The islands of the South Pacific have some odd views on currency. In the past, we've discussed how the Island of Yap famously used massive immovable stones as its currency. And now the island of Niue is prepared to recognize collectible Star Wars coins as official currency. Of course, the whole thing seems more like a publicity stunt by the New Zealand Mint, which is making these coins. They're still being sold at collectible prices -- meaning coins with a face value of $1 (New Zealand) will actually sell for $23.50 NZ. So even as they'll be recognized as legal currency in Niue (but not New Zealand), it seems unlikely that anyone will use them as such, as their face value will be significantly below their market value.

One of the things we hear over and over again about the evils of "open WiFi" is that it allows criminals do horrible things on a network with no way to track them down. We've always pointed out how ridiculous this is. Just because someone does something on a network, it doesn't mean they don't necessarily leave other clues that can be uncovered through basic detective work. And, time and time and time and time and time again, we see stories of basic detective work being used to catch criminals on open WiFi networks.

Here's yet another example. In a case involving a disgruntled former IT worker logging into his former employer's computer systems and pretty much deleting everything important (including "the company’s e-mail and BlackBerry servers, as well as its order-tracking system and financial-management software"). These sorts of things happen every so often, and the responsible party almost always gets caught.

In this case, Jason Cornish used an open WiFi network at a McDonalds to do his dirty work. But there was enough evidence to link the crime to Cornish (beyond basic motives). For example, investigators discovered that he had made a purchase of some food at that McDonalds about five minutes before the deletion began. Honestly, it looks like he wasn't particularly careful in a variety of things that he did -- but that's kind of the point. The fear about how open WiFi will be regularly abused and there will be "no way" to track down those responsible is a huge exaggeration. Perhaps there are some users who are careful enough not to leave a trail, but those sorts of people will figure out a way to do what they want with or without open WiFi. The fear of untraceable hackers on open WiFi is way overblown.

Several years ago, a president of Harvard resigned -- due, in part, to expressing his opinion that there are innate differences between men and women that contribute to fewer women in math/science professions. Since then, there have been a few studies on how people deal with math. Here are just a few quick links.

• Barbie was just stating an opinion, too: math is hard. But a study shows that girls are performing just as well as boys in math... [url]
• Some psychologists think people have an innate skill at math from birth. But that doesn't mean that kids who are bad at math should give up! [url]
• Chinese speakers tend to memorize numbers more easily because numbers in Chinese are simpler. If English speakers have a harder time because their numbers are weird, try French -- where ninety-nine is quatre-vingt-dix-neuf (roughly "four*twenty+ten+nine"). [url]
• To discover more interesting education-related content, check out what's currently floating around the StumbleUpon universe. [url]  

By the way, StumbleUpon can recommend some good Techdirt articles, too.

So just a couple weeks after S&P's (overhyped) downgrade of US debt, a story leaks that the Justice Department is investigating the S&P's ratings system. The reports say that the Justice Department investigation began before the downgrade -- which I absolutely believe to be true. It also notes that the focus is on conflicts of interest and a quote from an S&P managing director about not killing "the golden goose."

But, here's the thing. The timing of the news of the information getting out is certainly questionable. Even if the investigation is about mortgage debt, not sovereign debt, and even if it started before all this, just having it come out so soon seems like a clear shot at ratings agencies: downgrade the government and we'll ramp up our investigations of you. Does an action like this give Moody's or Fitch pause before changing their ratings on US debt? The report notes that it's "unknown" if only S&P is being investigated, or if all three are, which certainly seems like fair warning: downgrade us and we'll leak some dirty laundry.

As for the legitimacy of the investigation, again it seems to all go back to the fact that these firms ratings are seen -- in part due to US regulations -- as gospel fact, rather than just another opinion on value. That's a problem. Perhaps there's a case to be made that S&P's ratings people believed one thing while publicly stating another, and that can be turned into a fraud claim, but it seems like it may be a difficult case. A rating is still an opinion and an opinion is protected free speech. Getting over that hurdle is possible, but difficult. It seems like a much more effective way to stop S&P from abusing the system is to stop forcing organizations to treat its ratings as gospel. I would bet that would do a lot more damage than any lawsuit or criminal action against the company or its execs.

