These kinds of disclaimers, disassociating the tweets from the people who retweet them, are common. The Twitter bio belonging to Brian Stelter of the New York Times (@brianstelter) notes, “RT & links aren’t endorsements.”

A Social Media Policy Addressing RTs and Linking

But for some, those disclaimers are not enough.  Last fall, the Associated Press introduced an updated social media policy for its reporters and editors.  As recently reported in Yahoo! News, the AP memo advised reporters and editors that “Retweets, like tweets, should not be written in a way that looks like you’re expressing a personal opinion on the issues of the day. A retweet with no comment of your own can easily be seen as a sign of approval of what you’re relaying.” The guidelines note, “[W]e can judiciously retweet opinionated material if we make clear we’re simply reporting it.”

Members of the media might want to be careful, however, that statements like “No comment” or “without comment” before tweets do not take on meanings of their own. Often, retweeting something “without comment” can indicate an unwillingness to comment due to an either enthusiastic support for of disapproval of the content of the original tweet.

Take, for instance, this example, where a user named @ProgressiveMich, whose bio indicates that he (or she) is against corporate money and for progressive politics for Michigan, retweeted “without comment” a tweet by conservative political commentator Dick Morris (@DickMorrisTweet) that said, “To gain the younger vote I think Republican candidates need to pick up Cain’s 9-9-9 plan.” In retweeting “without comment,” @ProgressiveMich might be saying (who knows?) that the content of the tweet is not worth commenting on. Rather than using “without comment” to avoid expressing an opinion, the retweet-er is in fact expressing an opinion.

A Broader Perspective

This may be just the application of an old-school standard to a new medium. Just because you throw up a vanilla disclaimer of “nonendorsement” on your website or in the fine print, that may not cut it as effectively communicating nonendorsement.

In consumer protection law, this is the analogous problem with buried, “fine print” legal disclaimers, which have generated a whole rash of regulatory responses requiring “clear and conspicuous” disclosures.  So, for example, California’s recently amended security breach notification law requires disclosures be made via “conspicuous posting” of breach information “written in plain language”.

Various state Attorneys General have initiated legal actions against consumer websites, magazines and other subscription-type services, claiming deceptive practices from insufficient disclosure of billing practices, particularly automatic credit card renewal billing of subscriptions and other service purchases. American Journalism Review reported in 2002 on Florida’s Attorney General looking into Time Inc.’s re-enrollment practices that often forced subscribers to re-subscribe without their knowledge.

And perhaps most directly on point, the Federal Trade Commission (FTC) last year issued extensive rules requiring more prominent disclosures of commercial endorsements and affiliations by bloggers and other social media endorsers of commercial products.  The FTC’s blogger rules make clear the Commission’s view that the inadequacy of prior disclosures wasn’t limited to misleading or insufficient disclosure statements, but equally so the common practice of burying disclosures.

Big Pharma is quite familiar with this problem, which is why you find such seemingly awkward disclaimers (i.e. taking this drug may put you at risk of death!”) blithely stated by wistful lovers at the ends of Viagra and other sexual performance drug ads.  The US Food and Drug Administration requires “clear, conspicuous and neutral” presentation of risk information in pharmaceutical advertisements. And not leaving things to chance, the FDA has published highly detailed commentary on these practices, with examples such as this:

A seven-page sales ad devotes the first six pages to effectiveness claims, which are prominently presented with colorful graphics, abundant white space, and large, colorful headers. Three of these pages also include a footnote referring readers to “Important Information on page 7.” The seventh page summarizes some risk information from the PI in single-spaced paragraph format without headers or other presentation elements to emphasize to the reader that it is important risk information.  Such a presentation creates problems regarding the adequate presentation of risk. The important risk information about the drug should instead be integrated into the piece and presented with similar prominence to the effectiveness claims.

Back to RTs

Does a catch-all “RTs and Links aren’t endorsements” (per Brian Stelter of the New York Times) really make the case?  In my post last year about the FTC blogger guidelines (“FTC Blogger Rules: Why Not Disclose Advertising?“), I noted that the guidelines limit disclosure requirements to cases where the sponsorship relationship is not “reasonably expected by the audience.”  And perhaps followers on Twitter should really know better than to assume a RT is an endorsement.  But in that sense, the AP’s guidelines are quite reasonable, especially for professional writers for whom care is assumed to have been taken with choice words.

Kate Tummarello, a Research and Social Media Intern with Mirsky & Company and a reporter at Roll Call/Congressional Quarterly, contributed to this post.

