Big Data and Privacy at the American Bar Association

June 24, 2013 · by ·

bdI will be presenting next Friday the part on privacy and Big Data in this  CLE webinar presented by the American Bar Association: The Big Data IP Problem: Big Issues for “Big Data.”

From the program description:

The program will explore the ways that “big data” enhances and impedes innovation, the privacy issues it creates, and the viable solutions to creating a more secure system of compiling data.

 

 

Image is no Spin-Torque MRAM courtesy of Flickr user jurvetson pursuant to a  CC BY 2.0 license.

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How to Tweet an Endorsement

May 29, 2013 · by ·

EndorsementSocial media is now an effective medium for advertising campaigns, as consumers forsake television for their computers, tablets and smart phones. Many marketers choose to launch a ‘word of mouth’ marketing campaign on social media site and encourage users to discuss a particular product or service.

However, such messages are not always a spontaneous publication of one’s opinion. Influential users or celebrities with many ‘followers’ on Twitter are sometimes approached by marketing agencies to promote a particular product or service to their audience. It they act on behalf of the advertiser or one of its agents, the tweets they post about the particular product/service ‘endorses‘ the service or product of the advertiser.

An Ad Must not be Unfair or Deceptive

For the Federal Trade Commission (FTC), such tweets are advertisements. Under the Federal Trade Commission Act, the FTC has the power to prevent unfair or deceptive acts and practices affecting commerce. An advertisement must not be unfair or deceptive, and advertisers must have evidence to back up their claims. An ad is deceptive if it misleads consumers or if it affects their behavior or their decisions about the product or service advertised.

The platform used to advertise does not matter, whether it is a billboard on Times Square or a 140-character tweet, and the same rules must be followed.

The FTC Updated its Dot Com Disclosures

When the FTC “Dot Com Disclosures Guidance” (the Dot Com Guidance) was first published in 2000, social media sites were not around, and people still used their phones well, to make phone calls. Now, 67% of US Internet users are using social networking sites, according to a recent survey by the Pew Research Center, and, according to a Comscore report, smartphones reached a 50-percent market penetration in 2012.

It is therefore welcome that the FTC updated in March the Dot Com Guidance which now explains how to ‘make effective disclosures in digital advertising,’ and applies to offline and online commercial mediums. There is much to say about the updated Dot Com Guidance but, on this post, I will concentrate on endorsements via Twitter.

 General Rules About Endorsement

An endorsement is a particular type of advertising. The FTC updated in 2009 its Guides Concerning the Use of Endorsements and Testimonials in Advertising (the Endorsement Guides) but did not change the definition of an endorsement.

Under the Endorsement Guides, 16 C.F.R. Part 255.0b, an endorsement is:

“… any advertising message … that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser. The party whose opinions, beliefs, findings, or experience the message appears to reflect will be called the endorser and may be an individual, group, or institution.”

So what is important is the subjective view of what a consumer may see as reflecting somebody’s opinion on whether a particular statement reflects the personal view of the endorser or is an ad.

The Guides also addressed the application of Section 5 of the FTC Act to endorsements and testimonials in advertising. Such endorsements and testimonials must not be deceptive, and they also must “reflect the honest opinions, findings, beliefs, or experience of the endorser.”

In order for such endorsements not to be deceptive, it is sometimes necessary to publish a disclosure. Disclosures must be clear and conspicuous, and that comes with some challenges when using Twitter.

How to Disclose an Endorsement on Twitter

If an endorsement is not disclosed, then the ad is deceptive and unfair. Therefore, it is very important that a Twitter user being paid by an advertiser to post a certain message discloses such relationship.

A disclosure must be disclosed in every tweet, as a Twitter user reading his timeline would not necessarily view the sponsored tweets one after another, as other tweets may be come between other tweets (see Dot Com Guidance p. A-19).

During a Twitter chat, an attorney from the FTC answering questions from the public about the Dot Com Guidance said that putting  #ad, ‘ad’ or ‘sponsor’ on a tweet would adequately disclose that a particular tweet is sponsored. #Spon is however not an appropriate way to disclose an endorsement, as consumers might not understand this hashtag as meaning that the message is sponsored by an advertiser.

Also, posting the disclosure on a website and linking to this site from the post is not sufficient, because some consumers may not click on the link.

