Nurturing culture to build economies and communities

A newly released briefing by Professor Ann Markusen of the University of Minnesota Hubert H. Humphrey Institute of Public Affairs highlights the importance and influence of a creative arts community serves as a tool to develop a region’s broader economic growth.

The paper published by the Ewing Marion Kauffman Foundation highlights the opportunities created by encouraging a creative arts economy to help develop a more robust economic environment. Among the key findings of the report:

City appreciation for cultural entrepreneurship has grown following economists’ and city planners’ documentations of the roles that artists play in the local economy. Many artists and designers contribute to the city’s economic base, bringing in income from elsewhere by exporting their creations—books, recordings, visual art—and by travelling to perform elsewhere. Pools of artists attract and anchor cultural industry firms in fields like publishing, advertising, music, design, and architecture. Artists often work on contract in other industries to design and market products and services (visual artists, musicians, and writers) and improve employee relations (actors). …

Despite heightened interest in fostering artists/designers as innovators and entrepreneurs, most cities have found that traditional policies and services don’t work for artists. … Artists are many times more likely to be self-employed than are scientists and engineers. Some 48 percent of artists reported in the 2000 Census long form that they are self-employed. … Overwhelmingly, surveys of artists underscore that they need and want to develop business skills. Many organizations—some nonprofit, some linked to higher educational institutions, some for-profit—offer artist-tailored entrepreneurial training.

The work by Professor Markusen reinforces many of the themes discussed in the recent  NKU Chase Law + Informatics Institute program: Success Strategies for the Professional Artist in the Digital Age. That program helped artists and their attorneys learn to navigate self-promotion, online contracting, sophisticated financing, and a host of challenges that pull the artist away from the creative process and into the fast-paced world of digital commerce. A webcast is available of the program.

“With social media gaining in popularity, more people are becoming content creators, and there is great opportunity to share creative works, but many are now becoming aware that there is real value to maintain some control over what is shared,” commented Terry Hart, director of legal policy, Copyright Alliance.

“Artists have long been recognized as commodities in our communities, driving innovation and adding color to our environment,” shared Sarah Corlett, director of creative enterprise, ArtsWave SpringBoard. “It has become increasingly more important that our creative sector has opportunities to turn their passion into profit through education and training. This improves the likelihood that these individuals will stay in our region and continue to make this an even better place to live.”

Professor Markusen, building on her earlier scholarship concludes in the report that for cities, “economic development strategy/practice is increasingly turning to occupational approaches, asserting the significance of human capital and entrepreneurship in supplementing traditional industry-targeted programs.”

But the creative artist panelist had some words of caution.  Dayton School of Law professor Dennis Greene reminded audience members that “the devil is in the details.”  Jennifer Kreder noted “when art is created in more traditional visual medium and then digitized several issues will come up” to which Stephen Gillen explained that “there is no ‘one size fits all answer'” for how best to contract for rights.

The Kauffman Foundation report provides a strong reminder of what cities can do to improve the likely success of artists and entrepreneurs in their communities. These are partnerships well worth promoting.

Success Strategies for the Professional Artist in the Digital Age was presented by the NKU Chase Law + Informatics Institute and sponsored by the ABA Business Section Cyberspace Law Committee, Copyright Alliance, ArtWorks SpringBoard, Kentucky Arts Council, and Frost Brown Todd, this program featured expert attorneys and filmmakers who discussed a range of business and legal practices.

 

How Google Book Search transformed from impossible to inevitable

English: Google Digitization signs are all over the Michigan engineering library. (Photo credit: Wikipedia)

In a widely reported copyright fair use decision, Judge Denny Chin ruled that the Google Books program constituted fair use, denying claims of the Authors Guild that the scanning of 20 million library books and posting snippets of those works online infringed the rights of authors.

The litigation history reflects the transformation that has taken place on the internet in the past decade. In 2004 Google entered into an agreement with several universities, beginning with University of Michigan.

Google began the process of digitizing books at the nation’s great libraries, starting at the University of Michigan, the alma mater of company co-founder Larry Page. “Even before we started Google, we dreamed of making the incredible breadth of information that librarians so lovingly organize searchable online,” said Page. A 2005 lawsuit resulted in three years of negotiation and a proposed settlement in 2008. That settlement collapsed among antitrust concerns and fairness of the representatives of the plaintiffs’ sub-classes.

As the Google Books program evolved, two discrete projects operated. In the Partner Program “works are displayed with the permission of the rights holder.” The rights holders had the ability to opt out of the scanning, but in 2011 the Association of American Publishers settled with Google. According to the decision, “As of early 2012, the Partner Program included approximately 2.5 million books, with the consent of some 45,000 rights holders.” The participation suggests an industry voting with its feet.

Under the publisher agreement, Google stopped displaying ads with the publisher’s books. In turn, the publishers provide Google with the books. This settlement, even more than the two district court decisions, effectively ended the dispute – leaving the two lawsuits as mop-up activities.

