Techdirt. Stories filed under "ownership"

When You Sign Away Your Copyright To A Publisher, What If They Hold You Hostage Over It?

Mike Masnick — Fri, 12 Apr 2013 08:47:18 PDT

We're always amused to hear people talking about how copyright "protects the creator," when we mostly see cases where the original creators have effectively sold off their copyrights to giant gatekeepers: record labels, movie studios, book publishers, etc. That can lead to some unfortunate situations for the actual creators, such as the following story, sent in by someone who prefers to remain anonymous. Phil Foglio, author of a series of "Girl Genius" novels, recently found out that the American publisher of the books, Night Shade Books, is going out of business and is trying to sell off its contracts. However, the publisher looking to buy wanted to renegotiate the contracts in a ridiculous manner, massively decreasing Foglio's royalties. What follows, however, would make for an interesting game theory case study:

A certain percentage of Night Shade authors have to agree to this hose job before the deal goes through. Yay! We're safe! You'd have to be an idiot to sign onto this! True– So let's bring out a stick and threaten you! If they don't get enough authors willing to eat this crap, then Night Shade has no choice but to declare Chapter 7 bankruptcy.

Then all the books in question go into a legal limbo. No one has the rights until the bankruptcy is resolved, which might take years- or possibly, NEVER! This has happened before to way better authors than us. This means that once said books go out of print, the authors can't resell them. Can't reprint them. Can't sell any adaptation rights. Can't write any sequels.

A rock and a hard place, basically. If enough authors sign the deal, then bad royalty rates are forced upon them. If not enough authors sign the deal because the royalty rates are crazy, then the copyright may end up in limbo limiting what Foglio can do with the work. And I thought copyright was supposed to protect the artist?

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Now Canada Wants Activist Investors To Share With The Rest Of The Class

Dealbreaker — Thu, 28 Mar 2013 21:08:00 PDT

Cross-posted from

If you're an activist investor your job is to (1) think of an idea for how to make a company's stock go up, (2) buy stock in the company, (3) convince them to do your idea, and (4) sell high. Step 3 tends to involve lots of attention-seeking – it's easier to wear a company down into doing your idea if they’re constantly hearing about it from other shareholders and reporters and stuff – but steps 1 and 2, importantly, don't.¹ If you tell everyone about your great idea for Apple to issue GO-UPS,² then they'll all realize that Apple will certainly do it and unlock tens of billions of dollars of value, so they'll bid up the stock before you can buy it and you'll lose the opportunity to benefit from all those gains. That may be a bad example but just work with me here.

There's another way of putting that, which is: if you secretly conceive of an idea to make Apple a better company, and then secretly buy up a bunch of Apple stock, and then announce to the world “surprise! I have 12% of Apple's stock, and a brilliant idea that starts with a thematically appropriate lowercase i!,” and the stock goes up, and you make a lot of money – isn't that unfair? You got to buy stock at the low, pre-publication-of-your-idea price; the people who sold to you were bamboozled into selling out too low because they didn't know about your great idea. It almost “smacks of insider trading.”

Or something. I may not be doing this theory justice because I think it's silly: that great idea is your idea; why shouldn't you be able to make money off of it? (And why should anyone else?) The money is your incentive to come up with the idea in the first place, and do the hard ego-stroking work of pitching it to CNBC and the target company; if you had to share it with free-riders why would you take on the responsibility? We talked about this a little last year when there were vague rumors that the SEC was buying into it, and that they might require investors to disclose 5% stakes within 1 day of acquiring them (instead of the current 10 days), and include synthetic share ownership in computing the 5%, in order to make it harder for activists to secretly accumulate shares. I have not heard much about that proposal since, though I hesitate to assign any causality.

But last week in another, colder part of town, someone proposed the same thing. Canada, I mean. Canadian securities regulators proposed:

to provide greater transparency about significant holdings of issuers' securities by proposing an early warning reporting threshold of 5% [and disclosure of a 5% stake no later than the opening of trading on the next business day], requiring disclosure of both increases and decreases in ownership of 2% or more of securities, and enhancing the content of the disclosure in the early warning news releases and reports required to be filed. We are also proposing changes so that certain “hidden ownership” [i.e. synthetic ownership³] and “empty voting” arrangements are disclosed.

Current Canadian rules require immediate disclosure of a 10% stake, versus U.S. rules requiring disclosure of a 5% stake within ten days (which in practice allows you to secretly buy quite a bit more than 5% before disclosing – Carl Icahn got to 13% before disclosing his Herbalife stake, though he couldn't help himself from hinting at it beforehand), and neither U.S. nor Canadian rules currently require all derivatives to be included in that 5/10% calculation. So this would be rather a change.

Here's the rationale:

it may be possible for a shareholder at the 5% level to influence control of an issuer;

significant shareholding is relevant for proxy-related matters (for example, under corporate legislation, a shareholder can generally requisition a shareholders' meeting if it holds 5% of an issuer's voting securities);

market participants may be concerned about who has the ability to vote significant blocks as these can affect the outcome of control transactions, the constitution of the issuer's board of directors and the approval of significant proposals or transactions;

significant accumulations of securities may affect investment decisions;

the identity and presence of an institutional shareholder may be material to some investors;

a lower early warning reporting threshold will provide all market participants with greater information about significant shareholders and thereby enhance market transparency;

a 5% threshold would be consistent with the standard of several major foreign jurisdictions; and

changes in corporate governance practices have increased the need for issuers to communicate directly with beneficial owners. A lower threshold would provide reporting issuers greater visibility into their shareholder base and a greater ability to engage with significant shareholders earlier. It would also allow shareholders to communicate among themselves earlier.

I've bolded the ones that read particularly like “it's unfair for activists to profit from their ideas and investments if everyone else doesn't get an equal chance.”

So I mostly think that that idea is sort of irreducibly silly – people all the time make money by having ideas and don’t share with everyone else; Mark Zuckerberg didn't even share with the guys who had the idea – but there's also an empirical component to its silliness. The question is: if you're just a passive guy who invests in a bunch of companies, would you rather

have activists prowling around your stocks, sometimes pushing up the stock price in companies you own and benefiting you, other times buying you out before pushing up the stock price and leaving you feeling like a chump, or
have “market transparency,” much less risk of selling out to an activist before he goes public, but also much less chance of activism in the stocks you own?⁴

I'm not aware of answers to that precise empirical question but the related question – “do activists actually improve performance in the stocks they target?” – has been asked fairly often, and the answers seem broadly positive. Like, “we find that targets of high frequency activist hedge funds – those that target ten or more firms between fund inception and 2005 – experience better long-term stock and operating performance,” or “abnormal return around the announcement of activism is approximately 7%, with no reversal during the subsequent year,” or “top performing activist-focused funds produced an average return 53.04 percentage points greater than that of the MSCI World Index between 2006 and 2011.” Also the Journal had an article this week about how activists have outperformed the hedge fund index over the last few years, though apparently not the S&P 500, so take that for what it’s worth.

All of which suggests that for the average investor the value of letting activists do stuff secretly might outweigh the value of transparency, though it's not entirely clear. Here's one more data point: the proposed Canadian rule changes probably are in part due to Bill Ackman's proxy fight with Canadian Pacific, in which Ackman secretly accumulated 12.2% of the shares, some synthetically, before announcing his ownership. CP is up 95% since that announcement, making it not the most compelling advertisement for the evils of activist investing.

Activist Fights Draw More Attention [WSJ]
CSA: Proposed Amendments to Early Warning System and Related Take-Over Bid and Insider Reporting Issues [OSC]

1. Nor does step 4, for that matter, unless your idea was “sell the company,” which it often is.

2. Before they were iPrefs they were GO-UPS:

In 2012, Einhorn concluded his Sohn presentation by telling the audience that he’d invented something. It was a novel kind of preferred stock, he said, the characteristics of which could help certain companies unlock billions of dollars in value. He called his creation Greenlight Opportunistic Use of Preferreds, or—in case anyone missed his intent—GO-UPs.

Guys: it’s not a novel kind of preferred stock. It’s just the regular kind of preferred stock. The novelty would be convincing companies to do it.

