Wu blogged about recent First Amendment scholarship that address issues beyond classical censorship, and he included a shout out to my recent draft article. Also, the last two CoOp posts are about interesting articles (by Lash and by Swedloff).
In the spirit of karma, I figured I’d note some of my own favorite recent readings. I had some time to read over Spring Break. These include new readings on free speech and innovation, as well as an Internet law classic. Continue reading
In response to a reference by the High Court of Justice of England and Wales, an Advocate-General of the European Court of Justice, Niilo Jääskinen, issued the following opinion, which may be taken up and adopted by the Court:
26. In connection with the ‘AdWords’ referencing service, Marks & Spencer reserved the keyword ‘interflora’, as well as variants made up of that keyword with ‘minor errors’, and expressions containing the word interflora (such as ‘interflora flowers’, ‘interflora delivery’, ‘interflora.com’, ‘interflora co uk’), as keywords. (19)
27. Consequently, when internet users entered the word ‘interflora’ or one of those variants or expressions as a search term in the Google search engine a Marks & Spencer ad appeared under the heading ‘sponsored links’.
28. It is common ground that the ad displayed did not contain any expressions referring to Interflora chosen as keyword; neither did the ad display Interflora’s trade mark in any other way.
….
47. Therefore, in my understanding, in addition to its registered meaning, the trade mark INTERFLORA has gained a ‘secondary meaning’ (36) denoting a certain commercial networkof florists providing a certain type of delivery service, and the reputation of that trade mark relates to or is identical with the positive associations this meaning has in the minds of the relevant circles of consumers. (37)
48. Consequently, an association between the trade mark of Interflora and an identical delivery service of flowers provided by Marks & Spencer is possible and even likely in the mind of an average consumer seeking information about such services in the internet when faced with the following ad: (38)
‘M&S Flowers Online
http://www.marksandspencer.com/flowers
Gorgeous fresh flowers & plants. Order by 5pm for next day delivery.’
To my mind the display of the ad as a consequence of typing ‘interflora’ into a search engine creates in the context of this case an association that Marks & Spencer is part of the Interflora network.
….
86. Interflora claims that the choice as keywords of their trade mark and terms deviating from it only with small modifications by Marks & Spencer would imply a risk of dilution of the INTERFLORA trade mark and thus constitute blurring which they should be entitled to forbid under Article 5(2) of Directive 89/104. Their argument is that by typing ‘interflora’ the internet user is seeking information about florists marketing their services (and goods, i.e. flowers) under the trademark INTERFLORA. The conduct of Marks & Spencer would thus entail a risk that the INTERFLORA trade mark is diluted as it gains a generic meaning denoting any group of florists offering delivery services where the delivery may be undertaken by a different shop than the one who received the order.
87. I am afraid that this line of argument cannot succeed after Google France and Google because it implies that the choice of third party trade marks as keywords would as such constitute blurring, at least in case of trade marks with a reputation. The argument namely identifies the association resulting from the causal chain that unites the typing of the keyword to the display of the sponsored link with the third party’s ad as the factor that causes a risk of degeneration of the trade mark.
88. However, as I have already mentioned, the Court did not condemn keyword advertising using third party trade marks as such but linked the question of its permissibility to the contents of the ad displayed in the sponsored link. If the conjunction of a keyword and an ad in the sponsored link would as such amount to dilution, then any trade mark would be blurred if it were chosen as a keyword leading to an ad of an undertaking other than that of the trade mark proprietor.
89. In this case the sponsored link shown after the internet user has typed the search term ‘interflora’ does not itself include the sign or any similar sign. As I have explained earlier, in the case of a trade mark covering goods and services provided by a commercial network of enterprises this does not exclude the possibility of an error to the effect that there is an economic link between the trade mark and the advertiser. In other words, an adverse effect to the origin function is possible even if the trade mark is not mentioned in the ad displayed in the sponsored link.