Mark asked us to weigh in on an interesting post on Google+ by Felicia Day, wondering about the future of video content. Day, of course, has been quite successful in embracing the online community as well as new and different business models. She lays out the question in response to the news of Fox and others deciding to delay legal options and how that's likely to drive more people to unauthorized file sharing. She notes that, from a business perspective, this seems scary, but she also seems to recognize that it's reality (rather than denying it, as some people do):

There is a basic principle working here (scary, if you're in the TV business) that I've personally been dealing with on The Guild with a mere 2 DAYS! delay of releasing content: People want content immediately, wherever they like to view things. They don't care if you're trying to pay production bills, they don't care if it's the only way to fund things, they want it NOW, they want it CONVENIENT to them personally. Whether this is a reasonable attitude or not, it's what people are used to in this day of streaming on demand, and it's only going to get worse, because cord-cutters are getting more and more common. Long view=not good.

From there, she picks up on the trend of cord cutting we've been discussing, echoing to some extent Wil Wheaton's recent comments about the backwardness of many in the TV business today:

To me, the cable box seems like Tower Records 10 years ago, or Borders just 2 years ago. Look at how music and books have shifted to digital, on-demand purchasing. Cable companies are the "brick and mortar" place for video, and that business is dying. People don't have enough time for 140 channels, they have enough time for maybe 10 shows, that's it. Why pay 140 bux a month to watch that many shows when you can buy them individually? Or stream The Wire on Netflix for 8 bux a month, because you missed it the first time? Or play a video game? Or just surf the net?

But then she asks a final question, which is basically, "but how will we continue to produce videos" in this world? I should be clear: she doesn't seem to be doing this in the same "but you must save us" way some in the industry have done. She's just asking an honest question she has about where the world is going, because she's unsure:

So my question is: What happens to all those shows when they fragment like that? Who is gonna pay to produce them? What is the future? (And "funded by viewers" model is not the answer, only 1% of people ever really contribute, and the up-front costs of producing video are WAY higher than making a record or a book, etc. Believe me, I understand this personally.)

First off, one quick point before delving into the larger question: the whole "only 1% of people ever really contribute" claim is a common one, but I think it's a misleading one. While it lets some people write entire books on evil free riders, it's really meaningless. If you can get more than production costs out of that 1%, the fact that it's just 1% really doesn't matter, right? And, no, I'm not saying it's easy to cover production costs from 1% -- it's not for most productions. But I'm just showing that 1% by itself, without context, is meaningless. What if, for example, that 1% is made up of super wealthy patrons who are happy to fund the full production? Or, more realistically, what if those 1% are people who represent companies willing to buy advertising? Just because it's 1% doesn't mean you can't have a viable business model. The % is meaningless. All that matters is the absolute dollars.

But on to the larger point of what happens to video in a fragmented world? Well, I sense that it's going to be awesome. As with music and books, it will allow all kinds of niche productions to show up, which would simply never make it at all in a "network" world. In fact, this is already happening -- and Day's been a part of some of that with things like The Guild and Dr. Horrible. As for how to fund it, well, again there are a variety of options. One of the things that changes is that there's no longer "one clear path," but that hardly means there's no way to make money. It may take more experimentation, but there are all sorts of options, mostly involving a hybrid of models.

For years, of course, we've talked about how the new business models are built off of the formula of connect with fans, while giving them a valuable scarce reason to buy, and that certainly applies to video as well. In the past, for example, we've listed out 10 forms of scarcities that can help you figure out good "reasons to buy," and most of them apply to video as well. Let's take a look:

1. Access: This remains a huge one, of course. We mentioned a study in the past where 19% of music fans said they would pay anything to meet their favorite star. That's hyperbole, of course, but people are willing to do crazy things to meet their favorite stars. With a video, you could make it even more interesting by doing things like offering up the opportunity to be "an extra" on a shoot or something. How much would fans of The Guild pay to show up in an episode, even if briefly?
2. Attention: Here's an obvious one. When you have an audience, their attention is a scarcity that can be sold. Day, for example, has had success selling sponsorship deals for The Guild. That's an example of selling attention, and is basically the way lots of video (hello, network TV) has been funded for ages. Just because that attention is now online, it doesn't mean that the value of that attention goes away. Yes, it's absolutely true that online video attention isn't valued nearly as high as attention on TV, but it doesn't always have to be that way. And, there are even a few examples of shows online being able to command higher rates than shows on TV.
3. Authenticity: This isn't necessarily something you sell directly, but the more authentic you are, the more people will respond to that. Again, it's something that Day has mastered as well (as you can even see in the post that she wrote and her discussions on the matter both on Google+ and Twitter). Follow Day on either platform and it's just oozing with authenticity, and what that does is really build up her core and loyal audience. While she may say that only a small percentage will actually pay, never underestimate the ability of truly loyal "true fans" to help you figure out how to make money. Authenticity has a way of increasing such fans.
4. Exclusivity: This can be a tricky one, because some people think it means "locking stuff up" to make it exclusive. But we're talking about other forms of exclusivity, which don't involve pissing off other people. How about the ability to buy an old prop from a show? Or a chance to play WoW with the cast of The Guild. These are things that can very reasonably be exclusive. Day has done some stuff with offering The Guild slightly earlier, and as she notes in her post, that just seems to upset people. Doing anything that involves this kind of artificial exclusivity can be tricky -- especially when it's something that has a social component. While The Guild is a broadcast video, part of any really successful cultural content is the fact that you share it/discuss it with others. That's what makes it culture. Limiting when people can see content can actually take away value in that it harms that form of "sharing" (no we're not talking about "piracy" here). The ability to discuss a favorite show with others is, in many ways, part of the appeal. Taking that away through fake exclusivity can backfire.
5. (New) Creation: Any work before it's created is still scarce. Another way of looking at this is effectively the ability to do custom or commissioned creations. Imagine an offering where you could write a "fan" script of your favorite shows (within reason, of course). How many people would jump at the chance?
6. Tangibility: A scarcity that still sells. Never doubt the potential for tangible merch to sell. While it's something of a joke that people (falsely) claim that the business model we suggest for everyone is "sell t-shirts," that doesn't mean you should ignore the potential of t-shirts. They can be quite lucrative (and, yes, for all the people asking, we really will be restocking our own t-shirts soon).
7. Time (saving or making): If you can help people save time or make more time, people will often pay. This is one that may be a bit tougher to apply to TV, but I'd be interested in hearing suggestions. I know that some podcasting products have things like "double time" that let you listen to the same podcast at a (pitch-corrected) sped up pace. I wonder if there would be a market for "sped up" video too? Perhaps not, but just tossing it out there for brainstorming.
8. Convenience: Day mentioned this in her post. People want convenience above all else. This part is less about what an individual show can do, probably, and more about the platforms. If Netflix/Hulu/YouTube/BitTorrent/some-other-platform can make a work more convenient, then it becomes important to figure out how to embrace it... or else your fans will go there without you.
9. Belonging: Never, ever underestimate how important a sense of belonging can be to a group. This can be manifest in a variety of ways (including some listed above). But it certainly opens up opportunities for things like fan clubs, where a small subscription fee gets you cool "extras." This also goes back to the tangible merch as well. One part of belonging is showing off that group you belong to.
10. Patronage: This one is still looked down upon by some, and it's rarely a good option if you're betting entirely on it, but serious opportunities can come out of just asking people to support an artist -- especially one who really connects with the fans in an authentic way. Sure, perhaps only 1% of the people will be willing to act as patrons, but combined with other things listed above, you can build a really strong business model.

That's just my quick pass on thinking through some ideas for where video goes. Will some video productions fail as the market heads in this direction? Absolutely. But that's the nature of what happens when platforms and markets change. Radio stories more or less went away in an age of television, and TV found certain types of stories worked better on TV than they did on radio (and some worse). So things changed. And that will certainly happen online during this transition as well. But I can't see how it's likely to be worse or more limited. There's a ton of opportunity out there, and I have no fear that all sorts of unique and workable solutions are coming about for video.

The Congressional Budget Office (CBO), who tries to estimate the cost to taxpayers of all new laws proposed by Congress has put out its report on the PROTECT IP Act, noting that it will cost taxpayers $47 million (pdf) from 2012 to 2016. Specifically, the CBO notes that the Justice Department would have to go out and hire 48 new people (22 special agents and 26 support staff) to act as Hollywood's censor police -- and that the annual cost will run about $10 million. Separately, the CBO notes that outside of the cost for taxpayers, the law would certainly impose costs on a variety of tech companies, by placing liability and requirements on them in regards to sites picked by Hollywood and the Justice Department to censor (you know, sites like that bastion of "piracy," the Internet Archive, which Hollywood has already put on its evil pirates list). However, it does not estimate that additional cost on those companies, since it will depend heavily on "future judicial proceedings."

