Entertainment & Entrepreneurship

Google Editions Adds New Products and Questions to the Book Search Unsettlement

2010-05-05T15:13:11Z

In a panel discussion on May 4, 2010, Google announced to the imminent launch of Google Editions, its system for selling digital books. As reported by the Wall Street Journal, Chris Palma, Google's manager for strategic-partner development, explained that Google Editions will be reader independent so that the books will read on a variety of devices. More importantly, it will allow book retailers to sell through Google Editions on their own websites, "giving partners the bulk of the revenue" according to the Journal article.

The potential for retailers or vertically integrated publisher-retailers to sell directly without the intervention of Amazon or Apple will make Google's entry into the digital book market very significant for the consumer. University bookstores can reconceptualize the course pack with a digital download package keyed to each course section number. A student needs only plug in the course and instructor (or the section number) and the required and recommended texts will be available for the student. Simple, easy and branded for the college experience.

I have previously written extensively about the issues faced by Google this past year in its strategic planning. (See -

Searching Inside Google: Cases, Controversies and the Future of the World’s Most Provocative Company.) Google Editions fits nicely within the strategic planning for Google, pushing into Apple's business model and raising the competitive stakes between the two media delivery companies. It complements Google Books and connects the services between Google Book Search and the ability for consumers to buy the previously indexed books from Amazon and other retailers.

What is less clear is the relationship between Google Editions and the pending consent decree currently before the district court in New York. Google had been sued by a coalition of publishers, authors - and most recently - illustrators.

Google had previously developed a Partner Program in which it "partnered with over 20,000 publishers and authors to make their books discoverable on Google. [Consumers] can flip through a few preview pages of these books ... [and find] links to libraries and bookstores [to] borrow or buy the book."

Google Editions really is less of a change than a movement to an app-based model where retailers and website hosts can embed the sales on their sites and share in the revenue.

More important from the standpoint of the Book Search settlement is the manner in which the pricing for the books will be done. The settlement agreement gave Google a significant role in enabling publishers to coordinate and set prices. This power raises serious anti-trust concerns that the Justice Department questioned in its response to the proposed settlement. If Google Editions requires that retailer abide by these pricing controls, then the roll-out will have a profoundly negative effect. If instead, Google Editions provides publishers and retailers a platform to sell digital content at their own pricing - without pricing restrictions or the sharing of pricing data among competitors - then it will be an important next step in the evolution of digital content.

Wiki Authorship, Social Media, and the Curatorial Audience

2010-04-26T16:17:14Z

For those of you who follow my occasional posts, you know that most of my writing is in much longer formats. I'm very pleased that my most recent law review article was just published and made available on the Harvard website at: http://harvardjsel.com/current-issue/.

The article is Jon M. Garon, Wiki Authorship, Social Media, and the Curatorial Audience, 1 Harv. J. Sports & Ent. Law 95 (2010). It can be accessed here: http://harvardjsel.com/wp-content/uploads/2010/04/JSEL-Garon.pdf. The focus of the article is that shared editing websites - wikis - provide a social service that would be greatly expanded if the norms of authorship were better valued in the wiki architecture. The article, of course, goes well beyond this. I discuss the importance of an author's attribution rights and rights of integrity (the right to protect a work from being mutilated); I highlight how important research would be easier to access if online scholarship were used to reward researchers; and I stress the importance of understanding the nature of social media for creation of art, literature (whether pulp or profound) and scholarship.

For those of you who have never read a law review article before, you might find the excessive footnoting and format a bit off-putting, but I hope you can see past the form for the content.
The abstract of the article is below.

Jon M. Garon, Wiki Authorship, Social Media and the Curatorial Audience, 1 Harv. J. Sports & Ent. Law 95 (2010).

Wikis have become an important source of information and a go-to destination on the Internet. The shared authorship and social editing represent an increasingly influential model for content creation and dissemination, which will continue growing in prominence for education, training, newsgathering and entertainment.

Wiki authors undertake their participation based on their agreements regarding the ownership, attribution and integrity of the copyrighted material they contribute. To accomplish the goals of the wiki, both copyright law and contractual licenses are needed to allow unlimited republication, editing (or creation of derivative works) and waiver of control (or integrity) over the resulting publication.

At the same time, today’s participants increasingly want to be recognized for their part in social networks and media activities. As part of the newly identified curatorial audience, today’s media consumers participate by creating content, collecting media, commenting on works and building community around their various interests. Commercial content producers have been driven to reinvent their production and distribution methodology to meet the participatory role of this curatorial audience. Wikis are highly susceptible to these forces, and will inevitably evolve to incorporate other forms of social media.

Wiki’s traditional norms included a social networking of authorship which excluded not only control and integrity of works, but also the sublimation of attribution for particular authors. While the curatorial audience embraces collaborative authorship, the lack of attribution may be running counter to the developing social networking expectations.

This article explores the legal structures and normative rules likely to develop in socially edited content for the Wikis of the future. In keeping with the public migration to attributed online content, this article suggests that collaborative authorship must adapt its normative expectations regarding attribution. Improved attribution will benefit the accuracy and reliability of all social media and new sources, a critical step if news and other content providers hope to regain public trust. For wikis, and particularly for those with academic content, sites should emphasize attribution, content resiliency and audience relevance. These parameters should be integrated into the reporting software. In this way, contributors who have made quantitatively and qualitatively significant submissions can be recognized by research sponsors and academic employers. The ability for academics and researchers to demonstrate their success in creating and disseminating knowledge would propel the continued expansion of social editing resources and public information they generate without harming the open and egalitarian values of wiki culture.