3. Of interest only to me, probably, but the Canadians require disclosure of hidden ownership via an “equity equivalent derivative” like a total return swap or a contract for difference, but not a “partial-exposure instrument” like an option or a collar. What about Carl Icahn’s ~100% delta option trades? Well, the Canadians are aware of them, and “would generally consider a derivative to substantially replicate the economic consequences of ownership of a specified number of reference securities if a dealer or other market participant that took a short position on the derivative could substantially hedge its obligations under the derivative by holding 90% or more of the specified number of reference securities.” So it’s a delta test rather than a what-is-the-thing-called test.

Questions include: if you were an activist, would you be willing to buy 80%-delta cash-settled call options to beef up your stake secretly? Would you overpay for them? If you were a dealer, would you sell them? Would you overcharge for them? (Yes, right?) How would you hedge them? What vol would you use? Would you overhedge them? (That is, would you sell 80 delta call options and buy 90 deltas of stock figuring that, y’know, Carl Icahn announcing his position is gonna make the stock go up?) If you were a regulator what would you think about all that? Does it “smack of insider trading”? How would you know? What vol would you use? Show your work.

4. A further empirical question is: would this rule change significantly decrease activist investing in Canada? Again sort of unanswered empiricallyas far as I know; you could have a chain of reasoning that is like (1) reducing the stake you can accumulate secretly by 50% reduces your expected profits from activism by ~50% and (2) reducing expected profits from activism by ~50% should reduce expected quantity of activism by ~50%. I suspect both of those claims are exaggerated.

Other posts from Dealbreaker:

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The Power Of International Trade Agreements To Prevent You From Owning What You've Bought, And Why This Must Be Fixed

Mike Masnick — Wed, 27 Mar 2013 11:14:00 PDT

Back when the US was negotiating ACTA, we were among those who raised the alarm about just how troubling this trade agreement was -- negotiated in back rooms by the USTR, with details that were kept in secret until they were locked in. In response, many of our critics said that we were overreacting, since ACTA was merely an "executive agreement" which (1) could not bind Congress to anything and (2) would not require any changes to US law, so it was "no big deal." In fact, we were directly told that Congress would not feel bound by such things, so we should shut up with our "same tired arguments," which were nothing but a "chicken little mentality" based on "what ifs."

Of course, part of our very specific concern about ACTA was that even if it required no direct changes in law, it very clearly locked in existing problematic laws, making it much more difficult to fix those problems. And while it did not technically "bind" Congress, the second that anyone in Congress proposed a law that went against the international agreement, we'd hear screaming from the usual crew of copyright lobbyists about how Congress was doing the most horrible of horribles in "violating our international agreements." Of course, they'd leave out the fact that they wrote or heavily influenced those agreements as a way to directly route around Congress.

For all the claims of Chicken Littles and what ifs, in the last few weeks, the "hypothetical" situations we discussed have become very, very real, and have highlighted why it's so problematic that the USTR is including copyright and patent issues in international trade agreements. First, as we noted a few weeks ago, on the issue of phone unlocking, some existing US trade agreements have made it difficult to actually fix the issue. In particular, we named KORUS, the free trade agreement we signed with South Korea half a decade ago, which included a number of copyright provisions, pushed by the entertainment industry (who had flipped out because South Korea was one of the first countries blanketed in broadband). The end result of that, however, is that it would go against that agreement to actually fix the problem (as the White House claims it wants) of phone unlocking being illegal.

Now, as Shirwin Siy correctly points out, Congress is not technically bound by such agreements and can overrule them:

First of all, trade agreements don't dictate what laws Congress can and can't pass. If they're executive agreements, they can't override any laws passed by Congress in the past, and even if they're executed as treaties, they can be superseded by later acts of Congress. Just like Congress can pass a law that overrides an earlier law, it can pass a law that overrides an earlier treaty.

That's technically true, but the reality is not so easy. Soon after my post went up, I started hearing from people all over DC about this issue. In the past few weeks, in talking to numerous capitol hill staffers, as well as with a variety of others involved in the discussions, one thing has become clear: while some in Congress really wanted to do a comprehensive fix on unlocking, the realization that international agreements get in the way may have scuttled those plans entirely. They recognize that Siy is correct, and that Congress is not technically bound, but what becomes clear is that the political reality is, in fact, very different. Proposing a bill that goes against an international agreement is seen as a no-no and the political fight it would take to get that bill to actually do anything just probably isn't worth it.

So, there we have a very real and very tangible example of an agreement that technically didn't "change" our laws, now locking us in to a bad situation.

And... it could be even worse. For all the talk of how Congress isn't actually bound by the USTR's negotiations, it appears that someone forgot to tell that to certain members of the Supreme Court. When the Kirtsaeng case came out last week, the dissent, written by Justice Ginsburg, repeatedly cited international agreements for her interpretation of the law, even though those agreements aren't supposed to define or bind the law. John Bergmayer points out how wrong this is:

It is thus relevant that Justice Ginsburg writes, in dissenting from the majority opinion, that "[u]nlike the Court's holding, my position is consistent with the stance the United States has taken in international trade negotiations." But trade negotiators do not get to decide what the law is: Congress passes statutes and courts interpret them. The USTR is not part of this workflow. If trade negotiators have ever taken positions that are inconsistent with Kirtsaeng then those positions are now, and always have been contrary to US law. I would make a similar argument even if Kirtsaeng came out the other way: trade negotiators should not try to anticipate how contentious legal battles will turn out. They should steer clear of these areas entirely and allow the system to do its work.

So even though the law is clear that the USTR's secretive negotiations (often driven by the copyright industry) cannot actually make the law, even at least three Supreme Court justices seem confused on this point.

And it could get even worse. That's because with the still secretive TPP agreement, that is supposedly nearing completion, a look at what little leaked text there is on the issue of copyright shows that the TPP disagrees with the Kirtsaeng ruling and would require the US to kill off first sale rights on foreign made products to "meet our international obligations." The leaked text includes the following:

“Article 4(2). Each Party shall provide to authors, performers, and producers of phonograms the right to authorize or prohibit the importation into that Party’s territory of copies of the work, performance, or phonogram made without authorization, or made outside that Party’s territory with the authorization of the author, performer, or producer of the phonogram.”

And while the TPP is not yet in effect, Sean Flynn (at the link above) notes that some other free trade agreements negotiated by the USTR already have similar provisions. That's why Ginsburg was so concerned about our supposed "international obligations" in her dissent on Kirtsaeng. Since copyright lobbyists are already pushing to overturn the Supreme Court's ruling with new laws, you can bet that we'll soon be hearing claims that we need to do this to "meet our international obligations."

The point of all of this? The USTR shouldn't be involved, at all, in negotiating IP issues in any such international agreements. Not only is it antithetical to their stated purpose and despite the law being to the contrary, many in both Congress and the Supreme Court, really do feel that we are "bound" by those agreements, even if they were never approved by Congress and cover topics, such as copyright, which only Congress has the mandate to create and change. The "hypotheticals" we discussed around ACTA are no longer "what ifs," but are very real and should be a major concern.

With an attempt at real copyright reform on the table, the fact that the USTR may be seen (whether legally or not) as tying the hands of Congress should be reason enough to simply take those sections out of any and all trade agreements. They don't belong there and they're clearly causing significant problems for the public's best interests within the US. The USTR process is not transparent. It does not involve the public and is not responsive to the needs of voters. That Congress is then effectively unable to do such basic things as allowing the public to unlock their mobile phones (even at the White House's request) or to guarantee that we actually own what we've bought, show just how problematic the situation has become. A few people in Congress are now waking up to this fact, but too many are still oblivious. It's amazing that Congress has allowed the USTR to cut off its own power in this manner.

To fix this, the USTR needs to reject any language around intellectual property in any ongoing international agreements, and must look to pull that language out of earlier agreements. It just doesn't make any sense. Congress needs to assert itself, and let the USTR and the executive branch know that only it has say over copyright and patent laws, as per the Constitution. And, finally, if the White House truly believed what it said about mobile phone unlocking, it should order the USTR to reverse course -- and, as part of that, to start being much more transparent and responsive to the public as it negotiates any such agreements.