In the HathiTrust litigation, Judge Harold Baer determined Google’s Library Project partners who comprised the HathiTrust partnership were entitled to fair use protection for the digitization of the 20,000,000 volumes copied and used by the libraries. The decision highlighted the benefits to visually-impaired students and researchers who had access to content not previously available through audio readers or braille, the benefits of digital search functionality, and the importance of protecting the library collections from physical harm and erosion.

In both opinions, the courts highlighted the new research opportunities created by the digital database:

Mass digitization allows new areas of non-expressive computational and statistical research, often called “textmining.” One example of text mining is research that compares the frequency with which authors used “is” to refer to the United States rather than “are” over time. Quoting the brief of the Digital Humanities amicus, “it was only in the latter half of the Nineteenth Century that the conception of the United States as a single, indivisible entity was reflected in the way a majority of writers referred to the nation.”).

The Google decision followed the same path, highlighting the benefits of digital search, the limits placed on commercial exploitation by Google, and the pro-market effects agreed to by the publishers. “Google Books expands access to books.” With this simple sentence, the court highlights the essence of the eight years of litigation. In looking at the transformative nature of the fair use test, the court explained, “Google Books does not supersede or supplant books because it is not a tool to be used to read books.”

The court does not discuss the tremendous value the Google Books program benefits the search engine, speech recognition and other algorithms operated by Google. It also dismisses the intermediary copying as a necessary function to enable the research and archival function to be exploited. But it does highlight that Google “does not run ads on the About the Book pages that contain snippets” and that Google “does not engage in the direct commercialization of copyrighted works.”

Google’s settlements and decisions not to commercialize the Google Books program likely tipped the scales with the publishers and may have strongly influenced the courts. Unlike Judge Baer, Judge Chin does not even discuss the potential to license the digitized database to Google. Baer rejected the potential to license the database as speculative. Moreover, since new works are added by voluntary participation with the publishers, the licenses for new works are included.

The decision appears a simplistic fair use summary that could lead casual observers to wonder why it required eight years of litigation. But changes to the conduct of both parties are what really led to this simple decision. Google adapted its behavior to limit its commercialization of the works. Publishers shifted their position from one of demanding opt-in, ex ante control to recognizing that the opt-out partnership met their needs. Eight years of experience did not produce significant evidence of authors being harmed as a result of snippet-searches replacing library purchases of academic texts.

In addition, the role of digital texts has changed. The Amazon Kindle and Apple iPad have paved the way for a fundamental shift in the relationship authors have with electronic texts. Market forces proved Google correctly anticipated a highly reconstructed book industry. Google was only one of the players bringing about this change.

Both the HathiTrust litigation and the Authors Guild v. Google litigation will likely be appealed, but there is little appeal in undoing the transformations to publishing that the Google Books program began.

Social Media in the workplace – wide-ranging overview now available

In a recent blog post regarding Sam Moore‘s claim for publicity rights in a fictional film, I provided a general update on publicity rights law because such laws are now being used as part of the social media agreement between the public and such companies as Google and Facebook.

The discussion about continuing evolution of publicity rights doctrine is part of a larger review I have written on the role of social media across the spectrum of media law.  That working paper, Social Media in the Workplace – From Constitutional to Intellectual Property Rights is now available at SSRN: http://ssrn.com/abstract=2348779 or for download.

Social media has become a dominant force in the landscape of modern communications. From political uprisings in the Middle East to labor disputes in Washington State, social media has fundamentally disrupted the way in which communications take place. As noted constitutional scholar Erwin Chemerinsky explained, “technology has changed and so has First Amendment doctrine and American culture. It now is much more clearly established that there is a strong presumption against government regulation of speech based on its content.” Just as the government must tolerate more speech, the same thing is true about employers. Chemerinsky further notes that “for better or worse, profanities are more a part of everyday discourse.” Abrasive speech may be coarse from the word choice or may more readily upbraid the objects of the speech. Whether foul or abusive, such speech now pervades commercial and social media.

Social media fundamentally upends the notion of the traditional commercial media environment and with that, it reverses the established legal doctrine from constitutional assumptions to everyday rules involving copyright, defamation, and unfair labor practice. For employers, these rules are particularly important to navigate because they effect the manner in which the companies communicate with the public, how employees communicate with each other, and how laws are restructuring the employee-employer relationship. The transformation is taking place with changing policies affecting trade secrets, confidential information, copyrighted material, aggregated data, trademarks, publicity rights, and endorsements.

This article highlights the nature of the changes as they present the new paradigm shift and provides some guidance on how to prepare policies for the transitional model. The article tracks the rise of the many-to-many model of social media, its effect on commercial speech, intellectual property, and labor law. The article concludes with suggestions on employment policies geared to managing these changes in the modern workplace.

There will be a CLE program sponsored by the Dayton Intellectual Property Law Association on Friday November 8, 2013 featuring these materials.

Postal Service owes $685,000 for unauthorized use of sculpture in $1500 photograph

The U.S. Court of Appeals for the Federal Circuit set the damages in Gaylord v. U.S. This fair use and unfair licensing action involved the Korean War Veterans Memorial sculpture and the government’s decision to license an unauthorized photograph of the sculpture without securing rights to the sculpture itself.