Keller v. Electronic Arts - Reclaiming some California Publicity Protection in Video Games

2010-03-05T01:47:47Z

Last month the Federal District Court in Northern California answered a motion to dismiss in part of the litigation involving former Arizona State University and University of Nebraska quarterback Samuel Keller against Electronic Arts and the NCAA. Electronic Arts tried to have its case dropped because it claims First Amendment rights to use the names and likeness of players, based on California case law. In particular, the decision of Kirby v. Sega, 50 Cal.Rptr.3d 607 (2006), found the First Amendment to bar publicity rights cases involving video games. While the appellate court in Kirby purported to apply the transformative test set forth by the California Supreme Court in Comedy III Productions, Inc. v. Gary Saderup, Inc., 25 Cal.4th 387, 391, 106 Cal. Rptr.2d 126, 21 P.3d 797 (2001), it essentially found the creation of a video game sufficiently transformative as to make every depiction protected by the First Amendment:

Ulala is more than a mere likeness or literal depiction of Kirby. Ulala contains sufficient expressive content to constitute a "transformative work" under the test articulated by the Supreme Court. First, Ulala is not a literal depiction of Kirby.. As discussed above, the two share similarities. However, they also differ quite a bit: Ulala's extremely tall, slender computer-generated physique is dissimilar from Kirby's. Evidence also indicated Ulala was based, at least in part, on the Japanese style of "anime." Ulala's typical hairstyle and primary costume differ from those worn by Kirby who varied her costumes and outfits, and wore her hair in several styles. Moreover, the setting for the game that features Ulala—as a space-age reporter in the 25th century—is unlike any public depiction of Kirby. Finally, we agree with the trial court that the dance moves performed by Ulala—typically short, quick movements of the arms, legs and head— are unlike Kirby's movements in any of her music videos. Taken together, these differences demonstrate Ulala is "transformative," and respondents added creative elements to create a new expression.

In Keller, by contrast, the court gave a very thorough analysis for a mere motion to dismiss. Although it cited to Kirby v. Sega once, it did not follow the blanket First Amendment protection Kirby provided to video games, instead sticking with the transformative test borrowed from copyright fair use by the California Comedy III decision. In particular, the Keller opinion suggests that the transformative test will go much further to look at the amount of transformation involved, rather than merely looking at whether the person is interjected into a video game environment.

EA's depiction of Plaintiff in “NCAA Football” is not sufficiently transformative to bar his California right of publicity claims as a matter of law.In the game, the quarterback for Arizona State University shares many of Plaintiff's characteristics. For example, the virtual player wears the same jersey number, is the same height and weight and hails from the same state. EA's depiction of Plaintiff is far from the transmogrification of the Winter brothers. EA does not depict Plaintiff in a different form; he is represented as he what he was: the starting quarterback for Arizona State University. Further, unlike in Kirby, the game's setting is identical to where the public found Plaintiff during his collegiate career: on the football field.

This certainly does not end the question of transformation. Stating that the work is not sufficiently transformative as a matter of law does not mean that a jury might not find sufficient transformation as a matter of fact, based on the evidence - only that the factual question will need to be litigated fully (and at considerable expense).

Undoubtedly this raises the stakes in this case and will likely lead to a very visible battle over blanket first amendment protection for communicative works like films and video games (which have First Amendment protection).

Personally, I favor a blanket rule that communicative works - films, books, publications and video games are exempt from publicity rights; goods, services and advertisements for same are per se violative of publicity rights without written permission; and the transformative test is for tee-shirts, souvenirs and similar items where the primary intrinsic value is the content on the item rather than the item itself. Such a rule would fix 95% of the publicity rights confusion.

iPads, KinDroids and the Future of Books

2010-01-27T22:51:22Z

The Apple iPad has finally become official. The 9.7 inch screen provides an expanded platform for iPhone apps and features a proprietary chip selected to move beyond the present state of interface interaction with the Apple A4 microchip. The $829 version will have increased storage and 3G wireless connection for a $30.00 monthly fee.

More interesting are the features missing - the camera, the ability to run Flash, and removable storage and battery.

The most important aspect is the ability for the iPad to run the iPhone apps. This makes it a natural extension for the happy iPhone owners. The $30 monthly fee may not make iPhone owners happy to pay the additional charge, and it would make sense for AT&T to bundle service to the two devices. It positions Apple as a much more economically significant competitor to Microsoft then it has ever been before. When configured with an optional keyboard, it makes for a powerful competitor to Windows, something Apple has never before achieved. Microsoft is trying to play catch-up with its Zune, but absent dramatic leaps in functionality, a Zune phone and tablet will have as much impact as the Zune music and video player has had the past two years.

The market response will be fast and furious. The price will likely be a ceiling on competition. The weight and functionality will also set a very high bar. But Apple is not alone. Amazon's recent decision to add apps to the Kindle will do little to make the single-function book reader into the competition. Microsoft will be trying hard with both Windows 7 devices and Zune compatible devices.

