Copyright Troll Richard Liebowitz Helps Protect Free Speech & Fair Use By Losing Yet Another Case

from the it-almost-makes-you-wonder dept

Richard Liebowitz is infamous as the notoriously inept copyright troll lawyer. He's so bad at his job that he's been sanctioned repeatedly, and recently was suspended from practicing law in the Southern District of NY (his home court). The details of him lying under oath over and over again are simply staggering.

However, you have to give Richard Liebowitz credit for one thing: he's so bad at copyright trolling, that he's set some useful precedents. We wrote about one such case a year and a half ago, where Liebowitz's greed in turning down a settlement offer ended up costing his client a ton.

Now, lawyer Dan Booth (who has gone up against Liebowitz in a variety of cases) points us to another loss by Liebowitz that is actually a win for everyone (and if you're wondering, this ruling (in Arizona) came out before he was suspended in NY. But the ruling is important in highlighting how fair use can protect bloggers who repost articles from elsewhere.

The case was brought by Daniel Fellner, a photographer and journalist, against "Travel 4 All Seasons LLC" which is actually just a hobby website run by Alfred Hague, who admits he's never made any money from the site. While nearly all of the hundreds of Liebowitz trolling lawsuits are filed over photographs, this one was over the fact that Hague reposted part of an article that Fellner had written about.... Pickleball on cruise ships (I don't know what this is, and I don't think I want to know).

Some people like to insist that an article can't possibly be fair use. But that's wrong. A decade ago, in the midst of another highly publicized copyright troll, Righthaven, a court also found that reposting a full article can be fair use (incredibly, in a case where the defendant hadn't initially even raised fair use as a defense!). In this case, while Liebowtiz claimed that Hague reposted Fellner's entire article, the actual evidence suggested that wasn't even true.

And, again, in this case, the judge found that Hague's reposting of Fellner's pickleball article was absolutely fair use. First, of course, the court does the obligatory highlighting of Liebowitz's highly sanctioned record ("Mr. Liebowitz has filed hundreds of similar actions in federal courts throughout the country and has repeatedly been cited for misconduct in this District and in many other federal courts throughout the United States."), highlights his poor lawyering in this case ("During the course of discovery, it appears that Plaintiff requested hardly any discovery, and he did not depose Defendant or its principal, Alfred Hague"), his obvious cut-and-paste from other filings laziness ("Ironically, the vast majority of Plaintiff’s Response appears to have been copied and pasted from other briefs by Mr. Liebowitz, as the Response almost exclusively discusses the theft of photographs, not written text, and most of the law cited is from out of Circuit."), and a final "that's not how you evidence" smackdown:

As an initial matter, Defendant argues that Plaintiff has failed to proffer any admissible evidence to dispute the facts established in the Motion. Plaintiff provided a Declaration of Mr. Liebowitz, unverified interrogatory responses, and copies of the Article. (Doc. 35). Defendant argues that of the evidence provided, only a single statement can be supported with personal knowledge by Mr. Liebowitz, that he is “lead counsel for Plaintiff Daniel Fellner.” (Doc. 35-1). The Court agrees. Plaintiff submitted no authenticated documents, declarations, or admissible evidence of any kind to establish that there are material fact disputes. Under Rule 56(e), if a party fails to properly support an assertion of fact or fails to properly address another party’s assertion of fact as required by Rule 56(c), the court may consider the fact undisputed for purposes of the motion. As Plaintiff did not provide any admissible evidence to dispute any facts established by Defendant, the Court determines that there are no material facts in dispute.

Anyway, from there, we get a four factors fair use analysis, and it doesn't go well for Fellner or Liebowitz. Though it does go well for hobbyist/amateur bloggers who repost full articles. Let's go factor by factor. First up: commercial use?

