Defamation, Autocomplete And Search Royalties: How Not To Govern the Internet

by Glenn Manishin on May 6, 2013

With the controversy surrounding the International Telecommunications Union (a UN treaty organization) just recently subsiding, it is time to take a look at Internet governance from a different perspective. We all know that laws and legal principles differ among countries. What many do not realize is that these laws — most completely non-tech oriented — are having a massive and negative impact on Internet innovation.

In America we proudly have the First Amendment, the fair use doctrine and the DMCA. The first limits the reach of liability for libel (defamation) at least to cases, for non-celebrities, where a publisher is at fault (i.e., negligent). Section 230 of the last allows ISPs, websites and Internet hosts a legal safe harbor from copyright and other legal offenses resulting from user-generated content or any other content that a customer, client or some third-party has published. These landmark legal regimes are hallowed in the U.S., for instance used to strike down overreaching Web censorship efforts by federal government. Fair use, in turn, permits non-commercial or transformative use of a portion of copyrighted content. Think Google image search thumbnails or blockquotes from a news source in someone’s blog or a movie clip in a televised review.

Things are very different elsewhere. Three cases in point.

  1. In Germany and perhaps soon other EU nations, search engines that display snippets of indexed Web pages in response to user queries are now by statute responsible for paying copyright royalties to the original publisher, regardless of whether the content owner charges for its stories with a paywall. 
  2. In France, Italy, Ireland,  Australia and now Japan, courts permit individuals to recover for libel based on autocomplete and search results that return incorrect or harmful personal information, but against the search provider, not the writer or content publisher.
  3. A Denmark court ruled deep linking illegal, as did Germany, leading some to believe that linking to a website other than the front page was illegal throughout Europe. While the German courts overturned that decision, it was Agence France Presse (AFP) which eventually sued Google News for brazenly daring to send search  traffic to the organization’s news articles.

These results are foreign, literally, to U.S. jurisprudence. But they also illustrate a vitally important point. Legal regimes that have nothing to do with the Web are being applied in ways which upset existing services users take for granted and that threaten to impede future innovation.  Linking is inherent in HTML and represents the essence of the Web. No one in America would argue seriously today that a hypertext URL link represents copyright violation. Search “autocomplete,” in turn, is not a creative activity, but a very useful technical advancement; it applies computer algorithms based on past searches to predict what the current user wants to see, speeding the retreival of information from the Web.

Permitting autocomplete defamation suits against Google or Bing because other Web users have searched for information that damages an individual’s reputation is alien to our American way of thinking. It’s censoring completely accurate factual information about stuff on the Web, although that stuff may itself be factually wrong.  The augmentation of liability is also just plain silly, because both autocomplete queries and search results themselves merely return an indexed link to something someone else has posted on the Web.

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SideCar Approaches A Regulatory On-Ramp

by Rob Pegoraro on May 6, 2013

Can SideCar get a lift from the District of Columbia, or is it only going to get taken for a ride?

The ride-sharing service, which matches passengers with drivers heading in about the same direction, launched in San Francisco last June and began limited operation in D.C. in late March.

The District of Columbia Taxicab Commission is not pleased by the development.

“The DC Taxicab Commission has determined that Sidecar offers a public vehicle for hire service and as a result their drivers must have licenses from the Commission and those drivers’ cars must have L tags,” wrote spokesman Neville Waters in an e-mail Wednesday.

DCTC has yet to take enforcement actions against SideCar. In New York, however, the Taxi & Limousine Commission had police briefly detain two drivers and impound one’s vehicle. In Philadelphia, the city fined three drivers and impounded their vehicles, then fined the company too.

Here’s how the app works: After you open an account in SideCar’s iOS or Android app, including storing a credit card for a “donation” covering each ride, you set pickup and destination addresses. The app suggests the right donation for that route, you confirm the ride, and a driver accepts and arrives. At your destination, you pay what you want, then you and the driver rate each other.