The greatest competitor is likely to be Android (or Android/Chrome) from Google. The platform has its own significant app base, a host of Google tools and of course the Google Book Search repository for the ebook experience. There are no Andoid announcements yet. Give it a week or two and be prepared for a new paradigm in books and media.

Authors - time to start writing again.

The Android platform may provide

FTC Issues Second Report: Not Impressed with Virtual World Protections for Minors

2009-12-11T14:49:57Z

In a recent post, I discussed the rather anemic FTC report on voluntary parental ratings and suggested that better standards are needed. The FTC has provided a much more pointed report on the concerns for virtual worlds, particularly regarding sexually explicit content in these worlds. The FTC Virtual World report includes the startling finding that "some virtual worlds designed for teens and adults allow – or even encourage – younger children to get around the worlds’ minimum age requirements."

Part of the difference between the two reports stems from the difference between sex and violence - sex can be obscene and is much more the focus of regulation. Violence is somehow more permissible in U.S. content. But sexually explicit material seems to pose a more obvious danger to children, particularly the youngest children. And sexual content comes from peer-to-peer interactions as much as from the creators of content, a more insidious form of abuse for the participant.

The findings, then are not surprising. The companies involved in virtual worlds are less responsive than their motion picture, video game and music counterparts. The voluntary efforts are less effective and more actively undermined by the companies in the field. This is certainly not true of every company and those who do well should be recognized. Parents should know more about their children's online activities and respond to those companies that intentionally cheat.

Ten-year-olds are told by their peers how to get past the controls on Facebook. (I know - it is amazing what the children in the back of the car will say, when the driver just listens without participating.) But the same behavioral advertising tools that allow vendors to know exactly when to send the birthday card seem never to be used to say "are you really three years older than you were when you signed up for the birthday club?"

The tools are available. A parent-centered behaviorial advertising model should be available to protect our children - even from themselves.

Does this sound like a First Amendment advocate has lost his focus now that his children are of that age? Not really. I'm not calling for virtual world police. But I am calling on the advertisers and publishers to give me tools to make my job easier and create presumptions of protection rather than presumptions of predatory conduct.

The default rules need to be designed to protect families; family profiles should enable computers to know who uses machines, so that when an under-age child logs on, the check against the family profile posted by me to my computer stops my child from lying about his age or at least sends me an e-mail asking if this is correct. The FTC also suggests that better language screening tools be employed for these sites and provides more suggestions.

Finally and perhaps most importantly, the 13-year-old line should not become the line of majority. Most of these sites should be adult-only sites. College students do not hang out with high school and junior high school students at dances or at the mall; neither should they do so online. Make sites more age specific. This may not necessarily 'clean up' high school virtual worlds, but it will at least separate out the activities among the peer groups.

More from the FTC:

“It is far too easy for children and young teens to access explicit content in some of these virtual worlds,” said FTC Chairman Jon Leibowitz. “The time is ripe for these companies to grow up and implement better practices to protect kids.”
The FTC surveyed 27 online virtual worlds – including those specifically intended for young children, worlds that appealed to teens, and worlds intended only for adults. The FTC found at least one instance of either sexually or violently explicit content in 19 of the 27 worlds. The FTC observed a heavy amount of explicit content in five of the virtual worlds studied, a moderate amount in four worlds, and only a low amount in the remaining 10 worlds in which explicit content was found.
Of the 14 virtual worlds in the FTC’s study that were, by design, open to children under age 13, seven contained no explicit content, six contained a low amount of such content, and one contained a moderate amount. Almost all of the explicit content found in the child-oriented virtual worlds appeared in the form of text posted in chat rooms, on message boards, or in discussion forums.
The Commission observed a greater amount of explicit content in worlds that were geared towards teens or adults. Twelve of the 13 virtual worlds in this category contained explicit content, with a heavy amount observed in five worlds, a moderate amount in three worlds, and a low amount in four worlds. Half the explicit content found in the teen- and adult-oriented virtual worlds was text-based, while the other half appeared as graphics, occasionally with accompanying audio.

FTC Issues Detailed but Essentially Empty Report on Voluntary Entertainment Ratings

2009-12-10T15:25:15Z

The FTC recently published its seventh report focusing on "violent entertainment products" that are available to children. The report focuses on the motion picture, music, and video game industries. It reports generally good self-enforcement of the purchasing guidelines. Of course, at 80%, one of five attempted purchases goes through without objection. Toys-R-Us is singled out for even worse enforcement: "The Commission’s undercover shop found that retailers are strongly enforcing age restrictions on the sale of M-rated games, with an average denial rate of 80%. Only Toys ‘R’ Us lags far behind on enforcement (56%)." So the first lesson of the report is that otherwise savvy tweens who would rather not be caught dead in the Giraffe's den of lame childhood wonder, is that they can at least stop by to pick up the goods other stores won't sell.

The in-store enforcement does little to stop those non-adults with access to online accounts and gift cards to purchase anything they want without limit. The role of the store cashier has changed from that of gatekeeper to the monitor light on a freeway on-ramp. They moderate traffic flow, but will not stop the consumption.