Frank Gaylord created the memorial. Later John Alli photographed the Memorial. Given the beauty of his photographs, Mr. Alli decided to license his photographs. He purchased a license to reproduce the Memorial from Mr. Lecky, an architect with Cooper-Lecky Architects, P.C. the prime contractor for the creation, construction, and installation of the Memorial. Lecky did not inform Mr. Gaylord of the license fee, instead holding himself out as author of the sculpture. Eventually, however, Mr. Alli settled with Mr. Gaylord by paying a ten percent net licensing royalty.

Mr. Alli licensed his photograph to the Postal Service for $1500. “The Postal Service produced approximately 86.8 million stamps before retiring the stamp on March 31, 2005,” noted the court.

In the 2010 decision, the Federal Circuit rejected the notion that the use of the postal service stamp was fair use of the sculpture. It noted that the “Postal Service acknowledged receiving $17 million from the sale of nearly 48 million 37-cent stamps. An estimated $5.4 million in stamps were sold to collectors in 2003. The stamp clearly has a commercial purpose.” Presumably the collector stamps do not purchase mail services from the Postal Service, turning almost all of that revenue into net profit. Although the court did not see market harm stemming from the unauthorized postage stamp on other licensing opportunities for the sculpture, it nonetheless rejected fair use. “Even though the stamp did not harm the market for derivative works, allowing the government to commercially exploit a creative and expressive work will not advance the purposes of copyright in this case.”

The court also rejected claims the suggestions to the sculpture transformed the ownership into a joint work or the rather bizarre suggestion that the sculpture is an architectural work – meaning “the design of a building as embodied in any tangible medium of expression…” and a building as “humanly habitable structures.” Looking at the photograph below, it is difficult to see where one might inhabit the work.

Last week, the Federal Circuit answered the question as to the value of Mr. Gaylord’s sculpture depicted so beautifully in the photograph. According to Mr. Gaylord’s counsel, “the sculptor of the Korean War Veterans Memorial … has been awarded 10 percent of the United States Post Service profits from selling the collector stamps that featured the sculptures.”

The choice of the ten percent net licensing royalty seems particularly appropriate given the license granted by Mr. Alli to Mr. Gaylord. According to Mr. Gaylord’s attorneys, he was awarded $685,000.

Heidi Harvey of Fish & Richardson represented the artist on a pro bono-contingency hybrid basis. While it is disheartening that the U.S. did not settle this case earlier and that it took the position the work was not owned by the artist, the robust licensing fee hopefully rectifies the damage done by the Postal Service.

(Photographs from the 2010 Federal Circuit decision)

Copyright review hearings end first phase as DOC Copyright Green Paper is released

On April 24, 2013, House Judiciary Chairman Bob Goodlatte (R-Va.) announced that the Subcommittee on Courts, Intellectual Property, and the Internet would “conduct a comprehensive review of U.S. copyright law over the coming months.” The first set of those hearings have just concluded.

The first of the hearings featured a panel of experts who participated in the Copyright Principles Project led by Professor Pamela Samuelson of Berkeley Law School.^[1] The second panel, in contrast, emphasized representatives from the creative industries. The third hearing focused on the technology industries. The three hearings represent the Venn diagram of copyright policy: Creators, Disseminators, and Users. Each of these groups overlaps and the boundaries are very imprecise. Nonetheless, there remains a tension among these three spheres because greater legal protections in one sphere tend to affect the other spheres in unwanted ways. Since all three spheres are critical to the culture and to the creative economy, copyright reform is a matter of finding balance and cohesion within this matrix.

In addition to the hearings by the House Judiciary Committee, the Department of Commerce Internet Policy Task Force issued a green paper entitled “Copyright Policy, Creativity, and Innovation in the Digital Economy.”^[2] The green paper emphasizes the need for balance between protections for creative rights ownership and the broad dissemination of information.

Some would argue that copyright protection and the free flow of information are inextricably at odds—that copyright enforcement will diminish the innovative information-disseminating power of the Internet, or that policies promoting the free flow of information will lead to the downfall of copyright. Such a pessimistic view is unwarranted. The ultimate goal is to find, as then-Secretary of Commerce Gary Locke explained, “the sweet spot on Internet policy – one that ensures the Internet remains an engine of creativity and innovation; and a place where we do a better job protecting against piracy of copyrighted works.” Effective and balanced copyright protection need not be antithetical to the free flow of information, nor need encouraging the free flow of information undermine copyright. In fact, as the Supreme Court has recognized, “the Framers intended copyright itself to be the engine of free expression.”^[3]

While the green paper is very detailed, it emphasizes areas such as the public performance right for sound recordings, issues involving notice and takedown under the DMCA, online licensing of works, and online enforcement.^[4] The green paper also expresses support for expanded fair use and related exclusivity exemptions, particularly with regards to teaching and access for persons with disabilities. The green paper was distributed as the first round of hearings came to a close. The green paper had little influence on the initial hearings but is likely to become increasingly influential as the process continues.

The green paper and the Goodlatte hearings, together with the many efforts by the Copyright Office and others, are creating significant energy around changes to the copyright statute. At the same  time, the proposals are tweaks rather than overhauls and the public may quickly grow tired of what will be a lengthy process. But it matters, so try to stay tuned.