Or so I’m told: The service only runs on weekends for now in the District, and I’ve yet to have an opportunity to use it.

Co-founder and CEO Sunil Paul explained Thursday morning that the company provides a matching, not a dispatching service.

A driver need not accept a ride request, and a passenger can balk when a driver rolls up (Paul said he declined a ride when the car wasn’t the one pictured in the driver’s profile.) Drivers aren’t supposed to drive full-time or even go out of their way; a FAQ states “you share the rides you’re already taking.” And that voluntary payment can be zero.

(The suggested donations on a few sample itineraries are in the range of taxi fares–for instance, $11 to go from 15th and L Streets in downtown D.C. to the Rosslyn Metro stop in Arlington, less than three miles away.)

SideCar also aspires to be a friendlier ride than a taxi. “It’s social versus chauffeur,” Paul said. “Most people sit in the front.”

Passengers and drivers discussing SideCar on Quora have made the same point. As one driver wrote, “Money shouldn’t be your motivation, [….] meeting new people, discovering new places in the city & being a friend giving a ride to another friend should be.”

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Netflix Exec: To Combat ‘Piracy,’ Give Good Options

by Ali Sternburg on May 3, 2013

Lobbyists for copyright owners like to stress the problem of ‘piracy,’ proposing bills like the ill-fated Stop Online Piracy Act (SOPA), even when research continues to demonstrate that ‘piracy’ doesn’t always hurt, and in fact sometimes helps, content sales.  Often ‘piracy’ occurs when consumers’ expectations are not being met, because of technological constraints, or markets not yet existing.  If consumers can’t purchase the content lawfully, they may instead access it however they can.  (Exhibit A:  HBO’s ‘Game of Thrones.’)

However, content owners don’t always mind.  HBO programming president Michael Lombardo spoke out recently about this ‘piracy’ of Game of Thrones, saying it’s a compliment and doesn’t hurt DVD sales.  Lady Gaga’s manager Troy Carter has said ‘piracy’ is going away, thanks to technological innovation.

And just this week, a Netflix exec, in charge of Netflix’s new original content programming, echoed these sentiments.  According to Gizmodo, Netflix’s Chief Content Officer Ted Sarandos “claims the modern trend for easily streaming legal content is impacting on the more hardcore Bittorrent scene, with pirate traffic dropping in countries when Netflix switches on its servers.”

Sarandos explained that this is because “people are mostly honest,” adding that:

The best way to combat piracy isn’t legislatively or criminally but by giving good options. One of the side effects of growth of content is an expectation to have access to it. You can’t use the internet as a marketing vehicle and then not as a delivery vehicle.

Sarandos is exactly right that ‘piracy’ is reduced with a market-based solution.  The more services that emerge to provide consumers with superior options for content delivery the better, as competition drives down prices and spurs innovation.  There are barriers to entry, such as steep copyright licensing fees that deter innovation and lawsuits from incumbents, but disruptive competitors continue to emerge.  Companies shouldn’t be on the opposite side from their customers, by suing them or making their behaviors illegal; instead, they should be aware of consumers’ habits and changing norms, and innovate to meet demand.

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Patent Fixes Pick up Steam in Congress

by Daniel O'Connor on May 2, 2013

(Cross post on Patent Progress)

What a difference a year makes in Congress.  Last year, Reps. DeFazio (D-OR) and Chaffetz (R-UT) introduced the Saving High-tech Innovators from Egregious Legal Disputes (SHIELD) Act.  The bill generated some attention in the press, but never made it onto the campaign year legislative agenda.

Then we hit a tipping point of sorts.  It has been widely known that troll litigation is unsavory and inefficient, but many ardent defenders of the current patent system argued that patent trolls were a sideshow.  In 2005, trolls accounted for 23% of patent litigation.  Then, in December of last year, Santa Clara Law’s Prof. Colleen Chien released the results of her study showing that trolls accounted for 61% of patent lawsuits in 2012, which marked the first year that trolls accounted for more than half of all patent litigation.  The rhetorical rubicon had been crossed, which helped put the gears of Washington, DC in motion.

