With Europe approving this ridiculous retroactive copyright extension, which has set off an angry public who is reasonably frustrated that they'll be paying the cost to support a few rockstars and dying record labels -- there's an argument that this fundamentally breaks copyright law. And, it's making me wonder if it actually should mean that copyright is null and void.
I've argued in the past that this constant expansion of both copyright and copyright enforcement has only served to make people respect the law less and less, because it gets further and further away from what people think is reasonable. Rather than making more people respect the law, it drives more people to ignore the law. Dirk Poot takes that argument a bit further, and suggests that with such things, we've actually gone full circle and copyright law has become exactly what it was originally designed to stop.
If you know your history of the Statute of Anne, one key goal of the system was to stop overarching monopolies among publishers, by granting them limited monopolies. But as we've moved further and further away from such limited monopolies, Poot argues that we've actually gone back to exactly what copyright law was supposed to be against:
It is clear that the copyright deal is dead. The perpetual monopoly that Queen Anne sought to end in 1709 has, for practical purposes been restored. From the public have been taken all the benefits which made the deal worthwhile to begin with; from a cultural perspective we are back in the late 17th century.
So where does that leave the public? The benefits are gone, and adding insult to injury, copyright lobbyists are actively forcing web-sniffing, packet-inspecting and blocking-technology upon society, willfully endangering basic human freedoms. What incentive, except the threat of massive litigation and draconian measures is there for the public to accept this farce of a copyright law? For how long will society put up with prohibitive fines and three-strikes legislation?
With the latest copyright extension, the EU may have dealt a deathblow to copyright. Internal enforcers like morals and ethics have been taken out; the only thing that copyright law still has going for it, is the empty threat of dire consequences.
Copyright law has lost its legitimacy; heavy-handed enforcement can only lead to uncomfortable questions about the validity of the underlying laws, and eventually copyright will be become a mere curiosity, not unlike the obligation for males to schedule in two hours of longbow practice each week.
But all of this got me thinking about this from a slightly different angle. When you're locked into a term-based contract with, say, a mobile phone provider, one thing that has become standard is that if they unilaterally change the terms, you are granted an out. You get to say "that's not the deal I agreed to, so I'm voiding the whole deal." So... um... shouldn't the public now be able to make that same argument with copyright law? After all, the government has unilaterally changed the terms of the deal. The original deal was a limited monopoly of specific length, in exchange for the work itself being created, and then being contributed to the public domain at the end of the agreement. But, if the length of time is changed unilaterally -- especially with the public not getting any compensation -- then hasn't the government effectively reneged on the entire deal? Couldn't an argument be made that the public should now have the option of "opting out" of the copyright regime, because the terms of our contract have changed?
Last month, we posted an excellent video by entertainment attorney Martin F. Frascogna of the Fascogna Entertainment Law firm, deciphering some of the tricks of the trade in a standard recording industry contract, and showing how a band could still end up owing $500,000 even after selling a million albums. Most of that discussion was theoretical, as most record deals are kept confidential. However, due to a legal dispute involving the band Breaking Benjamin, that band's full contract was filed as part of the court documents in the case (embedded below). We asked Fascogna if he'd like to analyze the actual contract, and he did us one better, and did a full analysis of the lawsuit itself as well. He also created a new video -- embedded in the story, about the role of trademark for bands. Enjoy.
Breaking Benjamin’s internal struggle has left the group in shambles. I promise this will only get worse, but, in the interim, the dispute has me mildly wanting more. Chalk this up to the fact that I didn’t know people cared so much about the group, nor did I know they had so many albums out on the market, which is partially the cause of their internal problems to begin with.
Internal disputes are commonplace in the music industry, and honestly I’m thankful -- otherwise I would be an unemployed attorney. Call it snooping but I decided to poke around into the vast 98+ page suit/band agreement/and recording contract. It’s a fascinating soap opera. The dispute is filled with villains, heroes, bad actors, flashes of comedic relief, and loads of drama. Before breaking down the intricate legal components, it’s important to first understand the players, potential players, and the significant roles each play.