Plaintiff asserts, without supporting evidence, that Defendant profited off of the use of the Article. (Doc. 34 at 12). If Defendant had published the Pickleball Article for a profit-making purpose, such use would be presumptively unfair under this factor. See Harper & Row Publishers, 471 U.S. at 562. The contrary presumption is appropriate here, however. Defendant has established that the Article was not posted for any commercial purpose, and indeed did not make any profit. (Doc. 33-1 at 6). Alfred Hague, sole owner of the website, testified that the website is a blog for travel enthusiasts like himself to read. (Id.) The information on the website was fully accessible to the public and did not require a membership fee. (Id.) Moreover, Defendant has never made a profit from the website and does not have a bank account. (Doc. 33-1 at 6). The Court also considers that Defendant identified Plaintiff as the author of the Article and provided a citation to the original work, in order that any visitor to the website could read the Article in full. (Id. at 7). Defendant has since removed the Article, so it will never earn a profit from it. (Id.) The Court finds this factor weighs in favor of finding fair use.

Factor two, on the nature of the work. This is quite interesting, because the judge argues that since much of the article is just a straight up recitation of facts about pickleball, there is little in here that is creative or even subject to copyright protection at all, and thus it favors fair use.

Plaintiff argues that his Article was not a factual work, but a creative work that only he could have written. (Doc. 34). Moreover, Plaintiff argues that because Defendant did not transform the Article or add commentary to it that this factor favors a finding of copyright infringement. While the work included some of Plaintiff’s opinions, the majority of the work was a summation of the history of pickleball and its current popularity on cruise ships. (Doc. 33-1). For instance, one paragraph explained: “Pickleball is a racket sport that combines elements of tennis, table tennis and badminton. Paddles are made of wood or composite materials; the ball resembles a wiffleball. The sport can be played with two or four players, although doubles is far more common.” (Doc. 33-1 at 3). Another paragraph states: “Pickleball was invented in the 1960s in Washington state, but only recently has seen a huge growth in popularity; it now routinely attracts more players than tennis in age 55 and older housing developments. The USA Pickleball Association, which is headquartered in Surprise, calls it ‘the fastest growing sport in North America.’” (Id.) The Article is much closer to a news story than a motion picture. See Sony Corp., 464 U.S. at 455 n. 40. Moreover, only one of the seven paragraphs published on Defendant’s website contained personal observations from Plaintiff. (Doc. 33-1 at 3). The Court finds that the majority of the Article is factual in nature and not an original piece or a novel. Moreover, while Defendant did not add anything of substance to the Article to substantially transform it, that is not required for a finding of fair use. See Campbell, 510 U.S. at 579 (“[T]ransformative use is not absolutely necessary for a finding of fair use.”). The Court finds this factor weighs in favor of finding fair use.

The third factor, on the amount and substantiality used, you might think would cut against fair use, given that Fellner claimed the full article was reposted. But, as noted above, that wasn't actually true.

Plaintiff’s allegation that Defendant published the entire Article are clearly false. The original Article, published in AZ Central, contained sixteen separated paragraphs. (Doc. 35-3). The evidence is undisputed that Defendant only published seven paragraphs of the Article on the website. (Doc. 33-1 at 3). In terms of the substantiality of the Article published by Defendant, it did contain the main factual portions of the Article, but did not include other more creative portions, such as Plaintiff’s interviews with the president of the national pickleball association, cruise ship activity directors, or cruise ship passengers. (compare Doc. 35-3 and Doc. 33-1 at 3). Therefore, the Court finds this factor slightly favors a finding of fair use.

And finally, what's often considered the most important factor: the impact on the market. Here, the court rightly notes that this isn't harming the market at all. In fact, you can almost hear the judge laughing about this argument:

Plaintiff argues that the market for his work was diminished because of Defendant’s unauthorized publishing of the article. (Doc. 34). Plaintiff has provided no evidence to support this assertion. Plaintiff attempts to label Defendant as a “competing news organization” with the organizations that paid to publish Plaintiff’s article, AZ Central and later, USA Today. USA Today has a daily readership of 2.6 million and has thousands of employees, whereas Mr. Hague is the sole operator of Defendant’s website. Plaintiff has not provided any admissible evidence to suggest that Defendant is a competing news organization of USA Today, such that the Article’s reproduction by Defendant would reduce its economic viability with other large news organizations. It is undisputed that Defendant never made a profit from the Article. (Doc. 33-1 at 6). Moreover, Plaintiff has not established that the unauthorized reproduction reduced Plaintiff’s economic opportunities in the market. See Fisher, 794 F.2d at 438 (holding that “infringement occurs when a[n infringing work] supplants the original in markets the original is aimed at, or in which the original is, or has reasonable potential to become, commercially valuable”). The Court finds this factor weighs in favor of finding fair use.