Danny was the first of a few of you to send in variations on the story of Tampa police arresting a teenager, Jared Cano, for allegedly plotting to blow up a local high school. The police were apparently tipped off by someone. However, what resulted in the submission is the note in the article about a posting on Cano's Facebook page from a few days ago, in which he claims that he saw an SSID for "FBI_SURVEILLANCE VAN": This is leading lots of people to ask just how stupid the FBI is for having such an SSID. The thing is... I doubt this is really true. There's no confirmation of it other than this kid saying it, and it doesn't sound like it was the FBI who investigated and arrested him in the first place. And while we've certainly seen the FBI do some crazy and clueless things at times over the years, I have a hard time believing that anyone there would ever be so clueless as to set up an open WiFi with that SSID.

Charlie, over at the MusicTechPolicy blog, asks a rather simple question: How many DMCA notices are too many? Specifically, he asks this question of an attorney representing YouTube:

I asked him a question that I now feel very safe in asking-does a million notice and takedowns sent to one service in 12-18 months constitute "red flag" knowledge? This isn't speculation anymore-YouTube must have received at least a million DMCA notices by now. Even if the site has a repeat infringer policy, should they still get a safe harbor if they seem to attract significant numbers of repeat infringers?

Charlie's point is that if a significant amount of DMCA notices are filed against a certain site, it should have its safe harbors removed. The YouTube attorney responded:

Well, you see, it depends on how large the service is.

Charlie doesn't like this answer, but the answer is fair. Yes, a million DMCA notices is a lot, but let's take a look at YouTube's stats. 48 hours of content are uploaded every minute. If we are generous and assume that each 48 hours is broken down into 10-minute clips, it means that YouTube is receiving 288 clips per minute, or 414,720 clips per day. A week's worth of activity would be 2,903,040 clips at 10 minutes per. So, a million takedown notices in the course of a week would indicate that 34% of the videos were infringing.

But Charlie is asking about a 12-18 month period, which would involve anywhere from 150,958,080 - 226,437,120 clips. (Again, we're still assuming 10 minutes per. The actual numbers would be much, much higher.) At this point, the percentage of DMCA notices filed versus total uploads slips to 0.66% - 0.44%. Looking at these numbers, one would assume that YouTube is actually doing very well when it comes to handling infringing uploads, especially when you consider that more than 120 million videos have been claimed by Content ID and that YouTube is scanning over 100 years of video every day.

But that's not the way Charlie sees it. All he sees is millions of hours of infringement, monetized by Google:

So if the "service" does a really good job of creating lots and lots of infringement but only gets caught a small percentage of the time, then that doesn't mean that they "knew or should have known" that infringing activity was going on. Even if that small percentage was over a million copyright owners who decided to send notices.

First off, Charlie misstates the nature of the "knew or should have known" question when it comes to copyright infringement. That phrase is only directed at specific instances of works, rather than general knowledge across the site. Of course YouTube knows that some users on the site infringe, but that's meaningless. If a company lost their safe harbors just because some users infringed, generally, then there would be no safe harbors. Just because a tiny percentage of videos on YouTube get DMCA takedown notices (which YouTube is notoriously fast in then taking down), doesn't mean the entire site is a rogue site... unless you're Charlie and are looking for reasons to mislead the public about YouTube.

Separately, "creating lots and lots of infringement?" As far as I know, users create the content and YouTube polices it. Charlie is trying very hard to drop culpability for the users' actions into Google's hands, despite the fact that YouTube, as was stated above, is scanning 100 years of video every day in a rather successful effort to minimize infringement. It's also monetizing 3 billion videos per week and working with "every major US network broadcaster, movie studio and record label" to keep its Content ID reference files up to date. In other words, YouTube has one of, if not the most aggressive systems of any online service provider in not just stopping any infringement it can find (sometimes, in fact, being too aggressive), but also presenting options to copyright holders, creating new monetization streams that were impossible before to artists.

Charlie has a solution, though, to deal with the Googles and YouTubes of the world, who are raking in big money thanks to the creative "work product of others that they can't hold a candle to."

Wouldn't it be more efficient for an artist -who wishes to enjoy all the extraordinary benefits the first decade of the 21st century is bringing to them- if there were some kind of ranking system for the really bad guys? A ranking system for copyright infringers based on DMCA notices sent?