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A Look At 'Ownership' Society

Mike Masnick — Mon, 11 Mar 2013 15:01:50 PDT

We're big fans here of the WNYC radio show On The Media which regularly covers a number of the same issues we cover here at Techdirt. So we were quite thrilled to hear that their latest episode was entirely devoted to one of our favorite topics: The Past, Present, and Future of Ownership, mostly as it relates to ownership of things that are non-rivalrous and non-excludable. There were lots of great segments:

The Current State of Ownership: which covered the DRM Chair, and also talks to one of our favorite scholars on the subject, Professor James Boyle, about how the concept of "ownership" of culture has gone too far.
Happy Birthday: which explored the history of the song and the claims that Warner Music owns it -- even though all of the evidence suggests that Happy Birthday is 100% in the public domain. In the segment, producer PJ Vogt suggests that he wanted to test this by putting up a version of the song on iTunes, but unfortunately, their lawyers nixed that idea.
Fan Fiction and the Law: in which they talk to another of our favorite scholars, Rebecca Tushnet on the nature of fair use.
3D Printing, in which Chris Anderson explains how 3D printing is going to change the world in amazing and astounding ways.
Don't Screw It Up, in which Public Knowledge's Michael Weinberg worries about politicians killing off all those amazing and astounding things that Chris Anderson talked about once they freak out about how 3D printing will disrupt a bunch of industries.
Plaigiarism: Maybe It's Not So Bad where they talk to professor Kenneth Goldsmith, the new poet laureate of the NY MOMA, who apparently thinks that plagiarism is an art form. He apparently has his students buy an online term paper, hand it in, and then has them defend it as if it was their own. At one point, he notes that students are doing this anyway, so he might as well teach them to be better at it.

All in all a great program for folks interested in these topics. There was only one segment that I found disappointing. I get the feeling someone at OTM felt they needed someone to represent "the other side" of the argument that "ownership society" has gone too far, and so they had musician and critic of the "new media world," David Lowery (you may recall him from the past, like when he claimed that Apple iTunes did nothing more than host songs, leaving out the whole aspect of bringing everyone together, processing payments, etc.) In that segment, he chooses to take a swipe at The Sky is Rising report, which I co-authored, and he does so by completely misrepresenting what's in the report, as he has done in the past. I responded in the comments on that story on OTM's own site, and a lively discussion has ensued. Furthermore, Lowery took a completely gratuitous swipe at Amanda Palmer, bizarrely suggesting that the only reason she's successful is her penchant for getting naked. His disdain for someone who actually is successful by embracing fans and the internet is quite clear and insulting to the thousands of artists who have found success online whether or not they get naked. I don't mind people disagreeing with my opinion, but flat out saying we said stuff we never said is pretty bad, as is gratuitous insults for successful artists like Amanda Palmer, and it hurts OTM's reputation to present such things in that format.

Either way, it's great to see the rest of the segments get public attention, as more and more people are recognizing that copyright law today is broken, and is creating a society where a focus on "ownership" takes things so far, as to actually hinder the rights of the public in dangerous ways.

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What Happens To Drones When They Fall Out Of The Skies?

Glyn Moody — Wed, 6 Mar 2013 00:02:00 PST

For obvious reasons, stories about drones concentrate on what they can do while they are airborne. But they have to come down at some point, and sometimes emergency landings mean that they cannot return to base. An interesting story from Italy recounts what happened there in these circumstances:

A 24-year old college student in Bologna, Italy was arrested by Italian postal police after attempting to sell a drone that had emergency-landed on his apartment's terrace last October. The student had posted the drone, a privately-operated Microdrones quad-rotor helicopter owned by Italian startup Eye Sky, on Subito.it, an online auction site. The asking price for the $40,000 drone: 1,000 euros [$1300].

The Ars Technica post notes the mistakes the student made that enabled the police to track him down (hint: don't post too many details when you offer a drone for sale), and that he now faces up to a year in prison, and fines. But what's interesting here is that the student in question even thought of trying to sell it. It's almost as if drones belong to a different, heavenly world, and when they drop out of it into our earthly one, they are regarded as a kind of lucky gift from the gods to do with as we please. Of course, for all their novelty, they're just another kind of physical object that is owned by someone, who won't be best pleased if others try to appropriate it.

However, this does raise the question of what exactly the public should do when a drone comes down in their garden or on their roof. As drones and emergency landings in cities start to become more common, who do we call? Do we perhaps need a central Office of Lost Drones that can come along and pick them up?

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

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It's Finally Over: 8 Years Of Mattel vs. Bratz And No One's Getting Paid But The Lawyers

Tim Cushing — Tue, 29 Jan 2013 03:27:13 PST

One of the more epic IP battles has come to an end. Mattel (Barbie) and MGA Entertainment (Bratz), have spent most of a decade in various courtrooms hashing out the ultra-serious question about which of these companies is entitled to the Bratz millions.

Long story short, a former Mattel employee left the company and crafted one of the first serious threats to Barbie's dominance, the Bratz dolls. Mattel, of course, was none too happy because the designer was still employed by Mattel when he came up with the idea. Mattel felt it owned the idea and sued the designer in an effort to make that a reality. From that point on it went from bad to worse to farcical. At one point, the court ordered MGA to turn over all future plans for the Bratz line... which was then reversed... which was reversed by a lower court... which was re-reversed by the original court. This led to counterclaims flying from both directions and the last we had heard, Mattel, which had originally filed the suit, was being hit with a judgment for $309 million in damages, including MGA's court fees. Adding that together with Mattel's legal expenses, and this fight over dolls put Mattel on the hook for nearly $700 million.

Now, it appears the fight is finally over. And, like many long legal battles, the lawyers are the only ones coming out ahead.

The long-running IP war between Mattel Inc. and MGA Entertainment Inc. over the Bratz line of dolls has ended — for now — with zero damages.

The U.S. Court of Appeals for the Ninth Circuit on Thursday laid waste to Bratz maker MGA's $170 million trade secret award — an award procured on retrial after the appeals court wiped out Barbie maker Mattel's $100 million copyright verdict and constructive trust.

But MGA gets the last laugh. The Ninth Circuit left untouched $137 million in attorney fees and costs awarded to MGA for defending against Mattel's copyright claims.

Yes, the old truism (that I made up right now) "The only true winner in our legal system is MGA's lawyers" is proven once again in this case specifically. MGA won't be collecting any damages but at least its legal team lives on to fight another day -- possibly tomorrow, from the sound of its sore winner statement:

CEO Isaac Larian promised to retry the company's trade secret claims to a new jury. "We are confident that when the second jury hears about Mattel's sneaking into our showrooms and egregious theft of scores of our secrets over the years, they will be even more appalled than the first jury and award MGA even greater damages," he said in the statement.

Mattel has fired back with about the only silver lining retort available after spending nearly 8 years in court: the statute of limitations. The court basically agrees with Mattel's half-defiant, half-white flag statement, ruling that MGA's counterclaim (the one that had originally awarded it $170 million in damages) was time-barred and by no means "compulsory."

This hasn't stopped MGA from proudly declaring this "windfall" (which will all be going right back in its lawyers' pockets) to be the "largest fee and cost award in a copyright infringement case in US history." True, it's better than coming out of the battle stuck with the legal bill, but this misplaced joie de vivre makes it seem as though MGA will be presenting the award to Skadden, Arps, Slate, Meagher & Flom in the form of an oversized novelty check in front of gathered members of the sympathetic press and assorted minor local politicians.

Mattel v Bratz (PDF)Mattel v Bratz (Text)

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Hulu Continues To Wobble Along That Fine Line Between Success And Failure As CEO Bails

Timothy Geigner — Fri, 11 Jan 2013 16:02:14 PST

If one were to make a short list of the top great ideas that were implimented horribly, unbelievably wrong, Hulu would have to be somewhere between The View and the United Nations (I'll let you decide what goes where, exactly). Hulu was the once promising entertainment venture that has ugly-morphed its way into a mere excuse for entertainment studios to claim they offer people what they want. All the while there's been some discussion about whether or not the studios that own Hulu are purposefully trying to tank it to keep people from cutting the cable cord. And throughout all of this, Hulu has never really caught on with the same kind of fevered pitch as Netflix or even Amazon for streaming service customers.