Put that all together and all four factors lean towards fair use... meaning this is fair use.

At its core, “[f]air use presupposes ‘good faith’ and ‘fair dealing.” Harper & Row Publishers, 471 U.S. at 562. The undisputed facts establish that Defendant did not reproduce the Article to attempt to gain a financial benefit to Plaintiff’s detriment or for any nefarious reason. Defendant simply thought that the topic of pickleball on cruise ships would be interesting to the relatively few readers who visited his website. There is no evidence to suggest that Defendant’s use of the material was anything other than fair, and all four factors weigh in favor of finding fair use. Plaintiff has provided no admissible evidence to the contrary and the Motion for Summary Judgment will be granted.

Thanks, again, to Richard Liebowitz for establishing more good precedent in losing so many of your ridiculous cases.

Filed Under: alfred hague, blogging, daniel fellner, fair use, richard liebowitz

Want To Blog In Tanzania, Or Read Social Media In Uganda? Pay The Government, Please

from the consequences-of-lugambo dept

Although blogging may have lost its early excitement for many, in some countries it still represents a vital channel for news that may not be available elsewhere. For example, as Global Voices explains:

Blogging emerged in Tanzania around 2007 and became popular as an alternative news platform with educated, middle class people, as well as politicians and political parties. In Tanzania, where media historically holds strong ties to government interests, blogging opened up possibilities for individuals to establish private news outlets that proved immensely powerful in terms of reach and readership.

The current Tanzanian government is not very happy about this uncontrolled flow of information to the people. But instead of anything so crude as shutting down blogs directly, it has come up with a more subtle, but no less effective, approach:

On March 16, 2018, the United Republic of Tanzania issued the Electronic and Postal Communications (Online Content) Regulations demanding that bloggers must register and pay over USD $900 per year to publish online.

To put that in context, Tanzania's GDP per capita was under $900 in 2016, so the new fees are completely out of reach for the majority of people in the country. As Quartz notes, in addition, the registration process is onerous, and the fines for infringement serious:

applicants are expected to fill a form detailing the estimated cost of investment, the number of directors and stakeholders in the platform, their share of capital, staff qualifications, expected dates of commencing operations, besides future growth plans.

But even after providing this documentation, authorities still reserve the right to revoke a permit if a site publishes content that "causes annoyance, threatens harm or evil, encourages or incites crimes" or jeopardizes "national security or public health and safety." Officials could also force managers to remove "prohibited content" within 12 hours or face fines not less than five million shillings ($2,210) or a year in prison.

The situation is slightly easier in Tanzania's northern neighbor, Uganda. Under a new order there (pdf), "All online data communication service providers, including online publishers, online news platforms, online radio and television operators" are required to register with the Uganda Communications Commission. However, there's no mention of fees, or punishments for non-compliance. But if life for Ugandan bloggers seems to be easier than for those in Tanzania, a new daily tax on social media is designed to discourage ordinary users from engaging in what Ugandan President Yoweri Museveni calls "lugambo", or gossip, online. A report in the local Daily Monitor newspaper quotes the President as saying:

"I am not going to propose a tax on internet use for educational, research or reference purposes... these must remain free. However, olugambo on social media (opinions, prejudices, insults, friendly chats) and advertisements by Google and I do not know who else must pay tax because we need resources to cope with the consequences of their lugambo"

The amount of the daily tax is not clear -- a BBC report on the move says it might be either 100 or 200 Ugandan shillings ($0.013 or $0.027) a day -- and there are no details yet on how the new law will be enforced and the taxes collected for services deemed to involve "gossip". But as another Global Voices post notes, this social media tax is just the latest clampdown on the online world in Uganda. It quotes a January 2018 report from Unwanted Witness, a Ugandan NGO, which said:

2017 registered the highest number of Ugandans ever arrested for their online expression and these arrests are clearly targeted crackdown on free flow of information and speech on the Internet.