In December, the FTC and DOJ held a joint workshop on patent trolls, which marked the first time that our nation’s antitrust regulators took serious steps to examine the competition problem posed by patent assertion entities.  (Last April, I asked the former Assistant Attorney General for Antitrust, Sharis Pozen, about the DOJ’s stance on patent trolls and she said the agency was still internally thinking about how to handle trolls and had no comment beyond that [@ 39:10]).

Then this February the SHIELD Act was amended and reintroduced.  As some commenters have pointed out, the SHIELD Act is a small, but important tweak to get at some of the problems with trolls, but it does not go far enough on its own.  And, at the time of its introduction, it seemed like the SHIELD Act was as far as Congress was willing to go to help update our misfiring patent system, after having failed to agree on comprehensive reform in the America Invents Act.

However, the patent troll problem escalated to the Presidential level, with the President giving a well thought out response to a question on patent trolls in a Google Hangout he held in mid-February where he condemned the practice of trolling and discussed the need for more patent “balance” generally.

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Government To Industry: Secure Your Systems, But Also Make Them Easy To Wiretap

by Rob Pegoraro on May 1, 2013

You can’t blame tech companies if they feel a little confused about Washington’s security priorities this week.

For months, Congress and the Obama administration have been pushing for public-private cooperation to improve the state of cybersecurity. It’s not enough for companies that run critical infrastructure in telecommunications, finances and power to their individual defenses; the government also needs to make it easier for them to pool their knowledge and resources.

Congress just hasn’t been able to agree on how to do this in two weeks of trying. For the second year in a row, a “CISPA” (Cyber Intelligence Sharing and Protection Act) bill passed by the House has stalled out in the Senate over fears about privacy and accountability, backed up by veto threats from the White House.

Now comes news, courtesy of a front-page story in Monday’s Washington Post, that an administration task force is proposing a system of steep and escalating fines to push tech companies to open up encrypted online communications channels to wiretap requests:

“Under the draft proposal, a court could levy a series of escalating fines, starting at tens of thousands of dollars, on firms that fail to comply with wiretap orders [….] After 90 days, fines that remain unpaid would double daily.”

The story by my former colleague Ellen Nakashima goes on to note that while this proposal would be tech-agnostic, allowing companies to develop their own backdoors for the FBI and other law-enforcement agencies, it would also exempt smaller companies from these fines.

The piece notes the difficulty or impossibility in enabling real-time decryption in many of these situations, especially those involving peer-to-peer systems, but does not describe what will ensure that bad guys only stick to big-name communications systems. And that’s nowhere near the only head-scratching moment in this idea, which the White House has apparently not yet signed off on.

Consider this paragraph further down in the article:

“Former officials say the challenge for investigators was exacerbated in 2010, when Google began end-to-end encryption of its e-mail and text messages after its networks were hacked. Facebook followed suit. That made it more difficult for the FBI to intercept e-mail by serving a court order on the Internet service provider, whose pipes would carry the encrypted traffic.”

I’m not unsympathetic to the difficulties law enforcement can have here. But these companies–beyond Google and Facebook, you can add Microsoft and Twitter to the list–adopted full-time encryption, among other overdue security upgrades, for the sound reason that their users’ accounts kept getting compromised by man-in-the-middle eavesdropping.

If the cost of making it easy for the Feds to listen in on the communication of criminals is to open up everybody else’s chatter to Chinese hackers… yeah, good luck with that.

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Barry Diller On Incumbent Broadcasters And Aereo Being Legal

by Ali Sternburg on April 30, 2013

Barry Diller, an investor in Aereo (for more on Aereo, see this DisCo post about their recent win), was interviewed yesterday by Bloomberg TV.  The Verge transcribed part of the interview, and an excerpt is below:

“I understand broadcasting,” Diller says. “No incumbent wants anyone in. That is an unbreakable rule.”