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[1] See Pamela Samuelson, The Copyright Principles Project: Directions for Reform, 25 Berkeley Tech. L.J., 1175 (2011) http://www.law.berkeley.edu/files/bclt_CPP.pdf.

[2] Copyright Policy, Creativity, and Innovation in the Digital Economy, Dept. of Comm. Internet Policy Task Force, July 2013 at http://www.uspto.gov/news/publications/copyrightgreenpaper.pdf. See also USPTO & NTIA, Copyright Policy, Creativity, and Innovation in the Internet Economy, 75 Fed. Reg. 72790 (November 26, 2010) (notice of inquiry. The comments are available at http://ssl.ntia.doc.gov/comments/100910448-0448-01/.).

[3] Id. at 2, quoting Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 558 (1985).

[4] Id. at 5.

When are video games unlike movies – when publicity rights are at stake

In a 2-1 vote, the Third Circuit Court of Appeals reversed a district court ruling in favor of EA Sports, finding that the publicity rights of Former Rutgers football player, Ryan Hart, were violated by depicting Hart in the videogame NCAA Football in 2004-06. The decision is a step forward for collegiate players seeking compensation from the exploitation by the NCAA and its licensing partners. The suit highlights the inability for players to receive compensation even after they have left college and NCAA eligibility rules no longer bar them from receiving payment.

The decision is step backwards for free speech advocates who seek clearer and more consistent protection from claims of publicity rights when celebrities and athletes are depicted in communicative works like films and video games. While the decision provides a thoughtful roadmap through the various legal tests applied to publicity rights, the court’s application of New Jersey law is at odds with the same test’s application in California. This will likely lead to increased confusion and more rounds of litigation until new statutes are enacted or cases decided.

The decision focuses on the exactitude of the video game in reproducing the player but unfortunately pays less attention to the exactitude of the Supreme Court/s recent decision in Brown v. Entm’t Merchs. Ass’n, 131 S. Ct. 2729 (2011). The Third Circuit quoted Brown on the protection afforded video games under the First Amendment. “[V]ideo games communicate ideas — and even social messages — through many familiar literary devices (such as characters, dialogue, plot, and music) and through features distinctive to the medium (such as the player’s interaction with the virtual world).”

Although the court recognizes that “video games enjoy the full force of First Amendment protections,” it highlights the limits of those rights. “As with other types of expressive conduct,” the court explains, “the protection afforded to games can be limited in situations where the right of free expression necessarily conflicts with other protected rights.”

Seeking to apply the best balancing test between the First Amendment and state publicity rights, the court reviews and rejects both the “Predominant Use Test” and the “Rogers Test.” Under the Predominant Use Test, the Missouri Supreme Court held that “[i]f a product is being sold that predominantly exploits the commercial value of an individual’s identity, that product should be held to violate the right of publicity and not be protected by the First Amendment,   even   if   there   is   some ‘expressive’ content in it that might qualify as ‘speech’ in other circumstances.” Unfortunately the Missouri Supreme Court then treated a comic book as such a commercial product and found the use Tony Twist’s likeness a commercial misappropriation when transformed into the evil Anthony “Tony Twist” Twistelli. The Third Circuit correctly rejected this application of such a test.

By our reading, the Predominant Use Test is subjective at best, arbitrary at worst, and in either case calls upon judges to act as both impartial jurists and discerning art critics. These two roles cannot co-exist.

The Third Circuit similarly rejected the Rogers Test, which relies on trademark considerations.

In analyzing the right of publicity claim under Oregon law, the Second Circuit noted Oregon’s “concern for the protection of free expression,” and held that Oregon would not “permit the right of publicity to bar the use of a celebrity’s name in a movie title unless the title was wholly unrelated to the movie or was simply a disguised commercial advertisement for the sale of goods or services.”

The application of the Rogers test to the content of a work almost leads to a finding of free speech, although the content would violate the test where the content was really an advertisement. For example, where the paid ad were an advertorial, a newspaper column of paid content, or in the case of a TV episode which was little more than an infomercial for a forthcoming product. In these cases the content was also a disguised commercial advertisement for sale of goods or services. Unless the content were an advertisement, the Rogers Test would permit the publisher to succeed over the publicity rights.

The Third Circuit adopted the Transformative Use Test developed in California, which is based upon the Copyright Act’s fair use standard. Specifically, that court, in Comedy III Prods., Inc. v.  Gary Saderup, Inc., 21 P.3d 797, 804-08 (Cal. 2001), adopted the first fair use factor, “the purpose and character of the use,” as the sole determinant test to balance the publicity rights claims and free speech claims. In Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994)), the Supreme Court explained the meaning of this fair use factor:

whether the new work merely “supercede[s] the objects” of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is “transformative.”

The Transformative Use Test has been applied inconsistently in California:

• Tee-shirts depicting The Three Stooges to be insufficiently transformative to protect the free speech rights of the artist.
• Comic books depicting Johnny and Edgar Winter as “villainous half-man, half-worm creatures, both with long white hair and albino features” sufficiently transformative to be free speech.
• Video game depicting musician Kierin Kirby sufficiently transformative to protect Sega’s free speech rights to incorporate her image in a video game.
• Avatars depicting No Doubt in video game Band Hero were life-like depictions and therefore violation of contractual limitation on publicity rights was a violation of those rights.