I don't suggest that the non-adult ratings should be anything more than advisory for parent. On the other hand, I disagree with the line of court decisions which suggest that obscene material must be sexual to be obscene. Even under the auspices of the First Amendment, a society can identify that content which is so far beyond the acceptability on depictions of violence that the material is beyond First Amendment protection. This, along with requirements that any such obscenity label, must be fully adjudicated before any police action can take place against the content, should give states the right to declare ultra-violent material as obscene. Like sexual obscenity cases, the actual cases should be rare and the evidence 'beyond a reasonable doubt' because of the potential criminal enforcement.

Without the ability to identify content as obscene, the parental guidelines do little to manage content. They provide some helpful information for our under age and adult consumers. They are like food labels. They make us feel guilty after we have binged, but probably have little impact on what we actually consume unless we individually choose to follow them.

I look forward to next year's report. It is nice to know some things won't change.

FTC Updates Rules for Endorsements, Testimonials - Extending Regulation o Blogs and Social Media

2009-10-06T15:44:13Z

The Federal Trade Commission announced this week fairly sweeping changes to the
FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, which "address endorsements by consumers, experts, organizations, and celebrities, as well as the disclosure of important connections between advertisers and endorsers." Under the FTC Act the FTC has the power to stop unfair trade practices and fraudulent advertising.

The Guides, last updated in 1980, have been updated to reach commercial endorsements hidden as consumer comments on blogs and in social media.

According to the FTC "The post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement" which will make the blogger obligated to disclose the payment (whether cash, free products or other inducements). The new Guides codify the existing policy that both the advertiser and the endorser may be liable for false or unsubstantiated claims.

In addition, the 'results not typical' ads should disappear. "Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. In contrast to the 1980 version of the Guides – which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical” – the revised Guides no longer contain this safe harbor.

The result of this change is yet another indication that the days of the Web's Wild West past are disappearing. But for those of you who like your content wild and unsubstantiated, there remains hope. The Web is a very big territory and the FTC will be hard pressed to enforce its new policies. The rules have become much more rational, but it will take time and investment to make the reality on the ground (or on the virtual terrain) match the rules on the books.

Google Book Search - A Horizontal Price Monopoly in the Fine Print

2009-09-08T16:22:39Z

The Google Book Search is coming under increasing fire. Later in the month I will be giving a talk about Google at the Midwest IP Institute, but the summary paper I've written includes a bit on the settlement. Given the timeliness of that debate, I'm posting that section (footnotes and all) for more general access. The paper is available at SSRN. The excerpt follows:

Proponents of the Google Book Search settlement point to the societal benefits. Mark Lemley, a highly regarded intellectual property professor at Stanford, is also a lawyer for Google and explains the benefits as follows:

The settlement will permit Google to digitize most books published in the U.S. Members of the public will have access to electronic copies of previously unavailable works: It will be possible to search the content of the books for free, and to preview full pages from out-of-print books for free, allowing members of the public to find the books and the information they need. People who decide they want a book for themselves will be able to buy a digital version that they can read online. Libraries will be given licenses to provide free, complete access to out-of-print books at terminals in their buildings. And institutions will be able to buy subscriptions to vast catalogs of works. The public gets access to works that have, as a practical matter, been unavailable for years or decades and have never been searchable; authors and publishers get revenue from works that had long since stopped generating any. The result is clearly beneficial to all concerned.[1]

Lemley’s analysis, however, does not address the antitrust issues involved with Google’s position in this system. Nor does it address the costs associated with these benefits.

One cost associated with the benefit is borne by the rights holders to so-called orphan works, those copyrighted books for which the rights holder cannot be identified. In some cases, the orphan works are created when publishers go out of business without assigning their copyrights; in other cases orphan works arise from poorly managed estates, or in other situations where the rights transfers are forgotten, lost or mishandled. In these cases, no party has the legal right to enforce the copyright.[2] Parties who respect copyright law cannot find a legitimate copyright holder from whom to license the rights; infringers can act with impunity if they dare.

Despite suggestions to the contrary,[3] the practice experience for many entertainment attorneys may bear out the proposition that orphan works do not actually dominate the out-of-print market. In many situations, the copyright has descended to multiple family members by will or intestacy transfer. These family members have limited interest in policing the copyrights of out-of-print works unless the book suddenly becomes the focus of a possible film deal or other high-value transaction. In most cases, the rights holders for out-of-print books are known; they just are not interested.

From an antitrust perspective, the settlement provides Google a unique market position to be free of the risk of litigation for all orphan works.[4] Google will be the only company that can lawfully sell the orphan works or monetize advertising related to them. Every other company that elects to do so risks the orphan finding a parent. The Google Book Search highlights the orphan works problem and should encourage rights owners to seek their rights with the lure of obtaining lost revenue. Part of the settlement requires Google to support a non-profit, collective rights organization called the Book Rights Registry (“BRR”), to collect and distribute the revenue. The BRR is required to provide provenance information about the works claimed, further reducing the scope of the orphan works problem.[5] If the revenue is significant, the number of phantom works will shrink. If the revenue is not significant, there is no market to monopolize.