Aereo as it exists is legal, argues Diller; the real danger to its future is that the networks’ complaints will lead to a hostile intervention from Congress. “My attitude has been to jump into something that looks difficult and is against what people think will succeed and plant my little flag,” says Diller, adding that “sometimes it gets kicked.”

As The Verge notes, “Barry Diller is a media legend, a former Paramount CEO and USA Network mogul who helped launch the Fox television network.”  It is admirable that given his perspective and experience he is supporting an innovative service for delivering content to consumers, and is willing to depart from his former colleagues.  His quotes aptly demonstrate the conflicts DisCo often highlights between incumbents whose established revenue streams are being undercut by startups, who then seek government intervention to try to keep their market share (and, as Diller puts it, often ‘kicking’ the competitors in the process).  But given how popular the service has been in New York and its plans to expand (next stop: Boston), not to mention the crucial fact that the law is on their side, Aereo’s future looks bright.

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Why Harvey Weinstein’s Latest Anti-Internet Outburst is Wrong.

by Matt Schruers on April 26, 2013

On most days, another anti-Internet outburst from Harvey Weinstein wouldn’t qualify as news, but it’s a slow Friday afternoon.

At a Washington event today, the Hollywood producer and Miramax co-founder reportedly complained about Google and YouTube, alleging that consumers can view full-length movies online for free, and demanding legislation to regulate online platforms.  Jason Horowitz, tweeting for the Washington Post, said:

This isn’t a surprise; it is par for the Weinstein course.  He previously received attention for his widely-reported but dubious prediction that the Obama Administration would flip-flop on the Stop Online Piracy Act (SOPA) in the post-election period.  Following that, Weinstein offered remarks similar to his outburst today in a wide-ranging interview, complaining that:

“the internet shortchanges writers, directors and producers in our industry. Their work–10 minute clips, 15 minute clips, whatever–gets shown all the time and they never get any money. The Director’s Guild doesn’t get any money, the Writer’s Guild. Journalists don’t benefit when their stories are taken, and given a link. It would be like me launching a newspaper–call it Link—where I can have the greatest journalists in the world working for me without paying them. It’s inconceivable….  If BMI and ASCAP can monitor the music business, we need a BMI and an ASCAP to monitor these businesses. This will be the one legislation for our industry that I’ll press. We need for writers, producers, studios, and journalists to be protected.”

Setting aside Weinstein’s peculiar hypothetical here, the fact that he lumps news into this narrative suggests that his problem is not copyright infringement at all — for which extensive and potent legal remedies exist.  The problem with news is that traditional media outlets are to some extent competing with individuals using blogs and Twitter, individuals who have decidedly different cost structures.   It’s competition, and there’s a lot of it.

How substantial is that competition?  YouTube generates hundreds of millions of dollars for the music industry alone; PSY’s popular “Gangnam Style” stood to yield $2 million in revenue as of last year.  Over 3000 partners use Content ID, including major broadcasters, studios and labels, who have claimed more than 200 million videos on the site.  (YouTube’s ContentID, it should be noted, is the industry gold standard for DMCA compliance.)   That is a significant amount of content, and revenue, and a non-trivial amount of that revenue is going to creators who are not Hollywood insiders.

This raises another subtext to this morning’s outburst: services like YouTube and Blogger provide tools to people who are upsetting the established content business model.  These platforms enable creative individuals whose motives are not pecuniary.  That is, a substantial number of Internet users write, blog, perform, and create video because they desire attention, reputation, an audience to influence.  The long tail has a soapbox.  It doesn’t just receive; it transmits, and that makes it competition, some of which isn’t necessarily looking for monetary compensation.

And because “the long tail” has a different cost structure, existing content producers are hard pressed to compete.  Competition is tough.  Getting Washington to regulate is easier.

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Resolved: Competing Over Pocket-Sized Screen Resolution Has Gotten Out Of Hand

by Rob Pegoraro on April 26, 2013

By a year or so ago, the leading smartphone vendors could have jointly hoisted a “Mission Accomplished” banner–by then, they’d all succeeded in shipping displays with as much resolution as humans could hope to discern.

