No, Facebook's Argument In Response To Muslim Advocates' Lawsuit Is Not 'Awkward'; Facebook Caving On 230 Is What's Awkward

from the so-much-silliness dept

Mother Jones has a slightly weird article saying that Facebook is making an "awkward legal argument" in a lawsuit that was filed against the company by Muslim Advocates, arguing that Facebook and its executives lied to Congress when it insisted that the company would remove hate speech. There's a lot to unpack here, though I'd note that there are two things I find awkward here -- and neither of them are Facebook's legal arguments in the case. The real awkwardness is Muslim Advocates trying to argue that Facebook failing to remove certain content violates consumer protection laws. The second awkward bit is Facebook's constant political posturing about its openness to Section 230 reform.

Let's dig into the case, though. The complaint from Muslim Advocates (and filed by a lawyer who is a long-term critic of Section 230) is fairly straightforward. It says that Facebook's execs have testified before Congress that the company removes content that violates its policies. Yet, when Muslim Advocates alerted the company to content that it believed violated Facebook's policies, the company did not always remove it. Ergo (the complaint says), it means that Facebook's execs lied to Congress... and somehow that violates DC's consumer protection laws.

There's plenty here to roll your eyes about. There is no doubt that (tragically) there is plenty of hate speech on Facebook directed at Muslims (and many other groups). It is also true that content moderation is impossible to do well at scale, and that (1) mistakes will be made and (2) lots of people will disagree with Facebook's interpretation of its own rules. And just because Facebook testifies that if it becomes aware of content that violates its policies, it will take it down, if someone else believes that content violates Facebook's policies, but Facebook doesn't take it down, that does not mean that Facebook lied to Congress. It just means that there are differing interpretations of Facebook's policies, and Facebook is the one who gets to have the final say on that.

The lawsuit, obviously, argues otherwise. I find that argument to be kinda silly. And, if it actually wins the day in court, it would be tremendously problematic for the open internet. Enabling basically anyone to sue a company for not taking down content that the person (but not the company) believes violates policies is a recipe for (1) a ton of frivolous, wasteful litgation and (2) the creation of a near automatic heckler's veto for almost any content online. That would be very, very bad.

Also, the specific claims are kinda weird. How is it a "consumer protection" violation? Well, according to the lawsuit:

The CPPA establishes a right to truthful information from merchants about the consumer goods and services that they provide to people in the District of Columbia.

And thus, because this group claims Facebook lied to Congress, that somehow means that it did not provide "truthful information... about the consumer goods and services they provide." That... is a huge stretch. There are also claims of fraudulent and negligent misrepresentations.

Facebook has responded with two separate motions to dismiss. One is a typical 12(b)(6) motion to dismiss for failing to state a legitimate claim. The second is a separate motion to dismiss under DC's anti-SLAPP law. There are lots of interesting arguments made in both of those filings (some of which overlap), but the crux of the defense is exactly as you'd expect: (1) no one at Facebook said that they'd be perfect in moderating and (2) if Facebook disagrees with some 3rd party about whether or not some content violates Facebook's policies, that's not evidence of any lie.

Billions of people use social media to express themselves, which means that content reflecting the full range of human experience finds expression on platforms like Facebook Facebook agrees with Plaintiff Muslim Advocates that anti-Muslim hate speech is vile, and devotes significant resources to keeping such abuse off its platform based on Community Standards that outline what is and is not allowed on Facebook. Enforcement of the Community Standards requires being aware of potentially violating content, ether through Facebook's own efforts or reports by third parties, and making judgments as to whether that content should be removed as violating the Community Standards. As Facebook has candidly acknowledged, these judgments are subject to disagreement and error, but Facebook remains committed to making its service a place where people feel safe to share with others and express themselves.

Managing a global community in this way has never been done before. Facebook is committed to continuing to improve its enforcement efforts and believes that means engaging Congress and other stakeholders to share and seek input on its policies and practices. As part of this ongoing dialogue, Facebook executives have testified before Congress regarding the Community Standards,

The part of the defense that caught Mothers Jones' interest is that Facebook (correctly) note that this lawsuit is clearly barred under Section 230. And that does seem pretty clear. It's not awkward at all.

...all of Plaintiff's claims are barred by Section 230 of the Communications Decency Act, 47 U.S.C. § 230 (“CDA”), because they seek to impose liability on Facebook for not removing third-party content that Plaintiff believes should be removed. Plaintiff attempts to plead around the CDA by bringing misrepresentation claims, but it is clear from the Complaint that Plaintiff is challenging Facebook's alleged failure to remove certain third-party content that Plaintiff believes violates the Community Standards. These are editorial decisions that go to the core of conduct protected by the CDA.