Benjamin Burnley – The group’s front man put the entire controversy in motion. Essentially, Burnley was under the impression he fired fellow band members Aaron Fincke and Mark Klepaski. Stated in their Band Agreement, any internal dispute would be handled via arbitration. If you don’t know what this means, arbitration is a method of settling disputes outside of court. This route is extremely common in the music industry because arbitration records typically remain private unlike court documents that can be publicly accessed. Burnley, via his legal counsel Brian Caplan and Jonathan Ross, requests to activate the arbitration clause in the band agreement and demands an award of $250,000. More on the amount later.
Aaron Fincke and Mark Klepaski, through counsel, James Oschal of Rosenn, Jenkins and Greenwald LLP, claim the Band Agreement is null and void therefore making an arbitration clause irrelevant. They request that the Pennsylvania state court hear the case and dismiss the validity of the arbitration clause. At this time, they are not seeking any monetary damages. Believe me that’s coming.
Hollywood Records – Currently they are a non-factor but I promise they’ll become the star of this dispute in no time. Basically all the label wants is to release the album(s) allegedly agreed upon between the label and band. Sideline this thought for a minute as it will become a significant legal stance later on.
The time frame of events will also prove to be vital in this case.
January 2009 – Burnley, Fincke, and Klepaski enter into a Band Agreement.
March 2010 – Breaking Benjamin allegedly enter into a Recording Agreement with Hollywood Records.
March 2010 – Burnley allegedly communicates to band members, Fincke and Klepaski, along with the band's attorney, Nick Farrara, that he didn’t want to proceed with the Recording Agreement.
March 2011 – Burnley dismisses Fincke and Klepaski from the band.
June 6 2011 – Burnley seeks arbitration and a remedy of $250,000 from Fincke and Klepaski.
DATE UNCLEAR ON COURT DOCUMENTATION – Fincke and Klepaski request a declaratory judgment from the Pa. State Court.
There three principal legal issues in the dispute:
Is the Band Agreement valid because the Band Agreement essentially dictates who entered into a contract with Hollywood Records? Meaning – Did Breaking Benjamin as a collective group OR as Finckle and Klepaski acting as individuals and unauthorized representatives of the band sign the Recording Agreement.
Who owns the Breaking Benjamin trademark? The trademark dictates how the band proceeds with future recordings.
What happens to the Hollywood Records Agreement?
Bonus: Because label haters probably want me to dissect the Recording Agreement into a bloody carcass, due to the cyber-bullying and arm-pulling, I’ll reluctantly do so. However, I warn you that during this time of the legal dispute, the Recording Agreement is somewhat irrelevant as the Band Agreement and the Breaking Benjamin internal drama must unravel first.
THE BAND AGREEMENT:
Every major recording artist has an internal Band Agreement (if they don’t, they should). The agreement dictates how overall band business is handled in times of dispute, fund disbursements, etc. Courts traditionally look no further than the Four Corners Rule, meaning they only look at what’s taking place in the four corners of the legal document (i.e. – Band Agreement) that the group collectively signed. Sometimes the group’s intentions allude to one conclusion but the actual language interprets otherwise. In the Breaking Benjamin Band Agreement, it’s unmistakably clear that Burnley started the group, is the creative force behind the group and essentially dictates the group’s decisions. Evident in the agreement, Burnley can dismiss a fellow band member for “just cause.” This is interesting. This type of language is fairly standard in a “Band Agreement” but not so standard in a “Partnership Agreement.” These are two different agreements entirely. Some groups operate as a partnership, meaning each active member plays an equal role. For example if the group is made up of four members, each member essentially has a 25% stake and so forth. Here, through legal arguments stated by both sides, they use the language interchangeably – Band agreement and Partnership agreement. If the document is indeed a Partnership Agreement, this entire dispute could quickly end because Fincke and Klepaski, acting as a majority vote, could enter into band decisions on behalf of the group without Burnley’s authorization. Oddly enough, this legal stance hasn’t been made nor does it appear it’s going to be. The big city attorneys must know something I don’t. Because we’re led to believe the group has entered into a Band Agreement (as opposed to a Partnership Agreement), the contract’s four corners language will run the show.