Despite the fact that this practice is officially frowned upon in the Federal Trade Commission’s 2009 endorsement guidelines, companies will often engage paid individuals – either employees on the payroll or outside bloggers who receive compensation in the form of a free sample – to post positive reviews online, including to places like Twitter, personal blogs, or online public forums without identifying the connection between the commenter and the product being commented on.

The FTC’s endorsement guidelines seek (among other things) to ensure that unbiased positive reviews online can be considered credible, while also ensuring that positive reviews that are partially the result of some sort of compensation be acknowledged as such. The FTC’s guidelines encourage not just that bloggers acknowledge compensation, but also that the companies offering the promotion notify bloggers of the guidelines and then ensure that the guidelines are followed.

The New York Times reported last summer on a settlement reached between the FTC and Reverb Communications.  According to the report, employees of Reverb, a public relations firm, were posting positive iTunes Store reviews about Reverb client products. “[Reverb] engaged in deceptive advertising by having its employees write and post positive reviews of clients’ games in the Apple iTunes Store, without disclosing that they were being paid to do so,” according to the article.  The FTC’s settlement with Reverb reportedly included an agreement to remove all inadequately identified iTunes Store reviews, but no monetary penalties or admission of illegal activity.

Also last year, as reported in a post on the Citizen Media Law Project blog, clothing retailer Ann Taylor LOFT sent invitations to bloggers, offering a “fall fashion preview” and “special gift” to bloggers who agreed to write about the event.  The FTC commenced an enforcement proceeding against Ann Taylor LOFT for violation of the blogger guidelines, but ultimately chose not to pursue action, instead noting that the company had incorporated a written policy prohibiting similar conduct in the future.

K&L Gates’ blog on technology, media and technology, ”TMT Law Watch”,  reported earlier this year on another FTC enforcement.  As reported, a musical instruction company called Legacy paid “Review Ad Affiliates” to give positive reviews for site’s musical instruction services.  Those affiliates subsequently failed to provide adequate notice of their material connection with the promoter. “Affiliates received substantial commissions (20-45%) on sales of each product resulting from a referral,” TMT Law Watch reported.  Although Legacy required affiliates to sign a contract committing to follow FTC guidelines, there was no monitoring system in place to ensure that the guidelines were followed.  In its enforcement complaint the FTC stated “that the Affiliates’ reviews were false and misleading, that the failure to disclose the financial relationship was a deceptive practice, and that these acts and practices constituted unfair or deceptive acts or trade practices in violation of Section 5(a) of the FTC Act,” according to the post.

Under its administrative settlement with the FTC, Legacy agreed to monitor and conduct monthly reviews of 100 of its “Review Ad Affiliates,” including the top 50 review producers and a random sampling of 50 more affiliates. Legacy must also institute a system through which payment will be stopped to any affiliate that does not adequately disclose its material connection to Legacy when posting reviews. In addition to a civil penalty of $250,000 and a requirement to notify its employees of the settlement, the Legacy must carry out these reviews of its affiliates and report them to the FTC for the next 20 years.

Some companies have taken measures to preemptively ensure compliance with the FTC guidelines. For example, AdAge reported earlier this month on an undertaking by the social media influence ranking site Klout to provide free products to people with significant social media influence. Aan ccording to AdAge, the initiative would provide products, or “Perks,” to those with large influence on social media outlets. “Klout addresses the FTC rules by sending a card along with the ‘Perk’ that states that recipients aren’t required to do anything at all,” AdAge reported, “but they should disclose that they’ve received a sample if they decide to write about it.”

A question is whether this kind of passing the buck to bloggers (“you’re on notice that you shouldn’t do anything we wouldn’t do”) really complies with the guidelines, much less the spirit of the guidelines.  The Legacy case raises the specter of enforcement proceedings against companies for failing to adequately monitor compliance.  But generally, evidence of compliance should be able to be found in actual resulting conduct. As Forbes noted last year, it can be difficult to measure the impact of the guidelines when the intent isn’t clear. An FTC director was quoted by Forbes, “Our goal is not to bring enforcement actions. [Our goal is] to help people be educated so we don’t have to bring enforcement actions.”

***

Kate Tummarello, a Research and Social Media Intern with Mirsky & Company and a reporter at Roll Call/Congressional Quarterly, contributed to this post.

By definition, citizen journalism’s inherent difference from the traditional editorial process is the dispersion of responsibility for editorial choice.  Nonetheless, “trustiness” in journalism is a concept still heavily dependent on a reporter’s or editor’s reputation.  Is the New York Times trusted because it’s trustworthy?  Or is it trustworthy because it’s trusted?

The “Generated By Users” journalism blog recently reported the results of its reader poll, “Do you TRUST user generated content in news?”