Mother Jones claims that this is an awkward legal argument because of Facebook's openness to reforming Section 230. But, even for those of us who don't trust Facebook's proposal for reform, there is no indication at all that if Facebook got what it wanted out of 230 reform that this case wouldn't still be barred by it. Facebook's reform proposal is basically that if it engages in best practices regarding content moderation, it still gets 230 protections. And even if Muslim Advocates disagrees, Facebook can make a pretty strong case that it engages in "best practices" regarding content moderation. Indeed, Facebook's proposal also made clear that no reform should punish a company for missing any particular pieces of content.

So, there's nothing in Facebook's legal arguments that goes against its own advocacy regarding 230 reform. So it's difficult to say why that legal argument is "awkward." It's not. It's just Mother Jones trying to spin this into a story -- which is pretty disappointing. Especially considering that Mother Jones has been so active in the good fight for stronger and better anti-SLAPP laws which (as the other filing in this case shows) would protect Facebook here, since this lawsuit seems (also) to be an attempt to punish Facebook and its execs for their speech at Congressional hearings (which is a classic kind of SLAPP situation).

If anything, the "awkward" part is why is Facebook continuing to be so willing to throw Section 230 under the bus, when cases like this (and so many others) show why it totally makes sense and does what it needs to do in making sure that websites can moderate without fear of facing liability for their many, many difficult subjective choices. Of course, we all know the real reason Facebook is doing this: because the politics of the day means that it has to "give" something here since so many people are mad at the company, and Facebook has (unfortunately, probably correctly) realized that if it undermines 230, it can do so in a manner that Facebook can survive, and its smaller competitors cannot.

The rest of the motions to dismiss are worth reading as well, as they deftly call out the silliness of the complaint, including the fact that when Facebook execs say that they remove content that violates policies, that is only after (1) they're aware of it and (2) they, themselves, determine if the content actually violated the policies, something that is inherently subjective:

Contrary to Plaintiff's assertion that Facebook executives represented in Congressional testimony that Facebook removes all content that violates the Community Standards, that testimony makes clear that enforcement of the Community Standards depends on Facebook being aware of potentially violating content and making judgments that are subject to disagreement and error.

As for the argument that this is a consumer protection issue, Facebook notes that that law is about the sale of products, which just doesn't apply here at all:

Plaintiff cannot state any claim under the CPPA because it regulates conduct arising out of consumer-merchant relationships, and Plaintiff does not, and cannot, allege any such relationship with Facebook, or that the alleged misrepresentations were made in connection with the sale of goods or services to Plaintiff or anyone else.

As noted, there's a lot more detail in the filings that is worth reading, but this should give you the gist of both sides of the argument. This lawsuit seems an unfortunately silly one by Muslim Advocates, and frankly undermines the work that the organization does. And, if Facebook wins the anti-SLAPP argument (which is certainly possible), then the organization might even end up on the hook for Facebook's (I'm sure quite expensive, given the multiple well known lawyers it has working on this case) legal bills.

There is one separate thing that is probably worth noting in this case: it does have some similarities to the somewhat infamous Barnes v. Yahoo case in the 9th Circuit, in which the court ruled that via "promissory estoppel," a plaintiff could get around Section 230. In that case, the plaintiff spoke to someone at Yahoo who promised them they would remove some content, but then did not. In that case, the court said that once an employee promised the plaintiff that the content would be removed, the company loses the 230 protections.

However, this case strikes me as notably different in multiple ways (and, of course, is not bound by an already problematic 9th Circuit ruling, since it's in DC superior court). In Barnes, there were not only specific pieces of content that the plaintiff alerted Yahoo to, but then the employee told the plaintiff that the company would "take care of" that content. So that was the promise. Here, the plaintiffs are trying to take broad statements regarding Facebook's content moderation practices to Congress and trying to say that this constituted some sort of binding promise to never be wrong or never disagree with Muslim Advocates' own subjective opinion. And that's just silly.

So, in the end, we have an awkward basic legal argument from Muslim Advocates, and an awkward bit of political posturing by Facebook with its publicity campaign to "reform" Section 230. What is not awkward at all is Facebook's legal response to this silly lawsuit.

Filed Under: congress, consumer protection, content moderation, mark zuckerberg, section 230
Companies: facebook, muslim advocates

Washington State Has Sued A Patent Troll For Violating Consumer Protection Laws

from the state-ags-stopping-trolls dept

Landmark Technology, a patent troll that has spent 20 years threatening and suing small businesses over bogus patents, and received EFF’s Stupid Patent of the Month award in 2019, has been sued by the State of Washington.

