Techdirt. Stories filed under "liability"

Winning But Losing: Lessons From An Internet StartUp

Joshua Metzger — Wed, 24 Apr 2013 14:51:00 PDT

"Justice prevails" is often declared when a court case ends, honoring a system that produces the right result. Right, however, is not always just. The judicial system needs to address the exorbitant costs that accompany litigation, or a situation can happen when a company is sued by a deeper pocket plaintiff, wins the case, but has to shut down because the cost of litigation has exhausted its financial capital.

Last month, in a unanimous decision, the Ninth Circuit affirmed, once again, a judgment in favor of Veoh Networks in a widely followed copyright case brought six years ago by Universal Music Group. Veoh, the court held, was entitled to rely on the safe harbors of the Digital Millennium Copyright Act, and was not liable for copyright infringement for user-uploaded videos that Universal alleged contained their copyrights, an important precedent that benefits YouTube and others. Veoh, the company I joined during the early stages of the digital video revolution in 2006, which pioneered long form viewing on user generated content sites, and was the first site to offer premium content from major networks like ABC and CBS, is not around anymore to capitalize on its victory. Three years ago, a few months after Veoh's win at the district court, its leadership surveyed the war torn company, wounded from a litigation battle designed to inflict the very damage the lawsuit had wrought, wondered, at what price victory and decided to sell the assets and closed the doors. Universal Music lost the case, but achieved victory, shutting down an innovative company that threatened their static business model.

From the outset of the case, Universal Music Group made sure Veoh would suffer financially. They issued many discovery requests, doing their best to make sure Veoh spent money to defend itself. Savvy plaintiffs know how to exert pressure by exploiting our judicial system's liberal rules regarding discovery. In this regard, advances in technology have not produced economic efficiencies. Millions of documents and casual conversations are stored on computers, readily accessible. These petabytes of data need to be prepared and reviewed by lawyers before being produced in response to a discovery request. The lawyers' bill increases very rapidly when an army of attorneys is reviewing all this data. Because the bulk of documents and discovery often lie with the defendant, plaintiffs can inflict maximum financial pain on a defendant, while producing relatively few documents themselves. This tilted playing field gives plaintiffs an unfair advantage. In the Veoh case, legal fees on discovery alone were enormous, exacerbated by the magistrate's decisions to compel the company at its own cost to store every single video on our system, and to even produce Skype conversations. Who suffers? The defendant. Recourse? None.

The company quickly recognized the economics of litigation and the lack of upside to being a defendant and offered to settle. However, Veoh never had meaningful settlement discussions; Veoh did not have the cash to pay the amount Universal was seeking. The company was left with no choice but to litigate, and spend money.

To counter the ticking clock and register, Veoh hoped for a quick resolution to lift the dark cloud Universal had placed on the company that handcuffed it from raising the additional funds the company needed to grow. The case, however, was not resolved in the district court for over two years and is now approaching the six-year anniversary.

Defendants need an option other than to just play defense and wait. It was well documented in the case that Universal never even sent Veoh any takedown notice for their content and was similarly undisputed that every time Veoh received a takedown notice from every other content owner, that Veoh took the content down. Universal could have achieved its goal of having its alleged content removed from Veoh's website by merely sending the company a letter. Our judicial system gave Universal the right to sue. Shouldn't Veoh have any rights or recourse, especially when a mere letter could have avoided an entire litigation?

Unfortunately, the only option available to Veoh was to file a motion to recover fees after it won the case, even though this avenue was too little too late; the mortal damage was already inflicted. Six years of combative litigation cannot be undone entirely by recovering legal fees. Yet, the standard for recovering fees is very high and Veoh was not successful. Despite its favorable decision on the merits of the case, the Ninth Circuit denied awarding Veoh its fees, instead remanding to the District Court to consider awarding Veoh its much lower court costs. The Ninth Circuit's ruling on this point only further weakens an already poor option for innocent companies.

Our judicial system needs a solution to rectify the devastation that unfounded litigation causes companies ultimately proven innocent. Courts need to be sensitive to the new entrant and pay respect to the scales of justice when a deep pocket plaintiff goes after a financially weaker opponent. Instituting "loser pays" into the concept of commercial litigation in appropriate situations improves the chances for defendants, and could reduce meritless litigation. While this concept has been debated for decades, another standard needs to be introduced, one that holds plaintiffs and their lawyers equally accountable. Plaintiffs' lawyers should be compelled to pay any 'loser pays' fee along with their clients. In a world where plaintiffs' lawyers share in multi-billion dollar settlements, it seems only fair that if they lose a case they should pay. This will force lawyers to think twice about the merits of their clients' case, as opposed to what strong-armed litigation tactic they can use to extract a settlement. If lawyers are held accountable for their - and their client's - actions in a manner never before applied, we will see what everyone wants: a precipitous drop in the number of cases in our judicial system. We can even adopt a three strikes policy and ban law firms and their clients for twelve months if they are found guilty of such abusive behavior on more than two occasions. How refreshing that would be.

Fewer litigations will reduce the dockets of federal and state courts, reducing the need for our government to increase the number of judges and court staff, thereby saving taxpayers' money. Plaintiffs will pay more attention to increasing defendant's legal fees lest they lose. Legal fees and costs will decline, which will lead to a downward pressure on insurance premiums. Most importantly, productivity will increase. Companies will spend previously allocated monies to litigation on research, development, hiring, and expansion of operations.

Veoh encountered a plaintiff set on its destruction. They were unable to defeat Veoh in the world of technology or in the world of business. With those avenues closed, Universal sued. The judicial system provided Universal with what it could not achieve on a level business playing field. Veoh won the case but is not around to continue to grow. That is wrong. UMG and its lawyers should be required to pay for the damage they have done. Strike one to a plaintiff and its lawyers. Fairness in our judicial systems dictates such an outcome.

Joshua Metzger is an Internet consultant. He was SVP Corporate Development & General Counsel for Veoh Network and before that was chief legal officer for Overture Services, which was acquired by Yahoo!.

Permalink | Comments | Email This Story

EFF On IsoHunt: Bad Facts Make Bad Law

Mike Masnick — Tue, 16 Apr 2013 08:03:11 PDT

As Gary Fung is seeking a rehearing of the IsoHunt case in the 9th Circuit, two amicus briefs were filed yesterday. The first from the EFF and the second from Google. Neither brief suggests that Fung should get off as innocent, or that he did nothing wrong. Rather, both are worried about how the broad ruling by the court for the specific situation regarding Fung and IsoHunt will lead to further abuse by copyright holders and massive chilling effects on service providers. The EFF notes that while Fung/IsoHunt may have been bad actors, it appears that the court used this to go way overboard in creating new and dangerous standards for copyright.

This Panel Opinion is a classic case of bad facts making bad law. Amicus Electronic Frontier Foundation does not file this brief to dispute the Court's factual conclusions regarding the conduct at issue in this case. However, the Panel Opinion went far beyond what was necessary to address that conduct. As a result, it has created new legal uncertainty for online service providers and their customers, undermining over a decade of legislation and jurisprudence designed to help reduce that uncertainty. A predictable legal environment has proven to be crucial not only the growth of the Internet generally, but the growth of innovative platforms for free expression, in particular. This case should not provide a vehicle to impede that development.

In particular, they're quite (reasonably) worried at the court's broad interpretation of causation here, in which the court suggests that the most minor example of inducement can lead to liability for all infringement, even if the site had nothing to do with it.

Most important, the Panel Opinion adopts a "loose causation theory" that disconnects the scope of inducement liability from the defendants' acts—raising the troubling possibility that a single inducing act (such as a message to one customer) could open the floodgates to liability for third-party infringement entirely unrelated to that act. The Opinion's loose causation theory conflicts with fundamental common law principles of proximate cause essential to both predictability and fairness. The Panel's decision to depart from those principles was apparently based on the unfounded assumption that the Supreme Court's decision in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005) requires it. Not so. First, Grokster expressly recognized that secondary liability under copyright derives from common law principles. Second, given that Grokster's specific inducement standard was imported from patent law, it is more likely that the Court also intended to import the analytical framework patent law applies where, as here, a service is capable of both infringing and non-infringing uses.

Meanwhile, Google's focus is on the question of "financial benefit directly attributable" from infringing activities. The DMCA, of course, includes that as one of the prongs for testing whether or not a site gets safe harbor protections. Most courts have found that indirect profits don't make you lose safe harbors: i.e., if you're just making money on ads from a page that has infringing content, that's not "directly attributable". Most people recognize that for it to be "directly attributable" then it needs to be something like actually selling the infringing content, and the direct profits from that action need to be shown. Instead, copyright maximalists have tried to argue that if you have infringement on a site and some money is made (i.e., there are ads or affiliate links) then, that violates that prong of the test and you lose your safe harbors. Most courts have realized that's crazy. But the Fung ruling went very close to the maximalist view, and that (quite reasonably) has Google concerned. Specifically, it's concerned that the ruling could be read to mean that any "influence" a site has over content means it's liable for all of the content on the site:

There is a danger that this passage could be misconstrued to stand for a broader proposition that we do not believe the panel intended: that any time an online service provider is found to have exercised "substantial influence" over any user-submitted content on its service—no matter what that finding was based on—it thereby loses its DMCA safe harbor protections for all user-submitted content on the entire service. This is how some copyright plaintiffs have already tried to read the panel's ruling. In a recent submission to the Southern District of New York in the Viacom v. YouTube case, for example, the plaintiffs have asserted, citing the panel opinion, that this Court “made clear that where DMCA eligibility is unavailable due to the right and ability to control prong of the safe harbor, the DMCA defense is broadly lost as to all clips in suit.” Ltr. from Paul M. Smith to Hon. Louis L. Stanton at 2 (March 22, 2013) (attached as Ex. 1).