Reader Vidiot writes in about a Business Insider piece detailing all the reasons why Hulu may have one foot in the grave and the other foot hovering just over it. Amongst the less-than-awesome facts on Hulu's list are items such as a new request for $200 Million from investors, reported losses of $30 Million per quarter, and that Hulu is trying to compete against Netflix while spending one-tenth the money on original content and one-ninth the paid subscriber base. The article announces that because of all that, it's time to conclude that Hulu is a failure, but don't blame corporate leadership.

The fact is (CEO Jason) Kilar had an almost impossible job from the very beginning. Hulu doesn't own the content it distributes, so it only gets to keep a small portion of its revenues. Hulu is, in fact, owned by the companies that own said content. And those owners have little incentive to create healthy margins for Hulu at the expense of their own. The fact is, Kilar has, in a couple years, built a Web brand that you have heard of. Yes, this was done on the back of free TV and a big marketing budget. But it's still decently impressive.

I'm not sure how we went from failure to impressive in less than a hundred words (which is impressive, by the by), but I am sympathetic to Hulu's raw deal from the studios that own it -- something Mike has been pointing out for nearly four years. That said, I don't think Hulu is a failure that is so far failed that it can't be brought back from fail-dom. After all, I've heard that Justin Timberlake is taking some time away from bringing sexy back to work on bringing Myspace back and if that mess of a social network can rise from the internet grave, Hulu can too.

But whoever is going to try to bring Hulu back from the prep-coffin, it appears it isn't going to be the afore mentioned Jason Kilar, because he's decided to bail. By all accounts, Kilar tried, really tried to make this thing work, but despite some successes it's not wrong to say that Hulu hasn't turned out to be what some folks thought it would. Given the raw deal that Hulu has gotten, the conflicts of interest heading up the company, I don't blame Kilar one bit for leaving. Hulu needs to innovate despite its issues, or else we can get the funeral march going.

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Blowback From Publication Of Gun Owner Data Continues -- Threats, Lawsuits And Rejected FOIA Requests

Tim Cushing — Thu, 3 Jan 2013 15:37:00 PST

The battle over the privacy of gun owners continues in New York. Last week, the Lower Hudson Valley Journal News secured the names and addresses of gun owners in two New York counties, publishing the information as an interactive map and framing the "story" as a public service -- information people would "want" to have following the Connecticut school shooting.

Needless to say, this drew the ire of gun owners, along with others who felt the Journal News had crossed a line by publishing this personal information. In response, the names and addresses of various Journal News personnel were posted and the paper found itself dealing with angry phone calls and comments, along with anonymous threats and mail coated with a mysterious (but apparently, non-toxic) white powder.

Somewhat ironically, the Journal News has now hired armed security guards to protect its business and employees.

The Journal News of West Nyack, N.Y., has hired armed security guards to defend its offices after receiving a torrent of phone calls and emails responding to the paper's publication of the names and addresses of area residents with pistol permits.

RGA Investigations, a private security company, "is doing private security at on location at the Journal News as a result of the negative response to the article," according to a police report first obtained by the Rockland County Times (Nanuet, N.Y.) and shared with POLITICO. The guards "are armed and will be on site during business hours through at least January 2, 2013."

Now, the paper is finding itself stymied by public officials in its search for more gun owner data. Putnam County officials have announced that they will refuse the Journal News' FOIA request, which it had begun compiling before the backlash began. After receiving an "onslaught" of calls demanding that the county not release the data, Putnam County Executive, MaryEllen Odell, has decided to withhold the requested information, earning an ally in State Senator Greg Ball.

"I'm proud to stand with Putnam County and proud that Putnam won't be releasing its pistol permit records," [Ball] said in a statement. "The asinine editors at the Journal News have gone out of their way to place a virtual scarlet letter on law abiding firearm owners throughout the region and I thank God that Putnam County has a clerk with the guts to stand up and draw the line here."

[Putnam County Clerk Dennis] Sant said he was happy to protect law-abiding gun owners in his county.

"There is the rule of law, and there is right and wrong, and The Journal News is clearly wrong," he said in a statement. "I could not live with myself if one Putnam pistol permit holder was put in harm's way, for the sole purpose of selling newspapers."

Ball has also stated that he will introduce legislation to restrict gun permit information to prosecutors and police. A public press conference is scheduled to announce this refusal, but there's a good chance this move won't stand up in court, should the battle head in that direction.

Putnam County officials, who say they will refuse a newspaper's request to release the names and addresses of residents with pistol permits, would break state law by withholding the data, a state official said.

The opinion, of state Committee on Open Government Executive Director Robert Freeman, came after an announcement Tuesday by state Sen. Greg Ball and two Putnam officials that they would refuse to release the data requested by The Journal News of White Plains, which sought the records under the state Freedom of Information Law

Freeman said, the law is clear. "The name and address of any gun licensee are public," he said.

The Journal News will likely appeal the denial, which would then be heard by the Putnam County government. A second denial would route it to a judge for a formal decision. In the meantime, the Journal News is sticking to its proverbial guns, claiming the info dump was in the public interest.

In other bad news for the paper, it has just been named in a defamation lawsuit filed by a local business, which claims that the Journal News piece which named it as a gun owner caused "customers and clients of First Impression LLC to cease doing business, causing damages in amount to be determined."

The filing runs only two pages but is loaded with adjectives.

The two-page, bare-bones Summons With Notice accuses the newspaper of "falsely, maliciously, recklessly, slanderously, libelously and irresponsibly publicly stating in the interactive website www.lohud.com that plaintiff First Impression LLC is a licensed handgun owner."

So, it looks as if the future holds quite a bit of court time for the Journal News. It also looks like this fight over gun owner data isn't going to end anytime soon.

The thorny question still remains: did the Journal News have the right to publish gun ownership? Certainly, the First Amendment grants it the freedom and the fact that the information was gained through legal channels seems to make that "right" argument unassailable. The Journal News was well within its rights to post the information, no matter how irresponsible its use of the information was.

Unfortunately, the many people who opposed the Journal News' actions (which includes people on both sides of the gun control debate) have been vocal enough that government agencies are beginning to arbitrarily withhold requested information, stating a sudden (and unlikely) concern for protecting the privacy of gun owners -- whose permits are a matter of public record. Allowing government agencies to reject FOIA requests because they don't like how the information is being used or are worried about public response is a big step in a very wrong direction. Even worse, grandstanders like Sen. Ball are looking to further restrict the dissemination of information by limiting access to gun ownership data to prosecutors and police. Even if this particular restriction seems logical, the simple fact is once this protection is granted for certain data, the system is opened to abuse by other entities and agencies looking to keep as much info as possible under wraps. This will result in more restrictions and limitations and less actual freedom of information.

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Harry Fox Agency Claims Copyright Over Public Domain Work By Johann Strauss

Mike Masnick — Tue, 6 Nov 2012 10:02:46 PST

The Harry Fox Agency (HFA) is the main licensing agency for mechanical licenses (i.e., actual reproductions of recorded works -- which is different from things like ASCAP who handle licenses for performances). While it doesn't get into as many ridiculous copyright scrapes as others, it still has been known to insert itself where it doesn't belong at times. The latest, courtesy of BoingBoing is that HFA made a copyright claim on a YouTube recording of Thailand's Youth Orchestra (Siam Sinfonietta) playing the Radetzky March by Johann Strauss. The work is 164 years old and clearly in the public domain. Furthermore, since HFA only covers mechanical licenses, and this is a new performance, not a use of a recorded song that HFA has rights over, the whole thing is completely ridiculous. The director of the orchestra, Somtow Sucharitkul, sent a letter to HFA (and posted it to Facebook) expressing his amazement not only that HFA made the initial claim, but that it reinstated the claim after he initially disputed it:

I disputed this claim of course ... and in every case where I have disputed such a claim on youtube of ownership of a work clearly in the publc domain, the claim was released in a few hours.

I am amazed that Harry Fox Agency has reinstated the claim and that youtube now informs me that HFA may sue me or force me off youtube. The claim is patently absurd; Johann Strauss Sr. died in 1849.

Representatives of the Austrian embassy were at the concert from which the clip is taken and as this piece is practically a second Austrian national anthem, I am sure they would have objected to an improper violation against a national treasure.

Several well known music critics and artists have already written to you pointing out the absurdity of this claim as I tweeted a story about it.