Washington Attorney General Bob Ferguson has filed a lawsuit claiming that Landmark Technology has violated the state’s Patent Troll Protection Act, which bans “bad faith” assertions of patent infringement. Following a widespread campaign of patent demand letters, more than 30 states passed some kind of law placing limits on bad-faith patent assertions.

These laws face an uphill battle to be enforced. First of all, the Constitution places important limits on the government’s ability to penalize the act of seeking legal redress. Second, the Federal Circuit has specifically held that a high bar of bad faith must be established for laws that would penalize patent assertion.

Washington’s case against Landmark could be a major test of state anti-troll laws, and whether state anti-trolling and consumer protection laws can dissuade some worst-of-the-worst patent troll behavior.

The lawsuit is filed against “Landmark Technology A,” a recently created LLC that appears to be largely identical to the now-defunct “Landmark Technology.” The new company asserts the same patent against the same type of targets. The patent’s inventor is Landmark Technology owner Lawrence Lockwood.

Over 1,000 Demand Letters

Landmark threatens and sues small businesses over U.S. Patent No. 7,010,508, which was issued to Lockwood in 2006 and claims rights to “automated multimedia data processing network for processing business and financial transactions between entities from remote sites.”

The Washington case reveals just how widespread Landmark’s threats are. From January 2019 to July 2020, Landmark sent identical demand letters to 1,176 small businesses all across the country. Those letters threaten to sue unless Landmark gets paid a $65,000 licensing fee. 

Landmark essentially insists that if you use a website for e-commerce, you infringe this patent. In recent years, it’s filed suit against candy companies, an educational toy maker, an organic farm, and a Seattle bottle maker, just to name a few. 

Or as the Washington State Attorney General put it:

[T]he company broadly and aggressively misuses the patent claims, targeting virtually any small business with a website, seemingly at random. Landmark claims that common, near-ubiquitous business webpages infringe on its patent rights — such as small business home pages, customer login pages, new customer registration and product-ordering pages.

“Landmark extorts small businesses, demanding payment for webpages that are essential for running a business,” Washington Attorney General Ferguson said. “It backs them into a corner — pay up now, or get buried in legal fees. I’m putting patent trolls on notice: Bully businesses with unreasonable patent assertions, and you’ll see us in court.”

According to the AG’s press release, four Washington companies settled for between $15,000 and $20,000 each to avoid litigation costs. The lawsuit seeks restitution for those companies.

The patents created by Landmark owner Lawnrence Lockwood patents have been used in well over 150 lawsuits filed by Landmark Technology and Landmark Technology A; as well as at least 40 cases filed by his earlier company PanIP, which sued dozens of early e-commerce websites by 2003. Given what we now know about the more than 1,000 letters sent just in 2019 and 2020, the litigation record seems like just the tip of the iceberg.

The U.S. Patent and Trademark Office found in a 2014 review that the ’508 patent was likely to be invalid because it didn’t actually explain how to do the things it claimed. However, that case settled before the patent could be invalidated.

The USPTO is an office that labors under industry capture. Its fees are paid by patent owners, and in practice it works for patent owners far too often—not users or small business owners. While review processes like inter partes review (IPR) are useful in restoring some balance to the system, it’s critical that the worst abusers of the patent system be treated as a serious consumer protection problem. It’s certainly worthwhile for states to experiment and try to find ways to deter abuse, within the bounds of due process.

Patent owners who demand licensing fees from hundreds or thousands of individuals based on a patent that clearly should be found invalid, for broadly used web technology, are essentially engaging in widespread extortion, as AG Ferguson states. When patent owners won’t let users set up even a basic, out-of-the-box website without facing a demand letter, it’s not just an economic problem—it’s a threat to free expression.

Republished from the EFF Deep Links blog

Filed Under: bob ferguson, consumer protection, patent trolls, patents, washington
Companies: landmark technology

Bad Section 230 Bills Come From Both Sides Of The Aisle: Schakowsky/Castor Bill Would Be A Disaster For The Open Internet

from the that's-not-how-any-of-this-works dept

It truly is stunning how every single bill that attempts to reform Section 230 appears to be written without any intention of ever understanding how the internet or content moderation works in actual practice. We've highlighted tons of Republican-led bills that tend to try to force websites to host more content, not realizing how (1) unconstitutional that is and (2) how it will make the internet into a giant garbage fire. On the Democratic side, the focus seems to be much more on forcing companies to takedown constitutionally protected speech, which similarly (1) raises serious constitutional issues and (2) will lead to massive over-censorship of perfectly legal speech just to avoid liability.