[O]verall we like [user-generated content] but remain skeptical and need to know that it is trustworthy and adding value and perspective to reports. In an ever more connected world we can rely on UGC for immediate breaking news, but we want experienced journalists to sum up the day; if that requires using some UGC then we are fine with that, but it must be combined with original professional content.

Crowd-sourced citizen journalism attempts to bridge the gap between the historical (back to 2003 or so) understanding of “citizen journalism” and more recent efforts to create “virtual” news operations.  So, for example, in 2007 the US State Department’s blog America.gov wrote thoughtfully about the movement of established news organizations – the BBC, CNN and Le Monde were favorably cited – to integrate video, blogging and other raw reporting coverage of breaking news events into regular news reporting.  This trend had “becom[e] more of a dialogue between the providers and receivers of information, rather than an imposition of opinions and perspectives by an elite caste.”

Still, reporting is being collated (an unfair characterization?) by established media into seemingly traditional reporting.  Or, better yet, the explosion of number, variety and depth of sources of news could make the producing of established reporting – digesting, analyzing, summarizing and storytelling – that much better-sourced in the hands of writers, reporters and editors who know how to bring it all together.

Crowd-sourced journalism is not without downsides.  From America.gov’s 2007 report:

On the negative side, the Internet has opened up extraordinary new possibilities for the widespread and sometimes dangerous manipulation of information, which is difficult, if not impossible, to stem.  This phenomenon will increasingly place a heavy responsibility on professional journalists to maintain high standards of fact-checking, honesty, and objectivity. Editors are already spending enormous amounts of time verifying and authenticating user-generated pictures and text, and this will only become a more time-consuming part of their jobs. Blog posts and comments require careful and regular scrutiny.

It is true that the explosion of sources of information – just like the avalanche of the raw information itself via wide, public availability of data – makes the jobs of journalists more complex, but that may not be all that much of a change.  Reporting has always required judgment calls by reporters on the quality of and proper weight to be given to sources.  The difference now is the number of sources of where information is coming from, and who has the ability to monitor how it is used.

If a structural problem for “citizen journalism” is an inability to generate consistency in quality – “editorial standards” – why not remedy that problem with some of the same technology that makes citizen journalism possible in the first place?

That is the approach of a number of projects discussed in a recent Columbia Journalism Review article, including “Citizenside”, “Digital Journal” and “NowPublic”.  These sites use concepts from online gaming, including point tallies, rankings and accompanying cash and non-cash rewards.

Borrowing these techniques from online gaming may prove advantageous to reward those who produce quality content.  A recent panel during Washington, DC’s “Digital Capital Week” (DC Week), on “The Future of Publishing”, featured Washington, DC-based NewsIt, a self-described “mobile sharing network for creating and sharing news”.  Like its competitors discussed by CJR, NewsIt espouses the “gamification” of news, using math to rank “top citizen correspondents”.  The technology is built on an algorithm, and the distinguishing characteristic seems to be the strength (or weakness) of that particular algorithm to discern quality reporting.

Such an algorithm necessarily chooses different factors from the comparable calculi of competing services, and then weights those factors in whatever unique way chosen by its proponent.  The idea is terrific for setting up predictability for news sourcing, though it seems also vulnerable to its own being “gamed” (irony not intended) by users who can figure out the system.  Of course, that, too, is hardly news, as demonstrated by other algorithm-based services like Google Search, constantly tweaking its formula to stay ahead of the gamers.

Kate Tummarello, a Research and Social Media Intern with Mirsky & Company and a reporter at Roll Call/Congressional Quarterly, contributed to this post.

Ebbole claimed that Demented Needle owner Paul Averette had been telling customers and others that Ebbole’s shop used equipment infected with diseases such as Hepatitis C and HIV, claiming also that Averette had told the world that Ebbole had infected herself.

Ebbole also reported that Demented Needle boasted at least two defamatory objects in the parlor: a poster displaying an image of one of Ebbole’s tattoos, meant to discourage customers from visiting Ebbole’s shop, and a body cast decorated in demonic symbols and used to model Demented Needle’s apparel.  Ebbole claimed that Averette told customers the body cast was supposed to be Ebbole.

In his defense, Demented Needle owner Averette claimed that the poster was not defamatory because it was protected commercial speech and the body cast was not recognizable as Ebbole. The court held that Averette did not present adequate evidence to prove that the poster was protected speech. The court also held that, because Averette routinely told customers that the body cast was supposed to represent Ebbole, his speech was defamatory.

Ebbole also claimed that a co-defendant of Ebbole had defamed her through a MySpace posting, which included a video of Ebbole performing a body piercing.