I'm assuming Charlie means by total number of notices sent, rather than by any other indicator of ongoing and willful infringement, like a ratio or percentage -- despite the fact that a total number is meaningless in terms of noting how well a company deals with the issues. Instead, it looks like he's proposing another form of "rogue site" list, only one that is pointlessly targeting one of the most heavily traveled sites on the web; a site that hosts millions of non-infringing videos and is incredibly effective at blocking infringement.

All well and good, I suppose. He's got a take-charge attitude. After all, if you want something done, you've got to do it yourself...

There's actually nothing that would stop artists from developing such a service...

Or not.

...aside from money, of course, and time taken away from diligently monitoring the Internet for other "citizens of the 21st century" who are infringing their work. You would think that the Copyright Office would want to maintain it, too, so they could see how effectively the DMCA notice and takedown system was working. Or maybe even the Congress might be interested?

Oh. I see. Someone else needs to take care of this for you, too. Not only do the copyright maximalists expect their critics to come up with business models for them, but they also need someone else to red flag anything hinting of infringement solely for their benefit. The rest of the internet, these rogue companies "free-riding" on the backs of "creatives," need to be held accountable for their actions. And there's no one better suited to slapping a damning scarlet "R" right across YouTube's billion dollar chest than "someone else."

But not just any "someone else." This needs the touch of a Congressman. That way when web surfers wander into YouTube, there will be a DHS logo informing them that the road ahead is fraught with infringement, possible child porn and steeped in the blood of dying "creatives." Or maybe no one will get any further than the logo as the site has been seized due to a complaint about 0.66% of EOY 2011 Uploads.

Breaking it all down, it goes like this. YouTube hosts infringing content (current percentage unknown). YouTube also receives many DMCA notices. Therefore, the government should step in and slap some sort of arbitrary rating system into place solely to benefit the creative industries that are too busy to do this sort of thing themselves. And this should all be implemented because one million is a Very Large Number. Is that about right?

We've been having some fun with the MPAA's extraordinary cluelessness lately. It started with MPAA communications person Alex Swartsel bizarrely and unfairly attacking GigaOm's Janko Roettger for daring to point out that an economic downturn (combined with dumb moves by the movie industry) might lead to greater file sharing. Swartsel, a spokesperson for the MPAA, went ballistic, claiming that such a statement was intellectually dishonest and somehow condoned the practice as socially acceptable. Here's the key paragraph from Swartsel and the MPAA:

We doubt many people will subscribe to the kind of intellectual dishonesty that suggests that it’s fine – or really, that it’s inevitable – to steal as a way of saving. But it’s troubling that by suggesting that stolen content available on rogue sites and elsewhere is just another substitute good, Roettgers is tacitly arguing that content theft is legitimate and socially acceptable. Truth is, it’s neither.

And what, specifically, did Roettger say? Here's the exact quote:

The U.S. credit ratings downgrade, tumbling stocks and international instability have made not just financial analysts nervous this week. Consumers are also starting to wonder whether we’re about to enter another recession. Whenever that happens, people start to tighten their belts and cut unnecessary expenses — like paying for movies and TV shows. Add in the Netflix price hike as well as new authentication plans from broadcasters like Fox, and you’ve got yourself a perfect storm for piracy.

I don't see how that's condoning anything, really. But if Roettger is being intellectually dishonest and saying that it's fine, well, then that means that the MPAA is also intellectually dishonest and condones piracy. That's because, as TorrentFreak points out, just a couple years ago, former MPAA boss Dan Glickman said almost the exact same thing that Roettger said:

"This is a high priority issue," said Motion Picture Association of America head Dan Glickman, who expressed concern that the dire financial situation would make pirated movies more popular on the streets and online.

"If you look at the situation, the current economic crisis makes this problem much more serious than before," he told a forum.

So, if I'm reading all of this correctly -- and I pretty sure that I am -- according to the MPAA, the MPAA is being intellectually dishonest in suggesting that "it's fine -- or really, that it's inevitable -- to steal as a way of saving." Got it.

In the meantime, we're still waiting for the MPAA and Ms. Swartsel to issue an apology to Roettger, an excellent and fair reporter, who certainly doesn't deserve the MPAA's bizarre "blame the messenger and accuse him of supporting piracy" treatment.

