Chilling Effects Clearinghouse Weather Reports

Blue Jeans Cable Not Cowed by Monster's Roar

Wendy Seltzer, April 15, 2008

Abstract: When Kurt Denke at Blue Jeans Cable got a cease-and-desist demand from Monster Cable, his litigator's instinct kicked in. He sent back five pages of questions detailing what he'd need to see before he'd be convinced to back down.

When Kurt Denke at Blue Jeans Cable got a cease-and-desist demand from Monster Cable, his litigator's instinct kicked in. He sent back five pages of questions detailing what he'd need to see before he'd be convinced to back down. The response (posted on Audioholics) gives a good walk-through of the elements needed for a successful trademark, trade dress, or patent infringement claim -- and the perils of making a claim without that evidence in hand.

I have seen Monster Cable take untenable IP positions in various different scenarios in the past, and am generally familiar with what seems to be Monster Cable's modus operandi in these matters. I therefore think that it is important that, before closing, I make you aware of a few points.

After graduating from the University of Pennsylvania Law School in 1985, I spent nineteen years in litigation practice, with a focus upon federal litigation involving large damages and complex issues. My first seven years were spent primarily on the defense side, where I developed an intense frustration with insurance carriers who would settle meritless claims for nuisance value when the better long-term view would have been to fight against vexatious litigation as a matter of principle. In plaintiffs' practice, likewise, I was always a strong advocate of standing upon principle and taking cases all the way to judgment, even when substantial offers of settlement were on the table. I am "uncompromising" in the most literal sense of the word. If Monster Cable proceeds with litigation against me I will pursue the same merits-driven approach; I do not compromise with bullies and I would rather spend fifty thousand dollars on defense than give you a dollar of unmerited settlement funds. As for signing a licensing agreement for intellectual property which I have not infringed: that will not happen, under any circumstances, whether it makes economic sense or not.

I say this because my observation has been that Monster Cable typically operates in a hit-and-run fashion. Your client threatens litigation, expecting the victim to panic and plead for mercy; and what follows is a quickie negotiation session that ends with payment and a licensing agreement. Your client then uses this collection of licensing agreements to convince others under similar threat to accede to its demands. Let me be clear about this: there are only two ways for you to get anything out of me. You will either need to (1) convince me that I have infringed, or (2) obtain a final judgment to that effect from a court of competent jurisdiction. It may be that my inability to see the pragmatic value of settling frivolous claims is a deep character flaw, and I am sure a few of the insurance carriers for whom I have done work have seen it that way; but it is how I have done business for the last quarter-century and you are not going to change my mind. If you sue me, the case will go to judgment, and I will hold the court's attention upon the merits of your claims--or, to speak more precisely, the absence of merit from your claims--from start to finish. Not only am I unintimidated by litigation; I sometimes rather miss it.

Air Force DMCA-Bombs YouTube

Wendy Seltzer, from a report at Wired's Threat Level, March 7, 2008

Abstract: It's cyber war! Lawyers representing the Air Force's elite electronic warriors have sent YouTube a DMCA takedown notice demanding the removal of the 30-second spot the Air Force created to promote its nascent Cyber Command. We'd uploaded the video to share with THREAT LEVEL readers.

Over at Wired's Threat Level blog, Kevin Poulsen reports on a new DMCA overreach: the U.S. Air Force complained (via outside counsel) about his posting of their recruiting video. The post, Poulsen says, was initially made at the Air Force's invitation.

If the government created this work, then the DMCA claim is improper. Works of the U.S. government are not copyrightable. But the statute allows the government to receive copyright assignments, so if an independent contractor created the video, still available at the Air Force's (non .mil) site, the government could meet that technical requisite of the DMCA.

The DMCA also requires that the notifier assert the posting was unauthorized. Poulsen's article, however, says the Air Force sent Wired the ad and "thanked THREAT LEVEL for agreeing to run it." That doesn't quite square with the DMCA-required statement that the notice-sender "ha[s] a good faith belief that none of the materials or activities listed above has been authorized by the U.S. Air Force, its agents, or the law."

Even if the Air Force's DMCA claim is truthful, however, it's still a policy overreach. Wired posted the video in order to report on government recruiting efforts; the video's dissemination is part of that First-Amendment protected discussion, whether it happens on or off government websites. The DMCA makes it too easy to takedown first, think later.