The contract clearly states that Burnley can dismiss members with “just cause,” that disputes will be addressed via “arbitration” and that any “departed member has no right to ‘ID Materials License Terms’ nor shall they have the right to utilize the group trademark” as addressed in Section 5. Lastly, “all decisions must be collectively made,” which makes it clear we’re dealing with a Band Agreement. A Partnership Agreement would allow for a majority vote, not collective. In addition, apparently back when the group was friends, there is some language anticipating Burnley’s poor health and slew of unstable disorders and how it could affect the band’s income stream. For example, the agreement would become invalid should Burnley decease or become disabled prior to any studio album completion. Personally speaking, this is where the drafter of the contract went wrong because they didn’t identify what happens if this clause is activated, rather it just states that the contract becomes null and void.
Because the agreement in place appears to be a Band Agreement (not a Partnership Agreement), (a) no departing member has rights to a trademark, (b) all band decisions must be decided upon by all three members, and (c) Burnley could dismiss members with “just cause.” Therefore, since all three members agreed to these terms it appears (1) Burnley’s request for arbitration is valid, (2) Breaking Benjamin (as a group) didn’t enter into a Recording Agreement with Hollywood Records because Burnley, allegedly, didn’t agree to the terms, and (3) the dismissed members couldn’t enter into a Recording Agreement on Breaking Benjamin’s behalf because they weren’t authorized to make this decision.
WHAT HAPPENS TO THE TRADEMARK -
Because a band isn’t worth too much money if they don’t have a trademark, who will own the Breaking Benjamin trademark after this entire ordeal? For example, should it be Burnley, he could then hire new band members and continue touring, recording, promoting, etc. under the name Breaking Benjamin. Should it be Fincke and Klepaski, they may/may not be able to hire new members and keep operating under the name Breaking Benjamin without the group founder Benjamin Burnley. Trademark ownership is no joke because depending upon who legally filed for the mark (i.e. – the name on the registration form with the USPTO) and what the agreements say about the rightful owner(s), somebody will have to stop using the mark. Trademark ownership essentially means leverage and control because whoever owns the mark has both. To explain this further, I've created this video, which breaks down why trademark is important to music professionals.
Section 5 of the Band Agreement states: “Fincke and Klepaski hereby irrevocably assign to Burnley any and all rights, title and interest that Fincke and Klepaski may have in the band name “Breaking Benjamin” as well as any and all logo(s) and/or trademarks in any manner collected thereto.” Therefore, regardless of how the court interprets the contract (i.e. – Band Agreement v. Partnership Agreement), Fincke and Klepaski have assigned their rights to the Breaking Benjamin trademark to Burnley. Further meaning Burnley can be the only surviving member of Breaking Benjamin as Fincke and Klepaski, whether rightfully dismissed from the group or not, can NOT use the name Breaking Benjamin. If future albums are to be released, Benjamin Burnley must be on the album and must authorize the use of the trademark.
WHAT HAPPENS WITH HOLLYWOOD RECORDS?
The recordings being disputed are (1) a remake of “Blow Me Away”, and (2) the “Rarities” project. In order to be granted permission on these additional projects, Hollywood Records would have to secure the authorization of all the active members of Breaking Benjamin. Under this agreement, just as the previous Hollywood Records agreements with the group, Hollywood Records would be granted universal territorial rights with the recording, along with various other legal nuances such as trademark use, etc. Universe? Hollywood Records clearly anticipates a large expansion project. Oddly enough “universal territorial” rights are somewhat standard, as this got started when some overly cautious attorney was concerned about radio signals being sent out into outer space and who would legally own the music. Yes, I’m serious. Personally, I like to protect my clients throughout the galaxy just in case there is some intergalactic distribution system established during my lifetime, but that’s neither here nor there....
The Hollywood Records contract proves pretty standard for a Recording Agreement. They scream big numbers, make grand promises, etc., all while the actual language of the contract slowly chips away at Breaking Benjamin’s potential income stream.
Just as my earlier video states, you’ll see huge reductions with recording costs (Section 5), Reserves deductions, Advances, etc..