Different as they are, what the moves in Tanzania and Uganda both show is African governments coming up with new ways to muzzle online commentators that seek to tell people what the official media don't.

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

Filed Under: blogging, free speech, internet, regulations, social media, tanzania, taxation, uganda

How China Tamed The Country's Top Bloggers, And Took Back The Net

from the Weibo-vs-WeChat dept

Techdirt has been reporting for a while on China's continuing clampdown on the internet, the latest step being the new national security law. You might think these stringent measures, combined with numerous previous moves to strengthen censorship, would be enough. But a fascinating report in The Australian Financial Review reveals that over the last few years the Chinese authorities have also used other techniques in order to ensure that their control of the online world is as complete as possible.

As we reported last year, the number of posts on the Chinese microblog site Weibo plummeted by 70% as a result of new censorship rules that were brought in. The Australian Financial Review feature explains what happened next:

[China's Communist Party], which runs one of the world's slickest propaganda machines, was smart enough not to kill off social media entirely. Instead, it has encouraged the development of a more appropriate platform.

That is WeChat, the four-and-a-half-year-old service that boasts 500 million active users and a parent company with a sharemarket value of $US190 billion ($248 billion), making it the world's eighth-largest technology stock.

Here's the crucial difference between Weibo and WeChat:

Acquiring friends or followers on WeChat is more difficult than Weibo, as you either need to know a user's phone number, be in their vicinity or meet them in person whereby you can scan their QR code. Then they must accept your invitation to become a contact.

There is also no search function to seek out celebrities or opinion leaders and no way to determine how many followers or friends a user has.

That makes WeChat much more intimate -- and much less useful for spreading hot news rapidly or stirring things up.

Not content with replacing the mass-medium Weibo with the smaller-scale WeChat, the Chinese authorities have also ensured that the celebrities of the social media world, who once wielded immense online power, and represented an emerging challenge to the state, have been reined in. Sometimes this was done in the crudest possible manner, as the arrest of a popular political blogger last year shows:

At a nearby police station, in addition to the handcuffs, shackles were placed on his ankles. They would remain in place for 24 hours while he was interrogated.

Blackmail was the blogger's stated crime, although no documents were produced to substantiate these allegations.

"They told me just confess to something and you can go home. If I didn't co-operate, they said, 'you will be in jail for years'."

Remarkably, he didn't, and the situation deteriorated:

In the months after his detention, the man's father has been threatened and the blogger has been beaten up twice by hired thugs, once outside a public building watched over by security guards.

Understandably, in the end he yielded:

After some initial resistance, the blogger who describes himself as a "mild reformist" retreated from the field of battle. He is no longer exposing corruption and hypocrisy within the party.

After a few other high-profile bloggers were arrested and treated harshly, the intimidation could become more subtle:

Last month, at a state-run hotel outside Beijing, a group of China's most influential bloggers assembled. None was there by choice.

They had been summonsed to the Changping district, north-west of the capital, by the State Internet Information Department for a seminar on "Domestic Current Affairs".

It was the modern version of a re-education camp, complete with swimming pool, towelling robes and a buffet breakfast.

Central to that re-education were some helpful hints about what topics they might like to write about in the future:

During the seminar, the authorities even put up a slide, showing what they believed to be a successful re-education of one blogger. The person in question, who had once written about politics and the rule of law, had now turned his keyboard to more appropriate subjects, according to the moderator, such as hotel reviews, fashion and first-world type lifestyle problems.