As Google right notes, this would lead to "absurd results."

Imagine, for example, a video-hosting service that was otherwise eligible for the section 512(c) safe harbor, but that on one occasion commissioned a particular user to upload a video that, unbeknownst to the service, turned out to be infringing. A court might conclude that the service exerted a “substantial influence” over that instance of infringement and, if the service earned a direct financial benefit from it, there would be grounds for denying the safe harbor for a claim based on that video. But it would make no sense to thereby disqualify the service provider from DMCA protection across the board—even for countless other videos whose posting it did not control or from which it earned no benefit.

Likewise, consider a search engine eligible for protection under the section 512(d) safe harbor for linking to infringing material online. If one of the millions of links provided by the search engine pointed users to infringing material that had been authored by the search engine itself and that users were charged to view, a finding of control plus financial benefit might be warranted for that particular link. But, again, there would be no plausible basis for categorically depriving the service of the safe harbor for the millions of unrelated links it delivers to material that it does not control or financially benefit from.

But, of course, that's crazy (even if it's exactly what many maximalists actually do seem to want). Hopefully, the court is willing to revisit these issues and recognize that its original ruling went overboard because of the situations in this case, and that could unfairly mess up other legitimate offerings.

Permalink | Comments | Email This Story

Scholarly Kitchen Reposts Blog Post That Resulted In Legal Threat, But Removed Comment

Mike Masnick — Wed, 3 Apr 2013 19:52:03 PDT

We recently wrote about how academic publisher, Edwin Mellen, was both suing an online critic as well as having its lawyers send highly questionable threat letters to blogs and commenters who were criticizing the company. As part of that, we were disappointed to see the website Scholarly Kitchen, a blog of the Society of Scholarly Publishing, cave in the face of legal threats and pull down the blog post when it was clear that the post broke no laws (the threat letter even admitted as much). The board of SSP has since talked about it and agreed to reinstate the blog post.

Yesterday, the Board of Directors of the Society for Scholarly Publishing (SSP) unanimously decided to restore the posts by Scholarly Kitchen chef Rick Anderson that had been removed after the Kitchen and SSP received correspondence from a publisher that didn't like the content.
The posts (“When Sellers and Buyers Disagree” and “One Down, One to Go: Edwin Mellen Press Blinks One Eye“) have been restored without the comment quoted in the letter.

For many reasons I won't go into the ingredients of the sausage by explaining why the posts came down and why they went back up. I will say that the Board and the Scholarly Kitchen volunteers stand behind Rick's posts. The Board also stands behind the business and editorial decisions to take them down last week, until we could gather our busy volunteer leaders to fully evaluate the situation.

I can understand why a blog might pull such a post after getting such a letter. It's no fun to be the target of a legal nastygram, no matter how sure you may be that you're right. Even if you know with 100% certainty that you would win any such lawsuit, just the very threat of one could be attention, time and money draining. This is why such legal nastygrams can often be so effective in creating chilling effects around speech.

That said, I also think it's important for people to recognize the value of standing up for their rights in the face of such threats. Otherwise those rights get eaten away. On that note, I think that SSP could have and should have also reposted the "comment" which they say they took down. As we discussed in our initial article, Kristine Hunt's comments (which were actually mostly supportive of Edwin Mellen) seemed unlikely to reach the level of defamation -- but, much more importantly, this has no bearing on SSP's liability. Section 230 of the CDA is pretty clear that, as the service provider, they are not liable for such comments, even if they are aware of them and leave them up. It is, of course, SSP's decision as to whether or not to remove any comments (or posts) on its site, but I'm a bit surprised they'd remove that comment when the caselaw on Section 230 is pretty clear. Some courts have even ruled that sites have no obligation to remove such content even after the statements have been judged to be defamatory (though that's not agreed upon across the board). But, at this stage, merely on accusation, SSP is clearly protected by Section 230, so it's unfortunate that they still chose to remove that comment.

Permalink | Comments | Email This Story

IsoHunt Still Guilty Of Contributory Infringement

Mike Masnick — Thu, 21 Mar 2013 12:23:53 PDT

The 9th Circuit has finally ruled in the appeal of the IsoHunt case, and has found, once again, that Gary Fung is guilty of contributory copyright infringement, as per the Supreme Court's ruling in the Grokster case. They basically agree with the district court ruling, which found that IsoHunt hit on all of the factors that were present to create "inducement" (a theory of copyright that Congress had previously rejected, but which the Supreme Court decided to make exist in the Grokster case). That is, the court agreed that there was distribution of a "device or product", including acts of infringement, and (most importantly) that IsoHunt itself was promoting the product's use to infringe on copyrights. However, on the (slightly) good side of things, the court rejected the district court's broad injunction against IsoHunt as going overboard.

The court goes through the "Grokster" inducement factors, but the results are bit troubling. The first factor is the distribution of a device or product for infringement. Here, IsoHunt argued that it was just providing a service for searching and finding stuff, but wasn't actually distributing any file sharing software "product" or "device." The court doesn't buy it, but I find its argument troubling.

Unlike patents, copyrights protect expression, not products or devices. Inducement liability is not limited, either logically or as articulated in Grokster III, to those who distribute a “device.” As a result, one can infringe a copyright through culpable actions resulting in the impermissible reproduction of copyrighted expression, whether those actions involve making available a device or product or providing some service used in accomplishing the infringement. For example, a retail copying service that accepts and copies copyrighted material for customers after broadly promoting its willingness to do so may be liable for the resulting infringement although it does not produce any copying machines or sell them; all it provides is the “service” of copying. Whether the service makes copies using machines of its own manufacture, machines it owns, or machines in someone else’s shop would not matter, as copyright liability depends on one’s purposeful involvement in the process of reproducing copyrighted material, not the precise nature of that involvement.

That's problematic on multiple levels. First, it's clearly expanding the Supreme Courts limitations in Grokster, by arguing that effectively the requirement for distributing a product or service used to infringe is no longer a requirement at all! In other words, they basically argue that the first factor doesn't matter. Furthermore, the example they use doesn't make much sense either. The "retail copying service" they describe doesn't need inducement theory to be found guilty, as they appear to be violating the reproduction right directly.

The second factor is not difficult to prove. It's obvious that some people used IsoHunt to infringe. There's no real argument there. The third element gets a little trickier. It's the question of how much did IsoHunt promote "its use to infringe." The appeals court, like the district court, uses the fact that IsoHunt had a listing of "box office movies" as proof of promoting infringing uses, along with some of IsoHunt operator Gary Fung's own actions:

For a time, for example, isoHunt prominently featured a list of “Box Office Movies,” containing the 20 highest-grossing movies then playing in U.S. theaters. When a user clicked on a listed title, she would be invited to “upload [a] torrent” file for that movie. In other words, she would be asked to upload a file that, once downloaded by other users, would lead directly to their obtaining infringing content. Fung also posted numerous messages to the isoHunt forum requesting that users upload torrents for specific copyrighted films; in other posts, he provided links to torrent files for copyrighted movies, urging users to download them

While you can see why this might be seen as promoting the use to infringe, there's a leap here: which is that it assumes that any and all box office movies couldn't possibly also have torrents. That's not definitively the case. It is entirely possible that a movie could put up a legitimate torrent -- which the court doesn't even consider as a possibility. They also point out that Fung did not develop a filter and made money from advertising. I can't see how either is relevant, as there is no requirement for a filter, nor is it illegal to make money from advertising.

The most troubling part of the ruling, however, is in the way the court looks at the "causation" question. Here are the different views presented:

Fung and amicus curiae Google argue that the acts of infringement must be caused by the manifestations of the distributor’s improper object—that is, by the inducing messages themselves. Columbia, on the other hand, maintains that it need only prove that the “acts of infringement by third parties” were caused by the product distributed or services provided.

The court sides with Columbia on this one, but that basically seems to completely wipe out the fourth factor as well. Because they more or less argue if you can show both infringement (third factor) and the product (first factor) you've automatically got the fourth factor proven as well. So why do we even have that fourth factor?

The court claims that it recognizes this could go too far, but then tries to "strike a balance."

We are mindful, however, of the potential severity of a loose causation theory for inducement liability. Under this theory of liability, the only causation requirement is that the product or service at issue was used to infringe the plaintiff’s copyrights. The possible reach of liability is enormous, particularly in the digital age.

So... how does it deal with this? It... basically punts. It goes into a long discussion, highlighting how it's true that IsoHunt and Fung may have a reasonable argument that the infringements that happened were not caused by IsoHunt at all. For example:

Fung argues, on this basis, that some of the acts of infringement by third parties relied upon by the district court may not have involved his websites at all. He points out, for example, that by far the largest number of torrents tracked by the Torrentbox tracker are obtained from somewhere other than Torrentbox.com. If a user obtained a torrent from a source other than his websites, Fung maintains, he cannot be held liable for the infringement that resulted.

The court just punts the issue back to the district court:

We do not decide the degree to which Fung can be held liable for having caused infringements by users of his sites or trackers. The only issue presently before us is the permanent injunction, which, as in Grokster III, does not in this case depend on the “exact calculation of infringing use[] as a basis for a claim of damages.” 545 U.S. at 941. We therefore need not further entertain Fung’s causation arguments at this time, but leave it to the district court to consider them, in light of the observations we have made, when it calculates damages.

Separately, in discussing the DMCA safe harbors, the ruling does push back on the lower court's rulings, saying that its reasoning for rejecting safe harbors was not accurate. The lower court said that IsoHunt could not get a DMCA 512(a) safe harbor because that only applied to "transitory" networks, and since the content never actually touched IsoHunt, it didn't apply. The appeals court rejects this, however.