Last year, we wrote about the Supreme Court's deadlocked tie over whether or not the "first sale doctrine" applies to goods made outside the US in the Omega v. Costco case (Justice Kagan recused herself due to her involvement in the case while she was Solicitor General). Because of that the ruling from the 9th Circuit effectively remains the law. The basic issue is that the US has long had a "first sale" doctrine when it comes to works covered by copyright. The basic idea is that if you buy a book, you can resell it. This is important, because without the first sale doctrine, any time you wanted to resell a product that had any parts covered by copyright, you'd have to go back and involve the copyright holder. That would, of course, strangle commerce in many areas. Imagine having to get permission (and probably pay a cut) every time you wanted to sell a book you had.

While the Omega case involved some additional sneakiness involving Omega figuring out a way to "copyright" a watch (don't ask), we noted at the time that this ruling could have horrifying consequences, such as making anyone who resells a book made outside the US liable for huge damages awards under copyright law.

And, now we have our first case testing that exact theory... and, indeed, the court has ruled that selling a book made outside of the US is copyright infringement and there's no first sale defense. In this case, the bookseller was found guilty of willful infringement, because he was selling textbooks legally bought in Asia in the US, and told to pay $75,000 per infringement (in this case, eight books: $600,000), though it could have been as high as $150,000.

Applying these principles to the facts of this case, we conclude that the District Court correctly decided that Kirtsaeng could not avail himself of the first sale doctrine codified by § 109(a) since all the books in question were manufactured outside of the United States. In sum, we hold that the phrase “lawfully made under this Title” in § 109(a) refers specifically and exclusively to works that are made in territories in which the Copyright Act is law, and not to foreign-manufactured works.

The court basically says, hey, that's the law, pointing to the specifics in the statute, as well as the Omega ruling and a previous Supreme Court ruling. And, technically, the court may be right, as the law is drafted in an awkward way (the court says "ambiguous," but it's really just awkward), such that you can (but don't have to) read it to apply only to works first made in the US. But it's hard to see how this is not an insane result that should be fixed by Congress as quickly as possible. In an age when books (and other products) travel over borders all the time, the fact that you could risk $75,000 punishment for selling what you legally bought... is out and out crazy.

Thankfully, at least one judge on the panel felt similarly. Judge Garvan Murtha dissented from the ruling, saying that first sale should apply to works made outside the US. Murtha's argument is that the judges (and other courts perhaps) are misreading the section of Copyright Law that everyone relies on here, the part that says that First Sale applies to works "lawfully made under this title." The argument that has prevailed so far is that a work made outside of the US doesn't get US copyright protection, and thus isn't "lawfully made under this title." Murtha claims that this is a misreading, and since a US copyright holder authorized the production of this work, it was legally made under US copyright law:

The statutory text does not refer to a place of manufacture: It focuses on whether a particular copy was manufactured lawfully under title 17 of the United States Code. 17 U.S.C. § 109(a). The United States law of copyrights is contained in title 17. Accordingly, the lawfulness of the manufacture of a particular copy should be judged by U.S. copyright law. A U.S. copyright owner may make her own copies or authorize another to do so. 17 U.S.C. § 106(1). Thus, regardless of place of manufacture, a copy authorized by the U.S. rightsholder is lawful under U.S. copyright law. Here, Wiley, the U.S. copyright holder, authorized its subsidiary to manufacture the copies abroad, which were purchased and then imported into the United States.

Murtha goes all the way back to the original Supreme Court ruling on the First Sale Doctrine, in pointing out that the court first allowed the First Sale Doctrine so as not to restrict trade -- which this new ruling clearly does. Furthermore, Murtha notes the ridiculous results here, in which works made outside the US now have more strict copyright controls inside the US, and that the incentive now is for publishers to make all their books elsewhere:

Economic justifications also support applicability of the first sale doctrine to foreign made copies. Granting a copyright holder unlimited power to control all commercial activities involving copies of her work would create high transaction costs and lead to uncertainty in the secondary market. An owner first would have to determine the origin of the copy -- either domestic or foreign -- before she could sell it. If it were foreign made and the first sale doctrine does not apply to such copies, she would need to receive permission from the copyright holder. Such a result would provide greater copyright protection to copies manufactured abroad than those manufactured domestically: Once a domestic copy has been sold, no matter where the sale occurred, the copyright holder’s right to control its distribution is exhausted. I do not believe Congress intended to provide an incentive for U.S. copyright holders to manufacture copies of their work abroad.