The Third Circuit applied this transformative test and in a 2-1 decision found that the literal depiction of Hart’s avatar was insufficiently transformative to protect the free speech rights of the video game makers. The dissent emphasized the video game’s creative and transformative elements as a whole rather than the particular depiction in isolation.

Unfortunately both the majority and dissent ignored this highly inconsistent and arbitrary nature of the Transformative Use Test. Like the Predominant Use Test rejected by the court, the application of the Transformative Use Test remains a rather arbitrary rule. Since both the Hart decision and the Kierin Kirby decision were summary judgment decisions, the courts were basing their decisions on stipulations that the individuals were depicted in the games.

More troubling, if the First Amendment decision of Brown is to be given full effect, then this analysis should apply to television coverage of sports as well. If Hart’s image is exploited in a video game, is it not also exploited when broadcast? The NCAA cannot make any claim to the publicity rights of its former players or players who are no longer eligible under its rules. (Whether the nation’s colleges should be able to strip undergraduates of their privacy and publicity rights as a condition of college eligibility is a broader question best left to a different analysis.) I cannot distinguish between’ Hart’s avatar and a Tina Fey sketch on Saturday Night Live depicting Sarah Palin. Frankly, judges should be empowered to make that distinction either.

I have advocated for a different outcome,[1] based more closely on the Rogers Test of the Second Circuit that emphasizes that publicity rights only exist when the name or likeness is used for a commercial transaction. As such newspapers, news broadcasts, comic books and video games are immune from publicity rights claims unless they are used to promote a commercial transaction, in other words, they are a disguised advertisement for sale of a good or product.

In addition, a second category of commercial appropriation similarly exists when substantially then entire person’s act is exploited. Thus if a news station were to broadcast all of a concert under the guise of covering that concert, it would steal the commercial exploitation of the work itself. That approach accommodates the Supreme Court decision in Zacchini v. Scripps-Howard Broad. Co., 433 U.S. 562 (1977). In Zacchini, the entire act of the Human Cannonball was broadcast on the news and Zacchini sued for damages as a result. The Supreme Court explained that free speech rights must provide balance with state publicity rights, agreeing that a cause of action for Zacchini’s right of publicity was appropriate under Ohio law.

When a publisher of communicative content takes a substantial portion of the commercial work, then a fair use style balancing is essential to be sure that the communicative work has not usurped the marketplace of the commercial work. Such a test will protect the magicians, comedians, musicians, poets, and trapeze artists of the world. Depicting an athlete in a video game or in a fantasy sports league hardly usurps the athlete’s entire performance; it remains communicative rather than a product or service. It should not matter whether the depiction is accurate or transformed, for that decision is precisely an aesthetic decision inappropriate for determination by judges and courts.

The Hart decision may increase the importance of the Transformative Use Test outside of California, but it does not provide a more thoughtful or more predictable distinction between free speech and publicity rights. The time for a uniform state statute is finally at hand.

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[1] Garon, Jon M., Beyond the First Amendment: Shaping the Contours of Commercial Speech in Video Games, Virtual Worlds and Social Media (November 20, 2011). Available at SSRN: http://ssrn.com/abstract=1962369 or http://dx.doi.org/10.2139/ssrn.1962369;

Garon, Jon M., Playing in the Virtual Arena: Avatars, Publicity and Identity Reconceptualized through Virtual Worlds and Computer Games (March 26, 2008). Chapman Law Review, Vol. 11, No. 3, 2008. Available at SSRN: http://ssrn.com/abstract=1334950 or http://dx.doi.org/10.2139/ssrn.1334950.

W. Bruce Lunsford contribution to create Academy for Law, Business + Technology

With apologies for posting a press release as a blog post, the news that W. Bruce Lunsford has pledged $1 million to Chase under the direction of the Law + Informatics Institute for the creation of the the W. Bruce Lunsford Academy for Law, Business + Technology is exciting enough for us to share our news.

HIGHLAND HEIGHTS, Ky. (May 15, 2013) — The Northern Kentucky University Chase College of Law has received a $1 million gift from W. Bruce Lunsford to establish and support the W. Bruce Lunsford Academy for Law, Business + Technology.

Lunsford, a 1974 graduate of Chase College of Law, is chairman and CEO of Lunsford Capital, LLC, a private investment company headquartered in Louisville, Ky.

The W. Bruce Lunsford Academy for Law, Business + Technology will be an honors immersion program operated by the NKU Chase Law + Informatics Institute. The focus of the program will be to develop “renaissance lawyers” for the Information Age. The Lunsford Academy will provide students with the technological, financial and professional skill sets essential to the modern practice of law.  Through the program’s technology-driven, skills-based curriculum, students will acquire the fundamental skills that will make them more productive for their clients, more attractive to employers and better prepared to practice law upon graduation.