The district court should not have rejected this safe harbor on the ground it did. Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007), held that the § 512(a) safe harbor does not require that the service provider transmit or route infringing material, explaining that “[t]here is no requirement in the statute that the communications must themselves be infringing, and we see no reason to import such a requirement.” Id. at 1116; see also id. (“Service providers are immune for transmitting all digital online communications, not just those that directly infringe.”).

However, they still reject safe harbors for IsoHunt because of other activity by Fung, namely using trackers to generate info that is used to "induce further infringing use of his websites and trackers." Basically, the court says that Fung's website may be protected, but his trackers are not protected as service providers.

There are two other troubling parts of the ruling. The first concerns "red flag knowledge." This is the issue that is key to the YouTube/Viacom case. There's a problem with the DMCA, in that it first notes that takedowns only need to occur with a valid DMCA notice. That suggests that an invalid DMCA notice should not necessarily lead to a takedown. But, it also has a section saying that you can be liable if there's "red flag knowledge." But if you need a valid DMCA notice, would an invalid one count as red flag knowledge? The whole thing gets tricky fast. Most courts tend to avoid this by repeatedly saying that there is no red flag knowledge without specific knowledge of infringing files (usually in the form of takedown notices). The Fung case is really the only major case where red flag knowledge was considered reasonable. And the court just rubber stamps that decision with little discussion. It just says because Fung encouraged people to upload and download copyrighted works, that proves he had red flag knowledge. Again, this seems to assume that he must have known it was infringing.

The other troubling part is that the court argues that having advertising on the site constitutes direct financial benefit from the infringement. Other courts have noted that just having advertising on a site where infringement occurs does not mean that the financial benefit is directly attributable to the infringement, but the court here walks that back somewhat:

Under these circumstances, we hold the connection between the infringing activity and Fung’s income stream derived from advertising is sufficiently direct to meet the direct “financial benefit” prong of § 512(c)(1)(B). Fung promoted advertising by pointing to infringing activity; obtained advertising revenue that depended on the number of visitors to his sites; attracted primarily visitors who were seeking to engage in infringing activity, as that is mostly what occurred on his sites; and encouraged that infringing activity. Given this confluence of circumstances, Fung’s revenue stream was tied directly to the infringing activity involving his websites, both as to his ability to attract advertisers and as to the amount of revenue he received.

This is very worrisome, because contrary to what the court suggests here, the revenue stream is not tied to infringement, but tied to providing a popular service that people want. That is the success of the revenue stream does not increase or decrease with each infringement, but with each use of the overall service -- some of which is infringing, some of which is not. Fung doesn't make any more money if the ad is viewed by an infringing user vs. a non-infringing user. It would seem that this should be a prerequisite for requiring that there be a financial benefit from the infringement. Unfortunately, the court seems to lump this all together as "well there are ads and infringement and more infringement means more ads, so there's a direct financial relationship." But, under that theory, then pretty much any website that has any infringement could run afoul of that, and that's clearly not what the DMCA's safe harbors were supposed to be about.

Finally, one bit of good news in the ruling is that the court does rule that the injunction is against IsoHunt is too broad. This had been a major concern since the original court ordered a blockade that also blocked legitimate, authorized content. The court recognized this as a problem, noting that the injunction included all sorts of vague language that impose too much of an expectation that Fung can wave some sort of magic wand to block any and all "infringement-related terms in metadata for any webpages." The court agrees that this is too much:

Beyond the specifically-named examples, no one reading this injunction can tell what it means for a term to be “widely known to be associated with copyright infringement.” We understand the desire to build flexibility into the injunction. But Rule 65(d), overall, prefers certainty to flexibility. Subsection (ii) of the injunction’s definition of “Infringement-Related Terms” therefore must be modified to state simply that the phrase includes specifically named terms.

It also finds that some parts of the injunction are clearly too burdensome for Fung himself:

Fung maintains, and we agree, that certain provisions of the injunction could be interpreted to prevent Fung from ever working for any technology company whose services others might use to infringe copyright, even if those other companies are not themselves liable for primary or secondary copyright infringement.... We agree that insofar as the injunction can be interpreted to prohibit Fung from seeking legitimate employment, it is more burdensome than necessary to provide Plaintiffs relief.

On the whole, Fung still has lost big time with this ruling, and I'm still quite concerned about many parts of it. In a few areas the court has cut back on some excesses by the district court but, of course, this case is far from over.

Permalink | Comments | Email This Story

Kiwi Three Strikes Tribunal Fines Soldier Who Was Serving In Afghanistan When Infringement Happened

Mike Masnick — Wed, 20 Mar 2013 08:34:25 PDT

G Thompson was the first of a few of you to send in this story about the latest "three strikes" Tribunal hearing in New Zealand, in which the Tribunal ruled against a guy, despite the fact that he was a soldier in the NZ Armed Forces and deployed in Afghanistan at the time the various accusations of infringement occurred. Upon getting the third strike, having just returned from his tour of duty, he sent the tribunal a letter, noting that it was impossible for him to determine who had actually infringed, as he was away fighting for the country and there had been a number of flatmates in the place during the time of the accusations, such that it could have been any one (or multiple ones) of them downloading infringing material. Still, he agreed to "accept responsibility" because it was his account. That's an honorable thing to do, though it's simply ridiculous that he should have to do that, since he is clearly not at fault.

I have just returned from deployment overseas [in] Afghanistan and was not aware of music being downloaded. It is very difficult to determine who in the household is responsible for downloading music as flatmates are currently deployed around NZ.

However I understand entirely that I am the person who is held liable for these actions. I have spoken to the pers [sic] who have access to my internet IP address, and between 8 pers, we cannot determine who is fully responsible.

I ask that this notice be a lesson to those in my household as they now understand how severe the consequences may be for committing such an act. I do not wish this situation to grow any more than it needs to be. I am currently going through transitioning from military life in Afghanistan to life back home in NZ, and I'm not fit to tackle this allegation made against me.

However, I take full responsibility for the acts committed under my IP address and wish for this to be resolved asap. I am willing to co-operate by any means required of me.

And yet... the Tribunal still made him pay $255.97, despite not doing anything. The breakdown was $200 to reimburse the RIANZ for the application against him, $50 in fees, and another $5.97 for the "price" of the 3 songs on iTunes. Of course, since he wasn't the one who downloaded the songs in the first place, it seems ridiculous that he should have to pay for those songs, let alone the various other fees.

As Rick Shera points out in the link above, the Tribunal even acknowledged that it could override the automatic fine by claiming such a ruling would be "manifestly unjust," but bizarrely chose not to. Shera questions under what circumstances the Tribunal would ever use that ability if it didn't use it in this case:

So, it was open to the Tribunal to decide in these circumstances - soldier overseas, no way of knowing who infringed and therefore no ability to recover any award, admitted responsibility - that to make an award was manifestly unjust. Remember that it is unjustness to the account holder (the soldier in this instance) that is relevant not any unjustness to or cost incurred by the copyright owner. Difficult for the Tribunal though without any argument on the point being presented by the Respondent.

I have said before that trying to show manifest unjustness will be extremely hard, especially given the presumption of guilt in section 122N and the fact that an account holder is liable for all actions taken using its account. I think this case underlines that. I find it hard now to imagine any circumstance that will invoke this protection for an account holder.

Permalink | Comments | Email This Story

Anti-Piracy Group Threatens Pirate Party With Criminal Charges For Hosting The Pirate Bay

Mike Masnick — Wed, 20 Feb 2013 14:52:29 PST

For a few years now, the Swedish Pirate Party has provided some hosting services to The Pirate Bay, arguing that attempts to take it down would amount to political censorship. It appears that theory may finally get tested. According to TorrentFreak, the Swedish anti-piracy group "Rights Alliance" has sent a letter threatening to take legal action against the Pirate Party if it does not stop hosting the site.

In the letter, which also targets bandwidth provider Serious Tubes, the group cites last year’s Supreme Court rejection of The Pirate Bay case as a precedent that hosting providers can be held liable for providing Internet services to file-sharing sites.

“With that decision, it was finally determined that not only those who operate illegal file sharing services, but also the Internet providers to such illegal services are committing a criminal act,” the Rights Alliance writes.

The party is figuring out how to respond. They note that, given how the original TPB trial played out, even if they believe they're strongly in the right under the law, the courts seem to toss all logic out the window as soon as someone mentions "but, piracy!" So they are reasonably concerned that a fair trial on the merits of the case would not come from this. However, it would certainly be an interesting trial, and might certainly call more attention to the issues that go beyond just the initial TPB trial. This is clearly getting into significant questions about secondary liability, especially over products that have significant non-infringing uses, and where the site itself is not hosting any of the infringing content. The whole thing remains a witch hunt by people who don't seem to understand the technology. A lawsuit against a political party may serve to highlight just how crazy this witch hunt has become.

Permalink | Comments | Email This Story

Aussie Court Realizes That Google Is Not Responsible For Content In Google Ads

Mike Masnick — Tue, 12 Feb 2013 00:14:07 PST

Back in 2007, we wrote about a ridiculous lawsuit down in Australia, in which the Australian Consumer and Competition Commission (ACCC) was suing Google because other companies had purchased ads deemed to be "misleading" on Google. As we noted at the time, the ACCC seemed really confused about how Google worked, and the difference between being a self-service platform/tool and being a full-service advertising media company. While the ACCC ran into some trouble early on (its arguments were deemed "incomprehensible" by the first court) they actually won on appeal. The good news, however, is that the case moved up another level, and the High Court has overturned that decision with a pretty clear statement (pdf) on the basic issue:

Ordinary and reasonable users of the Google search engine would have understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations. Accordingly, Google did not engage in conduct that was misleading or deceptive.