How to Disclose a Disclaimer on Twitter

Disclosure of additional information may be necessary to prevent a tweet from being deceptive or unfair. If a tweet warrants a disclaimer, then that disclaimer must be included in the tweet. Merely adding a link to the disclaimer is not enough. The tweet must state the disclaimer, so that consumers understand that the link is a disclaimer. The Dot Com Guidance gave as an example a fictitious tweet  which adequately disclosed both the fact that the tweet by an user was an ad (Ad) and that the weight loss experienced by the user was not typical (Typical loss: 1lb/wk), see Dot Com Guidance p. A18.

One must remember that the Dot Com Guidance is a compliance document, not a law, and was only published to inform. It should not even be viewed as a safe harbor from liabilities, but mere guidance.

 

Image is no endorsements courtesy of Flickr user sookie pursuant to a  CC BY 2.0 license.

 

 

 

 

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Filed Under: Social Media Law, Uncategorized ·

Appropriation Art and Fair Use

May 24, 2013 · by ·

fair useThe US Court of Appeals for the Second Circuit issued last month an important decision for artists. The Andy Warhol Foundation, which had filed a brief of amicus curiae in favor of Prince, stated that it “does not object to other artists building freely on Mr. Warhol’s work in the creation of new art, because it recognizes that such freedom is essential to fulfilling copyright’s goal of promoting creativity and artistic expression.“

At issue was whether Richard Prince’s artwork had made fair use of Patrick Cariou’s copyrighted photographs.

Patrick Cariou published in 2000 a book, Yes Rasta, which featured photographs taken during his 6-year long stay in Jamaica. Richard Prince used some of these photographs to create his Canal Zone series.  Prince enlarged the Cariou photographs and sometimes cropped them. He also painted over on some of the faces and bodies of the subjects of the photographs, but used some of the Cariou photographs almost entirely. Prince did not seek licensing nor did he ask Cariou for permission to use his work.

Canal Zone was exhibited at the Gagosian Gallery in New York, and the gallery also published and sold a catalog for this exhibition reproducing the Richard Prince’s artworks.

Cariou sued both Prince and the Gagosian Gallery for copyright infringement, and the defendants raised a fair use defense. Fair use is an affirmative defense to a claim of copyright infringement. The United States District Court for the Southern District of New York (SDNY) found in 2011 that the use by Richard Price of photographs taken by Cariou to create his Canal Zone series was not fair use. It consequently ordered all infringing copies of the series to be delivered so that they can be destroyed. Defendants appealed.

The Second Circuit held on April 25 that the SDNY had applied the incorrect standard to determine whether Prince’s use of Cariou’s work was fair use, and concluded, after extensive analysis of the paintings, that all but five of Prince’s works made fair use of the original works. The Court remanded to the SDNY to decide whether Prince is entitled to a fair use defense for these five works as well.

What is Appropriation Art?

As noted by the Second Circuit, “Prince is a well-known appropriation artist” and quotes a definition of the Tate Gallery of appropriation art as “the more or less direct taking over of work of art a real object or even an existing work of art.”

The Gagosian Gallery describes Prince’s way to work as “[m]ining images from mass media, advertising and entertainment” adding that “Prince has redefined the concepts of authorship, ownership, and aura.”

Another artist using such techniques, Jeff Koons, was also the defendant in several fair use cases. In Blanch v. Koons, the Second Circuit held in 2006 that the use by Jeff Koons of a copyrighted fashion photograph in his collage painting, Niagara, was fair use.

Fair Use Defense

As noted by the Second Circuit in its Blanch v. Koons decision, referring to such art as ‘appropriation art’ may be unfortunate in a legal context. Indeed, copyright law provides copyright owners exclusive rights in their works, and appropriation of a copyrighted photograph to create a new work may or may not be fair use. In practice, it means that the outcome of a fair use case is difficult, if not impossible to predict.

So, what is fair use? The Copyright Act, 17 U.S.C. § 107, provides a fair use  limitation on copyright owners ‘rights, and provides four non-exclusive  factors that courts must follow in order to find out, case by case, if a particular use of a protected work is fair. These four factors are:

1)      The purpose and character of the use (the transformative use, the commercial use)

2)      The nature of the copyrighted work

3)      The amount and substantiality of the portion used in relation to the copyrighted works as a whole

4)      The effect of that use on the market

The SDNY had found that none of these four factors supported a finding of fair use in favor of the defendants.

I will discuss the fair use factors in the order used by the Second Circuit.

First Factor: What is Transformative Use?

The Supreme Court explained in the 1994 Campbell v. Acuff-Rose case what constitutes transformative use. The new work adds something new, and alters the original work while adding a new expression or message. Even if it is not necessary that the use be transformative to find fair use, the Supreme Court noted that “[s]uch transformative works lie at the heart of the fair use doctrine.”