As the rest of The Australian Financial Review's report makes plain, most of the country's top bloggers have gotten the message. Social media is now a "dreary mix of food reviews and gossip," and China's grip on the online world looks firmer than ever.

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

Filed Under: authoritarian, blogging, censorship, china, free speech, social media
Companies: wechat, weibo

The Brett Kimberlin Saga: A Story Of Wacko Vexatious Lawsuits

from the legal-system-run-amuck dept

For years we've been paying somewhat loose attention to the saga involving Brett Kimberlin and his ongoing lawsuits against bloggers. The story was complex and convoluted from the beginning, and only got more so over time. In fact, it got so confusing that it almost became too difficult to jump into the story mid-stream. On top of that, the "partisan" overtones of many of the folks debating the story (on both sides) made it even more of a farce. When Kimberlin lost one of his lawsuits against some bloggers a few weeks ago, we debated writing a story, but there was so much back story to cover (and so many other things going on) that we let it slide. Thankfully, Dave Weigel, writing for the Daily Beast has a giant story about last month's trial, including much of the background. If you're unfamiliar with the Kimberlin saga (or even if you're very familiar with it), it's a worthwhile read.

The short version is that Kimberlin is a guy who had some significant legal problems back in the 70s, including being convicted of the so-called Speedway bombings. In the 1980s, he got lots of attention for claiming to have sold marijuana to Dan Quayle. In the 1990s, a book was written about him by Mark Singer called Citizen K: The Deeply Weird American Journey of Brett Kimberlin, but that "deeply weird American journey" was far from over. In the 2000s, he got attention warning about e-voting machines and the possibility of fraud (something we wrote about extensively at the time as well). But in the 2010s, it appears his "deeply weird" journey has moved onto suing people who say things he doesn't like.

Weigel's writeup of the trial is well worth reading, highlighting just how ridiculous the charges were, and how it was pretty clear that Kimberlin was suing these bloggers simply because he didn't like what they said about him, rather than on the basis of anything that was actually defamatory. The end result was that Kimberlin lost spectacularly. It didn't even go through a full trial. Kimberlin presented his evidence, and the judge ruled against him on the spot (i.e., without the other side having to go through its whole argument). As Ken "Popehat" White explains:

After the close of Kimberlin's day of "evidence," the judge granted a motion for a directed verdict against him. Under Maryland law, that means the judge necessary found "a total failure of legally sufficient evidence to prove" Kimberlin's remaining defamation claim. The judge didn't just find Kimberlin's evidence unpersuasive; he effectively found it irrelevant

Reading Weigel's account of the trial, you can quickly see why the judge ruled that way. So many of the points raised by Kimberlin clearly had nothing to do with anything coming anywhere near defamation, but rather were focused on "people said mean things online." For example, Kimberlin questioned one of the defendants, Robert Stacy McCain, about a blog post supposedly making fun of Kimberlin's daughter's singing career (in reality, that's only mentioned in passing -- most of the post is about Brett Kimberlin himself). Kimberlin then calls his own daughter, Kelsie, to the stand to testify (I'm not making this up) about how Taylor Swift tweeted some of her videos, leading Kimberlin to ask her, "So, are you considered a child prodigy?"

After the ruling, Kimberlin made it clear to Weigel that he wasn't done, and he intended to keep bringing new legal actions to tie everyone up in court (Kimberlin, in the past has allegedly made similar threats, saying, "I have filed over a hundred lawsuits and another one will be no sweat for me. On the other hand, it will cost you a lot of time and money and for what," in an email to another blogger (who posted the email). Here's what Kimberlin told Weigel:

“These guys are going to come out today and say I’m a pedophile,” said Kimberlin. “And tomorrow, I can file another lawsuit against them. And now I know what I need to do. It’s going to be endless lawsuits for the rest of their lives. And that’s what it ends up being. I sue them. They sue me. They come into court. I sue them. They come into court. That’s the way it is.”