90. However, I do not think that dilution of a trade mark, i.e. weakening of its meaning as denoting goods or services of a specific abstract commercial origin, could legally be seen as resulting from advertising where the trade mark is not mentioned. After all, blurring in the sense of loss of distinctiveness means that the sign perceived by the consumer is acquiring an alternative meaning in his mind. The alternative meaning can either be an ambivalent indication of different goods or services from different sources, in the case of dissimilar goods or services, or that of a generic category of goods or services, in the case of identical or similar ones. (67)
91. In my opinion, the use of third party trade marks as keywords in search engine advertising is detrimental to the distinctiveness of a trade mark with a reputation in cases of identical goods or services when the following conditions are met: the sign is mentioned or displayed in the ad in the sponsored link, and the marketing message or communication in the ad uses the sign in a generic sense to refer to a category or class of goods or services, and not as distinguishing between goods and services of different origins….
100. Interflora contends that the keyword advertising by Marks & Spencer has considerably increased its own advertising costs because of the rise of the price per click charged by Google resulting from competition in relation to these AdWords.
Thus, the proposed test for blurring by Internet usage of trademarks in this opinion seems to contemplate that blurring will not occur due to Adwords unless the trademarks are used in the ad text or imagery. Eric Pfanner of The New York Times points out that the decision could make advertisers in Europe cautious about purchasing Adwords ads. However, OUT-LAW.com and The Register correctly note that “Though Jääskinen outlined an expanded area in which trade mark owners could take successful actions, he said that in this case Interflora was unlikely to succeed in arguing that M&S’s use of its term as a trigger was an unlawful blurring of, tarnishment of or free riding on its trade mark.”
I recently posted a draft law review article called First Amendment Architecture.
After months of working on the article, it’s interesting to see it out in the world and to see people talking about it. On Concurring Opinions, Tim Wu was kind enough to call it “important” and “fascinating.” (I’d sent an earlier draft for his comments.) Several hundred people have at least glanced at it. I posted it on a site called SSRN the night of March 23d. Today is the 26th. SSRN reports that little more than 600 people have read the abstract. So, on average, about 150 people a day–most of that in the first two days. Over 60 people actually downloaded the article, which isn’t hundreds or thousands, but still pretty gratifying for an author facing a small target audience for 70-page law review articles challenging conventional wisdom about the First Amendment.
X-posted on Balkinization and Concurring Opinions
The Southern District of New York rejected the Google Books settlement. I provide a summary of the opinion here. Essentially, Google negotiated a settlement with the publishers and authors that sued it. Then, after the settlement, hundreds of publishers and authors objected. Competitors and the DOJ raised concerns. So, yesterday, the court rejected the settlement based mainly on those objections and concerns. It applied a nine factor test, relying mainly on one factor–the reaction of the class. It determined that the class had five important objections. (All of which I summarize here.)
Here I want to post some initial reactions about three themes that seem to animate the decision.
These themes are: (1) that Google shouldn’t benefit from its blatant copyright infringement, (2) that Congress, not a court, should determine many of the forward looking issues, and (3) that the settlement should be rejected because it would grant Google a monopoly over out-of-print books still in copyright (e.g., many books published after 1923).
Copyright. At several points, the court suggests that Google engaged in massive copyright infringement. Usually, it merely quotes one of the objectors without endorsement. These quotes include calling Google a “serial infringer” or “pirate.” The court also states that the settlement would give Google advantages over competitors, therefore “rewarding [Google] for engaging in wholesale copying of copyrighted works without permission.”
This implicit theme of Google being a pirate strikes me as misguided. First, Google has a fair use argument for its copying; so far, Google’s uses have been limited and noncommercial. Google did not merely flout the law but appears to have attempted to follow it.
More importantly, Google’s actions are the usual means of progress in distribution technologies. A page of history is worth a volume of logic here: the history of copyright suggests that incumbent distributors will try to disadvantage new distributors by withholding copyrights. Technological advances often came from innovators “copying first” and asking for permission later. Tim Wu has analyzed this history, and I discussed it recently in the context of online television. For example, in the early 1900s, makers of piano rolls disregarded music composers’ copyrights. In the 1960s and 1970s, cable operators rebroadcast broadcast signals without obtaining copyrights. Copyright holders sued VCR makers for copyright infringement. Copyright holders characterized the Internet as one giant copying machine. If piano roll companies, cable operators, VCR makers, and Internet providers had waited for permission from their competitors–the existing distributors of copyrighted works–they would have waited a long time. This wait would have denied or delayed innovative benefits to all of us. Digitizing libraries has enormous benefits, as even yesterday’s court opinion acknowledges. (“Books will become more accessible. Libraries, schools, researchers, and disadvantaged populations will gain access to far more books.”) But I think Google deserves credit for moving forward on an innovative way to distribute information; history suggests that waiting for permission is often a losing proposition for everyone
Sometimes, the courts side with the new distributors, sometimes they do not. The usual resolution of such disputes is either immunity from infringement or a compulsory license. A compulsory license means granting distributors the right to distribute copyrighted materials for a set fee. This resolution usually happens through Congress.