Here Comes Another Takedown

Wendy Seltzer, December 19, 2007

Abstract: Earlier this month, comedy group The Richter Scales released a funny music video, "Here Comes Another Bubble." The video showed a montage of Silicon Valley images over a sound-track adapted from Billy Joel's "We Didn't Start the Fire," lampooning the Web 2.0 bubble that seems near bursting again. The video must have touched a nerve, as well as a funny bone, because it got wide linkage and discussion and became the week's top-rated video.

Then, it was removed from YouTube, "due to a copyright claim by a third party."

Photographer Lane Hartwell says she objected to use of her photograph of Valleywag's Owen Thomas, so she sent a DMCA takedown notice to YouTube. Hartwell says she owns copyright in the image and did not license its use. In response, YouTube appears to have disabled the video pursuant to its copyright policy (perplexingly, it did not identify the "third party" sender of the complaint.)

Now, the video is back, in a revised version that omits Hartwell's photograph.

To me, the original situation seems to lie near the blurry edge of copyright's fair use exception. The Richter Scales would argue that their use was "transformative," using the photograph to comment on the bubbly scene the photographer chose to depict; commentators on Silicon Valley foibles might be unable to get permission for photos used to skewer the establishment. Hartwell, by contrast, tells us that "Photography is my livelihood. It’s how I pay my bills. I’m not treating the band any differently than any other group that uses my work without my permission." She sells or licenses her work to magazines and others who want to use photo illustrations, and sees no reason to treat the Richter Scales differently.

Is the momentary use of Hartwell's photo an unfair substitute for something she should have had the right to license, or a fair use the law should license irrespective of the copyright holder's wishes? I'd be inclined to find the use fair, as transformative commentary, but I couldn't guarantee that a court would agree with me.

The DMCA harbors no such ambiguity, however. The moment someone claims an infringement, the law encourages the service provider to act "expeditiously" to remove the offending material. The strict penalties in copyright's "property rule" nature support that response: One who can prove copyright infringement can often get both an injunction and stiff statutory damages. Acting individually, the parties might stand firm or be pushed by the costs of legal uncertainty to settle their differences, but the service provider in the middle changes the calculus.

The intermediary service provider rarely wants to risk outsize damages or get into negotiations with copyright claimants and small content-posters, and so tends to take down rather than face even a remote chance of liability. If, on the other hand, intermediaries' secondary liability were limited as it is for defamation, content creators would be freer to make and defend fair use arguments. A liability rule or compulsory license, enforcing rights through payment rather than removal, could leave these items in the public view.

Even if the poster promptly files a counter-notification requesting re-post, the service provider who wants immunity from liability must leave the material down for 10-14 business days.

Absent copyright reform, we're stuck with the likelihood that clever montages -- which depend on pulling content from many sources -- get popped even more quickly than tech bubbles.

Best Buy Apologizes For Cease & Desist Letter to Laughing Squid Blog

Wendy Seltzer, via Scott Beale of Laughing Squid, December 12, 2007

Abstract: Best Buy sent a cease-and-desist to Scott Beale of Laughing Squid for reporting on an "Improv Everywhere" prank and their sales of T-shirts mocking the Best Buy logo. Best Buy claimed the post infringed its trademarks and copyrights by "promoting" T-shirt sales. Laughing Squid promptly posted the C&D, where it was picked up by BoingBoing and Slashdot.

But Best Buy seems to have learned from the hubub, and sent its apologies a day later:

"We appreciate your clarification of the nature of your posting. We do object to sales of T-shirts or other products bearing a logo which violates our trademarks or copyrights or other misuse of our logo in commercial ventures. However, we do not object to fair and accurate reporting fo facts, and respect the First Amendment rights of Laughing Squid and other bloggers to provide articles or commentary on current events. Now that we have a better understanding of your website, we regret sending you the demand letter."

It's good to see a company recognize the distinction between reporting and trademark infringement and drop its threats. We have to say, though, the T-shirts give "trade dress" claims a whole new meaning.

Prince Threatens to Sue Fansites

Peter Ostrovski, November 12, 2007

Abstract: Prince is threatening to sue his biggest fansites for improperly hosting content featuring his likeness.

As of last week, the artist once again known as Prince is threatening to sue his three biggest fansites, Princefans.com, Housequake.com, and prince.org, who have teamed up to form a coalition of solidarity, Prince Fans United. Prince's lawyers are asking for the removal of "all content featuring a likeness, image, identity and persona of Prince, Prince's creative work (lyrics, music, performance, album covers, etc.), and his trademarks." Prince Fans United indicated that the cease and desist letters went as far as demanding removal of fan photographs of Prince tattoos and license plates.