The SDNY interpreted transformative use as meaning that the new work has to comment on the original work, and that if Prince’s works would “merely recast, transform, or adapt the [Cariou] [p]hotos,” they would be infringing. Prince had testified that he did not intend to comment on the original work of Cariou, nor even on “the broader culture,” and thus the SDNY concluded that the first factor weighted against the Defendants.

However, the Second Circuit found that, because the new work does not necessarily have to comment on the original work in order to be transformative, the SDNY had applied an incorrect legal standard. Instead, the Second Circuit stated, quoting Campbell, that the “new work generally must alter the original with “new expression, meaning or message.””

The Second Circuit found than most of the Prince works added something new to the plaintiff’s photographs and “presented images with a fundamentally different aesthetic.”

First Factor: The Commercial Use

The SDNY also found that the Defendant’s use of the Carious’s photos was “substantially commercial” as Gagosian sold paintings from the Canal Zone series for a total of $ 10,480,000.00, traded some for other works of art at an estimated value of $6 million to $8 million, and also sold catalogs of the exhibition. However, the Second Circuit, while noting that Prince’s works are indeed commercial, did not give much significance to it, as his work was transformative enough to make the issue of commercial use insignificant.

Fourth Factor: The Effect on the Market

As Prince’s work is highly transformative, it did not usurp the primary or derivative market for Cariou’s work. The record shows that Cariou had not marketed his work “aggressively.” He earned about $8,000 in royalties from the sale of his Yes Rasta book, and only sold four prints of the photographs. Also, the potential buyers of Prince’s works are not the same than Cariou’s works. The Second Circuit noted for instance that Jay-Z and Angelina Jolie were invited to the opening diner of the Canal Zone show at Gagosian.

Second Factor: The Nature of the Work

The defendants had unsuccessfully argued in front of the SDNY that Cariou’s works were merely compilations of facts about Jamaican Rastafarians, and thus not protected by copyright. The Second Circuit pointed out that it is undisputed that Cariou’s work is creative. However, as Prince’s work used it for transformative purpose, this factor has limited, if any use.

Third Factor: The Amount of the Use

While some of the original photographs of the Yes Rasta book can easily be recognized in the Canal Zone series, others are hardly identifiable as in, for instance, James Brown Disco Ball (you can see it here).  However, the photograph taken by Cariou of a man looking at the camera from a three quarter angle is easily recognizable in Graduation, in spite of the addition of a guitar and the paint over the face.

Even copying the entirety of a work may be fair use. The SDNY found that Prince had taken more of the Cariou work than necessary, but the Second Circuit points out it is not required by law to only take what is necessary, and, in any case, it could not understand how the SDNY had actually come to that conclusion.

The Second Circuit engaged in its own pictorial analysis, and came to the conclusion that twenty five of Prince’s photographs transformed Cariou’s work “into something new and different,” but that Graduation, Meditation, Canal Zone (2008), Canal Zone (2007) and Charlie Company were not transformative enough, and remanded to the SDNY to determine if these five works are indeed transformative.

Judges as Art Experts?

Senior Circuit Judge Wallace, from the Ninth Circuit, sitting by designation, concurred with the majority that the SDNY had applied an incorrect legal standard. However, he dissented in part as, he believed that the whole case should have been remanded to the SDNY so that the lower court could analyze all the paintings using the proper standard, after new evidence is presented. Judge Wallace regretted that the Second Circuit judges used their own artistic judgment to determine whether the works were transformative or not.  Fair use is a mixed question of law and fact. Therefore, each fair use case requires extensive analysis of the works of both plaintiff and defendant, even to the point as making a judgment of the worthiness of a particular work. This is troubling, and Justice Holmes famously wrote in the 1903 case Bleistein v. Donaldson Lithographing Co. that “[i]t would be a dangerous undertaking for persons trained only to the law to constitute themselves final judges of the worth of pictorial illustrations.”

The image is my own play with a photography from the Yes Rasta book… Yes, it was a wise choice to go to law school, not art school…

 

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Blog Post on the NYSBA EASL Blog re Athletes Fined over Tweets

May 14, 2013 · by ·

Baseball BirdA blog post I wrote for the Entertainment, Arts and Sports Law Blog, sponsored by the Entertainment, Arts and Sports Law Section of the New York State Bar Association, about Athletes fined over tweets in the U.S. and in Europe, can be found here.