A legislative or court modification could further improve the situation. A second class action lawsuit or act of Congress should provide a safe harbor for any publisher that wishes to publish a work from the BBR which has not had its right owners identified following the five years that royalties have been collected on behalf of the work. The safe harbor would protect such publishers until the rights holders come forward, if ever. Such a solution would negate the cultural, rather than legal, monopoly that Google’s presence in the Book Search provides.[6]

While there is no doubt that Google will receive some network effect benefits from the orphan works, the scope of these rights is trivial to the overall publishing market. This should not be the source of antitrust concerns. The real value in improving the search algorithms and other products flows from the scope of the database, which is largely built by publishers that have acceded to the class action settlement as well as physical access to the public domain works in the collection.[7]

A different aspect of the case, however, does raise more serious antitrust considerations. The proposed settlement affords Google, the Authors Guild and the Association of American Publishers to agree on a pricing mechanism for digital works. For example, the settlement allows Google to set an institutional fee for access to the collected database on a full-time-equivalency or FTE basis.[8]

The economic terms for Institutional Subscriptions of Books will be governed by two objectives: (1) the realization of revenue at market rates for each Book and license on behalf of Rightsholders and (2) the realization of broad access to the Books by the public, including institutions of higher education. Plaintiffs and Google view these two objectives as compatible, and agree that these objectives will help assure both long-term revenue to the Rightsholders and accessibility of the Books to the public.[9]

To the extent that the Authors Guild and the Association of American Publishers agrees with Google that broad access and maximizing revenue are compatible, they are engaging in behavior that should be questioned under the Sherman Act.[10] The goal of authors and publishers is to maximize revenue. The goal may be achieved by raising prices or by lowering prices to encourage greater adoption, but in either case the activity of combining the class action of publisher and authors with Google is a massive agreement to set prices.

Similarly, digital copies of books may be sold at a price “to be determined by an algorithm (the “Pricing Algorithm”) that Google will design to find the optimal such price for each Book and, accordingly, to maximize revenue for each Rightsholder.”[11] This optimization and maximization allows Google to quantify the market for books based on sales data and other information that private publishers could never share with one another. Such optimization is unlikely to be in furtherance of price competition or the best interests of the consumer public.

Contrast the proposed Google settlement with the settlements involving ASCAP and BMI. In the case of the consent action involving the performing rights societies, the court administrating the consent decree retains jurisdiction over the competitiveness of the licenses.[12] Unlike the Google settlement, ASCAP and BMI are not left to set the market prices without supervision. “Although, under the terms of the BMI Consent Decree, BMI bears the burden of establishing the reasonableness of its rates, the setting of appropriate rates remains the responsibility of the District Court.”[13]

Absent this continuing supervision, the ability of the parties collectively – or Google on the parties’ behalf – to set the prices for digital content certainly appears to reach the same anticompetitive heights as ASCAP and BMI meet with regard to public performances. The court’s failure to recognize this in its preliminary approval is more likely to be the source of Justice Department interest than concern for orphan works. While the consent decree involving ASCAP and BMI suffers from excessive judicial entanglement, it has created a mechanism for fair licensing and public accountability for collectively managed private intellectual property resources. This is the accountability missing from the current proposed settlement. Worse, the internal dispute process is subject to a blanket of confidentiality, further hiding the mechanisms of the content pricing.[14]

As with other concerns, Google faces scrutiny over the Google Book Search in many countries. The outcomes and solutions are likely to vary considerably from country to country. In most countries, the performing rights societies are government agencies, so the ASCAP/BMI consent decree is unique in the world. As such, this proposed resolution is unlikely to be adopted by other nations. The Internet may be global, but nations remain territorial and apply their laws accordingly. Hopefully the Justice Department will insist that the court exercise far greater control over the pricing and other collusive aspects of the proposed settlement, inserting its own authority for that of the American Arbitration Association.

[1] Mark A. Lemley, An Antitrust Assessment of the Google Book Search Settlement, available at: http://ssrn.com/abstract=1431555 (last visited August 17, 2009).

[2] See Pamela Samuelson, The Dead Souls of the Google Book Search Settlement, 52 Comm. ACM (July 2009) available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1387782 (last visited August 17, 2009).

[3] Professor Samuelson suggests that orphan works are “most” of the seventy percent of the books in the Book Search repository. But that appears to conflate books for which the transaction costs of enforcing the copyright outweighs the value of the copyright of those works which have no one able to enforce their rights. See id. at 1.

[4] Id.

[5] Settlement Agreement, supra note __ at § 6.6(d).

[6] To comply with Berne, it may be necessary to make such a safe harbor apply only to U.S. works. The scope of such a proposal is beyond the scope of this article. Google has also recognized this issue:

Under the settlement Google will be able to open up access to truly orphaned books, but we still think more needs to be done to allow anyone and everyone to use these works. Any company or organization that wants to open up access to this untapped resource should be able to do so. The settlement is not a panacea, since it only covers a subset of orphaned works, provides only certain uses, and is not able to extend these uses to other providers. The need for comprehensive orphan works legislation is not diminished.

Derek Slater, Google Book Search settlement and Access to Out of Print Books, June 2, 2009, http://googlepublicpolicy.blogspot.com/2009/06/google-book-search-settlement-and.html (last visited August 16, 2009).

[7] Undoubtedly, the opt out designation for the class has helped Google win over these publishers. See generally, Richard Thaler and Cass Sunstein, Nudge: Improving Decisions about Health, Wealth, and Happiness (2009).

