This is a podcast that I did recently in which I discuss a key issue associated with the intersection of technology and the law: electronic contracting. Click the link below to listen.
I have practiced entertainment and technology law for over 30 years. More than any other area of the law, the developments and enhancements in technology have outpaced the law’s ability to take those developments and enhancements into account. I have written about this many times on this blawg, mostly in the area of copyright law.
Another area of cyber law that has been outpaced by technology is the area of tort liability for wrongs committed on the Internet. Specifically, cyber law has been affected by the ever expanding scope of immunity from tort liability afforded under Section 230 of the Federal Communications Decency Act, 47 U.S.C. § 230 (“CDA”). The CDA was enacted in 1996, primarily in an effort to control Internet pornography. While the anti-porn provisions of the CDA subsequently were struck down as unconstitutional, Section 230 remains the law of the land with respect to immunity provided to “interactive computer services.”
Section 230 of the CDA defines “interactive computer services” as “any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including services offered by libraries or education institutions.” The courts have interpreted this to mean all internet service providers (“ISPs”) and web hosts. Section 230 was enacted primarily as a legislative response to two court cases: Stratton Oakmont, Inc. v. Prodigy Services Co. (that had held that traditional common law publisher liability applied to ISPs for the defamatory statements posted by users on the ISPs site) and Cubby, Inc. v. CompuServe, Inc. (which similarly held that traditional distributor liability applied to defamatory statements posted in an online forum). Congress, recognizing that traditional publishers and distributors (who have the ability to pre-screen content before it is published) should not be treated like online hosting services (where posts are made by third parties in real time and really cannot be controlled by the publisher for content), effectively overturned the Stratton Oakmont and Cubby decisions. However, what started out as a statute to immunize ISPs from defamation liability has expanded greatly over the years to include a huge variety of torts.
The language of the statute appeared to be designed to address only defamation cases. Section 230 states that: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” There is also a “Good Samaritan” provision that allows ISPs to block and screen offensive material without civil liability. Significantly, Section 230 states that it has no effect on intellectual property. As I’ve written in a previous blawg post, the Copyright Act was amended with the enactment of the Digital Millennium Copyright Act (“DMCA”), pursuant to which ISPs enjoy immunity from copyright infringement liability for third party postings that infringe another party’s copyright (provided that the ISP has the appropriate “take down” mechanism in place). What this effectively means is that ISPs still potentially have patent and, most especially, trademark liability for online postings by third parties. It is also important to note that both Section 230 and DMCA only immunize the ISP if the post was not made by the ISP itself.
While the language of Section 230 (and the legislative history for that statute) appears on its face to apply only to defamation liability, since its enactment nearly 20 years ago the courts have taken a much more expansive view of Section 230’s reach, especially over the last 10 years. It has been interpreted as granting ISPs immunity for a broad range of torts committed by online users (in addition to the tort of defamation), including tortious interference with contractual relations, violations of CAN-SPAM Act, Fair Housing Act violations and now even outright fraud. In a recent decision, GiveForward, Inc. v. Hodges, a Federal District Court ruled that Section 230 provided immunity to a crowdsourcing platform on which a user perpetrated a fraudulent campaign to raise funds for an allegedly sick child. The child’s mother (who was not part of the fraudulent campaign) argued that the crowdsourcing platform (i.e., the ISP for purposes of Section 230) should be liable for the fraudulent campaign. Part of her argument was that the ISP influenced the fraudulent post seeking the crowdsourced funds and was actually, therefore, a participant rather than a passive ISP. The crowdsourcing platform sought a declaratory judgment that it wasn’t liable for the fake fundraiser. The court agreed with the ISP and held that it was immune from fraud liability under Section 230 because, in the court’s view, it was not an active participant in the fraud.
The ISP had argued that, if the Section 230 immunity was viewed as not applicable to this situation, it would imply that all crowdsourced platforms would now have legal responsibility for every factual assertion made by their users, thus making any crowdsourcing campaign more costly and time-consuming. On the other hand, as asserted by counsel for the plaintiffs in this action: “This ruling stands for the precedent that a professional fundraiser…can use the CDA to shield itself from any state regulation or state-law based cause of action related to its professional fundraising activities by moving its fundraising activities to an online platform rather than a brick-and-mortar business.”