Congress. Second, while Congress does often resolve these new copyright issues, the court’s beliefs about congressional action seems idealistic. The court says: “The questions of who should be entrusted with guardianship over orphan books [i.e. out of print, copyrighted books], under what terms, and with what safeguards are matters more appropriately decided by Congress than through an agreement among private, self-interested parties.” While Congress is more suited for a forward-looking, ex ante remedy than a court would be, it is not because Congress will look beyond self-interest. As Jessica Litman recounted in a classic book about copyright history, Congress makes copyright policy by blessing negotiations among private, self-interested parties. Indeed, for about 100 years, Congress has not engaged in rational policy analysis of copyright policy; it has simply deferred to private negotiations, as no other method has succeeded in passing a copyright revision. The congressional process suffers from classic public choice problems, heavily favors commercial interests over noncommercial interests, and concentrated interests over more public interests. It usually results in broad copyright protections and specific, narrow exemptions for those lucky enough, and powerful enough, to be at the table. In this case, before Congress, Google would have every incentive to agree to sweeping copyright assertions by authors and publishers, in exchange for exemptions to those assertions. The primary difference is that Google’s largest competitors–such as Microsoft and Amazon–would likely be at the table in Congress, and could sink any negotiated bill that gives Google exclusive advantages. (Just as they were able to sink this settlement in court.) So, while Congress may be the right place, it would be the right place largely because it would likely ensure that a larger number of private, self-interested parties are invited to the negotiation. Congress is not the right place because it will engage in enlightened policy making on copyright or more carefully consider the public interest. Again, copyright history tells a pretty persuasive story on Congress’s usual role.
Information Monopolies. The court is right to be concerned with the settlement’s effect on competition. While Google took the initiative to digitize millions of books and should be able to monetize that investment, Google should not receive exclusive legal advantages. The settlement grants to Google, and Google alone, the right to publish out-of-print copyrighted works without permission, until an objection. Other competitors would have to obtain permission first, before publishing online in the first place. Microsoft, Amazon, and the Department of Justice contended this would grant Google an effective monopoly over these orphan works. As a result, Google would have an advantage in the search market–people would begin their searches at Google’s more complete catalog–and in the subscription market–libraries would subscribe to the most complete database of books, which is Google’s.
The court was concerned with the problem of Google becoming, essentially, an information monopoly. The court’s discussion reminded me of the AT&T breakup order in 1982, where the DC district court imposed additional conditions on AT&T–above and beyond what the DOJ sought in a consent decree–based on First Amendment concerns. As the DOJ’s mandate pertains to competition concerns, the AT&T court looked more broadly to public interest concerns implicit in the First Amendment–notably that the First Amendment favors the “widest dissemination of information from diverse and antagonistic sources.” The court also looked to the recent history of media consolidation, and noted a fear that the consent decree, unless amended, could have led to further media consolidation. As a result, the court imposed a condition on AT&T’s ability to compete in a nascent industry called “electronic publishing.” Electronic publishing was not Google Books; but the court was not really sure what electronic publishing was beyond the transmission of information through phone wires.
Once again, yesterday, a court seems reluctant to bless a negotiation that would lead potentially to the concentration of control of information in the hands of one company. This reluctance reminds me of Jack Balkin’s observation that the most important free speech questions in the 21st Century may be questions of “design”–of structuring our communications environments. (I write about these issues in a recent draft article, so they are on my mind.) The Google Books settlement will likely have a greater impact on how Americans access information than even recent, justly celebrated decisions about funeral protests or hate speech. As a result, the court seems keenly, and rightly, aware of the problem of information monopolies.