[8] See Settlement Agreement, supra note __, at § 4.1(a)(iii).

[9] Id. at § 4.1 (a)(i).

[10] 15 U.S.C. § 1, § 2 (2009).

[11] Settlement Agreement, supra note __, at § 4.2 (b)(i)(2).

[12]United States v. Broad. Music, Inc., 426 F.3d 91, 93 (2d Cir. N.Y. 2005) (“Because of the inherently anti-competitive conditions under which BMI and ASCAP operate, they are regulated by court-approved consent decrees. See BMI Consent Decree; ASCAP Consent Decree.”) citing United States v. ASCAP, 1940-43 Trade Cas. para. 56,104 (S.D.N.Y. 1941), as amended, United States v. ASCAP, 1950-51 Trade Cas. para. 62,595 (S.D.N.Y. 1950).

[13] Id.

[14] See Settlement Agreement, supra note __ at §§ 9.1, 9.8.

Mickey a Mutant? Marvel's Comic Creations Line Up Behind the House of Mouse

2009-08-31T16:19:38Z

The Wall Street Journal today reported that Disney is providing stock and cash to acquire Marvel Entertainment, in a deal reported to have a $4 billion total value. The transaction, which will garner antitrust scrutiny, will likely be one of the largest realignments in tent-pole film production.

Marvel has been the inspiration for summer blockbusters for at leas the last decade, and it owns thousands of characters with potential for films, television, Internet, theme park and product lines. Disney has done a better job than any company in maximizing the return for its copyrighted characters, so the combination will reach much further than the slate of the summer blockbusters.

Though not discussed by the Wall Street Journal is the extent to which Disney hopes to use the Marvel content to redevelop its web strategy, including a pay model for premium content on its exclusive pages. The ownership of the popular Marvel characters will shift Disney's median demographic up to the peak Internet age, adding content to its delivery system.

Marvel already has licensing deals for a number of its characters with Fox, Sony and Paramount. The existing relationships will slow regulatory approval, but are unlikely to halt the transaction, given the level of competition in the industry and the lack of market power held by any of these companies.

The full impact of the transaction will take years to play out on the silver screen, but Disney has been very savvy at maximizing value from lesser characters and ancillary markets. The potential is for web-based content and merchandise to begin appearing later this year.

Not only has this increased the value of Marvel, but it is likely to be a boost to its competitors as well. Interesting how the comic book is the one publishing sector growing in the Internet age.

Will MGM be another victim of the economy ... or poor financing?

2009-08-18T18:21:26Z

According to a report in today's Wall Street Journal, Metro-Goldwyn-Mayer Inc. has replaced Chief Executive Officer Harry Sloan and hired restructuring expert Stephen Cooper. Cooper joins two other MGM executives in an office of Chief Executive: Mary Parent, the chairwoman of MGM's motion-picture group; and Bedi Singh, the company's chief financial officer. Ousted CEO Sloan will remain as chairman.

Nothing good can come out the latest management shakeup. For a studio which has made so many history and toga movies, it should know better than to be ruled by a triumvirate.

Worse, as reported by the Journal, "The 62-year-old Mr. Cooper's most recent assignment didn't work out well. Carlyle Group hired him last year to rescue Hawaiian Telcom, a land-line business the private-equity firm had acquired from Verizon Communications Inc. Those efforts failed when the company filed for Chapter 11 bankruptcy protection last December."

MGM has a fantastic and valuable film library, but its only active franchise is the James Bond films. The return to the Pink Panther has had limited success. It will be producing Fame for this fall and extending the Stargate franchise with another television series, but frankly it has a weak, recycled slate and crippling debt, generated by the purchase from Kirk Kerkorian. A history of bad financing has bloodied what was once the best Hollywood has to offer.

If MGM hopes to overcome its financial woes, the Triumvirate needs to kick open the doors to the vault and encourage a wide array of filmmakers to explore how best to revitalize these properties, perhaps taking a back-end participation so that new voices and new media can be added to the mix. If MGM follows the same old rules, it will be managing its assets through Chapter 11 in no time.

Redbox Kiosks update the battle over distribution control

2009-08-09T14:53:31Z

In a fight reminiscent of Sony v. Universal, Universal and now Fox are trying to control the sales of their DVDs to Coinstar's Redbox DVD kiosks. Despite a pending lawsuit between Coinstar and Universal regarding the legality of the limits, Fox just demanded that it receive a 30-day delay in kiosk distribution.

The idea certainly is not new. The movie industry has long used distribution windows to protect the pricing of its entertainment product. First run theaters which charged the highest ticket prices (and were often owned or operated by the studios) received licenses to exhibit films before the small theater chains had access to those films. Later, the studios briefly tried to control which video stores had access to video releases.

But the legality of controlling the content has also been well established. The tactics used by the film industry to protect the first run theaters were declared an antitrust violation which was upheld by the Supreme Court in 1948 in U.S. v. Paramount Pictures. Sony v. Universal, which focused on the fair use of recording over-the-air broadcasts for time shifting, was as much about whether the studios could demand a license fee from the sale of the playback machines as about video taping. By losing the fair use claim, the studios lost the leverage to demand those licenses.

According to its press statement, "Redbox is available at more than 17,000 locations nationwide, including select McDonald's restaurants, leading grocery and convenience stores, and Wal-Mart and Walgreens locations in select markets."