The latest bill of the latter kind comes from Reps. Jan Schakowsky and Rep. Kathy Castor. Schakowsky has been saying for a while now that she was going to introduce this kind of bill to browbeat internet companies into being a lot more proactive in taking down speech she dislikes. The bill, called the Online Consumer Protection Act has now been introduced and it seems clear that this bill was written without ever conferring with anyone with any experience in running a website. It's the kind of thing one writes when you've just come across the problem, but don't think it's worth talking to anyone to understand how things really work. It's also very much a kind of "something must be done, this is something, we should do this" kind of bill that shows up way too often these days.

The premise of the bill is that websites "don't have accountability to consumers" for the content posted by users, and that they need to be forced to have more accountability. Of course, this leaves out the kind of basic fact that if "consumers" are treated badly, they will go elsewhere, so of course every website has some accountability to consumers: it's that if they're bad at it, they will lose users, advertisers, sellers, buyers, whatever. But, that's apparently not good enough for the "we must do something" crowd.

At best the Online Consumer Protection Act will create a massive amount of silly busywork and paperwork for basically any website. At worst, it will create a liability deathtrap for many sites. In some ways it's modeled after the idiotic policy we have regarding privacy policies. Almost exactly a decade ago we explained why the entire idea of a privacy policy is dumb. Various laws require websites to post privacy policies, which no one reads, in part because it would be impossible to read them all. The only way a site gets in trouble is by not following its privacy policy. Thus, the incentives are to craft a very broad privacy policy that gives sites leeway -- meaning they have less incentive to actually create more stringent privacy protections.

The OCPA basically takes the same approach, but... for "content moderation" policies. It requires basically every website to post one:

Each social media platform or online marketplace shall establish, maintain, and make publicly available at all times and in a machine-readable format, terms of service in a manner that is clear, easily understood, and written in plain and concise language.

That terms of service will require a bunch of pointless things, including a "consumer protection policy" which has to include the following:

FOR SOCIAL MEDIA PLATFORMS.—For social media platforms, the consumer protection policy required by subsection (a) shall include—

(A) a description of the content and behavior permitted or prohibited on its service both by the platform and by users;
(B) whether content may be blocked, removed, or modified, or if service to users may be terminated and the grounds upon which such actions will be taken;
(C) whether a person can request that content be blocked, removed, or modified, or that a user’s service be terminated, and how to make such a request;
(D) a description of how a user will be notified of and can respond to a request that his or her content be blocked, removed, or modified, or service be terminated, if such actions are taken;
(E) how a person can appeal a decision to block, remove, or modify content, allow content to remain, or terminate or not terminate service to a user, if such actions are taken; and
(F) any other topic the Commission deems appropriate.

It's difficult to look at that list and not laugh and wonder if whoever came up with it has ever been anywhere near a content moderation or trust & safety team, because that's not how any of this works. Trust & Safety is an ongoing effort of constantly needing to adjust and change with the times, and there is no possible policy that can cover all cases. Can whoever wrote this bill listen to the excellent Radiolab episode about content moderation and think through how that process would have played out under this bill? If every time you change the policies to cover a new case you have to publicly update your already ridiculously complex policies -- while the new requirements be that those same policies are "clear, easily understood, and written in plain and concise language" -- you've created an impossible demand.

Hell, someone should turn this around and push it back on Congress first. Hey, Congress, can you restate the US civil and criminal code such that it is "clear, easily understood, and written in plain and concise language?" How about we try that first before demanding that private companies be forced to do the same for their ever changing policies as well?

Honestly, requiring all of this be in a policy is just begging angry Trumpists to sue websites saying they didn't live up to the promises made in their policies. We see those lawsuits today, but they're kicked out of court under Section 230... but Schakowsky's bill says that this part is now exempted from 230. It's bizarre to see a Democratic bill that will lead to more lawsuits from pissed off Trumpists who have been removed, but that's what this bill will do.

Also, what "problem" does this bill actually solve? From the way the bill is framed, it seems like Schakowsky wants to make it easier for people to complain about content and to get the site to review it. But every social media company already does that. How does this help, other than put the sites at risk of liability for slipping up somewhere?

