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03.18.2008

File-Sharing, LimeWire, Identity Thieves, and 9-Year-Old Girls: Solutions Are Needed

Yesterday, convicted identity thief Gregory Kopiloff was reportedly sentenced to 51-months in prison for using LimeWire to download inadvertently shared tax returns, credit reports, bank statements and student financial aid applications that he then used to commit credit-card fraud.

Some sources report Kopiloff as the first case involving inadvertent sharing and identity theft. Actually, it is the first federal prosecution of an ID thief who exploited inadvertent sharing. Back in 2006, Denver District Attorney Mitchell Morrissey indicted an 8-person ring that used LimeWire to download inadvertently shared files, commit identity theft and fraud, and then use its proceeds to buy and sell crystal meth.

For prosecutors, this means that nine identity thieves exploiting inadvertent sharing have gone down and "tens of thousands" remain. This latter point was reinforced in two recent Information Week stories (here and here) that focused on inadvertent sharing of corporate data:

Are peer-to-peer networks really filled with sensitive corporate data just waiting to be plucked and abused? It seems unlikely--surely people wouldn't be that sloppy....

The results were shocking and scary--loads of confidential business documents and enough personal information to ruin any number of lives and create PR nightmares for quite a few companies. Among the business documents were spreadsheets, billing data, health records, RFPs, internal audits, product specs, and meeting notes, all found in a quick expedition....

The Info Week researcher looking for such documents also reportedly found an "information concentrator," someone who appeared to be deliberately collecting other people's inadvertently shared data--bank passwords, credit card numbers, credit reports and tax returns. The researcher realized the irony of what he had discovered: Persons trolling for inadvertently shared documents have the strongest legal and practical reasons not to "share" the data they download. Consequently, Info Week's potential identity thief was almost certainly "sharing" his data stash inadvertently.

If the professional thieves who exploit inadvertent sharing cannot consistently manage to avoid doing it themselves, one can well imagine what happens to the 26% of the 9-to-14-year-olds who reportedly use LimeWire. Indeed, those who would assume that such kids understand even the best-known of the risks that they are incurring should review Torrentfreak's interview with "Hannah," the reported pseudonym of a nine-year-old LimeWire user. Here is a sample:

TF. …"You mentioned you like Sean Kingstone - what if I told you that Sean Kingstone’s boss might send you a letter asking for money because you shared his album on LimeWire? What would you say to him?...."

[Hannah]: "I’d say “tooooo strict!” and anyway he can’t make me do anything. He’s not the boss of me, he’s the boss of Sean Kingstone."

TF. "What do you think might happen if you didn’t pay him?"

[Hannah]: Nothing. I’m too young to be charged by the government so he can’t charge me.

This interview illustrates yet another reason why inadvertent sharing must end. It also illuminates three other important points about Internet copyright enforcement:

First, if Hannah's family has to drain her college fund to settle a potentially ruinous infringement lawsuit, that will happen because distributors of programs like LimeWire chose to ignore the 512(d) safe harbor and to lack any means of disconnecting infringing users and responding to takedown notices. They chose, in other words, to create a conflict between users of their programs and copyright owners that the latter could not resolve through means less punitive than infringement lawsuits. As a result, suing infringing LimeWire users (like "Hannah") was the copyright-enforcement solution proposed by LimeWire LLC in Grokster.

Second, in Grokster, over 8 public-interest organizations, 79 professors of intellectual-property law and a vast array of technology companies and Internet savants argued that that distributors of file-sharing programs should not be liable even if they did intentionally "induce," (i.e., encourage or dupe), 9-year-old-girls into violating federal law. Why not? Well, these amici argued, inter alia, that the adult inducers should go free because copyright owners could just sue the many thousands of children and college students that they induced. Such sue-the-children arguments were made by entities including the distributors of LimeWire, Morpheus and Grokster, CNET, university librarians, some Internet-service providers, and Project Gutenberg, the Internet Archive and four professors from Harvard Law School's Berkman Center for the Study of the Internet and Society. In Grokster, such arguments were also rejected, unanimously, by all nine Justices of the United States Supreme Court.