A shortened (tweeted) version of this quote led Ken White to suggest crowdsourcing an effort to get Kimberlin declared a vexatious litigant. Apparently, Kimberlin has already "filed a motion for issuance of judgment," basically a precursor to asking for a new trial on the basis that the judge got it wrong. Another defendant claims that Kimberlin is also threatening to have his daughter sue them as well.

For years we've written about various attempts by people to get others to shut up when they say or write unkind things. Our legal system isn't supposed to allow that sort of thing. Kimberlin's actions are, once again, a (strong) reminder why we really need a federal anti-SLAPP law that will help get bogus lawsuits designed to stifle constitutionally-protected speech tossed out quickly.

Filed Under: anti-slapp, blogging, brett kimberlin, defamation, free speech, slapp, speedway bomber, threats, vexatious litigant

Court Fines French Blogger $3,400 For Her Negative Review Of Local Italian Restaurant, Il Giardino

from the enjoy-your-cash,-idiots...-and-your-demolished-reputation dept

Here's yet another business that, when confronted with a negative review, thought to itself, "Why not deter EVEN MORE potential patrons from ever considering setting foot in our establishment?" There are many ways to react to criticism, and Il Giardino, an Italian restaurant located in France, opted for "catastrophic."

A food blogger in France has been fined 1500 euros ($2,040 USD) for writing a negative review of a restaurant. According to Arret Sur Images (translated), Caroline Doudet wrote an unflattering review of Il Giardino, an Italian restaurant in Cap-Ferret, France in August of 2013 on her blog Les Chroniques Culturelles. She was brought to court six months later by the restaurant.

Doudet's review is actually a blog post, one that would require readers to do a little digging to get past the normal review sites. As far as I can tell from the translation, Doudet portrayed the lousy service she encountered in a far more humorous fashion than most negative reviews, all the while clearly pointing out the deficiencies she encountered.

So, rather than address the issues, or simply disregard the single voice complaining about the three waitpersons apparently needed to acquire a single round of beverages (not to mention quality issues with the food [and service] past that point), Il Giardino decided to make its mégot mal a full-blown legal affair.

It all comes back to European supervillain The Google.

Sud Ouest reports (translated) that the lawyer for the restaurant claims that the post caused "great harm" to his client because when the restaurant was Googled, the negative review was one of the first results.

Ah, yes. SEO uber alles (he said, fearlessly mixing European dialects like a trainspotting linguist). Great harm was apparently suffered and, therefore, the person who received lousy service from the aggrieved entity must pay. The court apparently agreed with this faulty line of logic (possibly due to Google's name being raised [and presumably greeted with involuntary hisses by attending countrymen]) and slapped the blogger with a hefty fine and a request that she "change the title" of the offending post.

Doudet did them all one better. She deleted it. It lives on at the Internet Archive, but won't be troubling search engine results to the extent it once did. Not that it matters. Il Giardino's decision to sue is hurting it far more than Doudet's post did.




Doudet was also charged $1,360 in court costs, bringing her total fines to a positively KlearGearian level of vindictive ridiculousness ($3,400).

There are too many things wrong with this court decision to enumerate, but Doudet's take on the fiasco sums it up beautifully.

"If bloggers do not have the freedom to write negative reviews, positive reviews make no sense either."

If businesses like Il Giardino want to continue living a "hear no evil" existence, that's fine. But no one should believe anything positive posted about the restaurant anywhere -- not if this is how the business reacts when it's criticized. Every so often, something truly defamatory should be addressed in this fashion, but just being criticized shouldn't trigger this sort of reaction. If the restaurant's Google juice is so diluted it can't outweigh a blogger, the problem lies with the restaurant, not the critic. Now that it's punished a critic, its reputation has gone completely south, something that wouldn't have happened if it had just accepted the fact that bad reviews happen and moved on.

Filed Under: blogging, caroline doudet, food blogging, france, free speech, opinion, reviews, search results, seo
Companies: il giardino

Vladimir Putin Restricting Naughty Language And 'Unregistered' Bloggers

from the a-personal-threat dept

I've always kind of known that Vladimir Putin was a bit of a bastard. Between his hypocrisy on government snooping, to his horrific record on matters of artistic and political speech, and his absolute willingness to destabilize his neighborhood in favor of having Russia pick up some territory that didn't belong to it in the form of Georgia and Ukraine. That said, two recent actions by Putin are starting to make me think this guy might just be as bad as everyone says.