The bill then has separate requirements for "online marketplaces" which again suggest literally zero knowledge or experience with that space:

FOR ONLINE MARKETPLACES.—For online marketplaces, the consumer protection policy required by subsection (a) shall include—

(A) a description of the products, product descriptions, and marketing material, allowed or disallowed on the marketplace;
(B) whether a product, product descriptions, and marketing material may be blocked, removed, or modified, or if service to a user may be terminated and the grounds upon which such actions will be taken;
(C) whether users will be notified of products that have been recalled or are dangerous, and how they will be notified;
(D) for users—

(i) whether a user can report suspected fraud, deception, dangerous products, or violations of the online marketplace’s terms of service, and how to make such report;
(ii) whether a user who submitted a report will be notified of whether action was taken as a result of the report, the action that was taken and the reason why action was taken or not taken, and how the user will be notified;
(iii) how to appeal the result of a report; and
(iv) under what circumstances a user is entitled to refund, repair, or other remedy and the remedy to which the user may be entitled, how the user will be notified of such entitlement, and how the user may claim such remedy; and

(i) how sellers are notified of a report by a user or a violation of the terms of service or consumer protection policy;
(ii) how to contest a report by a user;
(iii) how a seller who is the subject of a report will be notified of what action will be or must be taken as a result of the report and the justification for such action;
(iv) how to appeal a decision of the online marketplace to take an action in response to a user report or for a violation of the terms of service or consumer protection policy; and
(v) the policy regarding refunds, repairs, replacements, or other remedies as a result of a user report or a violation of the terms of service or consumer protection policy.

Honestly, this reminds me a lot of Josh Hawley's bills, in that it seems that both Hawley and Schakowsky want to appoint themselves product manager for the internet. All of the things listed above are the kinds of things that most companies do already because you need to do it that way. But it's also the kind of thing that has evolved over time as new and different challenges arise, and locking the specifics into law does not take into account that very basic reality. It also doesn't take into account that different companies might not fit into this exact paradigm, but under this bill will be required to act like they do. I can't see how that's at all helpful.

And, it gets worse. It will create a kind of politburo for how all internet websites must be run:

Not later than 180 days after the date of the enactment of this Act, the Commission shall conduct a study to determine the most effective method of communicating common consumer protection practices in short-form consumer disclosure statements or graphic icons that disclose the consumer protection and content moderation practices of social media platforms and online marketplaces. The Commission shall submit a report to the Committee on Energy and Commerce of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate with the results of the study. The report shall also be made publicly available on the website of the Commission.

Yeah, because nothing works so well as having a government commission jump in and determine the "best" way to do things in a rapidly evolving market.

Also, um, if the government needs to create a commission to tell it what those best practices are why is it regulating how companies have to act before the commission has even done its job?

There are a bunch more requirements in the bill, but all of them are nitty gritty things about how companies create policies and implement them -- something that companies are constantly changing, because the world (and the threats and attacks!) is constantly changing as well. This bill is written by people who seem to think that the internet -- and bad actors on the internet -- are a static phenomena. And that's just wrong.

Also, there's a ton of paperwork for nearly every company with a website, including idiotic and pointless requirements that are busywork, with the threat of legal liability attached! Fun!

FILING REQUIREMENTS.—Each social media platform or online marketplace that either has annual revenue in excess of $250,000 in the prior year or that has more than 10,000 monthly active users on average in the prior year, shall be required to submit to the Commission, on an annual basis, a filing that includes—

(A) a detailed and granular description of each of the requirements in section 2 and this section;
(B) the name and contact information of the consumer protection officer required under subsection (b)(4); and
(C) a description of any material changes in the consumer protection program or the terms of service since the most recent prior disclosure to the Commission

(2) OFFICER CERTIFICATION.—For each entity that submits an annual filing under paragraph (1), the entity’s principal executive officer and the consumer protection officer required under subsection (b)(4), shall be required to certify in each such annual filing that—

(A) the signing officer has reviewed the filing;
(B) based on such officer’s knowledge, the filing does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements, in light of the circumstances under which such statements were made, not misleading;
(C) based on such officer’s knowledge, the filing fairly presents in all material respects the consumer protection practices of the social media platform or online marketplace; and
(D) the signing consumer protection officer—

(i) is responsible for establishing and maintaining safeguards and controls to protect consumers and administer the consumer protection program; and
(ii) has provided all material conclusions about the effectiveness of such safeguards and controls.

So... uh, I need to hire a "consumer protection officer" for Techdirt now? And spend a few thousand dollars every year to have lawyers (and, most likely a new bunch of "compliance consultants" review this totally pointless statement I'll need to sign each year? For what purpose?