Honestly, the amount being disputed, $250,000, could actually be $0, because Breaking Benjamin has yet to make money off the new recordings, rather than just racking up debt. Within the Recording Agreement, which was originally entered into by Burnley and Hummel (a former band member), then later amended to include Fincke and Klepaski, “Hollywood shall NOT remix, edit, or materially alter without the BANDS consent.” This clause would leave one to believe Hollywood Records illegally released the new version of Blown Away, because they didn’t have the band's consent; and because they didn’t receive authorization from Breaking Benjamin’s entire band (i.e. – Burnley, Klepaski, and Fincke), they couldn’t release the “Rarities” project. Clearly this is the end of the story, right? Wrong. I anticipate Hollywood Records is getting revved up.
Carefully drafted and tactfully scattered throughout the Recording Agreement, Hollywood has built in an insurance policy to assure they don’t get left out in the cold. Individually, these clauses may not mean a lot but you have to piece them together like a puzzle to see the major effect. The Recording Agreement, much like all major label agreements, has four really sneaky language elements that assures they’ll never get screwed over:
“In our reasonable effort”
“Unique Services”
“Notice must be mailed”
“Members will be joint and severally liable”
This doesn’t appear to be alarming on its face, right? Unfortunately all of these statements pack a heavy legal punch. “In our reasonable efforts” is what’s referred to as cautious language. Let’s decode that statement to find its real meaning - “we’ll try really really hard (subjectively speaking).” Apply this language to the Hollywood contract and they have essentially agreed to make their best efforts to agree to the terms with Breaking Benjamin. They may not have to fulfill the contract, but they’ll try really really hard. Ouch, this is getting shaky already.
How about “unique services?” Contractually speaking, Hollywood acknowledges that the band is unique (i.e. – there is nobody else in the entire universe like them). What a great stroke of ego for a band, but what this means is if the group can’t carry out their contractual obligations due to the fact that they are so “unique,” the label will be unable to recover from such damages because they can’t find a comparable group which could mitigate the damages. Oh no, this is getting worse.
Perhaps the two silent killers come with the last two clauses. “Notice must be mailed” means that if a group can’t perform their obligations, they must provide the label with a written notice. Here, based upon their previous contracts with Breaking Benjamin, Hollywood Records could take the stance that they were under the impression they could move forward on additional projects plus they were under the impression based upon Fincke and Klepaski statements that they could do so. Because no formal notice was mailed, no breach occurred. Right? It’s a legal argument, which may play out soon enough. Finally, buried in the contract Hollywood states that each member will be held jointly and severally liable. This means that if one party has done something wrong, they will all be held accountable. This alone will hang the group.
Breaking Benjamin has some tough times ahead. As the courts will likely determine Fincke and Klepaski were rightfully dismissed from the group, that’s also about the time Hollywood Records will come calling with their own suit about Breaking Benjamin. At least that’s what I would do if I worked as counsel for Hollywood. Unfortunately Burnley, Fincke, and Klepaski will have to reunite to defend the case. It’s beside the point who’s a member of Breaking Benjamin and who isn’t at that point, because in Hollywood Record’s eyes, authorization by one member means authorization by all. If Fincke and Klepaski agreed to the project, so did Breaking Benjamin. The group will be sued and then Fincke, Klepaski, and Burnley will once again turn to the Band Agreement to determine who’s paying who.
While this case involves one of the many ridiculous lawsuits filed by individuals demanding insane sums of money from companies for no good reasons, there are some good points in here (also, like many of these lawsuits, it involves a plaintiff who has history of filing lawsuits). Apparently, a guy by the name of David Stebbins sued Walmart. To understand the basis of the lawsuit, you have to understand that he sent various companies a link to a "contract" on his MySpace page, which he claims presents a binding contract (if you're particularly risk averse, you may want to avoid clicking on that link, though it's difficult to believe any such contract is valid). Here are some snippets from the faux contract:
My name is David Anthony Stebbins, and I live in Harrison, AR. I am sending a link to this webpage to various companies to put you on notice: If you contact me in any way, shape, or form, you hereby acknowledge that you have read, understand, and agree to be legally bound by the terms below.
[...]
This will also take effect if I attempt to contact you, and, upon hearing my name, you do not cease communications with me on the spot.