We've gotten a hand on the cease and desist letters sent to prince.org, and they contain some interesting insights. The first letter comes from a Chicago law firm and alleges violations under Illinois law (Deceptive Trade Practice Act) and federal law (Prince's rights of publicity and copyright). If the jurisdiction of the first letter seems unusual (why Illinois?), that of the second is even more so--it is from a French law firm and cites violations of French law. Apparently Prince's lawyers are contemplating taking advantage of France's holder-friendly copyright laws by asserting violations of trademark infringement in website domain names and source code, along with violations of copyright, publicity rights, name trademark, image rights, and moral rights. Jurisdictional questions aside, Prince Fans United contends that the newsworthiness, public interest, and fair use doctrines would swing a case in their favor. While the threats have had some effect on the websites and the support of fans, the posting of images certainly hasn't slowed.

Neither have Prince's litigation efforts. According to CNET, Prince also plans to sue torrent site The Pirate Bay for copyright violations. His lawyers are taking a multi-jurisdictional approach again, planning on filling suit in the U.S., France, and Sweden.

In the next post, we will take a more careful look at the legal claims presented by Prince and the fansites to see who has the law on their side.

Black Friday Ads: the Prequel

Wendy Seltzer, October 22, 2007

Abstract: If it's fall, these must be cease-and-desists for Black Friday ads. This year, they seem to be coming earlier than ever, as Wal-Mart sends pre-notifications against future posting.

For many years, major retailers have complained about the online posting of their post-Thanksgiving sale prices, generally protesting the previews that appear online even before the circulars hit the papers. The so-called "Black Friday" sales, on the day after Thanksgiving, often feature deep discounts and limited quantities of "hot" items, so bargain-hunters like scoping out the deals online. Major retailers say they'd prefer people found the sales the old-fashioned way, in the newspaper or perhaps on the stores' own websites. In past years, Wal-Mart, Target, Best Buy, Linens 'N Things, and Staples, have all fired off complaints. See Black Friday

In the past, they've used copyright claims, which fit poorly with the posting of price compilations. Copyright doesn't protect facts or ideas, only original expression. Yet the stores were trying to squelch pre-announcement of facts: the prices they intended to affix to items, not any expressive element of the circulars' graphic design or its arrangement of items. Copyright claims probably looked attractive because they pull in the DMCA notice-and-takedown procedure, giving reason for the service provider to disable customers' sites. See Chilling Effects' collection: Bargain Shoppers Chilled by Retailers' DMCA Threats.

This year, Wal-Mart has taken action even before the Halloween pumpkins are carved, sending pre-notifications to websites that have posted Black Friday ads in the past. For example, Wal-Mart Pre-Warns Against Early Black Friday Ads.

Why the pre-notification? Does Wal-Mart just want to add a bit of chill to the unseasonably warm fall? Does the retailer want sites to pre-screen user-posted content? Do the notices have any legal effect?

If Wal-Mart is relying on copyright claims, the notices are nearly pointless. Warning doesn't make facts copyrightable, while if users are posting material, a site doesn't incur obligation to monitor merely because someone warns that infringement is likely. Availing themselves of the DMCA safe harbor, sites can allow users to contribute material unfiltered, reviewing and removing only if copyright holders notify them of existing -- not hypothetical future -- infringements. If the site-owners themselves do the posting, they might be warned off by the assertion if they credit claims of copyright in facts, but their underlying liability would turn on whether they copied copyrightable expression, not whether they ignored a warning.

But this time Wal-Mart's claims appear to be broader, invoking the "confidential and proprietary" nature of their "commercially valuable" price information. Trade secret law proscribes "misappropriation" of commercially valuable secrets, provided the holder has taken reasonable steps to keep the secret. Most trade secret cases are against those who directly steal a secret or break a confidentiality agreement, but many states, guided by the Uniform Trade Secrecy Act, define misappropriation broadly, to include

disclosure or use of a trade secret of another without express or implied consent by a person who ... (B) at the time of disclosure or use knew or had reason to know that his knowledge of the trade secret was (I) derived from or through a person who has utilized improper means to acquire it; (II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use

By pre-notifying sites, Wal-Mart is likely trying to establish the "knew or had reason to know" element of a misappropriation claim, to say that even if the sites themselves engage in no "improper means," they should anticipate that anyone sending in Black Friday preview ads must have acted "improperly." Wal-Mart would have to establish that its price lists were properly trade secrets -- economically valuable because of their secrecy, subject to reasonable measures to preserve their secrecy -- and that any who posted after receiving its warning knew or should have known they were misappropriated.