I'm sure this will end in some sort of apology, but shouldn't we be concerned that we keep seeing these kinds of things happening? Copyright holders have become quite lax in doing any sort of verification before silencing content creators. It's a huge problem.

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Supreme Court Will Decide If You Actually Own What You've Bought

Mike Masnick — Mon, 29 Oct 2012 09:22:56 PDT

We've written about the Wiley v. Kirtsaeng case many times already, but it's an important one to follow. While everything else in DC closed down to bunker down for Hurricane Sandy, the Supreme Court Justices decided to soldier on and actually hear the case today. Joe Mullin has written up the most thorough and detailed examination of the case, including the fact that Kirsaeng is merely the first, and most well-known case brought by copyright holders trying to stop them from reselling legally purchased works made outside the US. Copyright holders love the fact that Kirtsaeng is the central case here, because he earned a lot of money -- so they can argue that he's somehow "unfairly" profiting from international arbitrage. But, as Mullin notes, lawsuits have been brought against many others who were selling a lot less.

Copyright holders keep trying to downplay the "horror story" scenarios that many of us worried about a ruling in favor of Wiley could lead to. However, if the Supreme Court says that it's copyright infringement to sell a copyright-covered work made outside the US, but legally imported in, you can bet that all sorts of companies will seek to take advantage of this fact. We've already talked about the predecessor case here, Omega v. Costco, in which merely putting a copyright image that no one would see on the back of a watch could open up the ability to block resale of physical products. While Omega eventually got smacked down in the lower court, that was for copyright misuse -- the first sale issue stuck. So, all companies need to do is slightly modify the way they use copyright, and they can ban your ability to resell products.

If you believe in basic property rights, this should freak you out. It's kind of funny to see the MPAA and RIAA -- who like to pretend they're in favor of property rights -- right upfront in arguing against it here.

While it's pretty rare to see "activism" around a Supreme Court case, the folks at Demand Progress have put together a campaign called You've Been Owned to speak out about this. While that won't impact the Supreme Court, they're right that this issue is going to matter in Congress eventually. Whichever side loses this case is going to run to Congress with pre-written legislation to "fix" the Court's ruling. If you believe that you should own what you bought -- even if it's made in a foreign country -- then this is a case to pay attention to, and to be ready to speak out about when the inevitable legislative "fix" is introduced.

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Turns Out When Random House Said Libraries 'Own' Their Ebooks, It Meant, 'No, They Don't Own Them'

Mike Masnick — Wed, 24 Oct 2012 12:44:34 PDT

Earlier this week, we talked about how publishing giant Random House had very explicitly stated that when libraries buy their ebooks, the libraries "own" those ebooks, rather than license them. They left no doubt about it. Skip Dye, Random House's VP of library & academic marketing and sales was explict: "when libraries buy their RH, Inc. ebooks from authorized library wholesalers, it is our position that they own them... this purchase constitutes ownership of the book by the library. It is not a license."

This raised some questions, such was whether this was true of everyone else who purchased Random House ebooks. Peter Brantley asked a bunch of questions and finally got Dye on the phone for a discussion, where he learned that when Random House says "own," they mean "not own." In fact, at best, when they say "own" they mean "if you fit into this limited category, you have the right to move your ebooks from one approved platform to another approved platform." This is, contrary to Dye's claim, a license. It is not ownership.

As many surmised, the key phrase in Random House’s communications is “authorized library wholesalers.” In the context of the LJ article, Random House was using a definition of “ownership” that you won’t find in Webster’s dictionary, conveying rights where none exist. In fact, Random will not sell directly to libraries or library consortia, although Mr. Dye reiterated that they continue to evaluate many alternative library business models. RH’s approach in the library market is to vet potential library market distributors for auditing, accounting, security, and other business functions, and then permit libraries to acquire titles from that short list of approved bureaus. In Random’s view, libraries “own” the titles they purchase to the extent that they should be able to migrate their ebook catalogs from one platform, such as Overdrive, to another, such as 3M.

That’s very nice. It’s just not ownership. It’s licensing, with benefits. Library customers of RH titles do not have the ability to transfer their titles to an unapproved platform, such as Califa or Open Library; they cannot resell or donate their ebooks; and there is no mechanism for libraries to receive ebook donations directly from consumers. All that libraries “purchase” from Random House is a verbal commitment to assist libraries in moving their Random House ebooks from one approved commercial platform to another. This is the kind of “perpetual license” that academic libraries have traded for ownership. Academic libraries now employ licensing specialists, and see the world through the lens of contracts. In consequence, faculty have begun to develop open access models that revolutionize scholarly communication from within.

In other words, Random House's claims were a load of bull. That's not surprising, but still disappointing. Brantley goes on to say what kind of ownership should be allowed for libraries when it comes to ebooks:

Public libraries seek a different kind of ownership – the kind that appears in the dictionary. The Internet Archive, Douglas County Libraries, Califa, and a growing number of other library systems are running their own ebook platforms, providing their own auditing, accounting, and security. We want to keep ebooks in our communities, run our own services, safeguard the privacy of our users, and be free from overreaching licensing regimes that threaten our services. And increasingly, we are finding publishers who are willing to sell to us directly, seeing the benefits of handing management of digital titles to libraries. Libraries can market e-books to the people that want them, and gather usage statistics in a privacy-protecting manner to help inform other libraries – as well as publishers – about what titles are popular, and where. These are rights and responsibilities that publicly funded libraries should not hand over to commercial distributors that must navigate between the Scylla of publishers and the Charybdis of Amazon. Readers First is an example of the larger movement articulating libraries’ desire to re-forge a partnership between publishers and libraries.

Of course, I'd also argue that this goes way beyond just libraries. Users want to own their own ebooks as well, just like they own physical books. That means they don't want to worry about having the company they bought their books from suddenly lock them out of their collection for reasons they won't explain. It means they want to be able to move those ebooks from platform to platform without permission. It means they want to be able to lend those ebooks to a friend. Some smaller publishers get this, provide DRM free ebooks, and make it easy for this to happen. Random House, on the other hand, doesn't seem to understand the issue at all.

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Random House Says Libraries Own Their Ebooks, Really

Mike Masnick — Mon, 22 Oct 2012 10:32:26 PDT

We've discussed, many, many times, how copyright holders in the digital age like to play fast and loose with the definition of what is "sold" and what is "licensed." Just today, we've seen Amazon wipe out a woman's ebook collection. As we've joked, many copyright holders like to play Schrodinger's download in which they'll argue that it's a license in some cases, and a sale in other, based on what benefits them the most at that instance. So it's a welcome surprise to find out that publishing giant Random House is unequivocal in making the statement that libraries who buy Random House ebooks own those ebooks. Michael Kelley, at the Library Journal, spoke to Skip Dye, Random House's VP of library & academic marketing and sales, and Dye left no doubt about it:

"We spend a lot of time discussing this with librarians, at conferences and elsewhere, and it’s clear that there is still some confusion out there around whether libraries own their ebooks," Dye said. "Random House's often repeated, and always consistent position is this: when libraries buy their RH, Inc. ebooks from authorized library wholesalers, it is our position that they own them."

He went on to make clear the distinction with licensing:

"This is our business model: we sell copies of our ebooks to an approved list of library wholesalers, and those wholesalers are supposed to resell them to libraries. In our view, this purchase constitutes ownership of the book by the library. It is not a license."

Of course, this raises a question: does that also apply to the public? It would seem inconsistent if it were just for libraries. If I buy a Random House ebook, do I "own" it, or have I licensed it? And... then how does that fit with various ebook retailers, such as Amazon, whose terms seem more like a license? Either way, it's good to see a company like Random House take such a clear position on this matter, when most big copyright holders prefer to avoid the question entirely.

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Artists Want The Ability To Buy Back Their Copyrights If Universal Is Allowed To Buy EMI

Mike Masnick — Wed, 1 Aug 2012 13:06:00 PDT

As Universal Music Group (UMG) continues dealing with antitrust questions as it tries to close its purchase of EMI, there's a lot of focus on "divestment," or which parts of the combined entity that would have to be sold off. There's even talk of having to sell off the famed Parlophone Records label (home of Coldplay and Radiohead). That would be a big deal, of course, but an even more interesting proposal has been brought up by the Featured Artists Coalition, a UK-based coalition of musicians, who are saying that if the company has to divest, why not let the artists themselves have the opportunity to buy back their copyrights at "fair market value."