The MySpace post read:

I came across this video during my recent health inspection of all [things]. I was certified to do microdermal anchoring in October of 2008…. [Ebbole's method] is disrespectful to what I do and what I love … allegedly. I ask you, people of the interweb … what should I do about it?

FYI: [Ebbole's method] is NOT the method I use or would suggest to be used for any implant procedure.

The post was followed by comments from third party MySpace users, some of which contained threatening and defamatory language.

In his commentary about the case, Eric Goldman questioned the court’s malice finding: “The court ruled the plaintiff was a public figure, so the plaintiff [would have] had to show defendants’ malice to support the defamation claim.  I am especially interested in its application to [the co-defendant’s] MySpace posting.” Goldman then questioned evidence of malice based on the MySpace posting.

Goldman discusses the specifics of the MySpace posting, wondering who had originally posted the video and noting that the statements that seemed to be most defamatory were made by third party commentators, not any defendant.  And in any event, Goldman thinks defendants’ MySpace comments were clearly opinion, not factual.  “I’m failing to see anything defamatory in this statement at all,” he concludes.

Goldman then discusses the case in light of 47 USC 230, the Communications Decency Act of 1996 (CDA). Section 230 of the CDA states that no user of an interactive web service can be held responsible for the postings or another user.  Goldman argues that this principle should have applied here. “Inferring malice from a site operator’s failure to remove third party comments should be preempted by [CDA Section 230] because it treats the operator as a publisher/speaker of those comments,” he writes.

First, the background.  Federal and state securities laws govern the sales – including the solicitation of sales – of securities, affecting all efforts to raise capital for startups.  This includes any public efforts to raise money, and includes raising small or large amounts of money.  Generally, sales and solicitations of sales of stock require compliance with SEC and various state securities law, and more particularly the registration requirements of those laws.

The applicable federal laws are SEC regulations governing how capital can be solicited and from whom capital can be raised.

Advertising and Solicitation Rule. SEC Rule 502(c) prohibits “any form of general solicitation or general advertising” for the sale of securities, except as permitted by other rules.  These rules traditionally prohibited general fundraising through radio, television and newspaper advertisements, but for the same reasons would bar the same conduct through Twitter, Facebook and other social media.

Accredited Investor Rules. SEC Rules 504, 505 and 506 permit sales of securities to “accredited investors” without compliance with the securities registration requirements.  Accredited investors” is defined in SEC Rule 501, individuals with net worth exceeding $1 million or with annual income exceeding $200,000.

Now, the current context.  Social media is not new nor are calls to relax the capital raising rules, but noise for changes has come from increased start-up activity and, in particular, increased popularity of public fundraising sites seeking to “crowdsource” capital for ownership purposes beyond donations.  The Wall Street Journal reported in April that the SEC is considering revising its advertising and solicitation Rule, if not necessarily to permit unfettered general solicitations, then at least to allow increased recognition of some use of social media for startup companies and small businesses seeking to raise relatively small amounts of capital.  SEC chairman Mary Schapiro sent a letter in April to Darrel Issa, Chairman of the House Committee on Oversight and Government Reform, stating that the Commission was considering new Rules or relaxing existing Rules.  Schapiro noted that she had received a widely-supported petition to ease rules for crowd-funding capital raises of up to $100,000.

The Journal noted, however, that in the early 1990s the SEC relaxed registration requirements for capital raises of up to $1 million, as well as accredited investor rules for wealthy individuals.  The story also noted that those relaxed requirements had been abandoned at the end of that decade out of revived concerns about investor fraud – perhaps not coincidentally, around the same time as the dot-com crash.

Current advocates for relaxing the rules – see for example, Joe Wallin’s StartupLawBlog – suggest that the SEC’s rules “don’t make sense”, although without offering much support other than that Depression-era legislation and accompanying Rules never contemplated social media.  That narrow point in and of itself is almost certainly correct.

Presumably, though, rules designed to prevent fraud still accomplish exactly that in light of the proliferation of ways for fundraisers to reach a broader investing public.  The advocates of changing the rules seem to be principally the same people who have always loathed the SEC, namely people trying to raise money from the public.  A better argument against the SEC’s existing rules might be simply that investors do not need these protections anymore, not that the existing rules aren’t adaptable to the medium.  That may or may not be true, but that does seem to be Wallin’s real argument when he writes, “If folks are willing to acknowledge that they are willing to lose their money on a highly speculative venture, let’s let them.”

Interestingly, the National Venture Capital Association has already publicly opposed any such broad regulatory relaxation.  From the NVCA’s perspective, securities law changes that incentivize small capital raises will discourage ultimate interest in companies seeking to tap into the broader public capital markets through traditional initial public offerings (IPOs).  Since IPOs are the most common form of payday for venture capital, this of course diminishes the attractiveness of venture capital, for investors and for entrepreneurs.