This may not seem like a big deal, but as Ali Sternburg rightly explains, having strong protections for secondary liability is a huge part of why the internet is so useful and innovative. In simple terms, we don't blame third party service providers for misuses by their users, because that takes away massive incentives for the service providers to innovate in the first place. It chills innovation in a major way.

Safe harbors from secondary liability are essential for Internet platforms and businesses, and it is encouraging when other countries affirm these principles.

Unfortunately, some of these safe harbors have come under increasing attack over the past few years, as people who feel wronged go the Steve Dallas route, and assume that if they've been wronged, it makes sense to sue the company with the deepest pockets, rather than those actually responsible. But, when you do that, you create incredible incentives to effectively shut down any open platforms, because the threat of liability is just too risky. The stifling effects are enormous, whereas the benefit from protecting platform providers from liability for users' actions is tremendous. And, no, this doesn't mean that illegal activity is allowed. It just means that liability is properly focused on those who actually break the law.

Permalink | Comments | Email This Story

Court Says Pfizer May Be Liable For Side Effects Of Drug, Even Though Man Took Non-Pfizer Generic Version

Mike Masnick — Wed, 6 Feb 2013 23:57:57 PST

An interesting case in the Alabama Supreme Court has ruled that a man who developed a movement disorder (tardive dyskinesia) after taking a generic version of the drug Reglan can sue Pfizer, the maker of Reglan, even though it did not make the actual generic he had taken (he took generics from both Actavis and Teva, both of whom he's sued as well). This one is a tricky one on the question of secondary liability, thanks to the oddities of the pharmaceutical world. While, naturally, it sounds absurd that Pfizer can be sued for a drug it didn't make, the regulatory world makes it slightly more complicated -- in part because current law says that generic drug companies could not be sued over failures in labeling of risks, because they're basically copying the labels from the brand name manufacturer. Other courts have ruled that the brand name manufacturers can't be sued -- so in theory that could leave the takers of generics with no legal recourse if there were failures to accurately label the drugs they took. Given that, it seems slightly more reasonable to think the brand manufacturer may be more responsible for what's on the label -- but since they can't monitor quality control of the generic, the whole thing seems like quite the legal muddle all around.

Permalink | Comments | Email This Story

Contractors Lining Up Against Free Speech

Mike Masnick — Thu, 10 Jan 2013 12:26:55 PST

I've recently been dealing with some building contractors over some work, and the process is no fun at all. Finding someone you can trust is a pretty harrowing experience, because if you pick wrong, the consequences can be huge. Online review sites, like Yelp, have actually been tremendously helpful, even if you know to take reviews with a grain of salt (in both directions). At the very least, they provide some good fodder for understanding strengths and weaknesses. Recently, we wrote about a case in Virginia, in which a contractor named Christopher Dietz took a woman, Jane Perez, to court for $750,000 because she wrote negative reviews about him on Yelp and Angie's List. A lower court had initially told Perez to change her reviews, but the Virginia Supreme Court overturned that, saying that it could not require changes under the 1st Amendment until a full hearing was held on whether or not the content was defamatory.

It's worth noting that Perez only posted her negative reviews after Dietz had already sued her in small claims court, a case that was dismissed (some of the defamation claim concerns Dietz disagreeing with how Perez described the end result of that court case in her reviews). Dietz has also suggested during a video interview on MSNBC that he wanted to go after both Yelp and Angie's List, and that they shouldn't hide behind Section 230 of the CDA. At this point, it would appear that Dietz either does not understand or underestimates the power of the Streisand Effect as well as the importance of free speech and the importance of secondary liability protection for service providers. It's a trifecta!

Perez has pro bono legal help from Public Citizen and the ACLU, but there are still substantial legal costs that she needs to cover. To help pay for it, she's put up an IndieGoGo campaign in which she notes that some comments on a popular site for home builders suggest that an association for home builders may be backing Dietz's lawsuit. The site in question does have a running update on the case, which includes one post where a spokesperson for the National Association of the Remodeling Industry claims that they "support [Chris Dietz] in the quest to right this wrong" and that the organization is "reviewing the case and will determine next steps." It's not clear if this means that NARI is actually financially supporting Dietz's lawsuit, but either way, "supporting" Dietz's misguided lawsuit still doesn't seem like a particularly smart stance, for reasons we'll get to below. NARI could do a lot more good for contractors by teaching them how to properly deal with negative reviews.

That same page includes a couple different reports from other contractors, insisting that contractors need to support Dietz and stop this scourge of people saying bad stuff about them. There's one post that insists the lawsuit is a good thing, saying it will take a "perfect storm" to lose (unlikely), while also mocking review sites claiming most of his customers have never heard of them. Then there's another one that mocks both review sites and the ACLU for daring to think that this was an important case.

I can certainly understand why contractors are upset about negative reviews -- just as lots of other businesses are worried about negative reviews. It's no secret that not all reviews are accurate, and it really does suck, emotionally, to see a negative review that's not true. But there are ways to deal with negative reviews that don't make the situation worse. Jumping straight to defamation lawsuits generally are the opposite of that. They do make the situation worse. SearchEngineLand has a great post in response to this very case, in which they point out that there are much better ways to deal with negative reviews online. Suing only creates news about those negative reviews -- and having it become widely public news that you sued a customer about their negative review seems likely to have a lot more damaging impact on a business than those negative reviews might have had in the first place.

Yes, we live in a legalistic society, where it is the first response of many people to "go legal" when they feel wronged, but in a world where information is widely available, there are often much better ways to respond to "negative" information than going legal. If these contractors really wanted to "support" Dietz, they should encourage more of their colleagues to read the SearchEngineLand article, rather than supporting a dangerous lawsuit that could undermine key principles of free speech or secondary liability.

Permalink | Comments | Email This Story

French Politician Wants Twitter To Help Censor Speech

Mike Masnick — Fri, 4 Jan 2013 10:43:04 PST

Glenn Greenwald recently wrote a wonderful post about a journalist's "praise" for a call by Najat Vallaud-Belkacem, a French politician, for Twitter to take responsibility for "hateful tweets" which are "illegal." I'll be doing another post specific to Greenwald's post, but for this one I just want to focus on the part he glossed over: that a French politician is calling for Twitter "to take steps to help prosecute" tweets that France feels are illegal. This is horrifying for a number of reasons, but let's cover one that Greenwald doesn't touch: the idea that a company providing a platform that encourages free speech around the globe should somehow then be responsible for regulating the speech to the point of legal prosecutions against people seems immensely troubling. If someone said something illegal, let law enforcement investigate and handle it. Putting that responsibility on a company is dangerous, and leads to massive censorship. That is the very basis of the Great Firewall of China. The government there has made it clear to ISPs there that they might be held liable if they don't "help" make sure that "bad stuff" online doesn't see the light of day. The response is to overblock, just to be "safe."

Somehow, well meaning people seem to think that "bad" speech is just obvious. But it's not. Speech is speech, and whether or not it's "good" or "bad" may very much depend on an individual's context, sense of humor, situation in life or a variety of other issues. To think that Twitter, or any company, should be in a position to make decisions about a person's ability to speak based on such amorphous concepts is a recipe for disaster -- and basically runs counter to everything that a service like Twitter is about. Vallaud-Belkacem's logic follows the standard censor's argument -- claiming that freedom of expression is important... except for speech she doesn't like.

For what it's worth, I agree 100% that the tweets she's complaining about are offensive and disgusting. But to pin the blame on Twitter is to totally misplace it. It actually serves to take the focus off of those who actually posted the controversial posts, and suggest that if only we hid speech we didn't like, it would go away. That's not what happens. Instead, those who are censored tend to believe that they're being persecuted by a government (or company) that "can't handle the truth" and wants to shut them up. It doesn't encourage the ignorant to be taught why they're ignorant. It doesn't encourage important discussions on why such statements are ridiculous and offensive. Instead, it just tries to sweep everything under the rug.

Permalink | Comments | Email This Story

Another Lawsuit Filed For Google Autocomplete 'Defamation'

Tim Cushing — Thu, 27 Dec 2012 15:04:45 PST

Another day, another lawsuit filed against Google for defamation-via-search-results. And, yet again, it's being filed in a country that has proven amenable towards plaintiffs who somehow feel a search algorithm has the power to defame.

This time the plaintiff is Guy Hingston, an Australian cancer surgeon. His complaint revolves around the fact that Google's autocomplete suggests he's all out of money.

Guy Hingston, an Australian cancer surgeon, sued Google in Federal Court.

"When an individual computer user types 'Guy Hin ...', into the Google search engine as a search, the words 'Guy Hingston Bankrupt' appears," the complaint states. "When the link(s) is clicked on, the article(s) to which the user is directed has absolutely nothing to do with a bankruptcy associated with Dr. Hingston. Dr. Hingston is not bankrupt." (Parentheses and grammar as in complaint).

"Dr. Hingston is a surgeon practicing in Port Macquarie, New South Wales, Australia," the complaint states. "Dr. Hingston's surgical practice focuses on breast cancer. Given his professional practice and position in his community, maintaining his good reputation is critical. Dr. Hingston has lost a number of patients and financiers who are refusing to associate and/or deal with Dr. Hingston as a consequence of the reference on Google to a bankruptcy."

While this may be true, it seems odd that potential patients and financiers wouldn't actually follow through with the search term, which lists one link related to bankruptcy. (At this point there's more, thanks to Hingston filing this suit -- something those filing these types of suits fail to consider.) Clicking through on that link brings up details on a bankruptcy filing by Eclipse Aviation. A commenter has reposted a Port MacQuarie news story that links Dr. Guy Hingston to bankruptcy -- via CoastJet Group, seven companies Hingston "principally controlled" that ceased operation when Eclipse Aviation went under.

Port Macquarie surgeon Guy Hingston bought the 19-year-old business 2½ years ago.