Divestments in the wake of mergers should first offer copyrights, at market rates, to the artists who created them. To sell them to other corporations, whether large or small, is just a perpetuation of an old business model, which has seen the recorded music business halve in value over 10 years. During that time, the technological revolution has displaced the old music business players. We do not need to repeat the mistakes of the past.

It would be good to have music business people rather than financiers owning and running music companies again. It would be even better to have artists owning their work and entering into partner relationships with service-providing major and independent record companies with all the finance and expertise an artist needs to develop their own business.

That letter is signed by Ed O'Brien of Radiohead and Nick Mason of Pink Floyd. Of course, I imagine that the labels and the artists might disagree about what "market rates" are. Also, given how focused the labels are on fighting copyright termination in the US (allowing artists to take back their copyrights after 35 years), you have to imagine that they'd fight any such plan equally hard. It's no surprise why, though: if the artists who could afford to buy back their rights did so, that would take away many of the "big name" acts, which are pretty much the remaining money makers under the old system. There's no way the labels would agree to this, even if it certainly puts the artists' interests first. Yet another example of how labels' and artists' interests are not aligned at all.

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Do We Need A 'Circle Section' Registry To Prove Digital Ownership?

Mike Masnick — Fri, 22 Jun 2012 18:33:00 PDT

If you look at the history of copyright law, it's really a never-ending story of the law adjusting (often quite awkwardly) to deal with changes in technology that the law never predicted and wasn't prepared to handle. We see this manifest itself in many different ways today, including the whole question of "ownership" in a digital age. When you "buy" a digital video or song, did you really buy it? Or did you just license it? Because copyright law doesn't handle this well, we have a sort of Schrodinger's cat situation, in which companies claim it's either a license or a sale depending on who's suing whom. In other words, it's a complete mess.

Entering the fray with a unique idea as an attempt to solve that, some folks (and a company who likely seeks to commercially benefit from this idea) are trying to convince the Copyright Office to create a new consumer ownership registration system, dubbed "circle section" after the character they'd like to use for it:
Unfortunately, they're marketing it like lawyers, rather than marketers, so there's a lot of verbiage surrounding the description everywhere they talk about it, but the basic idea is pretty straightforward (if I understand it correctly):

If you buy something digital, you can "register" your ownership right in that particular copy, which then would grant you basic ownership rights, including rights to format shift the content and to resell it under first sale rights.

The folks behind this project have set up a Change.org petition in support of this, where they're seeking 200,000 signatures, though, currently they have very, very few (again, perhaps an issue of being lawyers, not marketers). Separately, they've chosen an odd strategy for pushing this effort: filing a petition with the Copyright Office as a part of the process by which the Copyright Office comes down from the mountain every three years and declares which products can ignore the DMCA's anti-circumvention clause. Except... this project has nothing to do with that. So, the backers have filed a separate motion, in which they basically admit that this is outside the rules... but they're doing it this way because if the Copyright Office accepts the proposal, than the whole question of ignoring anti-circumvention issues becomes moot, because a registry of consumer ownership would make it pointless. Or something like that. You can read the full motion below.

This seems like an incredibly long shot no matter how you look at it, and I'm not sure that trying to jump into the magical anti-circumvention clearance debate is such a smart move here. That said, I can see how a proposal along these lines could be interesting as a possible way to deal with the question of whether or not you "own" the digital products you thought you bought. At the very least, I'd be interested in hearing what other people think about it. Personally, I wonder if it's really necessary, or if it would just become seen as another burden for users, needing to register and track their registrations.

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If You're Accused Of Trying To Scam Facebook Out Of 50%+ Of Its Equity, Probably Don't Have An Email Account Named GetZuck

Mike Masnick — Wed, 22 Feb 2012 23:01:28 PST

The case of Paul Ceglia, the guy who claimed that Mark Zuckerberg signed a contract giving him at least half (and maybe up to 84%) of Facebook, keeps getting more ridiculous. As more and more details came out there was considerable evidence supporting Facebook's claim that the whole thing was attempted fraud. Ceglia, whose case got a big boost when legal giant DLA Piper decided to take it on... lost much of that credibility when they quickly dropped him. Since then, he's had difficulty keeping lawyers.

And, now, he's being accused of defying court orders and refusing to hand over the details of an email account he had with the username "GetZuck," which raises just a few credibility questions.

Ceglia's ongoing obstruction--in the face of repeated motions to compel--has prejudiced Defendants by denying them access to time-sensitive electronic material that this Court ordered Ceglia to disclose more than six months ago. Ceglia's attorney Dean Boland appears to have recognized as much. After learning that his client had failed to identify webmail accounts in yet another violation of this Court's Orders, he sent an email to Defendants' attorneys offering to provide signed consent forms for two of the four undisclosed accounts: landlubber39@yahoo.com and paulc@hush.com. He did not, however, mention or offer Ceglia's consent to the inspection of the alleganypellets@gmail.com or getzuck@gmail.com accounts.

The judge in the case has already ordered Ceglia to pay $76,000 in Facebook's legal fees, as well as sanctioned him to the tune of $5,000 for delays in making his emails available. I'm guessing even those who originally thought Ceglia had strong evidence to support his case have probably long since changed their minds...

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Newzbin Lawyer Struck Off For Posting Insulting Tweets During Case -- & Failing To Declare He Owned The Company He Defended

Glyn Moody — Mon, 30 Jan 2012 20:04:30 PST

Well, this one's bizarre. Back in March 2010 we wrote about the UK Usenet aggregator Newzbin being found liable for the copyright infringment of its users. A year later, the ISP BT was ordered to block access to Newzbin2, its successor. What amounted to the UK's first Internet censorship order was upheld soon afterwards.

That on its own would make the Newzbin saga noteworthy; but it turns out that there's an extra twist to the story -- involving the lawyer who represented the site:

Mr Harris, an intellectual property lawyer, used an anonymous account to post a series of insulting messages while defending a website which allowed users to download films illegally. It later transpired that Mr Harris, 52, owned the website.

During the trial he bragged online that “whoring and drinking” would begin at the end of the case and described an opposing lawyer as a “p----”.

As that notes, his interest in Newzbin was not purely professional -- he owned it: He was forced to stand down eight days into the hearing when his link to the firm was discovered by opposing law firm Wiggins, which uncovered documents showing that all of the company’s shares were in his name.
Perhaps insulting his opponent was not such a clever move.

In the official record of the first trial, we find the following:

Mr Harris, instructed on a direct access basis, originally appeared on behalf of the defendant. On 10 February 2010, after the close of evidence, the defendant sought an adjournment in order to instruct solicitors and new counsel because it had become apparent that Mr Harris had acquired shares in the defendant and because he did not feel able to represent the defendant in the light of the way the case had developed and the evidence which had emerged. For the reasons which I gave in a short judgment on that day, I allowed that application. Kirwans Solicitors and Ms Lambert were instructed shortly thereafter and the trial resumed on 2 March 2010.

Harris's anonymous comments, and the fact that he failed to reveal his direct interest in the case, had one direct consequence: he was struck off (he now describes himself as an "ex-barrister" on the Twitter account he used to post the offending comments.) But it's possible his actions had even wider ramifications.

As the quotation from the court record above indicates, halfway through the case, Harris stepped down from defending Newzbin, and was replaced by another lawyer at short notice, Ms. Lambert. This meant she had relatively little time to research the case, which probably put her at a disadvantage compared to the opposing lawyer. Had she been working on it from the beginning, perhaps the Newzbin case and UK legal history would both have taken a very different turn.

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

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Ownership Mentality: Art Gallery Prohibits Sketching

Marcus Carab — Tue, 24 Jan 2012 06:04:39 PST

I've always been a bit baffled by No Photography signs in museums and art galleries. Presumably they exist to make the exhibits more exclusive and attractive, but that misses the point of why people visit museums: they want to see these things in person, which is a vastly different experience from simply knowing what they look like. Nobody has ever seen a photo of a dinosaur skeleton or Michelangelo's David and thought "oh good, now I don't need to go see that for real."