Image is Baseball Bird courtesy of Flickr user ensign_beedrill pursuant to a Creative Commons CC BY-SA 2.0 license.  

 
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Streaming of Unique Copies of Broadcast Television Programs Not a Public Performance

April 10, 2013 · by ·

antennaOn April 1, 2013, the United States Court of Appeals for the Second Circuit held in WNET v. Aereo that Aereo, a start-up company located in New York City, which streams broadcast programs and allows its users to watch or record them from their computer, telephone, or tablet, does not infringe the Plaintiffs’rights of public performance.

Plaintiffs were broadcasters of some of the programs streamed by Aereo. They had unsuccessfully tried to bar Defendant from transmitting broadcast television programs to its subscribers during the broadcast of these programs. The lower federal court, the Southern District of New York, denied their motion. Plaintiffs appealed, and the Second Circuit affirmed the order of the SDNY.

Aereo Business Model

Aereo is a start-up company located in New York City. It is only available in New York City for the moment, but the company has plans to expand soon to twenty-two other cities in the U.S.

This is how it Aereo works. Instead of using a roof antenna to receive publicly broadcasted channels, Aereo subscribers lease a tiny TV antenna, which is also connected to the Internet. All the leased antennas are all hosted in Aereo’s facility, not at the subscribers’ homes.

When a particular subscriber decides to watch or record a particular program, a signal is sent to Aereo’s antenna server. The server tunes the antenna assigned to the subscriber to the broadcast frequency of the channel chosen by him. A transcoder, well, transcodes data received by the antenna and sends it to another Aereo server, which saves the program chosen by the subscriber on her directory in a large hard drive.

The subscriber watches the program streamed from the copy of the program in the subscriber’s directory, either live, or by recording it, from her computer, phone or tablet, by accessing her account on Aereo’s site.

Is is an infringement of the plaintiff’s exclusive right of performance? The Court of Appeals said no. Here is why.

Public Performance Right

Plaintiffs claimed that Aereo was publicly performing their protected work without a license.

One of the exclusive rights provided to the owner of a copyright by § 106 of the Copyright Act is the exclusive right to publicly perform the work. Transmitting or communicating a performance using any device or process to the public is also a performance the under the ‘Transmit Clause’ of the Copyright Act.

The district court had found that the case could not be distinguished from the Second Circuit 2008 decision in Cartoon Network v. CSC, and the Second Circuit agreed with that view.

In the Cartoon Network case, Cablevision, a cable company, provided its subscribers with a Remote Storage Digital Video Recorder System (RS-DVR).The Second Circuit had found that each of the RS-DVR playback transmissions to a particular subscriber were using a single unique copy made for that subscriber, and therefore such transmissions were not public performances under the Copyright Act. That is because the subscriber was the only potential audience for that unique copy, and thus the transmission was not made to the public.

The fact that in Cablevision each copy was made for a distinct user and was not shared among users was important, because  the Second Circuit found relevant, when applying the Transmit Clause to a particular case, to consider whether  a copy is distinct or shared. If a copy is shared, the transmission is a public performance as the transmission can be received by the general public. If a copy is not shared, the transmission is not a public performance as only one subscriber can receive that performance.

The facts in the Aereo case were very similar, as each subscriber is assigned his own tiny antenna. The Second Circuit noted that an antenna does not generate multiple copies of each program but that only the user who requested a copy to be made can watch that copy. Therefore, the court concluded that:

“Aereo’s transmissions of unique copies of broadcast television programs created at its users’requests and transmitted while the programs are still airing on broadcast television are not “public performances” of the Plaintiff’s copyrighted works under Cablevision.”

Therefore, it is legal for consumers to stream a broadcast program that is available to them in their local market instead of watching it on their television, even if the company providing the streaming does not pay a licensing fee to the broadcasters. The broadcasters will probably try to have the case reviewed by the Supreme Court. Stay tuned…

Image is Antenna schmantenna courtesy of Flickr user rednuht pursuant to a Creative Commons CC BY-2.0 license.

 

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No Sales of ‘Used’ Digital Music Files

April 4, 2013 · by ·

2606063781_cdfde8a420One of my favorite things to do is to browse a used book store. I almost always find out-of-print books that I never knew could be so interesting. Same goes with buying used LPs. Yes I have some Luddite left in me…

Such browsing can also be done online. However, one is not likely to be able soon to browse a used digital music store. Here is why…

A federal court, the Southern District of New York, held on March 30 in Capitol Records v. ReDigi that the first sale doctrine does not authorize the lawful owner of a digital music file to resell it, even if only one file exists before or after the transfer.