Either way this is a mess, and makes it ridiculously dangerous to sell products under the First Sale Doctrine in the US unless you're absolutely sure where the product was first made, and if it's been authorized for sale in the US. It's going to hit hard against libraries especially, who often get books whose provenance isn't entirely known. One would hope that Congress would fix the ridiculously awkward language in the Copyright Act and make it clear that First Sale applies across the board, but since when has Congress ever done anything right with copyright law?

Ah, the NY Yankees. I've mentioned in the past that I'm actually a big Yankees baseball fan (last night's loss sucked), but sometimes the team (like all of Major League Baseball) does stupid things with intellectual property law. The latest is a report that the team (and Major League Baseball) are trying to deny a trademark to a couple who is selling anti-Yankee gear (mainly to Red Sox fans) using the term "Evil Empire." The Yankees are, quite amazingly, suggesting that this infringes on their own trademarks, while at the same time claiming that "evil empire" reflects poorly on the team. This whole thing seems pretty crazy. As the Deadspin article linked above notes, "Evil Empire" is a phrase first used by Ronald Reagan and has since been used in a variety of ways. For the past few years, it's been used a few times in reference to the Yankees, starting with a statement from Red Sox President Larry Lucchino, after the Yankees beat out the Red Sox in pursuit of pitcher Jose Contreras (who never turned out to be as good as advertised anyway). But it's just a silly thing among fans. Some Yankee fans have embraced the "Evil Empire" tag, while Yankee haters like to use it to express their displeasure with the team. Either way, having anti-fans mock the Yankees with "Evil Empire" merchandise hardly seems like a bad thing (and I say that, again, as a fan). It's part of what keeps the rivalry going.

The term "evil empire" has a negative connotation because the word "evil" refers to that which is morally wrong or bad, immoral, wicked, harmful and/or injurious. The BASEBALLS EVIL EMPIRE mark will be understood to refer to the Club, and, upon information and belief, is clearly intended to do so, and thus may disparage Opposer[The Yankees], or bring Opposer into contempt or disrepute among a significant segment of the consuming public.

Of course, at the same time, even as they say that it's got a negative connotation, they claim they're also worried that people will think it's legitimate Yankee merchandise. I really don't see how that's possible though.

the Yankees hold that the phrase is so connected with the Yankees that people "are likely to believe that Applicant's goods, which are identical and/or closely related to the goods offered and services rendered in connection with the Club's marks, have their origin with Opposer and/or that such goods are approved, endorsed or sponsored by Opposer"--that the average fan, seeing shirts with the words "Evil Empire" and an altered logo, would assume the Yankees were selling the shirts.

So... either "Evil Empire" hurts the reputation of the team, or it's so closely connected to the team that it's effectively a common law trademark?

Of course, what this really comes down to is pure greed. It was really just a few decades ago that fans were able to make their own shirts supporting (or denigrating) teams, and it was considered perfectly reasonable. But, as we've discussed, that all changed in the 80s, when sports teams suddenly decided that they wanted you to pay to cheer (or boo) any particular team.

In this case, the folks selling the Evil Empire gear are going to try to defend their efforts claiming it's protected use as a "parody." I really have no idea how well that will hold up at the Trademark Office (or, eventually, in court), but just the fact that this is even in dispute seems pretty silly.

I'm always interested in novel legal theories and arguments, and Eric Goldman points us to the latest attempt by one David Stebbins to convince the court system that giant companies owe him tons of money. Last time we'd checked in on Stebbins, he had been claiming Walmart owed him $600 billion, using some dubious claims which still don't make much sense. But it involved something with a "contract" he put on his website, which he apparently emailed folks at Walmart about, and when they sent back a boilerplate reply saying he had contacted the wrong department, he demanded they settle their "legal dispute." Walmart ignored that, and he declared that they now owed him $600 billion (with a b) as an arbitration award.

He's now trying something similar with Google, though this time it's "only" for $500 billion (again, with a b). The filing is embedded below and it's worth a read. It kicks off with a long diatribe insisting that the court cannot deny the motion, and making dubious legal claims that the court "must" grant the motion that Google owes him $500 billion. As for the crux of his "argument," it's that YouTube's terms of service say that the company can change the terms at any time and give notice. So he decided to change the terms himself. As he notes:

[YouTube's terms of service] state that the terms can be unilaterally modified at any time. If the other party does not wish to accept the new terms, they may sever the contractual relationship.

On March 22, 2011, I took YouTube up on that generous offer and sent them an email announcing my own modifications of the Youtube terms of service.