[...]
You hereby agree to allow me to use, distribute, and sell the rights to your name, physical likeness, and any intellectual property that you may own, throughout the universe, for no fee, for all eternity.
You hereby agree to not request, nor accept any offer for, any third party to remove any material that I use that you feel that you own the copyright to.
You hereby agree that, for now and for all eternity, in the event that I ask you a question, you must answer it promptly, accurately, and truthfully.
You hereby agree to never
Interrupt me when I am speaking, for all eternity.
Hang up on me in any phone call, for all eternity.
Block my attempts to communicate with you, for any reason, for all eternity.
Ask me a question that I have previously answered, for all eternity.
Demonstrate any rudeness, annoyance, or disrespect, however petty, against me, for all eternity.
Accuse me of lying, or any variation thereof, for all eternity.
It goes on along those lines. Anyway, he sent the email to Walmart with the link to this contract. Walmart customer care sent back a standard, boilerplate reply suggesting he contact a different department, which Stebbins used to claim the contract had been entered into (in combination with him also buying a gallon of milk -- don't ask). He sent a letter to Walmart demanding arbitration to settle their "legal dispute." When Walmart failed to agree to arbitration within 24-hours, he claims that he wins and should get $600 billion (with a b):
"since Wal–Mart did not accept the arbitration invitation within twenty-four hours of receiving it, he automatically wins regardless of the merits of the case and is entitled to an award of six-hundred billion dollars."
Plaintiff maintains Wal–Mart accepted the contract by its “act” of replying to his e-mail....The e-mails from Plaintiff are self-serving documents that did not form the basis for any conduct or performance on Wal–Mart's part....In this case, Wal–Mart performed no act. It merely replied to two e-mails by directing the Plaintiff to the correct department. It performed no service and Plaintiff made no promise.
Obviously, this particular case is something of a joke, but given how often people seek to claim that a contract has been entered into on dubious terms (such as replying to an email), perhaps a bit of reasonable caselaw comes out of this...
Many people don't quite realize that almost any kind of "agreement" can be seen as an enforceable contract in the eyes of the courts. While some people think a contract has to involve a full written document and signatures, that's often not true at all. Take, for example, a case involving affiliate sales of e-cigarettes, in which a written contract was deemed to be modified by a simple instant messenger conversation. The affiliate company, CX Digital, wanted to remove the contractual limit of 200 referrals per day for sales of Smoking Everywhere's e-cigs, and the following IM conversation ensued:
[CX] (2:50:08 PM): We can do 2000 orders/day by Friday if I have your blessing
[CX] (2:52:13 PM): those 2000 leads are going to be generated by our best affiliate and he's legit
[Smoking Everywhere]: is available (3:42:42): I am away from my computer right now
[CX] (4:07:57 PM): And I want the AOR when we make your offer #1 on the network
[Smoking Everywhere] (4:43:09 PM): NO LIMIT
[CX] (4:43:21 PM): awesome!
Smoking Everywhere then tried to bail out on paying CX the affiliate fees owed, and claimed (among other things) that this didn't represent an actual modification of the contract which had the 200 per day limit stated. The court didn't buy it, noting that this is a perfectly fine example of an offer, counter-offer and acceptance, all encapsulated in instant messenger:
After the discussion between Touris and Soltani about switching the URLs, Soltani sends an
offer to Touris: "We can do 2000 orders/day by Friday if I have your blessing . . . . [a]nd I want the
AOR when we make your offer number one on the network." ... Touris responds,
"NO LIMIT." ... CX Digital argues that Touris accepted Soltani's offer by saying "NO LIMIT."
The Court agrees a contract was formed but clarifies that Touris's response acted as a rejection and
counter-offer that Soltani accepted by then replying "awesome!"
[....]