Notification can't create secrets if Wal-Mart doesn't take other reasonable measures to keep the prices from leaking, but if it takes those measures, through confidentiality agreements and need-to-know limits on those who get early access, yet economically valuable secrets leak anyhow, advance warnings to third parties might turn innocent receipt into misappropriation. As any lawyer will tell you, much will depend on the particular facts!

Meanwhile, as Reuters reports, many of the consumer sites are encouraging their readers to contact Wal-Mart to ask for a change in policy.

Sen. McCain Calls Fair Use on Fox

Associated Press, October 26, 2007

Abstract: The Associated Press reports that presidential candidate John McCain has rejected Fox's call to "cease and desist" from using Fox debate footage in a campaign ad.

Fox is apparently claiming infringement by the use of 18 seconds from a 90 minute debate, in which Sen. McCain is the speaker. Political argument, even in the heated sound-bite form of campaign ads, is at the core of First-Amendment protected speech. This kind of commentary use, of newsworthy material available only from Fox, suggests that not only McCain, but the general public should have greater access to debate footage.

Public Citizen challenges "copyrighted" C&D

Greg Beck, Public Citizen Law & Policy Blog, October 5, 2007

Abstract: DirectBuy sent its critics cease-and-desists with copyright warnings. Public Citizen's response: Bring it on.

Public Citizen decided to post the letter on its website because it is only possible to understand our letter in response by seeing the letter we are responding to, and because we think Morris's letter is a good example of the many meritless threats that companies hurl at their online critics in an effort to silence dissent. We also don't think the copyright laws prevent us from posting the letter. First, the letter is not registered with the copyright office, and until it is, DirectBuy's law firm can't sue to enforce it. Second, posting the letter is a clear example of fair use. Companies should not be able to make threats and then hide from criticism behind the Copyright Act.

MediaDefender Claims Analyzed

Peter Ostrovski, October 7, 2007

Abstract: As against the hosts of stolen emails, MediaDefender's three statutory claims do not appear to be backed by the letter of the law or cases. Its claim of misappropriation of trade secrets would have some weight, if the information from the e-mails is found to contain trade secrets.

Recently I described MediaDefender (MD)'s attempts to combat the spread of its internal e-mails through cease and desist demands sent to various online hosts. I've since examined the three statutes MD invokes as the legal basis for its threat. Careful analysis and a look at pertinent cases reveals that these laws do not create third party liability for hosting information (no matter how ill-gotten it is by someone else). The person acquiring the information would be held liable, but since the identity of that individual is still unknown, MD has improperly decided to address their letters to those hosting the data. It would appear that MD has included the three statutes, and the accompanying penalties they potentially provide for, in an attempt to scare host sites into removing the content in question. (But MD may have some valid points in another area—see the trade secrets section below).

The complaint first cites 18 U.S.C. § 1030, the Computer Fraud and Abuse Act, but does not reference a particular section (only the threatened punishment). It's therefore up to the supposed wrongdoers to figure out what it is they supposedly did wrong, which at least under this act, appears to be: nothing. The first five provisions of Section (a) of the statute are all inapplicable, as they concern a party knowingly or intentionally accessing certain kinds of protected information. Since GPIO (now MediaDefender-Defenders or MDD) other hosts did not access anything (remember the MediaDefender e-mails appeared on the sites from third party sources), we move right along. (An examination of cases invoking § 1030 also turns up no examples of responsibility for third party breaches.) The last section deals with extortion and causing damage to protected computers, so we can ignore it as well.

The only part that may even conceivably apply is (a)(6), which concerns the trafficking of "any password or similar information through which a computer may be accessed without authorization." Even if the information at issue is somehow construed to fall into this category, it would still be a fairly hard sell to show that any "trafficking" occurred and if it did, that it took place "knowingly and with intent to defraud."

We now move on the second alleged violation, that of 18 U.S.C. § 2701, the Electronic Communications Privacy Act. The statute specifies punishment for an entity that "intentionally accesses without authorization a facility through which an electronic communication service is provided" or "intentionally exceeds an authorization to access that facility." As before, since the hosts themselves did not access the information in question, they seem to be unaffected by this statute. A careful review of cases arising out of this act also results in no examples of third party liability. Not looking too good on the federal claims--let's see if the state act applies.

The last potential prong of MD's tripartite attack is Cal. Penal Code § 502, the California Computer Data Access and Fraud Act. The provisions of this statute, however, read very much like the federal Computer Fraud and Abuse Act (lots of "knowing access" language) and appear to be similarly inapplicable to hosts. There is no mention of third parties, and a look at case law citing the statute again yields nothing that would implicate hosts.