For those interested in learning more about the details of the program, the most comprehensive vision is provided in my forthcoming article from Connecticut Law Review. An working draft of the paper may be found here: Jon M.Garon, Legal Education in Disruption: The Headwinds and Tailwinds of Technology, (Conn. L. Rev. forthcoming) at SSRN: http://ssrn.com/abstract=2040560.

In addition to taking the program’s required and elective law and informatics courses, Chase students participating in the Lunsford Academy will have the opportunity to participate in technology-focused semester-in-practice placements and study abroad programs; they will also be able to seek joint degrees.

Chase College of Law partners with the NKU College of Informatics to offer a Juris Doctor/Master of Business Informatics and Juris Doctor/Master of Health Informatics and with the NKU Haile/US Bank College of Business to offer a Juris Doctor/Master of Business Administration.

Professor Jon Garon, director of the Law + Informatics Institute, said the development of the Lunsford Academy is the next step in the evolution of legal education. “In addition to a solid foundation in legal doctrine, theory and practice, law students need business education, information technology and intellectual property knowledge, and law practice management experience,” he said. “These skills will enable students to compete in today’s highly networked, efficient and global business community. The generous donation by Bruce Lunsford enables Chase to meet this challenge and redefine the scope of legal education.”

In recognition of Lunsford’s gift, the academy will be named the W. Bruce Lunsford Academy for Law, Business + Technology, upon approval by the NKU Board of Regents.

“We are extremely honored and pleased that Bruce has made this significant investment in our Law + Informatics Institute,” said Dennis R. Honabach, dean of the College of Law. “The Lunsford Academy will provide our law students with invaluable opportunities to become uniquely prepared for the modern practice of law.”

One year later – DRM-free ebooks hugely positive for Tor

New York Times technology columnist David Pogue discussed the decision last year by Tor Books UK and US to drop copy protection. It just released a statement regarding the effect of the DRM-free ebooks after one year.

His column deftly discusses the tension between consumers who want the inconvenience of encryption eliminated and concerns that DRM targets lawful consumers far more than those acquiring illegally distributed copies. Although he does not address the plethora of DRM-free versions on bit torrent sites, he notes that the changes to DRM for commercial products might affect the rate of piracy, but not the existence of piracy.

The Tor announcement highlighted a few other features of their strategy. First, the strategy was about their authors and the goals of the authors to engage more effectively with their readers. Secondly, as a science fiction imprint, their readership is among the most capable of getting DRM-free copies, so the publisher needs to make the consumer happy more than it needs to protect itself from the consumer. And finally, the decision to eliminate DRM does not mean that the works are not for-profit, on-sale copies. This statement captures many of Tor’s concerns:

We had discussions with our authors before we made the move and we considered very carefully the two key concerns for any publisher when stripping out the DRM from ebooks: copyright protection and territoriality of sales. Protecting our author’s intellectual copyright will always be of a key concern to us and we have very stringent anti-piracy controls in place. But DRM-protected titles are still subject to piracy, and we believe a great majority of readers are just as against piracy as publishers are, understanding that piracy impacts on an author’s ability to earn an income from their creative work. As it is, we’ve seen no discernible increase in piracy on any of our titles, despite them being DRM-free for nearly a year.

Pogue suggests but does not state outright that DRM is an ineffective strategy for reducing piracy. But he is very explicit that the point of an anti-piracy policy is to increase sales and revenue. DRM-free does not mean without cost. iTunes sells its music even though it dropped DRM. He also points out that his own books have had fared similarly in the market.

If book consumers thought that everyone in the household could easily read the same book (in the manner that a family can share a physical book), it might be more willing to spend money to own the ebook. For works that have no physical cost, the increase in unauthorized copies is not the right metric. The right question is whether more customers will purchase the work. If more copies are sold, the work is more successful, even if more copies are also pirated.

Pogue makes another strong point that the ease of the transaction directly impacts sales. “Friction also matters. That’s why Apple and Amazon have had such success with the single click-to-buy button. To avoid piracy, it’s not enough to offer people a good product at a fair price. You also have to make buying as effortless as possible.” High transaction costs are reasonable only for expensive, infrequent purchases. Weight is a normal force on friction; only weighty purchases should have high friction.

Finally, Pogue addresses the pricing of ebooks. Frankly, he is more generous to the publishers than I would be on this issue by acknowledging the costs associated with “author advance, editing, indexing, design, promotion, and so on” but like the music industry, the investments are declining. The public is likely to value the fair price point of an ebook as a percentage of its physical counterpart. If the physical copy has a secondary market in the used bookstore, then the loss of resale also needs to be factored in for the consumer. Otherwise the consumer is only paying for the convenience of instant access, and if the instant access is undermined by cludgy DRM, there is no value to be had.

Tor heard this from its constituents:

But the most heartening reaction for us was from the readers and authors who were thrilled that we’d listened and actually done something about a key issue that was so close to their hearts. They almost broke Twitter and facebook with their enthusiastic responses. Gary Gibson, author of The Thousand Emperors tweeted: “Best news I’ve heard all day.” Jay Kristoff, author of Stormdancer, called it “a visionary and dramatic step . . . a victory for consumers, and a red-letter day in the history of publishing.”