The bill also makes sure that our courts are flooded with bogus claims from "wronged" individuals thanks to its private right of action. It also, on top of everything else, exempts various state consumer protection laws from Section 230. That's buried in the bill but is a huge fucking deal. We've talked about this for years, as various state Attorneys General have been demanding it. But that's because those state AGs have a very long history of abusing state "consumer protection" laws to effectively shake down companies. A decade ago we wrote a definitive version of this in watching dozens of state attorneys general attack Topix, with no legal basis, because they didn't like how the company moderated its site. They were blocked from doing anything serious because of Section 230.

Under this bill, that will change.

And we've seen just how dangerous that can be. Remember how Mississippi Attorney General Jim Hood demanded all sorts of information from Google, claiming that the company was responsible for anything bad found online? It later came out (via the Sony Pictures hack) that the entire episode was actually funded by the MPAA, with Hood's legal demands written by the MPAA's lawyers, as part of Hollywood explicit plan to saddle Google with extra legal costs.

Schakowsky's bill would make that kind of corruption an every day occurrence.

And, again, the big companies can handle this. They already do almost everything listed anyway. All this really does is saddle tons of tiny companies (earning more than $250k a year?!?) with ridiculous and overly burdensome compliance costs, which open them up to not just the FTC going after them, but any state attorney general, or any individual who feels wronged by the rules.

The definitions in the bill are so broad that it would cover a ton of websites. Under my reading, it's possible that Techdirt itself qualifies as a "social media platform" because we have comments. This is yet another garbage bill from someone who appears to have no knowledge or experience how any of this works in practice, but is quite sure that if everyone just did things the way she wanted, magically good stuff would happen. It's ridiculous.

Filed Under: busywork, consumer protection, content moderation, ftc, jan schakowsky, kathy castor, paperwork, private right of action, section 230, terms of service

If Something Is Advertised As A Knockoff Product... Is It No Longer Counterfeiting?

from the likelihood-of-amusing dept

People throw around a variety of terms that sometimes need to have more specific meanings. When talking about physical goods, when people talk about "knockoffs" or "counterfeits" they're usually referring to a trademark issue. And, in some sense, this is what trademark is supposed to be about. For many years we've argued that trademark should not be lumped in with patents and copyrights, as the concept, purpose, intent, and even Constitutional underpinnings are entirely different. It's extremely frustrating to see people lump in patents, copyrights, and trademarks as "intellectual property" as if they were all similar. They are not. And trademarks are especially different.

Indeed, we've always said that (unlike with the other two) trademarks are mostly a consumer protection law, so that you know who is actually making the things you're buying, and you know the origin of it. That is, we let Coke have a trademark on the Coca-Cola branding so that consumers don't get tricked into buying something that isn't Coke, while believing it is. This is why a key part of trademark law has always been the "likelihood of confusion." If there's no likelihood of confusion, than there isn't a trademark violation.

But here's an interesting question: if someone is making a counterfeit product... is it still violating trademark laws against counterfeiting if buyers know it's counterfeit? A recent 9th Circuit Court ruling suggests... perhaps not. The case is not about this issue directly, but is about two separate companies who each (independently it appears) came up with products called "Eye Dew." One, Arcona, created an eye cream that in a tall cylindrical silver bottle. Arcona registered a trademark on the name. Around the same time (or even possibly a bit earlier), a different company, Farmacy Beauty, developed its own eye cream, also named EYE DEW. The packaging of the two products looks very, very different:

The ruling in the case finds that because the Lanham Act requires there to be a likelihood of confusion, and people are unlikely to be confused between these two products, then there's no counterfeiting claim. The court notes that while it has been recognized that a pure trademark infringement claim requires a likelihood of confusion, the 9th Circuit had never ruled directly on the question of whether or not a counterfeiting claim does, even though both stem from the Lanham Act. However, noting that everyone agrees that trademark claims require it, and the plain language of the statute says so, the court confirms:

We thus hold that a counterfeit claim requires a showing of likelihood of confusion under Section 1114.

And while the case is not about this, it raises a somewhat fascinating question first posed by law professor Mark Lemley. He notes that under this ruling, brands may not be able to go after obvious knockoffs if the knockoffs don't confuse anyone:

This is interesting on a few levels. First off, we've highlighted many studies showing that the vast majority of people buying knockoff products know they're knockoffs, and they buy them aspirationally -- knowing they can't afford the real thing, but wanting to build themselves up to buying the real thing, by first buying a knockoff. We've used those studies to question the common wisdom (often used by customs and border patrol and ICE) about the "dangers" of counterfeits. If no consumers are fooled or harmed, then what's the issue? And that's especially true if they weren't going to purchase a legitimate version in the first place.