Will Congress clarify that Section 230 is to be limited to defamation claims, as opposed to the courts’ ever-expanding view of the scope of the immunity afforded? Only time will tell. In the meantime, you may start seeing more “online only” fundraising campaigns (as opposed to the telephone and mail solicitations that are so common now) in light of the expanded view of the immunity provided by Section 230.
This blawg focuses on US law as it pertains to technology and entertainment, but a recent decision of the High Court of the United Kingdom just caught my interest. The High Court of the United Kingdom held that certain “private copying” exceptions to the UK’s copyright law (which had allowed for private home copying of copyrighted materials such as musical recordings) is unlawful. (The High Court has no direct counterpart in the US Federal court system. It deals as the court of first resort in all high value and high importance cases in the UK, and also has a supervisory jurisdiction over all subordinate courts and tribunals, with a few statutory exceptions.) What this means is that, under British law (at least according to that court), a consumer may no longer make copies of CDs or even backup copyrighted programs on their computers without engaging in unlawful copyright infringement.
Accordingly, popular services such as iTunes (which is designed to allow for CD ripping) are now illegal in the UK. According to the UK Intellectual Property Office, it is now unlawful to make private copies of copyrighted works owned by an individual (such as a lawfully purchased CD or lawfully purchased copy of software) without first obtaining permission from the copyright owner. That office expressly stated that unauthorized format shifting from one medium to another (e.g., copying a purchased CD onto a computer or MP3 player) is now unlawful.
US copyright law, however, expressly allows consumers to make private copies of lawfully purchased or obtained audio recordings. The Audio Home Recording Act of 1992 (“AHRA”) (embodied in Section 1008 of the Copyright Act) provides:. “No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings.” The AHRA was a result of a compromise with interested parties (such as the then –fledgling digital recording device industry and the music industry) to address the desire for additional copyright royalties from digital uses of music while recognizing consumers’ personal copying behaviors. While there is some scholarly debate over whether all private digital copying is allowed under the Act, the prevailing view is that an individual consumer is allowed to make copies, either analog or digital, of musical recordings. (Note: The Copyright Act amendment did NOT address video recordings, only audio.)
What is going to happen next in the UK is anyone’s guess. To the extent that Apple continues to distribute iTunes in the UK without disabling the CD ripping functionality, it appears to be in violation of UK law and may be accused of engaging in copyright infringement. Even cloud services (which allow for making and uploading digital copies of copyrighted materials) may face legal action.
According to reports, the British government is not pleased with the High Court’s decision in this matter, rightfully concluding that it is likely to cause chaos and concern (and is likely to be highly unenforceable against individuals). As a result, I would not be surprised to see the British Parliament revise UK copyright law to make explicit that such home copying is lawful, similar to the American model.
Social media, it seems, has turned us all into photographers. Anyone with a Facebook page, an Instagram account or any of the other methods for socializing on the web, can post original photos for all the world to see, possibly forever. (Even after a posted photo is “removed,” it might be archived to one or more search engines.) Thus, the Internet is full of millions of photos by millions of photographers.
Richard Prince, a successful photographer and painter, sees this vast array of Internet photos as his personal image gallery. In fact, he enlarges copies of Instagram photos that strike his fancy and sells them as his own work for huge amounts of money—reportedly $90,000 a pop. He calls his work “re-photographing.” So what’s the problem? They are not HIS Instagram photos. For a recent gallery show in New York, Prince selected photos that appealed to him, blew them up without any of the accompanying comments (this is what he calls “re-photographing”), and called them “New Portraits.” He then proceeded to sell them without having first obtained any consent from the photographers or subjects of the Instagram photos (in many of the photos, the photographer and subject were, quite possibly, one and the same) and without paying any compensation to them.