Here, Touris's response of "NO LIMIT" varies from the two specific terms Soltani offered
and so acts as a counter-offer. Soltani proposed CX Digital provide 2,000 Sales per day and that
CX Digital be the AOR or agent of record..., a term of art meaning the
exclusive provider of affiliate advertising on the advertising campaign.... Touris makes a simple counter-offer that there be no limit on the number of Sales
per day that CX Digital's affiliates may generate ... and makes no mention of
the AOR term. Soltani enthusiastically accepts the counter-offer by writing, "awesome!" ... and
by beginning to perform immediately by increasing the volume of Sales
So, for those of you interested in contract law, let this be a simple lesson in what it takes to form a contract... and, yes, it is kind of awesome.
Last year, we wrote about a ridiculous situation in which the Association for Information Media and Equipment (AIME) threatened UCLA, after discovering that the school had set up an online video service, that let UCLA professors put up legally licensed video clips so that students could watch them from their computers. AIME claimed that UCLA's license did not allow for such uses. UCLA claimed this was fair use. After initially taking down the videos, UCLA decided this was worth fighting over and put the videos back up last March. At the time, we thought a lawsuit from AIME would come quickly, but apparently it took until December. UCLA recently filed a motion to dismiss the lawsuit, setting up a few reasons why -- including the claim that, as a state university, it has sovereign immunity from copyright lawsuits and, also, that AIME is not the copyright holder in question, and thus has no standing.
However, as Kevin Smith (not the filmmaker we've been talking about recently, but rather someone at the Duke University Library) notes in the post above, there is an interesting claim in the motion, where UCLA suggests that the breach of contract claim (which comes under a state law) is preempted by federal copyright law. If I remember the details correctly (and you copyright lawyers out there, feel free to correct me), with the Copyright Act of 1976, that law basically superseded any state laws that covered the same grounds. Mostly, people have thought this meant that state copyright laws effectively were wiped out (though, as we've seen, some awful remnants of those laws remain).
However, what UCLA seems to be arguing, is that federal Copyright Law could also wipe out portions of state contract law as well, if those aspects are covered by copyright. It's a creative way of saying that you can't contractually give up aspects of copyright, such as fair use. Now, there are some areas where it's known you can't give up what copyright says via contract. You can't, for example, contractually give up your termination rights (which let you take back a copyright you assigned to someone decades later). Also, it's not quite the same thing, but the recent ruling in the Augusto case has suggested that there are situations where you don't give up copyright exceptions (in that case, first sale) -- but it's distinguished by the fact that the court effectively said there was no license on promotional CDs (despite a stamped on "license" text).
So rather than relying on something like that, UCLA seems to be relying on preemption of state contract law, to say that even if you signed a license agreement, fair use rights can still apply. It's an interesting point. I'm of a mixed opinion on whether or not it's a good thing, however. I am a fan of such copyright exceptions, and would be worried if we started to see fair use "licensed away" in more situations. However, would that also mean that we couldn't license away other aspects of copyright law? Would that cause trouble for certain types of licenses, like Creative Commons licenses?
I'm guessing that the court may skip over this issue entirely, in that it can just hand UCLA a victory on the sovereign immunity or lack of standing claims and just move on without addressing this issue. However, I do expect that it will show up again in other lawsuits at some point.
Last week, we wrote about the bizarre case in New York where a guy is claiming to own 84% of Facebook due to a signed contract with Mark Zuckerberg from six years ago. As we noted at the time, the terms of the contract seemed quite odd and it appeared unlikely to be legit. Now things are getting strange, as a Facebook lawyer has admitted to being "unsure" whether or not Mark Zuckerberg actually signed the contract. That seems like the sort of thing Facebook's lawyer should have found out before going to court, doesn't it?
The hearing also explained the situation in a little more detail, saying that the guy, Paul Ceglia, had hired Mark Zuckerberg to do some coding for Ceglia's own project (a sort of "Street View" thing, that was intended to be a paid app for insurance providers). Somehow, according to Ceglia's lawyers, the deal was expanded so that not only would Zuckerberg code Ceglia's project, but Ceglia would "invest" in Zuckerberg's online yearbook project. The whole thing still seems... confusing, at best. It's unclear why a simple work for hire coding deal would also involve investment in the early version of Facebook, and even the timing seems off, as much of this happened well before pretty much all other reports discuss Zuckerberg's first plans for Facebook.