On Improving the Settlement
The court states that one change would address most of its concerns: making the settlement opt-in, rather than opt-out. At the moment, class members must opt-out of letting Google use their copyrights. Rather, the settlement could require publishers affirmatively to opt-in; just as Microsoft and Amazon must seek permission from every publisher or author, so must Google seek opt-in from every publisher or author.
My instinct on this different. I would prefer balancing the playing field for Microsoft and Amazon, but doing so in the other direction: they should be able to “opt in” to the Google settlement on Google’s terms. That is, Google has effectively negotiated a compulsory license for orphan works: it can publish works and then pay 63% of revenues. This will enable Google to digitize books more rapidly, without fear of major liability, and with revenues going to copyright holders. These are important benefits. The settlement as structured undermines competition: Google has special status as the lone publisher with this compulsory license. Rather than removing the license from Google, the court should encourage extending it to all providers. Even competitors should have this compulsory license. This would provide the public the benefits of rapid access to these works in digital, searchable form, while also providing competition in providing that access. Changing the opt-out to an opt-in is more like throwing out the baby with the bath water.
On Tuesday, the Southern District of New York rejected the Google Books settlement. The 48-page order is here, and some news stories are here and here. I provide some thoughts <elsewhere>, but here is a summary, for those who’d rather not read all 48 pages.
The court’s rejection is notable for our nation’s information policy; the terms of any settlement would have had an enormous impact on the availability of books online.
Background. Back in 2004, in partnership with several university libraries, Google began copying books for its Google Books project. It has copied 12 million books and has made these books available for search. For copyrighted books, it displays snippets. For books so old that copyright does not apply (e.g., pre-1923), it displays full texts.
But Google did not obtain permission to copy or display the copyrighted books. It relied on a fair use defense. In the words of one objector, its business plan was “So, sue me.” And that’s what many authors and publishers did. Faced with a class action suit, Google and the copyright holders negotiated a settlement back in 2008. Hundreds objected to that settlement, so the parties negotiated the “Amended Settlement Agreement.”
The Amended settlement is a complex 166 page document that enables Google to sell access to the digitized books or to sell advertising against the digital books, and provides copyright holders most of the revenue from those sales–63%. It also seems to give Google an advantage no competitor has: the right to display out-of-print books unless there is an objection. It is often difficult to find the copyright holder for an out-of-print book, and such works are called “orphan works” or “unclaimed works.” Other publishers would generally have to seek permission in advance to display orphan works.
It was this amended settlement that the court rejected. A court must approve a class action settlement because, in such settlements, only some parties negotiate the settlement for a larger “class” of plaintiffs. The negotiating parties my fail adequately to represent the other members of the class.
So a judge must ensure a settlement is “fair, adequate, and reasonable.” And the judge has wide discretion in making this determination. In the Second Circuit, courts apply a nine factor test, and they can determine how to weigh any of the factors based on the particular circumstances. This is essentially pure discretion tucked into a nine factor test. In the Google case, just about all the factors favored the settlement. Only one weighed against settlement in any important way, but it was decisive. That factor was the reaction of the class.
The class objects. As with the first settlement, hundreds of class members objected to the amended settlement, and thousands (6,800) opted out. Some members did write in support, as did some amici. But objections were more numerous and their concerns were, according to the court, “significant.” Objectors included academic authors, whose interests differ from the commercial publishers, and foreign publishers. The Department of Justice also voiced concerns about competition, alongside Microsoft and Amazon. Public interest groups and other amici raised a range of concerns, including privacy.
Indeed, the objections drove the entire opinion. Most of the opinion catalogs seven different objections. I’ll list them here, with the weak ones first, then the significant ones.
The court rejected two objections.
Five objections were more substantial.
Five substantial objections.
The opinion seems motivated less by legal issues and more by the class reaction. The court doesn’t bother to decide some legal issues–whether the settlement would in fact violate international law or the copyright act. The legal issues come up largely as areas of disagreement or objection, not legal problems for resolution. It is as though the court is setting out the areas requiring more negotiation for greater consensus going forward.
Going forward. The court suggested two options.
First, the court explicitly states that one change would address most of these concerns: making the settlement opt-in, rather than opt-out. This change would keep the default rule that the copyright holder need not transfer her copyright involuntarily; they opt-in to transfer, rather than the transfer being automatic. This change would also keep Google from having an advantage over Microsoft and others, which must seek an affirmative license (or “opt in”) from copyright holders.