What is going on here? Doesn’t copyright law protect these kinds of things? What about the right to prevent the commercial exploitation of one’s name and likeness (referred to as the “right of publicity”)?
Prince has been “re-photographing” since the 1970s. He takes photographs of existing photos in ads, magazine, books—anywhere he can find them—and then he tweaks the photos. However, many of these “re-photographs” consist of nothing more than reproducing the originals in larger formats.
Prince’s work has created controversy for quite a while. Back in 2008, a photographer, Patrick Cariou, sued Prince after Prince re-photographed Cariou’s images of Jamaica’s Rastafarian community. At the trial court level, the court sided with Cariou and held that Prince had committed copyright infringement. However, on appeal, the court ruled that Prince had not committed copyright infringement because his works were “transformative” and, therefore, the “fair use” defense applied to Prince’s works. Emboldened by that decision, Prince has continued his re-photographing activities, believing that the courts will protect such activities as allowable “fair use.” In fact, he has posted a series of tweets in which he has mocked and insulted those who feel that his actions are unlawful.
Under copyright law, the owner of a copyright (in this case the copyright to a photograph) owns a bundle of rights. Included in that bundle is the right to create “derivative works” based upon that work. The Copyright Act defines a “derivative work” as “a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted.” Prince’s “re-photographs,” I believe, are a form of an art reproduction.
The language in the Copyright Act, at first blush, seems to lead to the conclusion that Prince’s works are merely unlawful derivative works. However, a landmark U.S. Supreme Court decision from 1994, in which the Court was asked to interpret the Copyright Act’s “Fair Use Doctrine” as set out in Section 107 of the Copyright Act (which provides a defense to a claim of copyright infringement), may allow Prince’s work to be deemed to be “fair use” of the Instagram photos. In the case of Campbell v. Acuff-Rose Music (a case involving rapper Luther Campbell’s unauthorized cover version of Roy Orbison’s classic song, Oh, Pretty Woman), the Court established another element to be considered in assessing whether a use is a “fair use:” whether or not the unauthorized use is a “transformative use.” While some consider this to be a new “fifth element” to be considered, most legal scholars consider the “transformative work” test to be an element to be considered as part of the analysis of the first of the four statutory factors set out in Section 107 of the Copyright Act, i.e., the purpose and character of the work.
Recognizing that this new element to be considered might be viewed as a direct contradiction of the Copyright Act’s concept of the “derivative work,” the Campbell Court stated that a derivative work becomes a “transformative work” (and, thus, entitled to fair use treatment) if it uses a source work in a completely new or unexpected way. In other words, even though the statute says that a copyright owner may stop others from preparing derivative works based on their copyrighted work, if that new work is “transformative” enough, the copyright owner may not be able to stop the use, even if the other four fair use factors set forth in the statute weigh against a finding of fair use. One thing that has led to quite a bit of confusion over the years is that the definition of a “derivative work” includes a work that is “transformed.”
There have been numerous court decisions since 1994 in which a party has claimed that its use of a copyrighted work constituted “fair use” where the courts have applied the Campbell case’s “derivative work vs. transformative use” test. However, in my view, this is still a very muddled area and predicting how a court will treat any particular set of facts is somewhat of a mystery. In the current situation with these Instagram photos, Prince’s “transformative use” consisted of removing the original comments from the posts, blowing up the photos and adding his own comments. Even with the Supreme Court’s broad view of “fair use,” I fail to see how Prince’s work can be seen as using the Instagram photos in a “completely new or unexpected way.” Still, in light of the 2008 case referred to above, no party has stepped forward to bring legal action against Prince as a result of his use of the Instagram images.
Apart from copyright claims against Prince’s work, I think that there also may be right of publicity claims here. The right of publicity (which is the subject of a prior blawg post is a state law right that protects various aspects of a person’s name, likeness and persona. The scope of the protection varies from state to state, and the right is not recognized in every state. There is no uniform Federal right of publicity (like copyright law). Prince’s works are images of people. They are being commercially exploited. Under some state’s right of publicity laws, this may be actionable as a violation of the pictured individual’s right of publicity. However, many right of publicity statutes, where such laws exist, exempt from protection the use of an image in connection with the creation of a work of art (what I like to call in Pennsylvania, the “Andy Warhol Exception”). To my knowledge, nobody has asserted any such right of publicity claims against Prince.
