September 21, 2010

Copyright, Censorship, and Domain Name Blacklists at Home in the U.S.

Filed under: Chilling Effects, Internet, censorship, copyright, trademark — wseltzer @ 12:33 pm

Last week, The New York Times reported that Russian police were using copyright allegations to raid political dissidents, confiscating the computers of advocacy groups and opposition newspapers “under the pretext of searching for pirated Microsoft software.” Admirably, Microsoft responded the next day with a declaration of license amnesty to all NGOs:

To prevent non-government organizations from falling victim to nefarious actions taken in the guise of anti-piracy enforcement, Microsoft will create a new unilateral software license for NGOs that will ensure they have free, legal copies of our products.

Microsoft’s authorization undercuts any claim that its software is being infringed, but the Russian authorities may well find other popular software to use as pretext to disrupt political opponents.

“Piracy” has become the new tax evasion, an all-purpose charge that can be lobbed against just about anyone. If the charge alone can prompt investigation — and any electronics could harbor infringing copies — it gives authorities great discretion to interfere with dissidents.

That tinge of censorship should raise grave concern here in the United States, where Patrick Leahy and Orrin Hatch, with Senate colleagues, have introduced the “Combating Online Infringement and Counterfeits Act.” (PDF).

This Bill would give the Attorney General the power to blacklist domain names of sites “offering or providing access to” unauthorized copyrighted works “in complete or substantially complete form, by any means, including by means of download, transmission, or otherwise, including the provision of a link or aggregated links to other sites or Internet resources for obtaining such copies for accessing such performance or displays”; as well as those offering items with counterfeit trademarks. The AG could obtain court orders, through “in rem” proceedings against the domains, enjoining the domain name registrars or registries from resolving the names. Moreover, in the case of domains without a U.S. registrar or registry, other service providers, financial transaction providers, and even advertising servers could be caught in the injunctive net.

While the Bill makes a nod to transparency by requiring publication of all affected domain names, including those the Department of Justice “determines are dedicated to infringing activities but for which the Attorney General has not filed an action under this section,” it then turns that information site into a invitation to self-censorship, giving legal immunity to all who choose to block even those names whose uses’ alleged illegality has not been tested in court. (Someone who is listed must petition, under procedures to be determined by the AG, to have names removed from the list.)

Finally, the statute’s warped view — that allegations of infringement can only be good — is evident in the public inputs it anticipates. The public and intellectual property holders shall be invited to provide information about “Internet sites that are dedicated to infringing activities,” but there is no provision for the public to complain of erroneous blockage or lawful sites mistakenly or maliciously included in the blacklist.

Hollywood likes the Bill. Unfortunately, there’s plenty of reason to believe that allegations of infringement will be misused here in the United States. Even those who oppose infringement of copyright and trademark (myself included) should oppose this censorious attempt to stop it.

Cross-posted at Freedom to Tinker.

August 7, 2008

Follow the Lead-Users, Not with Cease-and-Desists

Filed under: Chilling Effects, code, copyright, innovation, trademark — wseltzer @ 2:25 pm

Hasbro should have settled with the Scrabulous developers, not sued

While Hasbro was scrapping with Mattel over rights to develop an official online Scrabble (the two split geographic ownership of the Scrabble trademark), the Agarwalla brothers were building one. Their Facebook app, launched a year ago, won a loyal following among Scrabble fans who appreciated a chance to play the word game online, with friends in their social networks. Scrabulous listened to user suggestions, enhancing the online version to the point where it could boast 1.3 million monthly users and a 4.2 star rating, (as compared to 235k users giving Hasbro’s recently launched “beta” 1.2 stars).

Hasbro, however, responded to Scrabulous with a lawsuit, filed in the Southern District of New York, claiming copyright and trademark infringement, trademark dilution, and unfair competition. In response, the Agarwalla brothers closed the Scrabulous app to users whose IP addresses were located in the U.S. and Canada. (Since the Scrabulous website remains accessible from North American IPs, it’s possible the Facebook app was restricted under pressure from and on Facebook.) The EA Scrabble beta has been criticized as more visual flash than substance, without many of the playability features users had appreciated in Scrabulous.

Whether or not it has the legal right, I think Hasbro’s lawyers gave the company bad business advice. As I’ve said before, I believe Hasbro has no copyright claim, but might have (easily avoidable) trademark claims based on the “Scrabulous” name. If trademark’s value is goodwill, Hasbro’s federal complaint lost far more in goodwill than it preserved in control.

Hasbro may think it can ride this one out, that even 1.3 million Facebookers are only a small fraction of those it might interest in an “official” version later. Numerically, of course, that may be correct, but the raw numbers would miss the identities of those users.