The first is what appears to be an entirely childish attempt to stifle supposedly naughty language in the arts.

Any new film containing obscene language won't be granted a distribution certificate, so there's no chance of seeing it at the movie theater. And copies of books, CDs or films containing swearing can only be distributed in a sealed package labeled "Contains obscene language," a Kremlin statement said. According to state news agency ITAR-Tass, individuals caught using foul language face a fine of up to $70, while officials can be fined up to $40 and businesses nearly $1,400. They face a higher fine and a three-month suspension of business for repeated offenses.

As of the time of this writing, it's unclear exactly what will constitute "obscene" language, though the Russian government has helpfully noted that they'll be the ones judging such obscenities with an "independent examination," which is likely to be just as "independent" as you'd suppose. Given the fact that Russia has found the LGBT community in the past to be oh-so icky-icky, you'd have to imagine that language dealing with their community will be on the list, alongside some of the hallmark swear words, like religiously offensive language, f-bombs, and-

"Shiiiiiiiiiiiiiiiiiiiiit!"

Er, thank you, Mr. President. My problem with this should be obvious: I love swearing. Seriously, I use the f-word as a verbal comma. But putting me aside, the idea that a developed nation's leader could think so little of his own people as to make it the state's responsibility to protect their delicate little ears is beyond silly. Restrictions on free speech are one thing, but when you're restricting the only speech that makes logical sense as a reaction to the very restriction on that speech, things have gone recursively wrong. Because if your first reaction to someone telling you that you can't swear any longer isn't "Well, shit," then you have a problem.

But if you thought that Putin was going to get blasted for this motherly move online, you may not know that he also signed into law the requirement for bloggers with even modest readership to register with the government and ban anonymity on their sites, which we were among the first to report about a few weeks back:

Russia has taken another major step toward restricting its once freewheeling Internet, as President Vladimir V. Putin quietly signed a new law requiring popular online voices to register with the government, a measure that lawyers, Internet pioneers and political activists said Tuesday would give the government a much wider ability to track who said what online.

Widely known as the “bloggers law,” the new Russian measure specifies that any site with more than 3,000 visitors daily will be considered a media outlet akin to a newspaper and be responsible for the accuracy of the information published. Besides registering, bloggers can no longer remain anonymous online, and organizations that provide platforms for their work such as search engines, social networks and other forums must maintain computer records on Russian soil of everything posted over the previous six months.

This is, of course, aimed at chilling speech critical of Putin's Russian government, which currently seems to be attempting to scale back the whole democracy thing and inch closer and closer to the days of the Soviet Union. I don't say that lightly. Russia's restrictions on speech, freedom, persecution of minorities, and a clear aim towards expansion of real territory and cultural influence are something right out of the post World War Two era. This might scare some people, but not me.

Why? Because, just like the recent revolution in Ukraine, this kind of thing doesn't work any longer. And, yes, I realize that there are nations out there that still restrict the internet, speech, and freedoms, but they don't go from democratically free back to repression any longer. That whole thing about the internet being the "Wild West" is true in some ways. Putin will never be able to plug all the holes. He'll never be able to tamp down all the critical speech. And, like the former Ukraine government found before him, he will end up finding that the tighter he grips the internet's throat, the stronger it will fight back. It may not be quick, but it will happen.

Filed Under: blogging, cursing, free speech, offensive language, russia, vladimir putin

French Stock Market Regulator Hits US Blogger With $10K Fine For Publishing Opinion On French Bank's Leverage Ratio

from the France-still-not-making-much-effort-to-shrug-off-the-'crazy'-tag dept

Everyone gather 'round as I regale you with a tale of stock exchange regulation and global finance bloggers!

Wait! Come back!