The key part that he "inserted" into his new terms was this nugget:

If you do not accept my invitation to arbitrate within 24 hours of receiving it, I automatically win the relief request, regardless of the merits. No actual arbitration award need be entered; I simply win, automatically, without having to go to arbitration. However, this will only apply to me. If you attempt to arbitrate with me, and I do not accept it, you must obtain an order to compel arbitration.

Amusingly, in the clause above that, he also states: "If you even so much as attempt to litigate a case with me, even if that attempt is unsuccessful you automatically loose that case." Yes, he typed "loose."

You can pretty much guess what happened next. He claimed that YouTube "accepted" his modified contract by not canceling his accounts within 30 days, and then it failed to respond to his arbitration request within 24 hours. Thus, he tells the court, Google owes him $500 billion and, according to the legal genius of David Stebbins, the court has no choice but to agree.

Of course, courts generally don't like having people waste their time, and I imagine this one gets dropped pretty quickly for any number of reasons, not the least of which is that YouTube's terms of service are actually pretty clear that only YouTube can modify them, not some random, lawsuit happy guy.

One of the issues that we've been discussing on Techdirt since the very beginning is the big question of how do you determine proper jurisdiction on internet related lawsuits, since the internet is accessible anywhere. Over the years there have been different rulings and different thoughts on this, but it's not clear there are good answers. The worst idea, of course, is suggesting that because something is available anywhere, it's subject to all rules. That creates a least common denominator setup, in which the absolute most restrictive rules win out around the world. That would hinder innovation tremendously. Almost as bad is the view that the US government appears to take, which is that the US's rules matter on most of the internet, because the major URLs of the internet (such as .com) are managed by a US company. That's pretty crazy, and is going to lead to serious international problems in the long run. I think a more reasonable (though far from perfect) test is simply an analysis of (1) where the actual business is located and (2) where the servers are located. It seems reasonable to focus mainly on where the company is located, and as a secondary measure, look at where the servers are located, and then use that for jurisdiction.

But, of course, when you're dealing with multiple parties, there can be questions of multiple jurisdictions. In the US, when there's a dispute over jurisdictions, such as when a declaratory judgment is filed for in one district, and the other party wants to file the lawsuit in another district, efforts are made to explain to the court that first got the case which district is best, and the court then decides to keep the case or boot it to a different district. But what happens when there are international jurisdiction disputes?

TechCrunch alerts us to a fun case in which Zynga (who has a well known history of copying other company's games) sued a Brazilian startup named Vostu, which it accused of copying its games. Personally, I think Zynga should shut up and not open up such a can of worms that might come back to bite it as well, but Zynga seems to be focusing a lot on being a legal bully lately. Either way, it filed lawsuits in both the US and in Brazil. While the US court, as typically happens, was taking its sweet time, the Brazilian court actually ruled in favor of Zynga (against the hometown favorite) and issued a preliminary injunction, telling Vostu to shut down within 48 hours.

And here's where things get interesting. This woke up the US court (at the request of Vostu), who has ordered Zynga not to enforce the Brazilian decision. As the court notes, it wants to "maintain the status quo" until it has a chance to decide the preliminary injunction question. Furthermore, even as Zynga argues that the two lawsuits are separate, as one covers Brazilian copyright law and the other covers American copyright law, the US court points out that the impact of the Brazilian ruling will hit the US as well:

But one clear policy that all federal courts recognize—even those which have been loath to interfere with foreign proceedings—is the need to protect the court’s own jurisdiction.... The Brazilian injunction evidently purports to restrict all use of the works in suit everywhere. It appears that enforcement of the exceptionally broad Brazilian injunction would prevent this Court from meaningfully adjudicating the claims of U.S. copyright infringement in this case.

As the court notes, allowing the Brazilian injunction to go forward could harm the US court's ability to decide the case... and, by the way, it notes that Zynga filed in the US first, and should wait for the US court to weigh in:

The injunction issued in the Brazilian action is a grim backdrop against which to consider issues of comity. To be sure, Brazil has an important interest in enforcing its copyright laws. But Zynga—which chose the U.S. forum first—now seeks to enforce an injunction it obtained abroad that would paralyze this Court’s ability to decide this case. Comity norms do not abide such a result.

It will be interesting to see if this cross-border dispute goes much further, because I would expect that we're going to see a lot more international jurisdiction battles in the near future, and how courts deal with these could become a very big deal.