Dr Hingston said the main reason for CoastJet’s demise was the loss of a $2.8 million deposit on two new jets when American company Eclipse Aviation Corporation went into bankruptcy. The business was made more vulnerable, he said, by its heavy investment in a new partnership with Sweden’s Lund University School of Aviation.

He said CoastJet was preparing for its first intake of 24 students from Sweden at the end of March.

Dr Hingston said he and CoastJet’s staff were devastated. “We had two jets we were about to take delivery of, but with the manufacturer going bankrupt, we’ve lost everything,” he said.

The jets were destined to for CoastJet’s growing air ambulance service, Dr Hingston said, as well as for international airline pilot training and charters.

A later story appears at the same site, detailing the eventual sale of CoastJet to a Chinese investor, which again mentions bankruptcy and liquidation. Both of these stories make Hingston's claim that "Guy Hingston bankrupt" link leads to article(s) that "have absolutely nothing to do with a bankruptcy associated with Dr. Hingston" completely false. He may not like the perception the words "Guy," "Hingston" and "bankrupt" give when placed next to each other in an autocomplete suggestion, but there's nothing inherently defamatory about having those words appear next to each, especially when it produces relevant search results.

Hingston claims Google's automatic search result is defamatory, show him in a false light, and are "highly offensive to a reasonable person."

He claims Google was "was negligent in determining the truth of the information or whether a false impression would be created by its publication."

"This issue, and Google's continued failure to remedy this issue, despite numerous demands to do so, has caused significant harm and economic loss to Dr. Hingston in excess of the minimum jurisdiction of this court," the complaint states.

Hingston seeks at least $75,000 in damages for false light, and court costs.

But the search isn't "negligent" or "highly offensive," unless the person searching for Hingston does nothing more than stare at the completion suggestion and draw all their conclusions from that single, incomplete phrase. Hingston is the only person "offended" by this search suggestion, and any "negligence" is solely on the heads of financiers, etc. who are unwilling to perform even the slightest bit of due diligence when researching Dr. Hingston. Every other link for Hingston points you in the direction of his apparently successful practice and book sales/public speaking sideline. And it must be pointed out again that Hingston is suing over one autocomplete suggestion, rather than the results of those searches.

It's really hard to see how this will come down in favor of the plaintiff, but then again, if judicial systems didn't occasionally head off the deep end, lawsuits like this one would very rarely be filed.

Permalink | Comments | Email This Story

Swedish Appeals Court Says Web Designer Is Responsible For Copyright Infringement On StudentBay

Mike Masnick — Fri, 21 Dec 2012 08:51:56 PST

It's really amazing how fearful people who don't understand technology are of anyone who has any connection to file sharing, no matter how remote. Over in Sweden, an appeals court has overturned a lower court ruling absolving a web designer of any liability for designing the StudentBay -- a torrenting site for educational material -- and decided that because he designed the site, he must be liable for what users did on the site. This goes beyond secondary liability into some sort of weird tertiary liability. It already seems odd to blame the operators of the site for actions taken by its users, but now we're holding the graphic designers responsible too? It's a sort of scorched earth policy from people who don't seem to understand how the internet works, and who just seem to want to "destroy everything." Of course, the end result is that anyone with half a clue just thinks the judicial system is a complete joke. That doesn't seem useful for anyone.

Permalink | Comments | Email This Story

Aussie ISP: We Won't Be Hollywood's Copyright Cops If Hollywood Won't Fix Its Own Business Model

Mike Masnick — Mon, 17 Dec 2012 13:54:21 PST

You may remember iiNet, the Australian ISP that Hollywood attacked (with support of US State Department officials) after they decided that it was too small to fight back, but big enough that people would notice. They guessed incorrectly, and iiNet not only fought back by taking a strong pro-consumer view, but won in convincing fashion. Even more importantly, as we noted, the courts made it clear why it's silly to expect third party service providers like ISPs to be copyright cops, since establishing infringement "is not a straight 'yes' or 'no' question," but rather involves going through a lot of evidence and evaluating it.

Since then, Hollwyood has continued (via the Australian government) to pressure ISPs to step up to become copyright cops anyway, and iiNet has participated in those discussions. But late last week it walked away from the discussions after Hollywood folks kept demanding a system similar to the US's in which ISPs would send along notices to people they accused of infringement. iiNet gave a bunch of good reasons for walking away, but the basic message was that piracy is a problem that the entertainment industry could solve itself by making all of its content available more conveniently and at better prices. Until it does that, it's silly to rope in third parties to try to hold back the tide.

A broken record

The conversation has failed to move on. The rights holders are still insisting ISP's should perform work on their behalf instead of addressing what we have always said is the root cause of the infringements – the limited accessibility to desirable content and the discriminatory and high cost of content in Australia. Infringements are a symptom – access is the problem.

Data retention proposals

iiNet won't support any scheme that forces ISPs to retain data in order to allow for the tracking of customer behaviour and the status of any alleged infringements against them.

Collecting and retaining additional customer data at this level is inappropriate, expensive and most importantly, not our responsibility.

It's not iiNet's job to play online police

We've been over this before. The High Court spoke loud and clear in their verdict when they ruled categorically that ISPs have no obligation to protect the rights of third parties, and we're not prepared to harass our customers when the industry has no clear obligation to do so.

It's time to find a new way

We believe that timely, affordable access to legitimate content is the best option for reducing unauthorised sharing.

The problem, of course, is that the entertainment industry still doesn't understand what's happening. They flat out reject the idea that piracy might be due to their own unwillingness to embrace the internet and provide more content, in more convenient ways at better prices. So, instead, they believe that everyone else should be responsible for fixing the entertainment industry's own mistakes. It's nice to see iiNet call them out so directly.

Permalink | Comments | Email This Story

Tor Exit Node Operator Charged With Distributing Child Porn

Mike Masnick — Fri, 30 Nov 2012 12:40:54 PST

Not this again. Last year, we wrote about how Austrian police had seized computers from a tor exit node, showing little comprehension of how tor worked, and why the operator of the node was not responsible for the content accessed. We wondered how difficult it would be to teach law enforcement how tor worked. Apparently, those in Austria still need more help, as it's being reported that another Austrian tor exit node operator has been charged with child porn distribution. The guy, William Weber, has a blog post with some photos.

Seven LKA officers, two police offers, and a court-appointed expert witness started a search of the flat, without respecting my privacy or property whatsoever. Paper documents in a cupboard were read, and no care was taken of my cat (who I was allowed to lock into another room later). My storage cubes (HP MicroServers) were confiscated without any regard for the hardware – the power cords were simply ripped out / hard shutdown, instead of properly shutting them down by the operating system. My main PC was shut down normally, as far as i could determine. After finishing the search in my living room, they continued in my bedroom, where they confiscated my legal firearms, as well as my cable TV receiver, and my Xbox 360. Despite my statement that all firearms and ammunition were legally owned and registered, having passed all background checks, this was doubted by one of the LKA officers due to the caliber.

He indicates later that there was at least some knowledge of tor, so hopefully this gets sorted out:

After this, I had them show me the offending IP address, which I identified as belonging to me in the specified timeframe. I explained that this was a TOR exit node under my control at this time. I attempted to explain what TOR is, and they appeared to be familiar with it, as the atmosphere suddenly became more friendly. They probably understood that it was very unlikely they had a child pornographer sitting in their office.

Some questions about my motives followed, which I attempted to answer – but this seemingly failed. I could not make them understand why I would “waste” resources and bandwidth (translating into money) to run a TOR node. I informed them that I was already contacted by the Polish police in May about this IP, regarding hacking attempts originating from it. Back then I had already explained to Polish police that this was a TOR exit node, and that no logfiles were held. After the report of hacking attempts, I shut down the TOR node on this server, but apparently this was too late and they were investigating (and/or wiretapping) already.

Obviously, there are reasons to investigate possible child porn distribution, but it still seems ridiculous that law enforcement still seems skeptical of tor exit nodes and assumes that they must be used for nefarious intent. This isn't the first time of course. Last year, here in the US, ICE seized a tor exit node as well. While it eventually returned the equipment, it warned the guy that "this could happen again." And, of course, just this week, we wrote about a German case where a court actually held someone responsible for the transmission of encrypted traffic on a tor-like system.

Permalink | Comments | Email This Story

German Court Holds Internet User Responsible For Passing On Unknown, Encrypted File

Glyn Moody — Wed, 28 Nov 2012 10:33:00 PST

A natural response to the increasingly harsh enforcement of laws against unauthorized sharing of copyright files is to move to encrypted connections. It seems like a perfect solution: nobody can eavesdrop, and so nobody can find out what you are sharing. But as TorrentFreak reports, a German court has just dealt a blow to this approach.

The case involves RetroShare, which describes itself thus:

RetroShare is a Open Source cross-platform, Friend-2-Friend and secure decentralised communication platform.

It lets you to securely chat and share files with your friends and family, using a web-of-trust to authenticate peers and OpenSSL to encrypt all communication. RetroShare provides filesharing, chat, messages, forums and channels

That sounds pretty safe, but TorrentFreak explains why it wasn't in the current case: This week a Hamburg court ruled against a RetroShare user who passed on an encrypted transfer that turned out to be a copyrighted music file. The user in question was not aware of the transfer, and merely passed on the data in a way similar to how TOR works.

The court, however, ruled that the user in question, who was identified by the copyright holder, is responsible for passing on the encrypted song.