Second, while not as explicit, the court suggests that the parties should address forward-looking issues through Congress.
I am going to travel again and give some talks. I have not been traveling (or even blogging) because I spent the past few months writing this draft article.*
While writing it, I couldn’t blog or travel. Just not enough time. But it’s out.
So I went to Austin this week (uploaded the paper the moment I landed). I went for South by Southwest Interactive and stayed for the Music Festival. I saw lots of old friends in tech policy: Andrew McLaughlin, Susan Crawford, Tim Wu, Elizabeth Stark, and others. It was a great working vacation turned into music vacation.
But more travel is on the way.
I will be speaking in Chicago, Michigan, and Boston.
In Chicago and Michigan, Nebraska is holding conferences on Space & Telecom law. (Luke Pelican, one of the merry band, will also be speaking in Michigan. So will Erik Mudrinich in Chicago.)
In Boston, I am one of the many speakers at the biggest conference on media reform–the seminal National Conference on Media Reform, organized by Free Press. I’m on a panel. Keynoting speakers include Joseph Stiglitz (Nobel Prize winning economist) and Nancy Pelosi, among others.
My biggest talk will be the second talk in Michigan. I will speak at TEDx University of Michigan!
I’m excited and honored to join an amazing group of speakers at my alma mater. We will be at the historic, beautiful Michigan Theater, which will be at capacity, at 1700. I’ll speak about democracy and technology. That seems like an important topic that excites me …
*The law review article is about the First Amendment’s role in ensuring adequate spaces for Americans to speak, and how that role challenges several flawed assumptions about the First Amendment’s meaning. It was, if nothing else, an ambitious piece, and couldn’t be drafted overnight unfortunately. I’ll say more about it here and on other sites but the ultra-curious can go to the article itself.
Trademark owners have argued for some time that Facebook might be liable for trademark infringement by its users, if it fails to act in compliance with the standards discussed in Tiffany v. eBay.
Now Congress is debating with the Obama administration whether seizure of domain names like facebook.com is an appropriate remedy for IP violations.
The Twitterati are not happy about new AT&T broadband caps. For a recap of the controversy about this in 2008-2009 on Facebook and att.com, see here.
CNBC has this interesting forecast of AT&T’s expected 40% hike in its stock price due to this move and various mobile phone strategies:
http://plus.cnbc.com/rssvideosearch/action/player/id/1513405666/code/cnbcplayershare
Earlier this year, Google’s Search Quality / anti-spam executive Matt Cutts toured Washington and “explained that while search results are based on an computer algorithm for the most relevant results, engineers such as Cutts go into the search engine routinely to manually weed out spam and viruses.” In resisting calls from the telecom and online travel industries to regulate Google or limit its power in some way, Cutts argued that “‘There is no barrier to entry, and with one click they can choose to go to another search engine’.”
Frank Pasquale recently reiterated his position that federal regulation is necessary in order to ensure two principles relating to “search neutrality”:
1) Stealth marketing (secretly taking cash or other consideration in exchange for elevating the profile of sites in organic search results)
2) De-indexing without notice and explanation (removing legal, non-spam sites from the index after they have been included in the search engine’s corpus, and failing to give some explanation to the removed site as to why it was removed)
On a page devoted to high quality sites that lost their former places on the first or second pages of results for specific searches, a Google employee explains that “as this is an algorithmic change we are unable to make manual exceptions, but in cases of high quality content we can pass the examples along to the engineers who will look at them as they work on future iterations and improvements to the algorithm.”
Frank argues that when a “scheming company starts ‘link farms’ to make its sites more visible, it should be punished,” but regulation should “require both conduits and content providers to disclose whether they are raising the profile of those who pay them.” It is an interesting proposal, but regulation seems a long way off in a time when, as Frank explains, we barely have net neutrality.
Martyn Williams at PC World Australia reports on China’s pledge to increase its administration over the Internet, in an effort to:
“strengthen the development of civic morality” and “speed up the establishment of moral and behavioral norms that carry forward traditional Chinese virtues.”
Marvin Ammori 