So, be careful about what you post. Your face, or the faces of your family and friends, could end up staring down from the walls of a wealthy art collector.
In a 3-2 vote along party lines, on February 26, 2015, the United States Federal Communications Commission voted to approve the so-called “net neutrality” rules. By treating all Internet traffic equally, these rules are designed to preserve online competition. FCC Chairman, Democrat Tom Wheeler (reflecting the position of the Obama Administration), announced that broadband access to the Internet was to be classified as a “telecommunications service” and, as a result, the FCC would be applying Title II of the Communications Act of 1934 (which prior to now has applied to telephone carriers) to Internet service providers. With this ruling, the FCC declared that there would be governmental enforcement of the concept of “net neutrality.”
While the detailed rules were not released at the time of the FCC’s announcement, the FCC did announce a few key elements of its ruling. First, and most profoundly, the FCC has stated that it will regulate the Internet, just as it regulates other telecommunications and broadcasts. Second, the newly approved rules prohibit Internet service providers (“ISPs”), such as Comcast, Verizon, AT&T, etc., from blocking or slowing the traffic of their rivals. Third, and probably most significantly, the rules prohibit ISPs from imposing new fees for faster download speeds that would create paid prioritization (or “fast lanes”) for certain Internet traffic. The FCC’s ruling seeks to protect smaller websites and Internet services who could not compete with larger, more commercially successful websites if they could not afford to pay higher fees to ISPs who imposed a “fast lane” fee. The FCC also felt that allowing for such “fast lane” fees would lead to higher charges to consumers because the companies who chose to pay those fees would simply pass along the increased costs to its customers.
What does this all mean? For companies that rely on the ability to move massive amounts of data over the Internet quickly (such as Netflix), this ruling means that ISPs like Comcast (which also is a competitor of Netflix for streaming movies through its Xfinity service) cannot charge higher fees to Netflix than it charges to any other customer, even though Netflix uses enormous amounts of bandwidth.
Proponents of net neutrality (which includes representatives of many in the technology industries) have argued that FCC enforcement of net neutrality was essential to ensure that there would be a “level playing field” for small companies to compete in the Internet space. By prohibiting the large ISPs from deciding whether to allow faster downloads of certain sites, these proponents argued that net neutrality would protect Internet entrepreneurs, small websites and consumers, by enabling greater competition and consumer options. These proponents seem comfortable with the U.S. government taking a role in regulating the Internet.
While there are many supporters of net neutrality (the FCC reportedly received over four million comments from the public supporting it), the FCC’s newly announced rules are not universally being applauded. In fact, it is highly likely that they will be challenged in court (AT&T already has announced that it will be filing such a suit) and the Republican-controlled Congress may introduce new legislation to overturn the rules. Interestingly, free speech advocates seem to fall on both sides, depending on their view of what interests are being protected by these rules.
The opponents of the net neutrality rules have various reasons for opposing them. Some feel that it will be the first step to a government takeover of the Internet in the U.S. While other countries (such as Russia and China) long have advocated and imposed governmental control over access to the Internet by its citizens, the US historically has sought to preserve an open and unregulated Internet. Second, Title II of the Communications Act, say the opponents, was never designed to be used with 21st century cyber-technology; rather, it was enacted in 1934 to regulate the telephone companies. Third, the opponents fear that these rules will allow the FCC to set rates that can be charged and by imposing burdensome regulations, both of which will lead to increased costs to consumers. Finally, and perhaps most significantly, the opponents fear that these rules will stifle competition in the Internet space by discouraging investment by the larger ISPs in new technologies.
The proponents of net neutrality have won the first round. However, given the changed makeup of Congress following last November’s mid-term elections and the likely litigation challenging these rules, it is clear that the net neutrality debate is far from over.