The judge ordered an injunction against the RetroShare user, who is now forbidden from transferring the song with a maximum penalty of €250,000 or a six month prison term. Since RetroShare traffic is encrypted this means that the user can no longer use the network without being at risk.
That's because the user can't know what's in an encrypted file passing through his or her system, and thus cannot guarantee that it is not the song in question. In truth, this situation is partly the user's own fault: RetroShare derives its security from the fact that all transfers go through "trusted friends" who users themselves add. In this case, the defendant added the anti-piracy monitoring company as a friend, which allowed him to be "caught."
But even if the court case in Hamburg is a result of fairly exceptional circumstances, it creates an awful precedent: that German users are responsible for encrypted contents passing through their connection, even though there is no way they can know what they might contain. Unfortunately, this is of a piece with a previous ruling by a German court that people can be fined for what others do with their open wifi connections, regardless of whether they knew what was going on.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Permalink | Comments | Email This Story

Company Sues Kickstarter Over 3D Printer Patent, Maligns 'Hackers And Makers'

Mike Masnick — Wed, 21 Nov 2012 19:39:00 PST

We've been pointing out for a while that one of the reasons why advancements in 3D printing have been relatively slow is because of patents holding back the market. However, a bunch of key patents have started expiring, leading to new opportunities. One, in particular, that has received a fair bit of attention was the Formlabs 3D printer, which raised nearly $3 million on Kickstarter earlier this year. It got a ton of well-deserved attention for being one of the first "low end" (sub ~$3,000) 3D printers with very impressive quality levels. Part of the reason the company said it could offer such a high quality printer at a such a low price, relative to competitors, was because some of the key patents had expired, allowing it to build key components without having to pay astronomical licensing fees. A company called 3D Systems, however, claims that Formlabs missed one patent. It holds US Patent 5,597,520 on a "Simultaneous multiple layer curing in stereolithography." While I find it ridiculous that 3D Systems is going legal, rather than competing in the marketplace, it's entirely possible that the patent is valid. It just highlights how the system holds back competition that drives important innovation, though.

3D Systems claims that Formlabs "took deliberate acts to avoid learning" about 3D Systems' live patents. The lawsuit claims that Formlabs looked only for expired patents -- which seems like a very odd claim. Why would they only seek expired patents? Either way, the lawsuit claims that all of the articles that highlighted how the expiration of patents made Formlabs' printer possible meant that Formlabs must have known about its patents. Again, not quite sure the reasoning makes much sense here.

But what's really crazy is that 3D Systems isn't just going after Formlabs... but Kickstarter as well. You can read the whole filing here. 3D Systems is claiming that because Kickstarter takes a cut, it's equally liable.

Upon information and belief, Formlabs and it sales agent Kickstarter knew or should have known about, or were willfully blind to, 3D Systems' extensive patent rights in the area of three-dimensional printing and stereolithography, including but not limited to 3D Systems' U.S. Patent No. 5,597,520 covering improved methods of stereolithographically forming a three-dimensional object by forming cross-sectional layers of an object from a material capable of physical transformation upon exposure to synergistic stimulation, by virtue of their sales of machines touted by Formlabs as using "stereolithography (SL) technology," which is a technology invented and extensively patented by 3D Systems and its founder Charles Hull.

The accusations against Kickstarter are really ridiculous -- suggesting that it encouraged infringement:

Upon information and belief, Kickstarter contributes to the infringement of the '520 Patent by offering to sell and selling within the United States the Form 1 3D printer which is an apparatus for use in practicing patented processes of the '520 Patent, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of the '520 Patent, and the Form 1 3D Printer is not a staple article or commodity of commerce suitable for substantial noninfringing use.

Upon information and belief, Kickstarter knowingly or with willful blindness induced and continues to induce infringement and possessed specific intent to encourage another's infringement by, or was willfully blind as to the '520 Patent and with respect to, its activities and Formlabs' activities described above.

Most bizarre of all? 3D Systems claims that because Kickstarter encourages "hacker and maker" projects, it's knowingly encouraging infringement -- as if "hackers and makers" are only about infringement. This is a really cynical attempt to tie those words to a negative connotation where clearly none is meant.

Upon information and belief, Kickstarter had specific intent to infringe the '520 Patent by virtue of its agency, business and sales arrangement with Formlabs, which had actual knowledge of the '520 Patent and/or was willfully blind to the existence of the '520 Patent as set forth in the allegations above.

Indeed, in Kickstarter's own Guidelines as to "Project must fit Kickstarter's categories" at http://www.kickstarter.com/help/guidelines?ref=footer, under section 02, under "View Design and Technology requirements," Kickstarter is actively encouraging "hacker and maker" companies to make 3D printers for Kickstarter to sell, stating: "Not everything that involves design or technology is permitted on Kickstarter. While there is some subjectivity in these rules, we’ve adopted them to maintain our focus on creative projects: D.I.Y. We love projects from the hacker and maker communities (weekend experiments, 3D printers, CNC machines) and projects that are open source. Software projects should be run by the developers themselves."

I've read those paragraphs over a few times and I still can't see what the issue is there. How is supporting hackers and makers somehow evidence of "intent to infringe"?

Either way, 3D Systems has now permanently placed itself into the category of companies not worth ever doing business with. Suing Kickstarter just because a competitor was selling a better, cheaper 3D printer and you got jealous? Shameful.

Permalink | Comments | Email This Story

Recording Industry Rep Suggests Parents Should Slap Their Children To Stop Piracy

Glyn Moody — Fri, 16 Nov 2012 12:35:00 PST

One of the many problems with the "guilty until proven innocent" approach to tackling unauthorized filesharing is that it's not clear exactly who should get the punishment. For example, in France, we saw someone convicted not for infringement that he had committed, but something his then-wife had done and even admitted. And it's not just spousal activity that is problematic, as TorrentFreak reports in this interesting case from Germany:

A ruling handed down yesterday by Germany's highest court represents a blow to rightsholders in their quest to clamp down on illicit file-sharing. The court ruled that the parents of a teenager who had made available more than 1,100 songs on file-sharing networks can not be held responsible for their son's infringements, nor be required to monitor or hinder his online activities.

What's particularly interesting here is that Germany's top court not only threw out the original fine, but did so without imposing any unreasonable conditions on the parents, for example by requiring them to spy on their child: The Court ruled that the parents had met their parental obligations when they informed their child of "basic do's and don'ts" including that file-sharing copyrighted content online is illegal.

Furthermore, the Court ruled that the parents were not required to monitor their child's online activities nor install special software to restrict his online behavior. This would only be required should the parents have "reasonable grounds" to presume that their child would engage in infringing activities online.
Of course, not everyone was happy with this result, which could have major implications for imposing fines in Germany, since it seems likely that much unauthorized file sharing there as elsewhere is carried out by teenagers in their family homes. The Netzpolitik.org blog pointed us to an interesting comment made by a representative of the music industry (original in German): The case shines "a harsh light" on the fact that, for many parents, the concept of upbringing has become a foreign word, the legal representative of the music industry complained, according to the AFP news agency at the hearing before the federal court in Karlsruhe. While before "an occasional slap didn't hurt", today children are kept on a loose leash.
This hankering after the good old days when parents could hit children to cow them into submission is hardly surprising: it's the physical equivalent of the disproportionate legal punishment the music industry would like to see meted out to all those caught doing naughty things online like sharing files without permission.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Permalink | Comments | Email This Story

German Court Sees Through The DOJ Fairy Tale, Rejects Attempt To Seize Megaupload Assets

Mike Masnick — Wed, 14 Nov 2012 11:45:00 PST

We've covered a series of embarrassing setbacks for the US government's case against Megaupload over the past few months. It's a pretty stunning trail of errors by US officials who seemed to think that a scary story about a "bad man" would trump a lack of actual evidence or following legal procedure. While the case may hold up in the long run, it seems like everywhere you look there's evidence of highly questionable activity by the government.

The latest setback comes from Germany, where the US sought assistance from officials in seizing various assets of Dotcom's or Megauploads. However, the court has now rejected the request:

The Frankfurt judges have since rejected this request, because it contains insufficient evidence. The US legal team failed to demonstrate that a web hosting service for the illegal upload of copyrighted files, amounts to a criminal offence.

According to the German 'Telemediengesetz' (communications legislation), a hosting service for foreign files will generally not be accountable unless the host had active knowledge of illegal activity. The judges also emphasised that the concept of knowledge is limited to positive knowledge. Therefore if the service provider believes that it is possible or likely that a specific piece of information is stored on their server, this is not sufficient evidence of knowledge of abuse.

According to the court ruling, there is no legal obligation to monitor the transmitted data or stored information or to search for any illegal activity.

Of course this was the same point that we raised the day that Megaupload was shut down. While it may be true that many Megaupload users have infringed on copyrights, there's a massive leap from that point to the idea that Megaupload is a criminal enterprise -- yet the US government's case basically skips over any details to make that leap. Thankfully cooler heads are recognizing that a significant amount of the US's case seems to be based on a fairy tale that US officials -- under the influence of Hollywood -- keep telling.

Tip to DOJ officials under the sway of Hollywood's version of the internet: remember, these people make their livings telling fairy tale stories. You know those opening credit lines about how something is "based on a true story"? Yeah, quite frequently the actual truth is a long way from what's shown. It seems that you may have been taken in by another such Hollywood "true" tale.

Permalink | Comments | Email This Story

BREIN Scores Another Victory, Making It Suck Even More To Be A Dutch Internet Company

Mike Masnick — Thu, 25 Oct 2012 15:33:49 PDT

Torrentfreak reports on a really scary ruling coming out of the Netherlands, in which a court found hosting company XS Networks liable and ordered it to pay up because it hosted a torrent site. We've discussed issues of secondary liability, but this goes well beyond what we've seen elsewhere. As TorrentFreak explains, super-aggressive Dutch anti-piracy organization BREIN was trying to shut down the site SumoTorrent and get information about its operators. XS Networks, who briefly hosted the site, pointed out that it required a court order to turn over any info. This is a perfectly reasonable stance. However, it later backed down and reached an "agreement" with BREIN to hand over some info. By that time SumoTorrent had moved on to another host, and the info that XS Networks had to give to BREIN was incorrect or useless. BREIN then claimed that XS Networks was responsible for this situation and sued for damages.