I'm sorry. Before your eyes glaze over again, let me entice you with a better opening sentence.

An American market blogger found himself on the receiving end of a 8,000 euro fine for quoting another blogger. In real money, that works out to an almost $11,000 fine. And all for quoting another blogger's best guess on a French bank's leverage ratio.

Mike "Mish" Shedlock is a US blogger who covers global markets and his story begins this way.

On August 15, 2011, I posted BNP Paribas leveraged 27:1; Société Générale Leveraged 50:1; Sorry State of Affairs of U.S. Banks; Global Financial System is Bankrupt

In that post I quoted Jean-Pierre Chevallier on his Business économiste monétariste béhavioriste blog, that BNP Paribas leveraged: 27!

I also cited Chevallier's Société Générale leveraged: 50!

Société Générale took exception to the numbers and came up with its own set of numbers. According to SG, its leverage was 9.3%.

Chevallier revamped his math after SG's initial noisemaking and Shedlock issued an addendum to his own post.

Société Générale disputes the numbers and new calculations using the banks' numbers are 28:1 or perhaps 23:1 not 50:1 as noted on Forex Crunch.

My position has not changed much. Something is seriously wrong at Société Générale. Banks do not plunge out of the blue on rumors. I do not know the precise leverage, but shares are acting as if Société Générale has severe capital constraints (which of course they will deny) and/or other major problems.

That only seemed to irritate SG more. It contacted the SEC and basically informed the American regulatory body that whatever numbers it's presented were to be taken as fact. The SEC passed this complaint on to Shedlock, adding (paraphrased by Shedlock) "French banks [are] notorious about filing frivolous complaints."

Shedlock received a few more letters (in French) which urged him to respond to the complaints (but only in French), which he duly ignored. Later, a French blogger compiling his own post on the issue (entitled: Gross Delirium: The AMF sanctions bloggers rather than financial corporations!) contacted Shedlock and offered his assistance. One of Shedlock's friends broke down the French bank's complaints into plain English.

The French authorities accuse Chevallier of 'knowingly disseminating false information' about SocGen and you to have disseminated it further on 'Chevallier's urging', although you should have known better and it was your duty to check if his numbers were right (that is the basis for fining him 10,000 and you 8,000 euros).

The French blogger's post pointed out that Chevallier didn't "falsify" anything. He merely used a standard calculation for leverage ratios, one that disregarded "risk weighting" of various assets. Shedlock himself found a Wall Street Journal article that put SG's leverage ratio at 23-24 times its equity, still considerably higher than SG's own figures.

None of this mattered to the French bank, which accused the bloggers' calculations of possibly "influencing" its share price. While the SEC may have passed on the complaint with an eyeroll, the AMF, which regulates the French stock market, took the accusations at face value and issued fines to both bloggers. Not that the AMF is going to have much luck collecting these fines. Chevallier is appealing the verdict and suing AFP (France's largest newspaper) for making "false and defamatory accusations." Shedlock, conversely, is doing nothing.

The Witch hunt is now over and I was fined nearly as much as Chevallier. It's absurd enough to fine someone for a quote, and even more so when the facts are accurate.

The AFM has no jurisdiction over me, so they won't collect. As a US citizen living in the US, I am not subject to the absurdities of French laws, or French witch hunts. All they get from me is a vow to never go to France.

Good idea, considering French law apparently provides regulatory bodies with the power to fine bloggers for publishing their opinions on French banks, even when these opinions are backed up by reasonable calculations. And Shedlock is almost certainly protected under the SPEECH Act, which protects Americans against foreign judgments that would violate the First Amendment here. There doesn't seem to be much "regulation" going on in this situation. (And any French legislation that touches on the internet is routinely terrible.) Conceivably, SG could leverage itself Lehman-style and financially beat into submission anyone who points out this fact by running and complaining to the nearest subservient "authority."

Filed Under: banking, blogging, france, free speech, jean-pierre chevallier, leverage, mike shedlock, mish, quotes, regulations
Companies: bnp paribas, societe generale