Facebook is still claiming that the statute of limitations on this means it doesn't matter one way or the other, but it still is surprising that it's lawyer would go to court being "unsure" of whether or not Zuckerberg signed the contract.
One of the more interesting issues related to copyright law is how contract law meshes with copyright law. For example, there was the recent case (still going through the appeals process) over whether or not a copyright holder (a record label in this case) could effectively wipe out First Sale rights (allowing you to resell what you bought) via a contract. As of right now, the US courts have said no -- and that's important. If you could supercede copyright laws with contractual terms, it would make the limitations on copyright law effectively meaningless, because every product would quickly include some sort of licensing agreement that took away fair use, first sale and other exceptions (including, potentially, the idea that the copyrights might someday expire). This is not a US only issue, of course. Just recently we've seen blogs from elsewhere also start to discuss if contracts can increase limitations beyond copyrights.
However, there is a new lawsuit in the US that may be worth following on this topic. It involves GateHouse Media -- a company that has been ridiculously aggressive in trying to stop others from doing things as simple as copying a headline and a lede. In this case, the primary issue is a little (if only slightly) more reasonable, in that the lawsuit involves a company that sells nice looking plaques to people with a copy of a newspaper article about them or their company. GateHouse offers such a service itself, and clearly sees this competition as infringing.
For quite some time, Copycense has been banging the drum that setting up Creative Commons as a contractual layer to copyright takes it into dangerous territory that isn't good for copyright law itself or overall public policy. There haven't been too many cases that have tested this point, but it sounds like the GateHouse Media one has the potential to raise certain questions (who knows if we'll actually get answers) about how copyright and contracts relate to each other -- especially within the realm of Creative Commons.
This has been one of my concerns with Creative Commons. Many folks who support Creative Commons licenses are justifiably worried about what happens in cases like the one above concerning promo CDs where the First Sale doctrine gets written out of copyright law via contract. Yet, at the same time, the whole basis of many Creative Commons licenses is based on this same ability to bring contract law into copyright. As much as I like the concept of Creative Commons, this still leaves me worried. The lawsuit itself may not end up challenging this point, but sooner or later, someone's going to do so, and people who think they're on one side of the argument may quickly find themselves on the flip side.
There have been plenty of questions over the years about the enforceability of online contracts, especially of the "clickwrap" variety. However, a recent ruling apparently says that contract terms are acceptable even if hidden behind a hyperlink. Apparently, the court found that because the link to the terms is "highlighted" in a different color, it's consider conspicuous enough that a reader should have clicked on it and read it.
Now, that's interesting to me, because I'd just been reading law professor Peter Friedman's blog post for his first year Contracts law class, where he talks about how few people actually read online agreements, and how many people probably agree to things they didn't think they had agreed to:
65 out of my 66 students (law students in a contracts class!) admitted in our first class they rarely or never read the online agreements they "agree" to. The only empirical survey I am aware of regarding consumer behavior in connection with online agreements found the following 7 years ago:
50% of the respondents said that they sometimes read online agreements and 40% never read them;
Thus, only 10% of the respondents always read the online agreements that they encountered;
Well over half of the respondents (64%) always click the Accept button and most of the others (35%) some times Accept;
More than half of the respondents (55%) didn't believe that they were entering into a legally binding and enforceable contract even after clicking I Accept;
Most (79%) never ever kept a copy of any click-wrap agreement that they entered into;
The majority of respondents (90%) indicated that they never completely read shrink-wrap agreements;
38% of the total respondents came from the IT/Internet/E-commerce industries.
Andrew Gatt, "Electronic Commerce -- Click-Wrap Agreements: The Enforceability of Click-Wrap Agreements," doi:10.1016/S0267-3649(02)01105-6 (2002).
We've seen similar things in experiments that offered prizes within the clickwrap agreements, to see if anyone claimed them -- and it took four months and 3,000 downloads for anyone to claim the prize. In many ways, this actually reminds me of an old story about Van Halen's concert contracts with local promoters and venues, that was getting lots of attention last month, after it was featured on an episode of This American Life. Many people have heard the story of how the band had a rider in its contract demanding a bowl of M&M's backstage with all the brown ones removed. And most people who heard that story assumed it was a sign of rockstar divas with ridiculous demands. However, the true story is that it was actually in there to see if the people setting things up had actually read the details of the contract:
Van Halen was the first band to take huge productions into tertiary, third-level markets. We'd pull up with
nine eighteen-wheeler trucks, full of gear, where the standard was three trucks, max. And there were many, many technical errors -- whether it was the girders couldn't support the weight, or the flooring would sink in, or the doors weren't big enough to move the gear through.