This is the point that any reasonable court would laugh at BREIN and tell its boss Tim Kuik to learn a little something about suing the proper party, rather than a tool provider (especially one who simply asked for a court order before coughing up private info and who later was clearly willing to negotiate in good faith). Instead, the court went in the other direction, and said that SumoTorrent "is clearly facilitating copyright infringement" and that XS Networks should have magically known that to be the case, and shut the site down when BREIN first asked. Even if you're a copyright system supporter, this ruling should scare you. It takes away any sort of due process. Most reasonable people admit that whether or not a site is illegal should require at least a basic adversarial trial in which the site is able to make its case. But here the court ignores all of that, and the fact that it hadn't yet proved SumoTorrent guilty of infringement, and just insists that XS Networks should have magically accepted that BREIN must be right. Talk about a recipe for abuse by BREIN and other copyright holders.

If you're a hosting company in the Netherlands, your legal liability just shot way, way up. Apparently, if you don't magically kick off every site that might be enabling someone to break the law, you yourself may be liable for any illegal actions done on the site (even without such illegality ever being proved). That seems like a great recipe to get a bunch of Dutch hosting companies to reconsider even being in business.

Permalink | Comments | Email This Story

First 'Three Strikes' Case In NZ Dropped After It Becomes Clear Accused Didn't File Share

Mike Masnick — Fri, 19 Oct 2012 09:42:14 PDT

One of our biggest problems with the various "three strikes" or similar programs is the fact that they're all based entirely on accusations not convictions. You would think, in this day and age of bogus copyright claims, that people would realize why that might be a problem. Down in New Zealand, where they implemented a three strikes plan not too long ago, the local version of the RIAA (the RIANZ) has been pushing to bring "music pirates" to the copyright tribunal to pay for their supposed infringement. However, as expected, it's looking like all that's happening is the record labels are being left with egg on their face yet again.

That's because RIANZ had to hastily drop one of the cases after it became clear that the person they were accusing of file sharing... didn't even know what file sharing was. Nice job, record labels! There were multiple problems with the case:

The defendant was a student in a flatting situation and was the account holder for the flat's shared internet account. She has never used file sharing software and we had to explain to her what it was and how it worked. It seems likely that one of her flatmates had it installed.

The flat never received the first detection notice and they didn't really understand the second warning notice. She did show it to her flatmates and asked them to stop doing anything they were doing. They denied doing anything, so she checked to make sure that their wireless network was properly protected by a password in case they had been hacked. The third notice was a mess - addressed to the wrong person, Telecom eventually withdrew it and replaced it with another one.

Then came the notice from the Ministry of Justice that action was being taken against the account holder.

In other words, a complete disaster, top to bottom. And for this, the RIANZ demanded $2669.25 in penalties. How'd they get that number?

$1075.50 as the cost of the music.

$373.75 to repay the cost of the notices and tribunal fee.

$1250 as a deterrent.

The cost of the music was calculated as being five tracks (total number of notices) multiplied by the $2.39 cost of each track on the iTunes store. The observant may notice that this works out to $11.95 rather than $1075.50. RIANZ decided, based on some self-serving research, that each track had probably been downloaded 90 times and therefore the cost should be multipled by 90. There is no basis in the Copyright Act or Tribunal regulations for this claim.

While the student in question ended up cancelling the internet account for the entire flat -- making life difficult for everyone there -- she eventually worked with Tech Liberty New Zealand to defend her. After Tech Liberty highlighted the multiple problems with the case, RIANZ -- realizing that it had screwed up royally -- decided to just drop it.

It would be funny to look at how often they make accusations, only to walk away when they realize they're going to lose. That is, it would be funny if it didn't seriously mess with people's lives. You'd think, given how often false accusations are levied, that lawmakers would know better than to pass a law that allows for such actions to be taken based entirely on accusations without real evidence.

As Tech Liberty notes:

This case exemplifies just how unjust and unfair the law is.

If you are the account holder you will be responsible for the actions of anyone using the account. There is no way for non-technical people to monitor or control what their flatmates or other people sharing the internet connection are doing. Even IT professionals would struggle to do so with the normal tools available on a home network.

The provisions in the law allowing for an internet account to be cut off have been suspended for now. This was because it is becoming increasingly clear that an internet account is critical for engaging in modern society. However, the effect of this law was still the same - the defendant panicked at these allegations and cancelled her account, cutting off her entire flat from the internet.

The law is meant to act as a deterrent to infringing copyright, but the way it is written it is actually an incentive. "Just use a connection that doesn't have your name on the account and they'll be be the one who is penalised!" The only deterrent is to becoming an internet account holder.

Permalink | Comments | Email This Story

Google To French Media: We May Have To Cut You Off

Timothy Geigner — Fri, 19 Oct 2012 05:35:14 PDT

If you're like me, you may have thought that France was simply a repository for cheese-eating surrender-monkeys. It turns out that's not true. They also have a wonderful court system that doesn't want to understand the digital world. That same French court system also managed to make a complete mockery of HADOPI, all while hysterically referring to their actions as "justice".

But French lawmakers now have a new target in their crosshairs: Google. Lawmakers are reportedly considering legislation that will force search engines to pay for sending French newspapers readers.

French newspaper publishers have been pushing for the law, saying it is unfair that Google receives advertising revenue from searches for news.

French Culture Minister Aurelie Filippetti also favours the idea.

This may be my favorite stance of all time. It's unfair that Google, a search engine, receives revenue on searches, i.e. their business, and it should instead go to news organizations that are not in the business of search but still receive the traffic. I am sure there's a word out there that properly describes the stupidity of this stance, but so far all the ones I'm coming up with involve the kind of language Mike keeps telling me I'm not allowed to use on Techdirt (which is [censored], by the way (oh, come on, really?)).

Google, because they don't exist in the same non-logic-ungrateful-verse, and after apparently spending some time reading our comments section and picking up on some suggestions there, is now letting France know that if they go through with the law, they'll simply exclude French media organizations from search results. In addition, in a letter to lawmakers, they added:

Google said such a law "would threaten its very existence".

Google France had said earlier that the plan "would be harmful to the internet, internet users and news websites that benefit from substantial traffic" that comes via Google's search engine. It said it redirected four billion clicks to French media pages each month.

Which leaves France with an interesting choice. Continue on with their proposed legislative silliness and forfeit all the traffic Google sends French newspapers via search results, or retreat from their position, thus proving my ignorant American stereotyping of them correct. Your move, France!

Permalink | Comments | Email This Story

Oh Look: Police Can Use Backpage.com To Track Down, Arrest & Convict Pimps & Prostitutes

Mike Masnick — Tue, 2 Oct 2012 20:08:21 PDT

A few years ago, there was a ton of political grandstanding against Craigslist, because there was some prostitution on the site. As we noted at the time, it was pretty misguided. Craigslist cooperated with law enforcement and many law enforcement officials realized that Craigslist was an excellent tool to help them find and arrest law breakers. We pointed out that going after Craigslist instead of the actual law breakers would mean that the activity would just move somewhere else. Indeed, Craigslist finally caved to tons of public pressure and blocked any ad that might be related to prostitution... and it did nothing to stop prostitution or human trafficking. It just moved elsewhere. The same crowd that wrongfully targeted Craigslist then shifted all of their attention to Backpage.com. Even though the law has made it clear that Backpage, as a third party service provider is not liable, the grandstanding continues against Backpage. The whole thing has gotten to be so much, that Backpage's owners, Village Voice Media, have sold off the newspapers to separate them out from the site, and to avoid having the two properties connected.

The crusading against Backpage.com has become increasingly intense and increasingly misguided lately. We get press releases all the time, full of emotional, but legally false, language, all attacking Backpage.com. No one seems to even want to recognize that attacking Backpage instead of those actually responsible only makes it that much more difficult to track down the real criminals. Some law enforcement officials are not quite as misguided. As with Craigslist, we're seeing cases where Backpage.com is instrumental in putting together the case -- in this case, against someone who had set up a brothel.

And yet, the attacks on Backpage.com continue. The whole thing is stunning to me. Here's a tool that is a goldmine for the police to collect evidence against those actually responsible for prostitution and human trafficking... and the response is to try to shut it down and drive those efforts further underground, rather than actually going after and arresting those responsible. It's shocking.

Permalink | Comments | Email This Story

RIAA Lobbyist-Turned-Judge: ISPs Deserve Copyright Trolls For Not Stopping Infringement

Mike Masnick — Fri, 24 Aug 2012 10:19:45 PDT

We've written about judge Beryl Howell a few times before. She's the recently-appointed judge whose immediate job prior to that was as a lobbyist for the RIAA. Before that, she worked for the Judiciary Committee and was apparently a key player in drafting the DMCA. It seems pretty damn clear that she holds a strong viewpoint on the nature of copyright law and copyright infringement -- but that hasn't stopped her from taking those cases, even when her rulings appear to be exactly the opposite of nearly every other court. For example, while most courts have been throwing out copyright trolling lawsuits for improper joinder, Judge Howell had no problem with the practice and ordered various ISPs to cough up names based solely on IP addresses.

The ISPs asked her to reconsider back in April, noting how pretty much every other court has ruled otherwise. The specific case involves well known trolling firm, Prenda Law, which is connected to one of the larger jokes in the copyright trolling business: John Steele. Steele's lawsuits have been laughed out of court and he's even been told to stop filing these bogus lawsuits, where the clear purpose is to use the judicial system as a weapon to force people (innocent or guilty) to pay up.