Tor never says it has become more profitable, but the company does relish the role it is taking in leading the publishing industry towards a more consumer-friendly business model.

The move has been a hugely positive one for us, it’s helped establish Tor and Tor UK as an imprint that listens to its readers and authors when they approach us with a mutual concern—and for that we’ve gained an amazing amount of support and loyalty from the community. And a year on we’re still pleased that we took this step with the imprint and continue to publish all of Tor UK’s titles DRM-free.

So the lesson from Tor is simple – for low-cost impulse purchases DRM doesn’t add value. High quality, fairly priced, and easy to access works will continue to attract a growing market. These are the points of emphasis and differentiation for the marketplace. DRM may be a legal solution, but it is not a sound business strategy.

Comprehensive Copyright Review – The First Steps of a Very Long Journey

House Judiciary Committee Chairman Bob Goodlatte has announced that the Judiciary Committee will conduct a comprehensive review of U.S. copyright law over the coming months. The comprehensive review is not any particular legislative agenda, but it will serve as an open invitation to content industries, technology industries, and the public in a way that likely never occurred in any of the Copyright Act’s prior legislative reforms.

Chairman Goodlatte emphasized the evolution of technology and media in his remarks:

The discussions during the early 1900’s over the need to update American copyright laws to respond to new technology were not the first time such discussions occurred and they will certainly not be the last. Formats such as photographs, sound recordings, and software along with ways to access such formats including radio, television, and the Internet did not exist when the Constitution recognized intellectual property. My Committee has repeatedly held similar discussions about new forms of intellectual property as they arose and enacted laws as appropriate. Driven by new technologies and business models, a number of changes to copyright law went into effect in 1976.

No one should expect immediate legislation. As Register of Copyrights, Maria Pallante noted in her recent congressional testimony “a major portion of the current copyright statute was enacted in 1976. It took over two decades to negotiate, and was drafted to address analog issues and to bring the United States into better harmony with international standards, namely the Berne Convention.” Even there, the effective date for U.S. adherence to the Berne Convention took until March 1, 1989.

In the decades of negotiation over copyright reform in the past, the tension was primarily between commercial interests of the content industries – film, television, music, and publishing industries with the trade unions, authors, and creative interests. But that focus has shifted dramatically with the rise of the information age.

The defeat of SOPA highlighted the tension between the technology industries – led by the ISPs, Google, Apple, Microsoft, eBay, Facebook, and Wikipedia with the content industries. In this fight, the content industries continue to lose. They could not push ACTA and they have lost in the courts over first sale in Kirtsaeng v. John Wiley & Sons, secondary liability in Viacom Int’l v. YouTube Inc. and Tiffany v. eBay, Inc., and many others.

Even more importantly, the rise of social media and the role copyright now plays – or interferes – in the daily lives of ordinary citizens means that the public’s interest in this debate will be higher than ever. Organized by social media companies like Facebook, LinkedIn, Twitter, Google and hundreds of others, the public will be exhorted to be heard every time they log on or check in. This is a great change for democracy. But we shouldn’t forget that those intermediaries are also the very technology companies that have their own stake in the outcomes.

Register Pallante has indicated some of the critical issues before the Judiciary Committee (though the explanation and approach is mine, not Register Pallente’s):

• First sale doctrine – which could include both (i) a review of Kirtsaeng (2013) which internationalized first sale, and (ii) technologies that allow for a digital forward-and-delete that mimics first sale in the online environment;
• Orphan works – questions about how to handle works for which the ownership information or the transfers of ownership have been lost;
• Library exceptions – addressing digital collections and the ability to gain far greater usage out of far fewer copies;
• Statutory licensing reform – on rate setting and rates;
• Federalization of pre-72 sound recordings – resolving the issues involving retroactive pseudo-copyright protection for these works and the implications on the public domain;
• Resale royalties for visual artists – addressing the conflict with those states which provide these rights and potentially creating national legislation;
• Copyright small claims procedure or courts – adding a mechanism for copyright to be enforceable for small scale claims; and
• Mass digitization of books – addressing the myriad of problems triggered by the intermediate copyright violations of works, the fair use of showing snippets, the procedural issues in the project, and many other concerns.

This list does not include many other potential areas for reform, including some of my preferred topics:

• Explicit free speech and human rights accommodations for the statute, since copyright and First Amendment issues increasingly intersect;
• Expanded fair use or copyright exemptions codified under Section 110 for digitization, reverse engineering, comparative advertising, and others;
• Anti-circumvention (DMCA) reform to prohibit its use for use in commercial products – such as cars, printers, garage doors, and other goods;
• Expanded registration requirements so that most of the economically insignificant works people create daily are outside of the copyright regime;
• Statutory Damage Reform to tie statutory damages more closely to actual damages and separate commercial infringers from consumers;
• Mandatory cease-and-desist system so that no one can be sued for copyright damages unless they have been notified directly the conduct is infringing and continue, after a reasonable opportunity to cure has been provided; and
• Broader non-commercial exceptions to copyright analogous to the public/private distinction of the 1909 Act.