But this raises an even more interesting question to me: under this ruling, could a company not just make cheap knockoffs of a famous brand's products, but then avoid some level of liability by clearly advertising them as knockoffs? I wouldn't suggest doing that without a huge legal budget, but a strong argument can be made that if you made it abundantly clear that your fake Louis Vuitton handbag was a fake Louis Vuitton handbag, and that buyers could not buy it without understanding that fact -- then there might not be any claim. There would be no likelihood of confusion. There would be no harm.

It's such an intriguing idea, I'm now kind of hoping that someone (again, someone with fantastic trademark/counterfeiting lawyers, and a large legal war chest) tests this out. If you do, send me some sample counterfeit merchandise as a thank you.

Filed Under: 9th circuit, consumer protection, counterfeit, counterfeits, eye dew, fake goods, lanham act, likelihood of confusion, trademark
Companies: arcona, farmacy beauty

Washington And Oregon Fine CenturyLink For Completely Bogus Broadband Fees

from the gullibility-surcharge dept

For decades, broadband providers have abused the lack of meaningful competition in the telecom market by not only refusing to shore up historically awful customer service, but by raising rates hand over fist. This usually involves leaving the advertised price largely the same, but pummeling customers with all manner of misleading fees and surcharges that drive up the actual price you'll be paying each month. And by and large regulators from both major political parties have been perfectly okay with this practice, despite it effectively being false advertising.

CenturyLink (combined by the merger of Qwest, CenturyTel and Embarq) has been exceptionally talented when it comes to such fees. A few years ago the company began charging its broadband customers an "Internet Cost Recovery Fee," which the company's website explains as such:

"This fee helps defray costs associated with building and maintaining CenturyLink's High-Speed Internet broadband network, as well as the costs of expanding network capacity to support the continued increase in customers' average broadband consumption."

But the cost of maintaining broadband networks is what your entire bill is supposed to be for. Again, breaking out such additional bullshit surcharges and burying them below the line is designed to do one thing: help providers falsely advertise a lower rate. And while the "internet cost recovery fee" was only a few bucks per month, it's a fairly lucrative scam when spread across millions of CenturyLink's US broadband subscribers over the last five years.

With the federal government now largely comatose on such issues, states have been forced to step up to the plate and try to fill the void. As a result, Centurylink was forced to settle a lawsuit by Oregon's AG requiring it cease the practice and shell out $4 million to impacted consumers. That settlement comes several weeks after a similar settlement with Washington State's AG to the tune of $6.1 million:

"CenturyLink deceived consumers by telling them they would pay one price, and then charging them more,” Ferguson said. “Companies must clearly disclose all added fees and charges to Washingtonians. If you believe that a company has charged dishonest fees, please contact my office.”

In states where telecom regulatory capture is more prevalent (read: most of them), absolutely nothing is being done to thwart this practice, which extends to other fees like the misleadingly named "regulatory recovery surcharge" or the widespread "local sports surcharge" and $10 per month "broadcast TV" fees.

Keep in mind, these are precisely the kind of consumer enforcement actions the Trump FCC attempted to ban with its net neutrality repeal, which didn't just repeal net neutrality but attempted to neuter nearly all state and federal oversight of one of the least-liked and uncompetitive industries in America. The courts argued the FCC overreached, noting it can't eradicate its telecom protection authority, then try to ban states from stepping in to fill the void. The fact they even attempted the gambit should tell you all you need to know about the Ajit Pai FCC.

Filed Under: bogus fees, broadband, competition, consumer protection, extra fees, ftc, hidden fees, oregon, truth in advertising, washington
Companies: centurylink

Colorado's Governor Jared Polis Signs Strong Anti-SLAPP Law And Blocks Damaging Licensing Restrictions

from the keep-it-up,-gov dept

When Jared Polis was in Congress, he was one of the (tragically few) reliably good, principled voices on topics that were important to us here at Techdirt: copyright, patents, encryption and more. Now that he's governor in Colorado, it appears he continues to do good things. First up, he's signed an excellent new anti-SLAPP law modeled on California's gold standard anti-SLAPP law. As we've discussed at length over the years, anti-SLAPP laws are a key tool in protecting free speech. They do this in two key ways: by ending bogus lawsuits designed to silence critics by enabling a court to toss them out very quickly (before they get too involved) and (importantly) making it much easier to make the plaintiffs in such cases pay the legal expenses of the defendants they sued. These laws have been in place in about half of the states so far, and they've been incredibly useful in deterring lawsuits that have no merit, but are filed entirely to burden the defendants with costs and general chilling effects of being dragged to court.