2 great background sources on what BitTorrent is and how it works can be found here and here.  In short terms, BitTorrent is a file sharing technology, different from Napster and its peer-to-peer progeny in that it draws down pieces of large data files from multiple computers – rather than single computer to single computer peer-to-peer – based on a “community” structure of participating individual users.  The two biggest distinctions are (1) no single source for the compiled total file contributes more than a very small portion of the total file and (2) the distributive structure finesses the constant file-sharing problem of large data transfers demanding large broadband resources.

Why is bitTorrent in the (copyright) news?

BitTorrent is in the news not simply because Netflix’ CEO stated that “we’ve finally beaten bitTorrent.”  (“We”, by the way, presumably refers to Netflix’ full-file streaming capabilities.)

BitTorrent is mostly in the news because of its enormous popularity among file sharers, which of course begs the question why has it garnered so much popularity among file sharers?  Among other reasons, Napster and Grokster are gone, Limewire just recently settled all sorts of lawsuits with music labels, and the next target of the movie studios and content owners is … bitTorrent.

Legal issues aside (at least until the next paragraph), bitTorrent is an innovative exploitation of the internet’s networking and cloud-computing capabilities to distribute large and ever-larger files seamlessly and quickly.  From a the standpoint of a non-technologist observer, it is simply pretty neat how it takes advantage of distributive concepts of sharing and cost- and resource-burden shifting.

From the standpoint of content creators and intellectual property owners, however, the technology is really quite law-evading.

The isoHunt case

A leading bitTorrent case is in federal court in California, involving Columbia Pictures and other film studios who sued a bitTorrent company called isoHunt (defendants were isoHunt and its founder, Gary Fung).  The defendant – isoHunt – hosts a bitTorrent service, which was challenged by several major film studios as serving no purpose other than facilitating direct infringement by the technology’s users of copyrighted films and television programs.  And according to the film studios, doing so intentionally and willfully.

Columbia Pictures moved for summary judgment, and the court granted it, finding that isoHunt was liable to the studios for secondary copyright infringement.  To be clear, Columbia argued that the bitTorrent company itself didn’t directly infringe the copyrights, but rather improperly “induced” copyright infringement by its users.  Columbia’s summary judgment motion was granted, and thus isoHunt was liable for copyright infringement.

The court’s summary judgment Order can be found here.

isoHunt appealed the case to the 9^th Circuit Court of Appeals in San Francisco, and the appeal is pending.   isoHunt’s appeal brief can be found here.

Relevant legal issues

Several important copyright arguments were made in the isoHunt case.  Of most significance were 2 particular issues: Inducement of copyright infringement and the safe harbor for providers of “information location tools” under Section 512 of the Digital Millennium Copyright Act (the DMCA).

First, Inducement of Copyright Infringement

The film studios claimed – successfully – that isoHunt should be held liable for copyright infringement under a “secondary liability” theory.

This argument relied on the Supreme Court’s Grokster case, and its standard for determining inducement liability: “inducement requires that the defendant has undertaken purposeful acts aimed at assisting and encouraging others to infringe copyright”.

Grokster was the 2005 US Supreme Court case in which a peer-to-peer file-sharing service was held liable for copyright infringement under a theory of “inducing” infringement by others.  In the isoHunt case, the court ruled that the plaintiffs – the movie studios – had proven inducement by the defendant’s bit-torrent technology, applying the Grokster test for inducement.

What facts supported this argument?  Lots of them.  Some examples (see commentary from Michael Barclay here):

• Expert witnesses for the studios used statistical samplings of the content and server logs to show that 90-95% of all available content available through the defendant’s service infringed copyrights.

• The studios offered evidence that isoHunt’s search code was expressly designed to find copyrighted material:  As ArsTechnica reported, “One of [isoHunt’s] sites also displayed a list of the top-20 grossing movies in the US, with links to copies of each, while another had categories that included “High Quality DVD Rips” and “TV Show Releases.””

• The defendant’s own blog made statements questioning whether copyright infringement was really theft.

Second, DMCA safe harbor

The court then rejected isoHunt’s DMCA arguments based on the same facts, ruling that the same actions that demonstrated isoHunt’s inducement conduct also demonstrated either actual or presumed “knowledge” on the defendant’s part to nix any DMCA safe harbor argument.