Universal demanded a 45 day release window, revenue sharing and the destruction of previously purchased DVDs, all steps designed to support the sales price of DVDs. Fox is demanding the 30 day release window or "agree to better economic terms" according to newspaper reports.

The attempts by the studios to force other distributors not to sell to Redbox looks to be a violation of the Sherman Antitrust Act as a conspiracy or contract in restraint of trade. Moreover, the Copyright Act specifically provides that the owner of a particular copy of a copyrighted work has the right to resell or dispose of that particular copy as the owner sees fit, without any obligation to the copyright holder. Known as the "First Sale" doctrine, the U.S. law denies publishers and distributors the right to downstream control over copies of the work.

So where is the need to increase rental prices coming from? Blockbuster is certainly hurt by Redbox. Blockbuster is owned by Viacom, the parent of Paramount Pictures and a number of cable channels. (Paramount has not made the same demands as Universal or Sony, perhaps out of the more obvious antitrust concerns.) More generally, as the prices for videos in kiosks drop, the price pressure will increase on video-on-demand through iTunes or other retailers. Even more broadly, $1 video rentals make waiting until a movie comes to video more appealing than going to a movie theater. But the $1 movie also makes the idea of video piracy economically stupid and indefensible.

In the short run, the limits on Redbox actually hurt the DVD distributors because it reduces a revenue stream. It also paints the industry as greedy at a time of deep economic difficulty. It is likely to violate the antitrust laws and runs afoul of the copyright laws.

The studios should look at the big picture and rethink their kiosk strategy before real harm is done.

behind creating a 30-day window for

Damages for Tenenbaum under Review

2009-08-02T04:27:15Z

As widely predicted, the peer-to-peer file sharing case ended quickly and decisively after U.S. District Judge Nancy Gertner disallowed any evidence on fair use. The jury awarded $675,000 to the plaintiffs. But as mentioned in the previous post, the approach of Judge Gertner has been rather favorable for the defendants (despite the ruling on fair use and her frustration with Professor Nesson).

Taking a cue from a ruling in the prior jury trial ruling out of Duluth, Judge Gertner may follow some of the dicta by Judge Mike Davis in the prior case and review the appropriateness of the damage award in the context of due process and Eight Amendment claims.

Judge Davis wrote of his grave concerns regarding the disproportionate damage awards. This may be the decision that directly addresses the concern that a very few individuals are being held responsible for the costs to the entire industry. At the same time, of course, there may be evidence that there are far more songs traded than those actually named in the case. Jurors understand that as well, which can definitely impact their decision regarding damages.

Is Court's Rebuke of Fair use in Tenenbaum P2P Case a Win for Fair Use?

2009-07-29T22:23:49Z

According to a recent report from Arstechica, Judge Nancy Gerntner has thrown out the fair use claims in the file sharing trial of Joel Tenenbaum. The trial has been something of a circus due to attempts to broadcast the hearing over the Internet and a fairly bitter relationship between Harvard Law Professor Charlie Neeson and the Judge. She threw out their fair use defense as a matter of law in the hours just before the trial started.

Her ruling reads, in part:

To be sure, this Court can envision certain circumstances in which a defendant sued for file-sharing could assert a plausible fair use defense. Indeed, an amicus brief previously filed in this consolidated action by the Berkman Center at the Harvard Law School (on which Defendant's counsel was a signatory) outlined some of those circumstances—for example, the defendant who 'deleted the MP3 files after sampling them, or created MP3 files exclusively for space-shifting purposes from audio CDs they had previously purchased.' The Court can also envision a fair use defense for a defendant who shared files during a period of time before the law concerning file-sharing was clear and paid outlets were readily available.

The advent of the internet in the late 1990s threw a number of norms into disarray, offering sudden access to a wealth of digitized media and giving the veneer of privacy or anonymity to acts that had public consequences. At the beginning of this period, both law and technology were unsettled. A defendant who shared files online during this interregnum but later shifted to paid outlets once the law became clear and authorized sources available would present a strong case for fair use. It might matter, too, who the defendant shared files with—his friends, or the world—as well as how many copyrighted works, and for how long.

But the Defendant has offered no facts to suggest that he fits within these categories. He is accused of sharing hundreds of songs over a number of years, far beyond the infancy of this new technology or any legal uncertainty.

The outcome will be hard on the defendant. Mr. Tenenbaum has admitted to file sharing (which was a much better choice than Jamie Thomas' hard drive issues). Without any factual evidence on fair use to try and befuddle the jury, the case comes down to the need to document ownership of the copyrighted works and assess damages. The damage portion of the case could prove interesting, if Prof. Nesson can convince judge or jury that the statutory damage range violates the Eighth Amendment because it bears no relation to the value of the songs copies or the economic harm caused by any particular file sharer. (Each individual should not be responsible for the cumulative economic impact of peer-to-peer file sharing, assuming arguendo that the illegal sharing was one of the causes of the music industry's economic collapse.)

But Judge Gertner's denial of fair use is more generous than most. Her ruling adds additional support to the idea that sampling might be acceptable, that using peer-to-peer as a technological work-around for content owned in other formats (think albums and 8-tracks, not just CDs), or because the law was unclear when the technology was first introduced all suggest a very broad vision of fair use.