Instead, many of them have since escalated this competition by shipping phones with even-denser displays that may now require upgrades to our own retinas to appreciate their awesomeness.

In the process, these companies risk replaying one of the older stories in competition: incumbent vendor overshoots while trying to satisfy one perceived customer demand, then astute upstarts notice how it’s neglected other needs and proceed to eat its lunch.

That’s not what I expected in 2010 when Apple introduced the idea of the “Retina Display” on the iPhone 4′s 960-by-640 pixel screen. Quadrupling the pixel count from the iPhone 3GS’s 480 by 320 screen–and going from 163 pixels per inch to 326–made the usual bitmapped edges on text and graphics vanish.

(Fun fact: According to the display calculator at Is this retina?, my old Treo 650′s 2.7-in., 320 by 320 screen had the first three iPhones beat in terms of pixel density, at 167 ppi.)

It seemed inevitable that other manufacturers would match this new standard. But many have since been vying to demonstrate their superiority by going past it.

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Cord-Cutting Trendline Forming: Netflix Has More U.S. Subscribers Than HBO; Amazon Beta-Tests New Original Content

by Daniel O'Connor on April 25, 2013

One point is not a line.  Lots of points, well, that might just be a series of dots.  It could also be a trend, especially if the dots start beating you over the head, saying “pay attention to this development.”

When Netflix reported its quarterly earnings, it announced that the company had added over 2 million U.S. subscribers in the first quarter of 2013 to total 29.17 million.  To put this in perspective, HBO had 28.7 million U.S. subscribers at the end of 2012 (note: it is possible that HBO added more than half a million subscribers in the quarter, which would still keep it ahead of Netflix).

Whether HBO or Netflix holds a marginal lead in viewership is not as important as Netflix’s growth and future potential.  In fact, Netflix shares surged after the earnings call for this very reason.

One can argue about the short-term significance of this, but this is just one more data point in the growing trend towards a viable video content distribution industry that potently disaggregates traditional cable operators.

Some other facts of note:

  • Amazon, with its own Hollywood studio division, is launching its own original content in a very Silicon Valley way.  The company is releasing 14 new pilots (or should we call them beta content?) that will be available for its users to watch and rate.  Amazon will choose which shows to fund based on user feedback.  And these aren’t two-bit productions either, as they feature the likes of John Goodman, Bill Murray, Bebe Neuwirth, Stephen Colbert and Ed Begley Jr. to name a few of the actors.  Given Amazon’s penchant for disrupting industries, I wouldn’t bet against the company making a dent in the content industry.

Why is all this significant and why should we not listen to the big cable execs who are downplaying the significance of the cord-cutting revolution? MORE »

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Observations on Reddit’s Apology

by Matt Schruers on April 24, 2013

On Monday, the website Reddit apologized for the actions of certain Reddit users, a large number of whom had speculated extensively about the identity of the Boston Marathon bombers on a user-created discussion thread on that site.  Although this apology was applauded in some circles, it was a mistake — a mistake which may create unrealistic and undesirable expectations about the future of online communications.

By way of background, the days after the attacks saw Reddit and Twitter users engaged in amateur, crowd-sourced investigations, sharing photographs, notes, and speculation on numerous individuals photographed with bags who might be suspects.  Suspicion fell upon on a local athlete.  These speculative claims were subsequently repeated by the NY Post, which went so far as to falsely label two individuals “Bag Men,” republishing their photographs as front page news, an act which media watchers called “appalling.”  Yet these claims were thereafter repeated by other traditional media outlets, until the allegations were ultimately refuted.  Separately, Twitter speculation and Reddit comments were repeated by journalists, incorrectly naming a missing Brown University student as a suspect.

However inappropriate and unwise Reddit and Twitter users’ comments may have been, neither Reddit nor any other service should create the expectation that a service should have policed the speech of its users. MORE »

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