For example, isoHunt argued that much if not most of the service’s offending content resulted from user queries that generated automatic responses – essentially, it was the user downloads of the dot-torrents that generated the infringing copying (or infringing distribution) of the copyrighted films and television shows.  If that argument had been accepted, this would have safely placed isoHunt within the DMCA’s safe harbor for information locator services, shielding the service provider from liability for content posted by its users.

This was the really interesting part of the case, because this is where – at least from the position of more established companies like Google – the court went off the rails with its decision.

First: In a footnote, the court made this statement about dot-torrent file downloads:

It may be true that the act of downloading a dot-torrent file is not itself a copyright-infringing action; but once that dot-torrent file triggers the process of downloading a content file, copyright infringement has taken place.  Because dot-torrent files automatically trigger this content-downloading process, it is clear that dot-torrent files and content files are, for all practical purposes, synonymous.  To conclude otherwise would be to elevate form over substance.

isoHunt had argued that whether or not it may have done things to “encourage” or “suggest” copyright infringement, its core, basic actions as embodied in its technology – dot-torrent files – did not (because it could not) constitute copyright infringement.  Thus, isoHunt made a sort of lack of “nexus” argument: Before you can claim inducement of copyright infringement, you have to prove … copyright infringement.  And therefore, users’ actions in downloading the dot-torrent files were not copyright infringement at all, and therefore isoHunt shouldn’t be held responsible for having induced anything illegal.

As just quoted, the court made fast work of this argument.

Second, the court used this same point to illustrate how isoHunt had undercut its own DMCA safe harbor argument: “upon obtaining such knowledge or awareness [of infringing material], [the service provider] acts expeditiously to remove, or disable access to, the material.”  (DMCA Section 512(d)).  isoHunt had not complied.

Third, quoting from TechDirt: “Most safe harbor cases have focused on whether or not the service provider responded to notices, but in this case, the court said that there were enough “red flags” that, even in the absence of notices, IsoHunt should have blocked certain files.”

Why is this case in the news?

Short answer?  Because Google got involved.  Longer answer?  Because this case was an unusual instance where a court ruled that DMCA safe harbor protection was not available to a provider of “information location tools” who knew or should have known about potential or actual copyright infringement happening on its service.  On the appeal, Google – which was not a party to the case – sought to intervene in the case arguing that the lower court got it right when it held against isoHunt for inducing copyright infringement, but also that the court went too far when it further held that this same reasoning nixed the availability of the DMCA safe harbor.  Or in other words, that inducement of copyright infringement in and of itself is distinct – and sufficiently culpable – as grounds for liability for copyright infringement.

Google’s brief on the appeal can be found here.

The court in isoHunt stated:

inducement liability and the Digital Millennium Copyright Act safe harbors are inherently contradictory.  Inducement liability is based on active bad faith conduct aimed at promoting infringement; the statutory safe harbors are based on passive good faith conduct aimed at operating a legitimate internet business.  Here, as discussed supra, Defendants are liable for inducement.  There is no safe harbor for such conduct.

It is this statement that drew Google’s attention and the attention of many commentators (see, for example, these stories from arstechnica and paidcontent).  Google is right in arguing that “mere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor to liability” (quoting from Grokster), and that a long line of cases had held that this “mere knowledge” hasn’t been sufficient to nix the availability of the DMCA safe harbor.

The problem for Google’s argument, though, is that that is what the DMCA safe harbor does actually state.  So, and more to the point, the language that Google relies upon is from Grokster, which was a case involving claims of inducement of copyright infringement, not the availability of the DMCA safe harbor.  Relying on language from Grokster – an inducement of infringement case – to address a DMCA safe harbor case may be misplaced.

Google argues that isoHunt’s lack of compliance with the DMCA’s takedown requirements is sufficient to nix any DMCA safe harbor defense that might be available.  So that, any further discussion of whether the DMCA would otherwise be available to a service provider in this situation is inappropriate.

A conceptual problem or an actual problem?

A problem in bitTorrent cases is the lack of any potential non-infringing uses, making the perverse situation where the yet – as Google and other DMCA safe harbor advocates would have it – further evidence is still needed of the service provider’s affirmative, demonstrable steps acknowledging infringement.  In isoHunt, arguably this wasn’t a big deal because you had a really bad actor doing egregious things.

On its appeal, isoHunt argues that it does the same thing that Google does when it comes to torrents, and that it is entirely easy to search for torrents on Google ((using a filetype: command for “torrent”).  Google probably cannot argue otherwise, but it can argue against (a) the inducement activities that isoHunt does (see above) and (b) isoHunt’s nonresponsiveness to DMCA notices.