Copyright needs to continue to adjust to address these issues. While the system is not broken, there are many strains. Again, from Chairman Goodlatte:

There is little doubt that our copyright system faces new challenges today. The Internet has enabled copyright owners to make available their works to consumers around the world, but has also enabled others to do so without any compensation for copyright owners. Efforts to digitize our history so that all have access to it face questions about copyright ownership by those who are hard, if not impossible, to locate. There are concerns about statutory license and damage mechanisms. Federal judges are forced to make decisions using laws that are difficult to apply today. Even the Copyright Office itself faces challenges in meeting the growing needs of its customers – the American public.

It will be important to be heard on these issues and to think carefully about a system that is good for today’s issues, tomorrow’s challenges and the decades of unanticipated changes the new law will cover.

Beyond Google’s Looking Glass – The Internet of Things is Already Here

(photo: Wikipedia)

Perhaps triggered by the New York Times coverage of Google Glass, The FTC announced both a call for submissions and a workshop related to the Internet of Things and its implications on privacy, fair trade practice, and security implications for both data and people. The FTC announcement highlights both the benefits and risks of device connectivity.

Connected devices can communicate with consumers, transmit data back to companies, and compile data for third parties such as researchers, healthcare providers, or even other consumers, who can measure how their product usage compares with that of their neighbors.  The devices can provide important benefits to consumers:  they can handle tasks on a consumer’s behalf, improve efficiency, and enable consumers to control elements of their home or work environment from a distance. At the same time, the data collection and sharing that smart devices and greater connectivity enable, pose privacy and security risks.

The issue is not new. The ITU released a 2005 study discussing the implications of the Internet of Things. The ITU described a near, technological future in which “industrial products and everyday objects will take on smart characteristics and capabilities. … Such developments will turn the merely static objects of today into newly dynamic things, embedding intelligence in our environment, and stimulating the creation of innovative products and entirely new services.”

I have previously described some of these concerns in an article, Mortgaging the Meme.[1]

In each of these situations, an automated and consumer-defined relationship will replace the pre-existing activities. In many situations, this will create efficiency and convenience for the consumer, but it will also reduce the opportunities for human interaction and subtly rewrite the engagement between customer and company. Those that understand this change will adjust their technologies to improve the service and increase the customer‘s reliance on its systems. Companies that do not understand how this engagement will occur, risk alienating customers and losing markets quickly.

Beyond consumer interactions, other uses may arise. Ethical and privacy concerns regarding misuse tend to focus on government, business and organized crime. These include unwarranted surveillance, profiling, behavioral advertising and target pricing campaigns. As a result, as companies increasingly rely on these tools, they also bear a responsibility to do so in a socially positive manner that increases the public‘s estimation of the company.

Timing for the FTC submissions and workshop are overdue. Reading the New York Times quote regarding app developers, there is a sense that unlike the technology giants such as Microsoft and Google, the developers are thinking more about the technology’s potential than its potential impact. One such example from the Times: “‘You don’t carry your laptop in the bathroom, but with Glass, you’re wearing it,’ said Chad Sahlhoff, a freelance software developer in San Francisco. ‘That’s a funny issue we haven’t dealt with as software developers.’”

Many fields will benefit from increased device connectivity. Just a few:

• Public transportation systems designed around real-time usage and traffic patterns.
• Prescription monitoring to help patients take the right medications at the correct time.
• Fresher, healthier produce.
• Protection of pets and children.
• Social connectivity, with photo-tagging and group-meeting moving into the real world.
• Interactive games played on a real-world landscape.

There are also law enforcement uses that must be carefully considered. After the Boston Marathon attack, for example, calls for public surveillance will undoubtedly increase, including calls for adding seismic devices and real-time echo-location. Gunshots, explosions, and even loud arguments could become self-reporting.

Common household products sometimes become deadly in large quantities. RFID technology could be used to monitor quantity concentration of potentially lethal materials and provide that data to the authorities.

The consumer use, public use, and law enforcement use must be thoughtfully reviewed to balance the benefits of the technology with the intrusions into privacy and the legacy of retrievable information that such technology creates.

FTC staff will accept submissions through June 1, 2013, electronically through iot@ftc.gov or in written form. The workshop will be held on November 21^st. These are the questions posed by the FTC thus far:

• What are the significant developments in services and products that make use of this connectivity (including prevalence and predictions)?
• What are the various technologies that enable this connectivity (e.g., RFID, barcodes, wired and wireless connections)?
• What types of companies make up the smart ecosystem?
• What are the current and future uses of smart technology?
• How can consumers benefit from the technology?
• What are the unique privacy and security concerns associated with smart technology and its data?  For example, how can companies implement security patching for smart devices?  What steps can be taken to prevent smart devices from becoming targets of or vectors for malware or adware?
• How should privacy risks be weighed against potential societal benefits, such as the ability to generate better data to improve healthcare decision making or to promote energy efficiency?
• Can and should de-identified data from smart devices be used for these purposes, and if so, under what circumstances?

While the FTC has asked some good questions, they are only the beginning. Please submit your thoughts and join the FTC conversation.

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[1] Jon M. Garon, Mortgaging the Meme: Financing and Managing Disruptive Innovation, 10 NW. J. TECH. & INTELL. PROP. 441 (2012).