Plaintiff in this case was Capital Records, which owns the copyright in many recordings. The defendant was ReDigi, which, according to its site, is the “World’s First Pre Owned Digital Marketplace.” It describes itself as being a “free cloud service that allows you to sell your legally purchased digital music.”

This is how it works, or worked. A ReDigi user is able to upload his legally purchased digital music files to a remote server, ReDigi’s “Cloud Locker.” The files are stored, and are available to the user for streaming, but he may also elect to sell one or more files. In that case, he can no longer access the digital file which was sold, and exclusive access to this file is transferred to the user who purchased it ‘used.’

The main issue in this case was whether a ReDigi user “migrates” a digital music file when uploading it to the ReDigi server, or if he makes a copy of it. This was important because, under the Copyright Act, the owner of a copyright has the exclusive right to reproduce, distribute or perform the copyrighted work. Also, Section 106(1) of the Copyright Act gives the owner of the copyright the exclusive right “to reproduce the copyrighted work in copies or phonorecords.”

Is transferring a digital file from a hard drive to a server copying that file?

Under Section 101 of the Copyright Act,  a ‘phonorecord’ is the material object in which the sounds are fixed by any method.

“Phonorecords” are material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term “phonorecords” includes the material object in which the sounds are first fixed.

In this case, the copyrighted work is the digital music file, and the “phonorecord” is the segment of the hard disk where the file is embodied.

ReDigi’s system aims at preventing illegal copying. First, it does not allow music files illegally downloaded or copied from a CD to be sold on its site. It acknowledged, however, that the program it uses to detect illegal copying cannot detect copies stored in other locations than a user’s hard drive. ReDigi’s “Media Manager” program, which users must install on their computers, can, however, detect if a copy of a digital file uploaded on ReDigi remains on a user’s hard drive. In that case, ReDigi contacts the user and asks that the file be deleted. Not doing so may lead to the account being terminated.

ReDigi argued that a user does not copy the musical file he originally had acquired legally, but merely “migrates” it, and thus it is the same file that is transferred from the hard drive of the ReDigi’s user to the ReDigi’s server, and then is eventually sold to another ReDigi user.

The Court was not convinced, finding instead that a reproduction occurs each time a user uploads a digital file into ReDigi’s server. It noted that “[i]t is beside the point that the original phonorecord no longer exists. It matters only that a new phonorecord has been created.”

The Court reasoned that the copyrighted work, fixed in a phonorecord, is copied if it is fixed in a new material object, and therefore the plaintiff’s copyright was infringed each time a digital music file of which Capital Records owns the copyright was uploaded into ReDigi’s server.

The First Sale Doctrine Defense Does Not Excuse the Infringement

ReDigi asserted a first sale defense, but the court disagreed.

Under the first sale doctrine, the owner of the copyright cannot prevent the legitimate owner of a book or a phonorecord protected by copyright to resell or to give it away. That is the federal law which authorizes us to sell or to give away our books, our CDs, and our DVDs. Once the owner of a coypyrighted work has placed it in the stream of commerce by selling it, he has exhausted his exclusive right to distribute the work.

The doctrine was originally recognized by a court in 1908, and has been codified in the 1976 Copyright Act.

Under its section 109(a):

“the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”

But the first sale doctrine could not be used as a defense, according to the Court, because ReDigi’services infringed Plaintiff’s reproduction right. Additionally,  the first sale doctrine could not be a defense in this case, as it is only a defense if plaintiff claims a violation of his right to distribute.

Also, according to the Court, the first sale doctrine could not protect ReDigi as it only protects the legitimate owner of a copy or a phonorecord, and the digital music files sold on ReDigi’s site were not lawfully made under the Copyright Act.

Here is what the court said:

“Here, a ReDigi user owns the phonorecord that was created when she purchased and downloaded a song from iTunes to her hard disk. But to sell that song on ReDigi, she must produce a new phonorecord on the ReDigi server. Because it is therefore impossible for the user to sell her “particular” phonorecord on ReDigi, the first sale statute cannot provide a defense. Put another way, the first sale defense is limited to material items, like records, that the copyright owner put into the stream of commerce.”

It looks like we may not be able to resell the digital music we fell out of love anytime soon…

Image is 174/366  courtesy of Flickr user irrezolut pursuant to a Creative Commons CC BY-SA 2.0 license.

 

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