The ruling does nothing for Mr. Tenenbaum. I can only assume his lawyers were much more circumspect about the small likelihood of success with him in private than the rather blustery approach they have taken in public. But the ruling says a good deal about the expansion of fair use as a consumer protection statute, which is a significant expansion from its meaning during the past 40 years. The ruling is mindful that fair use must have its limits and protect the rights of copyright owners, but it goes further than most to recognize the interest of consumers as well.

The approach suggests that the court may pay more attention to the issue of damages than has been given in the past. So this case is still not over.

Amazon's next Kindle class action suit

2009-07-21T04:55:45Z

Only days after Amazon changed its refund policy in an attempt to settle a class action suit over Kindle eReader covers that had a habit of cracking the screens on the computers, Amazon finds itself in murky legal water after using its embedded software to delete books from consumer's Kindles that had been improperly sold to those customers.

As first reported by the New York Times, Drew Herdener, explained by e-mail that the company which uploaded the books to the Kindle Store had not acquired the rights to sell the books in the Kindle format. “When we were notified of this by the rights holder, we removed the illegal copies from our systems and from customers’ devices, and refunded customers,” he said.

Oops.

Of course Amazon was obligated to immediately stop selling the bootleg copies of the books. It could even face copyright violations for the sales of those books. Worse still, it might have been obligated to inform the purchasers that they had unintentionally purchased illegal copies and were responsible to destroy the illegal copies or face their own copyright liability. At that point, of course, Amazon would also be expected to refund the cost of those books and perhaps offer a coupon to those customers as a goodwill gesture.

But Amazon skipped the step where it informed its customers of the customer's obligation not to keep bootleg books. Instead, Amazon used its software to delete the books directly from the Kindle. As the New York Times correctly pointed out, the Terms of Service do not give Amazon the rights to exercise the self-help it just chose to use.

Use of Digital Content. Upon your payment of the applicable fees set by Amazon, Amazon grants you the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times, solely on the Device or as authorized by Amazon as part of the Service and solely for your personal, non-commercial use. Digital Content will be deemed licensed to you by Amazon under this Agreement unless otherwise expressly provided by Amazon.

Amazon's license does not include either self-help or revocation. If the Kindle is a networked computing device of the type protected by federal law, then the tampering with the content stored on that device could potentially be considered a federal crime. More likely, however, the interference with the devices done in a manner beyond the terms of service agreement will be considered a violation of the Federal Trade Commission Act.

Section 5(a) of the FTC Act, which provides that "unfair or deceptive acts or practices in or affecting commerce...are...declared unlawful." It is a broad, general catch-all. It was the statute that forced Sony to stop putting hidden encryption software on its music CDs, and will serve well in this case. Section 5(b) allows for administrative processes. Expect the FTC to respond to consumer complaints with an administrative process and an agreement by Amazon not to use its software tether in this manner ever again. Amazon will also pay a fine and the adminstrative costs of the investigation.

Whether this will satisfy the lawyers lining up to bring the class action lawsuit in this case remains to be seen. But I doubt it.

Given that the books deleted include George Orwell's Nineteen Eighty-Four, the lesson of a corporation being able to delete (or at least technologically - to alter) the text of a purchased book should not be lost on anyone. (A second irony is that a website has Orwell's complete works online.) This is more than a mere gaff. Amazon needs to be found liable for this mistake by a court or administrative process that makes it clear that companies cannot retain this right in their terms of service agreements.

So perhaps we should be thankful for the blunder Amazon has made. Deleting copies of Nineteen Eighty-Four should serve to provide another reminder of the liberties we take for granted and the technologies that have the potential to put those liberties at risk.

Comic-Con's Coming - the future of Entertainment

2009-07-20T15:51:20Z

On July 22nd, the 40th anniversary of Comic-Con will grace San Diego with its assortments of Wizards, Warlocks, Elves, Demons, Vampires, Warriors, along artists, writers, software programmers, and filmmakers. A funny thing happened to the costumed prom for geeks and freaks - the event has grown into the cultural touchstone of new media.

The film program feature over sixty films - not counting the special screenings and other film events outside of the competition. (Self-interest disclosure: My client, Derrick Comedy will be presenting a panel and more regarding their upcoming release of Mystery Team.)

The striking aspect of Comic-Con's breadth is the way in which Internet culture has shifted towards Comic-Con's agenda. Comic books are not necessarily a larger industry than at other times in history. Comics have waxed and waned in different eras. But comics do not lend themselves to e-book readers and may have some resilience to avoid digitization. At the same time, comics have come to dominate epic film making. Comic books are inherently visual and easy to conceptualize on the big screen. Filmmakers should never give screenplays to prospective investors. They are simply too difficult to translate into the finished product and tend to read very flat. Comic books, on the other hand, translate the power and pacing of film on the page.

In addition to film, comic books translate elegantly into video games and virtual worlds, an increasingly critical aspect of modern culture. Comic book characters have come alive on game consoles and computer screens for years. With better avatar software and increasingly interoperable software platforms, the superheros, villains, monsters and myths are freeing themselves from their creators' formats to populate computers and devices of the audience's choosing.

So look to Comic-Con as a the new harbinger of taste. And remember to sharpen your broadsword.