While Congress (and the California Legislature) may, in light of this fairly visible issue, modify these acts to include third party hosts that ease access to such unauthorized information (in which case, this would still be far from an open and shut case for a multitude of reasons), the statutes as they stand do not appear to back MediaDefender.

So none of the statutes MediaDefender cites seems to impose liability on a third-party poster. Then there's the whole Trade Secret issue.

We first have to ask whether the information contained in the e-mails was a trade secret. Though it would appear that much it was not, there's room for argument among the whole mass. The first characteristic of a trade secret is that it must be a secret that provides a business with a competitive advantage. While it is a bit unclear how anything in those e-mails provided MD with a competitive advantage (against other anti-piracy companies working for the RIAA?), it could have, and trade secret status itself is a tricky concept. To qualify, information must be "not generally known or readily ascertainable." Host sites would argue that the key information at issue here was widely reported by numerous sources, including official news organizations, as soon as it was leaked (and some of it was available even before). MD, however, would contend that this classification does not cover all of the content, some of which was indeed secret, or that the rapid dissemination shouldn't deprive it of erstwhile secrets.

Let's say that those e-mails did contain some trade secrets. Did sites hosting them engage in misappropriation of trade secrets? Then, finally, it would appear that they did. The Uniform Trade Secret Act's definition of misappropriation, as applicable in this case, is "disclosure or use of a trade secret of another without express or implied consent by a person who ... at the time of disclosure or use knew or had reason to know that his knowledge of the trade secret was derived from or through a person who has utilized improper means to acquire it." Even if certain hosts can claim ignorance over a certain period of time, MediaDefender could put them on future notice with a cease and desist notice. For a place like MD-Defenders, which openly boasts about hosting this particular content knowing how it was acquired, the ignorance argument wouldn't fly.

Even under this scenario, however, damages appear minimal. There is no actual loss here, and the only unjust enrichment experienced by hosts would be additional ad revenue from an increase in the number of people using the site. This figure would be higher for MD-Defenders since it relies solely on this information and probably fairly low for torrent hosts. But for all this to happen, the information has to be proven to fall into the category of trade secrets. (And if only some of the information qualifies, what proportion of the unjust enrichment would be attributable to the trade secrets?)

Media Defender Struggles to Defend Leaked Emails

Peter Ostrovski, September 27, 2007

Abstract: During an embarrassing week of leaks, Media Defender has been trying to use takedown notices to prevent internal information from circulating around the Internet. So far, it has met with minimal success.

Media Defender is not making too many friends on the Internet. With many people already aware that the company inundated peer-to-peer sites with fake files, a leak of the company’s internal e-mails last week confirmed long-standing suspicions that the company created a program entitled MiiVi as a trap for those sharing copyrighted content. Just a few days later, the source code used to create their decoy files secret government project thing. (Apparently, MediaDefender was (still is?) in the process of negotiating a deal with the New York Attorney General’s Office that entailed providing information on users accessing porn.) So much for the company’s “practical, proven methods" .

Needless to say Media Defender wasn’t too happy with this information floating around. Their solution? Why, takedown notices, of course. The company, represented by Sheppard, Mullin, Richter & Hampton, has sent a multitude of takedown notices to various peer-to-peer sites. The notices seem to cite the federal Computer Fraud and Abuse Act, the federal Electronic Communications Privacy Act, and the California Computer Data Access and Fraud Act.

Sample responses have been nothing short of impudent. Since most are based outside the U.S., they claim there is no jurisdiction over them under the DMCA and are therefore unconcerned about their flippant replies.

IsoHunt takes the complaining lawyer to task for improperly composing a takedown notice by addressing it incorrectly and not linking to the (questionably) violating content. IsoHunt then states, "Despite us being located in Canada, if you do actually figure out how to compose a valid DMCA notice, we will honor it, just as soon as we're done laughing at you."
Meganova’s statement begins with "Dearest little asstunnels, let me start of by thanking you for your pitiful attempt to have your emails removed from the entire internet" and only gets more scathing from there. In between the profanity, Meganova reminds the lawyers, "In case you haven't noticed, this site is located in Europe (I hope you can point it out on a map) where your stupid copyright claims have no base."
Media Defender-Defender (the site responsible for the propagation of the leaked content and now hosting much of it) points out the fact that it is in Norway and describes a process of numerous site redirects that would help it avoid cease and desist notices if it so desired. The author of the e-mail also suggests,“You could also pay me a lot of money. That might help. That'd actually help immediately. But as it stands, it appears that your legal grounds for throwing letters at me claiming this-or-that is shaky enough that you might want to relocate." Ouch.