The New York Times reported yesterday that the company had reached a settlement with the NLRB. In particular, The Times reported that the company agreed to modify its workplace policies “to ensure that they do not improperly restrict employees from discussing wages, hours and working conditions with co-workers and others while not at work, and that they would not discipline or discharge employees for engaging in such discussions.”

It is believed that this case was the first of its kind, where the NLRB took action against an employer related to an employee’s comments and conduct on a social media site like Facebook.

According to the San Jose Business Journal, the company reached a separate private settlement with the fired employee, the terms of which were not disclosed by the NLRB, the company or the employee.

Interestingly, while the case obviously did not get to a full precedent-setting decision, a publicly-acknowledged condition to the settlement was the company’s acknowledgment that outside discussions of work conditions could not be acted upon detrimentally by the company. And without explicitly stating so, these outside discussions obviously included facebook and other social media outlets.

In a past post, we wrote about copyright as it relates to how preemption of state law civil causes of action in the same or related cases.  In writing about the Perez Hilton and NFL Films cases, we noted that federal copyright law did not preempt applicable state laws (specifically, “hot news” and right of publicity claims) because the rights claimed under the state laws were not equivalent to the rights protected by the Copyright Act.

Put another way, federal copyright preempts state law claims where the rights sought to be enforced under the state claims do not necessarily match those protected by the Copyright Act.  In those cases, the rights protected by copyright – reproduction, performance, distribution or display of the work – were distinguishable from the rights protected by the state law claims.

A 2008 North Carolina case offers a counter example, involving failure to show that a state law added some unique element outside of the rights protected by copyright. The case, Rutledge v. High Point Regional Health System, F.Supp.2d –, 2008 WL 2264239 (M.D.N.C.) shows how claims under state law can only avoid copyright preemption if they are “qualitatively different” from copyright law.

Rebecca Tushnet, a Law Professor at Georgetown University Law School, wrote extensively about the case, and her commentary is here.

Plaintiff was Rutledge, a physician who developed a unique gastric bypass weight loss procedure.  Rutledge registered federal copyrights for the procedure and the accompanying processes, documentation and so forth.

There was no issue in the case about whether Rutledge’s copyright claim was valid, but rather whether he could also pursue North Carolina state law unfair competition claims (under the North Carolina Unfair and Deceptive Trade Practices Act) against a group of physicians who he claimed misappropriated his copyrighted works.

Unlike the hot news and right of publicity cases, there was no question as to whether the works involved were being used by another party for commercial purposes.  Instead, the question was whether Rutledge’s claim under the North Carolina Unfair and Deceptive Trade Practices Act (UDPTA) added that unique element outside of those rights protected by the Copyright Act.

The court noted that, “Where courts have found an extra element sufficient to avoid preemption in this context, the record frequently, but not always, reflects a separate cause of action alleging the additional claim (and thus elements) upon which the unfair competition claim is predicated.”

Rutledge claimed that the extra elements in this case were “misrepresentation” and “deception”, because the defendants misrepresented the copyrighted materials as their own, altered the materials, surreptitiously posted them on the Internet, and used the materials.  Rutledge argued that these constituted the necessary unique element to survive a preemption challenge to his state law unfair competition claim.

The court, however, found that the misrepresentation claim was “the natural consequences of a Copyright Act violation.”  Rutledge “neither has a free-standing cause of action for misrepresentation upon which to rest the UDTPA claim, nor are the acts upon which he predicates his UDTPA claim different from those giving rise to the Copyright Act claim such that the UDTPA claim would be qualitatively different from the Copyright Act claim.  Thus, the UDTPA claim is preempted.”

In plain English, the court found that the plaintiff’s claims of what the defendants had done amounted to restatements of the same claimed copyright violations – and since already covered by copyright, were therefore preempted.

This is a fairly broad reading of copyright preemption, in that it relies heavily on the claims being based on the same set of underlying facts, rather than involving independent facts giving rise to independent claims.  That alone would seem to eviscerate any realistic ability to escape a preemption claim when a copyright issue is involved, since the same set of facts will presumably be shared across the set of state and federal claims.

It seems likely that the plaintiff’s reliance on state unfair competition was based on the weakness of copyright as a viable remedy in this case, where ideas and expression were intermingled in the alleged infractions and infringements.  Copyright, of course, protects the expression of ideas rather than the ideas themselves.  Where the misappropriation involved “how” to do something rather than the physical thing itself, the remedies for breach may be severely limited.

This may further explain the court’s reluctance to enforce Rutledge’s claims, perhaps viewing his reliance on unfair competition as a backdoor to obtain copyright protection for the ideas themselves.