The other possibility is that the museums are concerned about photographers getting in the way of other patrons, but in that case an outright ban is overkill: people tend to be pretty considerate of each other when you allow social pressure to take its course, and a few "don't block this hallway" signs in key areas would probably suffice.

Either way, at least most such places only prohibit photography. BoingBoing recently highlighted this even-more-ridiculous notice found at the Art Institute of Chicago:

In case you can't see the image, it is a sign listing several things that are "NOT permitted" inside the exhibit: "Photography, Flashes, Tripods, Video Camera, Sketching."

For starters, items two through four seem rather unnecessary in the presence of item one. Are there photographers out there who, after being told they can't take pictures, set up their tripod and start snapping their flash just for fun? Has someone attempted to evade regulations by claiming that video cameras don't count as photography? Somehow I doubt it.

Then there's the concerning presence of "sketching" on the list. Sketching in galleries is a staple among artists, especially students, and it's impossible to see why anyone would want to ban it. A sketch of a painting or sculpture — even a masterful one that becomes a piece of artwork in its own right — is never going to serve as a replacement for the original. In fact, banning sketching is just going to make the exhibit less attractive to a gallery's biggest fans: artists. What purpose could such a ban possibly serve?

That's the problem with the ownership mentality of modern copyright: few people bother to think about purpose because they are too busy thinking about control, operating from a default "cover-all-our-bases" mentality without bothering to ask why. At some point during the drafting of this sign, somebody should have stopped and said "Wait, why do we care?" — but instead they said "Have we forgotten anything? Better throw tripods on there just to be safe."

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Can A Company Keep An Employee's LinkedIn Account After They're No Longer Employed?

Mike Masnick — Fri, 30 Dec 2011 04:50:01 PST

Venkat Balasubramani has the story of a bizarre fight between a company, Sawabeh Information Services, and the founders of Edcomm, a company that Sawabeh bought in 2010. A few months later, the founders of Edcomm were fired, and the lawsuits commenced. There are a variety of issues here, and Venkat's post goes through most of them in detail, but I wanted to focus on just one: the fight over who gets to control Dr. Linda Eagle's LinkedIn account. Eagle was one of the founders of Edcomm and the key figure in this fight. Sawabeh claims that Eagle "misappropriated" her own LinkedIn account and the contacts associated with it, by continuing to use it after being fired.

While I can kind of understand some of the legal fights over who gets to control Twitter accounts, the entire point of a LinkedIn account is to represent an individual and their job history. How would it possibly make sense for a company to control an ex-employee's LinkedIn account?

The company seems to think that the LinkedIn account was more like a rolodex. Because (for reasons that are beyond me), Eagle had let others in the company access and manage her account, as soon as she was fired, people at the company accessed her account and then changed her "name" and profile picture to someone else at the company. That would be pretty shocking for her connections, who might not know who the guy was at all. They also tried to do this with the account of one of the other fired founders, but they didn't have his password. Apparently the company asked LinkedIn to hand over the password, and LinkedIn, properly, told the company to get lost.

Either way, the court digs into the "misappropriation" question with the LinkedIn account and refuses to dismiss it out of hand (at this stage of the case), which seems too bad. However, there's an unclear issue of who "developed" the contacts in the account:

The Counterclaim Complaint expressly alleges that, with respect to the LinkedIn account connections and content, "Edcomm personnel, not Dr. Eagle, developed and maintained all connections and much of the content on the LinkedIn Account, actions that were taken solely at Edcomm’s expense and exclusively for its own benefit." ... While Plaintiff argues that Edcomm fails to allege facts that would show that it made a substantial investment of time, effort, and money into creating the cell phone number or LinkedIn account, Edcomm counters that its employees developed the accounts and maintained the connections, which are the route through which Edcomm contacts instructors and specific personnel within its clients. As these conflicting allegations create an issue of fact requiring further discovery, the Court must deny the Motion for Judgment on the Pleadings as to the misappropriation counterclaim.

Of course, I wonder if they're arguing about the wrong thing here. If the company developed the contacts, perhaps it has a right to ask for a copy of the contacts, but the account itself seems like it should belong to Eagle. Part of the problem here is the idea that contacts are some scarce resource. Both parties can have them, and the simplest thing would be, if there is a legitimate claim that the company developed those relationships, to require that their contact info be provided to the company -- but leave the account in the hands of Eagle.

Either way, the case should be a warning for any company that wants to control the LinkedIn accounts of its employees.

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Microsoft Reminds Everyone: You Do Not Own Your Software

Zachary Knight — Fri, 16 Dec 2011 16:05:11 PST

With the proliferation of smartphones and other portable electronic devices such as tablet computers and e-readers, we are often left wondering, "Do we really own the books, games and other apps we pay money for?" Now that question has spread to your computer as well. PC World has revealed that Microsoft's terms of service for its Windows 8 app store gives it the right to not only disable but also remove apps Windows 8 device owners paid money to own. In Microsoft's own words:

In cases where your security is at risk, or where we're required to do so for legal reasons, you may not be able to run apps or access content that you previously acquired or purchased a license for.

This is probably nothing new to users of the Amazon Kindle who had their copies of the book 1984 remotely deleted or to people who bought music from Rhapsody who had their DRM'ed tracks reduced to nothing over night. Nor is this unique to these businesses. As PC World also notes, both Apple and Google retain the right to remove software users of their devices "bought". Businesses have been calling to question the ownership of digital products for quite some time. If we cannot prevent the loss of legally purchased products from those which sold these products to us, how can we really claim ownership?

If it is any consolation to you, Microsoft has told PC Mag that it will refund buyers of apps it deletes. However, any data you may have saved using the app will be completely lost. So not even the work that you put into this software is yours to claim ownership.

While Microsoft claims that it will primarily remove software in the case of security violations, it also retains this power for cases of "legal or contractual requirements." This is quite the broad opening left here. With the looming threat of increased enforcement of Copyright through SOPA and PIPA, the idea that an app can be removed via a "legal requirement" creates yet another question over ownership. If an app we purchase ends up infringing some company's copyright, patent or trademark, they could theoretically use that as a tool to remove that app from our devices.

We are moving further and further into a digital landscape for everything from movies, music, books, games and software. With this transition, companies that produce these products are working overtime to remind consumers that they are not owners of these products but merely licensees. We will not have the luxury of physical media on which we can claim ownership rights for much longer. Consumers for the last few years have been clamoring for more digital content. They have been the primary drivers of this transition. The only real question left is, do they realize the consequences that come with this change, and will they demand the right to claim ownership?

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Finns And Norwegians Argue Over Who Owns The Northern Lights

Mike Masnick — Fri, 18 Nov 2011 18:38:00 PST

Perhaps it's because I live in the US, but I always associated the Northern Lights/Aurora Borealis with Alaska. Apparently, over in Europe, they associate it with some Scandanavian countries... but apparently there's a bit of a fight over which one. Matthew A. Sawtell alerts us to what he refers to as "a sign of the times," in which Norwegians and Finns are fighting over who "owns" the Aurora Borealis. Apparently, the Norwegians believe that their country is most regularly associated with the phenomenon. But Finland has just kicked off a tourism campaign that focuses on highlighting that you can see the Northern Lights from Finland. And the Norwegians are none too pleased:

The tension was triggered by a short film that the Finnish Tourist Board posted on its channel on video-sharing platform YouTube, featuring time-lapse footage of the aurora in Finnish Lapland. The film has been viewed almost 400,000 times since September, prompting Norwegians to complain that the Finns are trying to "steal" the northern lights.

"We can not stand by and watch the Finns try to grab a bigger share" of the northern lights market, said Per-Arne Tuftin of Innovation Norway, a state-owned company that promotes tourism in Norway. "We will not give up -- the northern lights will be ours," he told the Troms&ostrok;-based newspaper Nordlys, whose name translates appropriately as Northern Lights. Back in 2009, Innovation Norway launched a campaign to brand the northern lights as a Norwegian phenomenon.

The idea of ownership over shared things is getting downright ridiculous.