The contract rider read like a version of the Chinese Yellow Pages because there was so much equipment, and so many human beings to make it function. So just as a little test, in the technical aspect of the rider, it would say "Article 148: There will be fifteen amperage voltage sockets at twenty-foot spaces, evenly, providing nineteen amperes . . ." This kind of thing. And article number 126, in the middle of nowhere, was: "There will be no brown M&M's in the backstage area, upon pain of forfeiture of the show, with full compensation."
So, when I would walk backstage, if I saw a brown M&M in that bowl . . . well, line-check the entire production. Guaranteed you're going to arrive at a technical error. They didn't read the contract. Guaranteed you'd run into a problem. Sometimes it would threaten to just destroy the whole show. Something like, literally, life-threatening.
And, indeed, what the band found out is that the contract is just as enforceable whether or not you read the contract -- and that appears to be the result online too. While I have heard of a few cases of courts rejecting clickwrap agreements, it certainly sounds like more and more are considering them to be viable, legally-binding contracts.
An interesting court ruling has added a wrinkle to section 230 safe harbors that protect a website from being liable for actions of its users. In this case, Yahoo was given immunity due to section 230, but may still be in trouble because a Yahoo employee promised to remove the content in question. The case involved a guy who posted profiles of his ex-girlfriend on Yahoo sites. The profiles in question included nude photos the ex-boyfriend had taken and her (real) contact info. He then posed as her in chat rooms and pointed men to her profile leading to numerous unwanted phone calls. Yahoo was apparently quite slow in responding to her complaints, but eventually someone promised to "take care of" the issue. However, two more months went by and nothing happened, so the woman sued (at which point the profiles were finally removed).
Now, it's pretty bad that Yahoo was slow to remove the profiles, but it still seems like the woman's case should have been against the ex-boyfriend who posted the profiles. That, of course, is the whole point of Section 230, so that the service/tool provider is not blamed for the actions of an individual, even though that individual is still responsible. There was some question over whether or not Section 230 still applied since this wasn't a defamation case, but the court (correctly) ruled that section 230 applies to much more than just defamation.
However, the more interesting part is that the court noted that since a Yahoo rep indicated she would "take care of" things, she may have established a separate "contract" outside of section 230 safe harbors, which was then violated. So... the lesson is, if you want to keep your safe harbors, don't promise stuff and fail to live up to it...
Skype has gotten some press this week after it announced the availability of a an iPhone client for its service (except in Canada, though, thanks to patent issues). The application only works over WiFi, though, and not the cellular data network. Operators typically say these restrictions are in order to prevent the use of massive amounts of bandwidth and harm network performance for other users; what seems more likely is they're worried that Skype will "steal voice minutes" away from their network. That's a silly belief though, because when users are already paying for a big bundle of minutes, and have unlimited off-peak minutes, and so on, it's not very likely they'll go to the trouble of using Skype for most calls. Perhaps the only ones they'd use such an application for are for calls they weren't going to make through the operator's network anyway -- such as international calls, for which they'd use a cheaper landline, a calling card, or wait until they're in front of a PC. Blocking Skype from working over the mobile network only hurts the operators by putting up a barrier in front of customers, it really doesn't protect any revenues. But no matter, the blocking -- or worse -- goes on. In Germany, where Skype is the top download from the App Store, T-Mobile (the operator which sells the iPhone there) is threatening to terminate the contracts of customers who use Skype on their iPhones, because the contracts prohibit the use of VoIP services. That's a nice touch: play by our rules, or you'll no longer have the privilege of giving us your money. You know, that doesn't sound so bad, because then users are free to take their business elsewhere. Although, as Skype's general counsel points out, every other mobile operator in Germany also bans VoIP.