As Professor Tushnet writes,

Plaintiff also alleged use of the materials to perform medical treatment.  The court treated this as an allegation of use of the ideas, rather than the expression. The Copyright Act bars protection for ideas, and as part of that preempts idea claims like this where no contractual violation is alleged. (Depending on the claims, “use” could also mean simply consulting the materials, which implicates no copyright rights but is allowed by the first sale doctrine.)

In today’s podcast, we discuss the Federal Trade Commission’s recently issued privacy proposals. My guest is Karen Neuman, a founding partner of St. Ledger-Roty Neuman & Olson LLP, a Washington, DC law firm that focuses on regulation of information technologies and communications law, including privacy & data security, mobile communications, the Internet, media, telecommunications and related transactional matters.

At the core of the new privacy proposal is the idea that the current system of self-regulation does not provide enough consumer protection.  Basically, from the FTC’s perspective, people do not pay enough attention to the data-collecting activities of websites and not enough companies are up-front about the data they do collect from visitors to their sites.  The FTC says that while many companies detail their data collection through privacy policies, consumers bear too much of a burden in having to sort through such long, legalistic documents.

Among other proposals, the FTC’s new framework would require a “Do Not Track” option, much like the one we currently have to avoid telemarketers.  “Do Not Track” would essentially prevent companies from tracking things like your browsing history and buying habits, making it much more difficult for them to target consumers with personalized ads.  The proposal also aims to have companies incorporate more consumer protection into their business practices through simpler, more transparent options and by allowing consumers more access to the data being collected about them.  The FTC issued its proposed rules just last week, and requested public comment from both businesses and the public.

Please click play on the audio player below to hear the podcast.

Not in dispute is that the employee’s actions violated the company’s social media and other personnel policies, which (among other things) prohibited depicting the company ‘in any way’ on Facebook or other social media sites or from “disparaging” or “discriminatory” “comments when discussing the company or the employee’s superiors” and “co-workers.”

In dispute is whether that social media policy – and the company’s actions in enforcing the policy – violated public policy, in particular Federal labor law.  This came into fast relief when the National Labor Relations Board (NLRB) subsequently filed a complaint against the company, charging the company with violations of the employee’s rights under the National Labor Relations Act (NLRA).

The company is American Medical Response (AMR), an ambulance service provider.  The incident followed a customer complaint about the employee’s work, when the employee’s supervisor asked the employee to prepare a report about the incident.  At that point, the employee sought but was denied representation from her union.

Later that day, the employee posted negative remarks about her supervisor and AMR on her personal Facebook page, through her home computer.  It appears that at no time did she use AMR’s technology or services to conduct her actions.

According to the New York Times story about the case, the employee’s grievance – and subsequent social media commentary – related primarily the fact that her supervisor barred a representative of the Teamsters to assist her in preparing her report.

The employee’s Facebook comments sparked an exchange of further commentary by other AMR employees, and further disparaging comments by the employee about the supervisor.  That prompted her suspension and later termination.

Two important things to note about this case:

1. “Concerted Activity” under NLRA.

As the NLRB stated in its press release about the case, “the employee’s Facebook postings constituted protected concerted activity” under the NLRA.  “Protected concerted activities” under the NLRA include the right of employees to “Discuss wages, working conditions or union organizing with co-workers or a union” and “Act with co-workers to improve working conditions by raising complaints with an employer or a government agency”.

Employers may not, among other things, “Fire, demote, transfer, reduce hours or take other adverse action against employees who join or support a union or act with co-workers for mutual aid and protection, or who refuse to engage in such activity.” (emphasis added)

According to the New York Times, this case is the first where the NLRB interpreted its powers to include regulation of employer conduct related to employee activities in social networking.

What is not clear is whether the NLRB would have filed this case – and whether this would have constituted “protected concerted activity” – had the employee’s conduct been limited to solo Facebook complaints, rather than engaging with co-workers and an online community.

2. Social Media Policies Violative of NLRA.

As described in the New York Times, AMR’s policies “barred employees from depicting the company ‘in any way’ on Facebook or other social media sites in which they post pictures of themselves.”  Another policy prohibited “disparaging” or “discriminatory” “comments when discussing the company or the employee’s superiors” and “co-workers.”

According to the NLRB, “Such provisions constitute interference with employees in the exercise of their right to engage in protected concerted activity.”

This view is troubling if only in the sense that these types of policies and provisions are common for companies adapting to social media.  As Bret Cohen of Hogan Lovells wrote recently about the case, “Though such policies are most likely to be invoked when employees post material to the Internet or social media sites that exhibit clear insubordination or disloyalty to the company, the NLRB was clear in expressing its concern for the possibility for companies to use the policies to stifle union-related employee communications.”

The case is set for hearing on January 25, 2011.