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Company Sues Ex-Employee Because He Kept His Personal Twitter Account & Followers

Mike Masnick — Fri, 11 Nov 2011 14:58:11 PST

Well, well, well. Look at this. Just about a year ago, we wrote a blog post questioning who "owned" a Twitter account when someone was an employee of a company and had built up a big "personal" Twitter following in that role... but then left the company. The example we used was CNN's Rick Sanchez. That one never hit a legal conflict, but it really was only a matter of time. Venkat Balasubramani alerts us to a case in which the company PhoneDog sued a former employee because he kept his Twitter account. A couple of important points right upfront. This was not "the" PhoneDog Twitter account. The company had its own specific Twitter account. The employee in question, Noah Kravitz, simply named his account "@PhoneDog_Noah", which has become a fairly standard naming pattern among employees of certain companies -- using both the company name and their own name as part of the handle. Also, once Kravitz left PhoneDog, he switched the account to @noahkravitz. PhoneDog still sued, claiming (1) misappropriation of trade secrets, (2) interference with economic advantage; and (3) conversion.

The court ruled on Kravitz' motion to dismiss by rejecting the "interference with economic advantage" claim, but left the other claims to stand for the time being. I have trouble seeing how either the trade secret or the conversion claim stands up at all. What's the trade secret here? Hell, what's "secret" at all? The Twitter account is public. The follower list is public. The only thing not public is the password, and there is some argument over whether or not the password was "adequately safeguarded" as a trade secret. Even if it wasn't, though, is that really a "trade secret?" It's a password! But the court thought that was enough:

PhoneDog has sufficiently described the subject matter of the trade secret with sufficient particularity and has alleged that, despite its demand that Mr. Kravitz relinquish use of the password and Account, he has refused to do so. At this stage, these allegations are sufficient to state a claim. Further, to the extent that Mr. Kravitz has challenged whether the password and Account followers are trade secrets and whether Mr. Kravitz's conduct constitutes misappropriation requires consideration of evidence beyond the scope of the pleading.

The whole thing seems pretty crazy. If you want him to Tweet as the company, give him the company account. If you want to him to Tweet as himself, let him do so. Suing for the account just seems silly and petty.

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What Exactly Makes A Pop-Up Mall A Pop-Up Mall? On Second Thought, Who Cares?

Glyn Moody — Mon, 31 Oct 2011 13:34:27 PDT

One of the pernicious effects of once-obscure legal issues surrounding copyright and patents seeping into everyday life is the belief that even the vaguest ideas can be owned, and that such ownership is a thing worth fighting over. Here, for example, is a sorry tale from Christchurch in New Zealand, which suffered a massive earthquake in which 181 people died back in February of this year:

The City Mall Restart project is being threatened with legal action after being accused of copying a "pop-up mall" in London.

Director of the London Boxpark development Roger Wade emailed City Mall Restart organisers accusing them of a "blatant breach of the Boxpark intellectual property rights".

"Boxpark has now instructed legal action against the owners of City Mall – Pop Up Mall for intellectual property rights infringement," he said.

But City Mall organisers have hit back, claiming Boxpark was being "precious" and there were no similarities between the projects.

The threat could not have come at worse time for Christchurch organisers, with City Mall scheduled to reopen on Saturday, marking the first return of retail to central Christchurch since the February 22 earthquake.

And if, like me, you're wondering what exactly a "pop-up mall" might be – does it leap out of the earth as you approach, perhaps? - here's the basic idea:

The temporary shopping centre has been described as a "pop-up mall" made out of 60 shipping containers converted into 27 shops, including two cafes

> But the people behind the New Zealand pop-up mall claim there are key differences between this and the London pop-up mall:

However, he denied similarities between the projects, with the City Mall development divided into two horseshoe precincts while Boxpark was essentially a giant box with a cafe on the top.

"It will be very hard to say it's a copy because it doesn't look anything like Boxpark. The only thing that aligns these things together is they both use containers."

So the deep philosophical questions come down to these. Wherein lies the Platonic essence of a pop-up mall? Is the use of containers enough to generate the mall's pop-upness, or is their arrangement important too? And finally, and perhaps most importantly, is a world in which a city devastated by an earthquake has to worry about such things still sane in any meaningful sense?

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

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Bob Dylan, Defender Of Strong Copyrights, Once Again Caught Copying Others

Mike Masnick — Thu, 29 Sep 2011 11:40:00 PDT

Bob Dylan has a pretty long history of appropriating works from others, but then going after anyone who has built on his works. He's also been held up by copyright maximalists as someone whose career just wouldn't be the same without strong copyright. So it's somewhat amusing to discover, once again, that he's been caught outright copying others. Emily Goodhand points us to the news that Dylan has a new painting exhibit, and people have started noticing that some of the paintings appear to be clearly copied from old photographs. Take these two comparisons from the NY Times:

The images on the left are from Dylan's exhibit (photographs taken by the NY Times' Marcus Yam). The top photo on the right is by Henri Cartier-Bresson, and the lower photo is by Leon Busy. It would be difficult for anyone to argue that the paintings were not based on these photos. Dylan had claimed that the paintings were all based on scenes he had seen in his travels. I guess he may have seen those photographs during his travels, but that's certainly not the implied origin of the paintings.

Now, to be clear, I actually don't see anything wrong with Dylan making such paintings. Painting from a source photograph is a good way for many to learn how to paint. On top of that, the paintings don't take away anything from the photos, and may actually create more attention for the photos. It does feel sleazy, though, to not credit the source. But the bigger issue is the hypocrisy of it all -- of arguing that others can't appropriate his works, while regularly and directly appropriating the works of others... and then refusing to admit to it.

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Paul Ceglia To Facebook: I Didn't Forge A Contract, You Did!

Mike Masnick — Wed, 17 Aug 2011 16:08:00 PDT

We just wrote about how, during the discovery process in the lawsuit in which Paul Ceglia claims he only recently discovered a contract giving him more than 50% of Facebook, Facebook found an original contract with identical handwriting on it, that has nothing to do with Facebook, suggesting that Ceglia forged the contract at the center of the dispute. Ceglia has now responded with the not-particularly-believable claim that he didn't forge the contract, but that Facebook forged that "original" document and placed it on his computer. Even better, he suspects that perhaps Mark Zuckerberg himself was the one who placed it there:

Ceglia’s main argument appears to be that the original “authentic contract” Facebook says it found is really just a Photoshopped image the company planted on his computer. He says he and his lawyers reportedly knew about it for some time and willingly handed it over to Facebook. He declares that his team will prove the image in question “has no authenticating properties whatsoever.”

Ceglia speculates it could have been Zuckerberg himself, or the US law firm Orrick, Herrington & Sutcliffe that may have done the alleged dirty work. He also says Facebook co-founder Eduardo Savrin accused Orrick of “conspiring with Zuckerberg to deprive him of his shares during his case.”

The rest of the article is pretty funny. As we've mentioned in the past, Ceglia has had trouble keeping lawyers, as most of his lawyers have ditched him after becoming more aware of the details of the case. That's generally a huge warning sign that the lawyers don't believe the client. In this article, Ceglia claims that he's looking for a more "collaborative" law firm, and is trying to open source his defense via a wiki (good luck with that). Nothing in the claims that Ceglia makes in this article make him sound any more credible. He's about to lose this lawsuit.

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Original Contract Used By Paul Ceglia To Claim Facebook Ownership... Doesn't Mention Facebook

Mike Masnick — Tue, 16 Aug 2011 16:34:36 PDT

The latest chapter in the bizarre story of Paul Ceglia claiming a right to more than half of Facebook is that Facebook -- who has previously claimed that Ceglia is nothing but a fraud -- says that in the discovery process it found the original contract, and that contract doesn't even mention Facebook. Facebook pretty clearly is suggesting that Ceglia doctored the contract he did have with Mark Zuckerberg, to work on a Ceglia project called StreetFax, and changed it to supposedly cover Facebook. If you look at the two documents side by side you can see clearly that the original was changed. The fact that both have handwriting and both MZ and PC's initials on it show that this is the same document: Given this evidence, and how this case has gone so far, especially with multiple lawyers dumping Ceglia (including some big names who surprised a lot of people in taking his case originally), it doesn't look like Ceglia has much of a chance here. I'm still a bit mystified that Zuckerberg and Facebook didn't come out more vehemently originally. When the story first came out, Facebook's lawyers simply said they were unsure if the contract was legit. You would think that if he'd never signed any such thing, the denials would have been a lot more upfront. Still, in the end, this case looks dead in the water.

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