But apparently copyright trolls have found a friend in Judge Howell, who not only is welcoming them with open arms, but seems to be using these trolling cases to further the goals of her former employer. She's released her decision on the motion to quash the subpoenas, and it's basically a 42-page screed on the evils of infringement and how ISPs should be responsible for stopping piracy (much of which has absolutely nothing to do with the case at all). The only nod towards the other side seems to be a weak acknowledgement that "the Court recognizes that other Judges on this Court have reached different conclusions with respect to the legal questions posed by the ISPs" and thus she's agreed to stay her decision until the appeals court weighs in.

But she makes sure to get her arguments in for the appeals court to read, and it certainly feels like she reverted back to "lobbyist" mode, rather than "impartial judge."

She kicks off the polemic with a grand history of the DMCA, and how the task force that was created to write the DMCA originally wanted to pin liability on ISPs for actions done by their users. And while she admits that eventually the DMCA did include such liability protection, it seems clear she would have preferred it the other way. She then highlights the important court decisions from a decade ago, against the RIAA and in favor of Verizon and Charter, that ruled that the RIAA could not demand ISPs identify users without actually filing a lawsuit against them first. This, of course, was a basic recognition of basic privacy rights, and the fact that if you are going to expose someone's private info, you ought to at least file a lawsuit against them first. But, in the world of Judge Howell, apparently this was a bad decision. She approvingly cites the dissent in one of the key cases, claiming this somehow "unraveled" the balance struck in the DMCA. Nothing, of course, is further from the truth. That's a total rewrite of reality.

She also seems to suggest -- contrary to the very law she was just citing -- that ISPs have some sort of responsibility to "deter infringing activity."

Other than barebones references from two of the four movant ISPs that these subpoenas impose “a substantial administrative burden,” the ISPs fail to present any witness or other evidentiary detail to demonstrate a burden to the Court, let alone what steps the ISPs are or could be taking to deter infringing activity on their networks to reduce any burden subpoena compliance engenders.

This is a fascinating interpretation of the law. Basically, she says that if they're going to claim that copyright trolls are showing up with tens of thousands of IP addresses, demanding they all be identified, then that means they also have to show that they've taken "steps" to "deter infringing activity on their networks." In other words, if it's burdensome to the ISPs to identify users to copyright trolls, it's their own damn fault for failing to stop infringement. Seriously.

Oh, and then she flat out misrepresents the GAO's findings from a few years ago that found that all of the entertainment industry's claims about the impact of "piracy" were complete bunk. Yet, in the world of former RIAA lobbyist Judge Howell, the GAO actually came to the opposite conclusion:

The plaintiff’s estimates regarding the amount of online infringing activity and the economic harm resulting from such activity is corroborated by a recent government report. See U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-10- 423, INTELLECTUAL PROPERTY: OBSERVATIONS ON EFFORTS TO QUANTIFY THE ECONOMIC EFFECTS OF COUNTERFEIT AND PIRATED GOODS 23-24 (2010) (estimating that U.S. economy annually loses $58 billion, over 370,000 jobs, and $2.6 billion in tax revenue as a result of copyright infringement over the Internet) (citing Stephen E. Siwek, THE TRUE COST OF COPYRIGHT INDUSTRY PIRACY TO THE U.S. ECONOMY, Institute for Policy Innovation (IPI), IPI Center for Technology Freedom, Policy Report 189 (Oct. 2007)).

Uh, no. Go read what the GAO actually said. While the report does cite Siwek's widely discredited report of $58 billion in losses -- it does so only to say that Siwek did these studies and they claimed to show "ripple effects" beyond the immediate industry. However, most of the rest of the report highlights how those numbers, and others like them, cannot be substantiated and that most experts they spoke to found the methodology questionable. Furthermore, the report specifically calls out the reports that only try to calculate the negative impact, without even considering any possible positive impact, as being clearly misleading. That describe's Siwek's research exactly. Specifically, the GAO report noted:

Since there is an absence of data concerning these potential effects, the net effect cannot be determined with any certainty

In other words, sorry, but the Siwek claim of $58 billion is hogwash. And yet Judge Howell pretends that the GAO has blessed this number.

The ruling goes on to defend its position, but basically says that there is no burden on the ISPs and if there is one, it's their fault. It also says that there is no issue of improper joinder to consider until after everyone's identified (at which point it won't matter, since that's all the copyright trolls want, so they can then shift to demanding cash from them). The whole thing, once again, raises significant questions about why a judge who had such a vested stake in pushing for an extreme maximalist view of copyright now gets to judge cases where key decisions are made about the interpretation of copyright law.

Permalink | Comments | Email This Story

Australian Advertising Watch Group Says Companies Are Responsible For Comments On Their Facebook Pages

Timothy Geigner — Tue, 7 Aug 2012 13:28:00 PDT

Techdirt has dealt a great deal with how artists and companies should be connecting with their fans and customers and how an active community can increase the brand. We've also discussed the value of comments and commentors on websites and what they can mean for discussion and for business. But now, thanks to an Australian advertising watch group, we're presented with a question that intersects between the two: should a business community's comments be considered advertising?

The Australian details the story of how the Advertising Standards Bureau is releasing a report attacking Carlton & United Breweries over comments users posted to their Facebook pages. Like many companies, they have a presence on social media with which they engage their customers and ask deep, contemplating questions like "What's the next essential needed for a great Australia Day BBQ?" Personally, I would've answered with something involving marsupial-racing, but, in a turn of events nobody except everybody could have predicted, some user comments were what expert socialogists call "dick-ish." The ASB decided that these abhorrent comments qualified as the brewery's advertising:

"In a copy of the report obtained by Media, the ASB said comments left by people on the social network site constituted advertising, even though the company had not posted them.

The complaint to the ASB claimed that the Facebook page breached alcohol advertising guidelines by connecting alcohol with social or sexual prowess and promoted irresponsible drinking and excessive consumption."

Perhaps the folks at the ASB had had one too many Foster's, because in my dictionary the definition of advertising involves the company calling attention to a product or service in the hopes of gaining more customers. I'm not sure how user comments on a Facebook page fit that definition, but then again, I'm not insane. It'd be bad enough if this was some regular occurrence left completely unchecked by the brewery, but all along they had been checking the page twice a day to remove inappropriate comments. They were already self-policing, but the ASB still felt compelled to assign ownership of user comments to the brewery.

The concern, of course, is the way this is going to stifle brands jumping into social media. As we've discussed here many times in the past, the basic safe harbor protections from secondary liability are a large part of what makes the internet work. If the brewery is responsible for user comments to the degree that the ASB seems to be indicating, the liability and staff required to monitor comments won't be worth the exposure, and brands and fans alike will lose a valuable way to connect with one another.

""It would be unduly onerous on alcohol beverage producers and indeed any company participating in this medium to interpret the code as including user comments on Facebook pages as falling within the scope of 'advertising or marketing communications', since CUB does not have a reasonable degree of control over them," the company said."

And that results in the very antithesis of connecting with your fans/customers. Overly restrictive advertising regulations like this can only stifle business, all in the apparent attempt to pretend that some people aren't jerks. Let's hope that the ASB's report is struck down.

Permalink | Comments | Email This Story

Court Shelves Washington State Law That Would Turn Service Providers Into Criminals Based On Their Users' Behavior

Mike Masnick — Fri, 27 Jul 2012 18:31:00 PDT

Back in June, we wrote about a challenge -- from both the Village Voice's Backpage.com and the Internet Archive to a new law in Washington State, SB 6251, that effectively criminalized online service providers based on actions by their users. We've long talked about the problems of such secondary liability efforts, and thankfully the US has section 230 of the CDA that forbids most such efforts to apply secondary liability. And, indeed, the court has now granted a preliminary injunction against the law, citing the Section 230 issues, among other things. Basically, the court sides with Backpage and the Internet Archive on every issue here, finding the state's reasoning in support of the law to be weak.

There are some important points in this ruling. First up, the court said that Section 230 applied, even though this was about a criminal law issue, rather than a civil law issue. Many (even Section 230 supporters) have argued that Section 230 only applies to civil law. The court notes that the law says it doesn't apply to federal criminal laws, but says nothing about state laws. And, as such, CDA 230 should be seen to apply to state laws, even if they're criminal:

If Congress did not want the CDA to apply in state criminal actions, it would have said so.

So, the law is already on shaky legs due to it being knocked out by Section 230. However, the court goes further to focus on how the bill violates the First Amendment as well, targeting the suppression of speech. It's a pretty detailed explanation for how laws that target speech, rather than action, have a much higher bar, and this bill does not appear to meet that higher bar. Most importantly, the court recognizes that any laws targeting speech can have severe chilling effects, even on legal speech, and that's unacceptable under the First Amendment:

The most problematic aspect of SB 6251 is not the protected speech that it regulates by its terms, but the likelihood that it will chill a substantial amount of protected speech in addition to the unprotected speech that Defendants argue the statute was meant to address

The court even notes that it could create chilling effects and potentially criminalize sites like Facebook and Twitter as well. While the state denied this possibility, the judge points out that it's entirely possible to read the law in that way, and that alone could create chilling effects from companies trying to avoid criminal liability. Finally, the court notes that the law also almost certainly violates the Commerce Clause, because it would regulate companies located entirely outside of Washington State.

In other words, the state is on very thin ice here, as the court isn't buying any of its arguments for why the statute is legal. At this point in the case, the discussion is just over whether or not an injunction is granted to block the enforcement of the law -- and that's now done. There's still much more to come in the case, but the law doesn't look likely to survive at this point, and that's a good thing. There are some real issues that the law seeks to take on (mainly dealing with prostitution and child porn), but it does so in such a broad way and with the wrong tool: criminalizing service providers. It's good that the courts are recognizing how this law is massively overbroad.

Permalink | Comments | Email This Story