Colorado joins nearly 30 states that have adopted measures to curb what are called strategic lawsuits against public participation. Witnesses testified during the legislative session about how they’d been sued for libel or slander simply for exercising their First Amendment rights.

The new law allows a citizen to seek an immediate stay of such a lawsuit by arguing it’s motivated by the citizen’s exercise of First Amendment rights. A higher court can order immediate dismissal of the lawsuit, and plaintiffs can be held liable for court costs and attorneys’ fees.

Democratic Reps. Lisa Cutter and Shannon Bird and Sen. Michael Foote sponsored the bill, which was modeled after a longstanding California statute that is considered one of the nation’s toughest.

On another issue we've talked about, ridiculous occupational licensing laws that go way beyond any "public safety" reason to just block out competition and limit the competitiveness of markets, Polis has responded by vetoing a bill to increase occupational licenses in Colorado. This was a bill pushed by members of his own party, so it's good to see Polis push back on it. His veto statement is worth reading.

Before any unregulated occupation is to be regulated, or any regulated occupation is to be continued, the state should complete its due diligence to ensure that regulation will, in fact, ensure consumer safety in a cost-efficient manner. This bill does not meet that threshold.

As we have previously noted, occupational licensing is not always superior to other forms of consumer protection. Too often it is used to protect existing professional within an occupation against competition from newcomers entering that occupation. Meanwhile, according to the 2019 Current Population Survey, 24 percent of the national workforce is licensed, up from below five percent in the 1950s. Licensing in the United States over the years has at times prevented minorities and the economically disadvantaged from having the ability to access occupations. When the supply of professionals is restricted, the cost of services increases and the poorest among us lose the ability to access these services.

There's a lot more in the statement, but that's the crux of it.

Kudos to Governor Polis. Keep it up.

Filed Under: anti-slapp, colorado, consumer protection, free speech, jared polis, occupational licensing

John Oliver Robocalls Ajit Pai For Not Doing More To Thwart Robocalls

from the ill-communication dept

Despite endless government initiatives and countless promises from the telecom sector, our national robocall hell continues. Robocalls from telemarketers continue to be the subject the FCC receives the most complaints about (200,000 complaints annually, making up 60% of all FCC complaints), and recent data from the Robocall Index indicates that the problem is only getting worse. Consumers continue to be hammered by mortgage interest rate scams, credit card scams, student loan scams, business loan scams, and IRS scams. 4.9 billion such calls were placed in February alone:

You might recall that HBO's John Oliver caused Ajit Pai's FCC no shortage of trouble when his coverage of net neutrality drove millions of pissed off consumers to the FCC website to complain. The FCC then got into a bit of hot water (and remains under investigation by the GAO and others) after falsely claiming those angry website visitors were part of a malicious DDOS attack. In reality, emails confirmed FCC staffers were simply trying to craft an alternative explanation to try and downplay massive public opposition to the Trump FCC's policies.

Fast forward to last weekend, and Oliver again brought some much-needed attention to the FCC's apathy, this time on the subject of robocalls. The whole missive is well worth a watch if you haven't seen it already:

Oliver's bit (which involves robocalling all five FCC commissioners) does a stellar job highlighting that the previous FCC passed new rules to rein in the robocall threat. But those rules were struck down by the courts after a lawsuit by the Association of Credit and Collection Professionals, a group representing debt collectors (Pai celebrated the ruling at the time). To be clear, Pai has done a few notable things to try and crack down on the problem, ranging from slightly expanding (pdf) carrier abilities to try and block the calls, to issuing major fines against particularly-obvious scammers.

But as Oliver notes, there's a lot more Pai's FCC could do, like demanding big carriers offer their customers free robocall protection services, actually punishing those lagging behind at adopting anti-spoofing authentication tech, and narrowing the definition of robocalls to include debt collection and other purportedly "legit" but overwhelming callers. But that would require Pai actually standing up to major industries, something he's yet to do at any meaningful point during his appointment as FCC boss.

As it stands, predictions are that by next year, half of all calls made will be robocalls. And while companies like AT&T spent a few years trying to blame everybody else for its own failure to police the problem, it's one of several carriers finally on the cusp of deploying SHAKEN/STIR authentication technology that should dramatically put a damper on caller ID spoofing later this year. But evolving scammer tactics and lagging carriers means that to solve this problem, the FCC will need somebody willing to actually punish companies that refuse to do more.

Filed Under: ajit pai, consumer protection, fcc, john oliver, robocalls