I just came out of a three-day workshop on user innovation, where much research was presented on the value of “lead users” in innovation (see Democratizing Innovation for more). Lead users, such as Tim O’Reilly’s “alpha geeks,” push products and services to their limits, tweaking and often improving when their needs aren’t met by the stock components. Smart companies learn to listen to these users — while some of their demands will be unique corner cases, others are early indicators of where the masses will be soon — and where profits are to be made by a company that can supply needs and lead demand.

The Net makes lead-user innovation easier than ever, lowering the costs of communications channels to users sharing their enthusiasm and jointly developing ideas. They often freely reveal ideas and improvements that the savvy company can use in its own product development.

Some companies, O’Reilly’s among them, recognize the value of lead-user innovation and foster these user communities with conferences, forums, or support. When they take ideas and develop them further, to a mass audience now caught up to the curve, they do it so everyone feels fairly treated: the lead users get access to better products the company can produce at larger scale — and a platform for further innovation. Maybe the company even gets a chance to steer the “hackers” toward developments it prefers.

Others, however, see any hacking as “unauthorized,” to be shut down with cease-and-desist threats. They send nasty letters that may shut down the activity but also alienate the users who might show them where to go next. This is what Hasbro has done with its lawsuit against the Agarwalla brothers behind Scrabulous.

The Scrabulous users included Scrabble’s lead-user enthusiasts. Many fans posted to the application’s forum or “wall” (10,953 posts), giving the app developers (and anyone listening) both praise and suggestions for further enhancement. These lead users both told and showed where they wanted the game to go next. The Agarwalla brothers themselves were lead user innovators par excellence, spotting a need and filling it.

Hasbro’s lawsuit response to this outpouring of enthusiasm around Scrabble play quashed much of that lead-user drive. The posts on the EA “Scrabble beta” forum mix criticism of the company with complaints of bugs. Hasbro has neither the quality application nor the community around “official” Scrabble as the Agarwalla brothers had for Scrabulous.

There should have been enough value in Scrabulous to share — Hasbro does have US and Canada trademark rights to Scrabble, which imparted some value to the “Scrabulous” app, and Hasbro’s authorization could have allowed Scrabulous to build even further on the recognized brand. The Agarwallas have shown both programming talent and the ability to engage other enthusiasts. Together, they could create more value than either alone, and likely more than enough extra value to make it worth both their whiles to cooperate. As is, some of that value will migrate over to Wordscraper (Scrabulous’s revised form, which is fun but suffers from lack of interoperability with Scrabble), and some will head to authorized Scrabble, but some will dissipate entirely.

July 14, 2008

eBay Shines in Tiffany Trademark Fight

Filed under: Internet, law, markets, trademark — wseltzer @ 12:45 pm

In Tiffany v. eBay, decided today, the Southern District of New York gives helpful bounds to secondary liability for trademark infringement, saying eBay is not liable for its use of the term “Tiffany” nor for its sellers’ sales of counterfeit goods. Judge Sullivan’s careful analysis leaves the path clear for online marketplaces to flourish, putting enforcement burdens, where they belong, on trademark claimants.

First, the court finds eBay’s advertisement, through “Tiffany”-keyed adwords on Google and Yahoo! searches, to be “nominative fair use.” Some eBay sellers are offering genuine Tiffany merchandise, as trademark law recognizes is legitimate, and eBay has the right to use the brand name to identify them, rather than “absurd circumlocutions … [such as] ’silver jewelry from a prestigious New York company where Audrey Hepburn once liked to breakfast.’” Even if search keywords are “use in commerce,” therefore, the court finds them non-infringing.

Second, the court holds eBay not liable for the infringements of its users, under either direct or secondary liability theories. Instead, its contributory liability test looks much like the notice-and-takedown regime that the DMCA sets up for copyright: only specific knowledge of infringement can trigger liability, a “showing that a defendant knew or had reason to know of specific instances of actual infringement”; not the “generalized” knowledge of counterfeiting Tiffany would like to attribute to eBay. The court does not impose any prior monitoring obligation, implying only that a defendant must take appropriate steps after being notified of claimed infringement. (The court helpfully notes several times that Tiffany’s “Notices of Claimed Infringement” are just claims, not proof, and that some listings have even been reinstated after incorrect claims.)

“[T]he fact remains that rights holders bear the principal responsibility to police their trademarks.” Trademark holders are best situated to assess the provenance of their branded goods and to weigh the costs and benefits of enforcement. The marketplace benefits from a rule that leaves lawsuits to the endpoints, keeping intermediaries relatively safe and clear.

Finally, the ruling suggests that trademark law continues to function effectively in the Internet era. While trademark holders might like greater control, and (some) sellers might like greater leeway, trademarks serve as indications of origin even without enlisting intermediaries in the fight. Yet further reason why ACTA’s proposed “update” to anti-counterfeiting trade law should not put liability on Internet intermediaries.

Thanks for the link, Ray.

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