Third, today, many countries are re-assessing whether and how we can significantly reduce the deliberately-crafted problem of file-sharing piracy without asking copyright holders (or prosecutors) to sue tens of thousands of children, students, and single mothers. For the sake of all concerned, I hope that this debate will feature Internet-community thinking more creative than the sue-the-children/my-customers mantra that animated the defense of the Grokster respondents. Indeed, even LimeWire LLC now argues that there are now better, alternative solutions to the mess that it made--albeit legislated solutions that impose significant costs upon all concerned, except LimeWire LLC.

posted by Thomas Sydnor @ 9:45 AM | Academia , DMCA , Enforcement & Remedies , Free Culture Movement , Internet: P2P, Search Engines... , Privacy and Security , Supreme Court

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10.18.2007

User-Generated Content: A Principled Market Response

Some of the most interesting challenges for digital-age copyright policy arise from the growing popularity of user-generated content (UGC). UGC offers exciting new possibilities for people to create or interact with their favorite works, but it raises thorny problems that range from its potential to facilitate infringement to questions about reconciling the creative potential of UGC with other creators’ interests in the artistic integrity of their works.

Fortunately, one advantage of letting enforceable property rights generate markets for socially valuable goods and services is that markets require participants to find “win-win” solutions: In a market, a given transaction should occur only if all parties to it are better off as a result. Markets thus create potent incentives to reconcile divergent interests.

The solution-generating power of markets was evident today when a diverse coalition of technology and media companies released Copyright Principles for UGC Services. The Principles attempt to define a win-win-win solution: A set of ground rules that will promote respect for copyrights, the production of UGC, and the development of innovative platforms for promoting and distributing it. Key provisions of the Principles include the following:

1) UGC sites should use “highly effective” filtering technologies, or human review, to identify and remove infringing content before it is uploaded and enhance or update those technologies as significant advances become commercially available.

2) Copyright holders and UGC sites should cooperate to ensure that filtering systems effectively balance legitimate interests in blocking infringing uploads, allowing original or authorized uploads, and accommodating fair use.

3) Copyright holders and UGC sites should develop procedures to promptly address conflicting claims of ownership, and user’s claims that filtered content was not infringing.

4) Copyright holders should neither file infringement claims against UGC sites that adhere in good faith to the Principles nor assert that adherence to the Principles disqualifies a UGC site from claiming the benefits of safe-harbor protections like those in the DMCA.

At their core, the Principles seek cooperative solutions to the possibilities and challenges posed by UGC. For that, they should be applauded. When property rights are unclear, or not respected, we often resort to non-market-based dispute-resolution mechanisms—like litigation. But litigation does not promote win-win outcomes and may leave all parties worse off. Companies like Disney, Microsoft, NBC-Universal, MySpace, Daily Motion, CBS, Viacom, and Fox deserve great credit for this effort to identify solutions that balance their interests with those of creative consumers. Bravo.

posted by Thomas Sydnor @ 5:46 PM | DMCA , Enforcement & Remedies , Internet: P2P, Search Engines... , Markets: Business, Investment & Innovation , Prices, Terms, and Licensing , Standards

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10.17.2007

The Link-Site Cases

Recently, the movie industry has sued several websites that provided well-organized sets of links to infringing copies or streams of movies or television shows hosted elsewhere on the web. In effect, the plaintiffs allege that these link sites were web-based versions of The Pirate Bay that used the draw of infringing content to sell advertisements. After reviewing the complaint in one of these cases, Disney Enterprises Inc. v. ShowStash.com, I think these link-site are potentially important for three reasons.

Continue reading The Link-Site Cases . . .

posted by Thomas Sydnor @ 11:50 AM | DMCA , Enforcement & Remedies , Free Culture Movement , Internet: P2P, Search Engines...

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08.23.2007

Intellectual Property Baselines

IPR critics take broad swipes at copyright and patent policies. Two prominent arguments posit that 1) investments into creative productions and inventions can be appropriated by leveraging them as "advertising" for other products, such as t-shirts, 2) peer-production under alternative incentives is sufficient for innovation and continued economic growth. These arguments are fundamentally flawed, and will have drastic implications if set into regulatory policy.

A resource with which to analyze arguments against IPRs is Innovation and its Discontents, Princeton Univ Press (2004), where Professors Jaffe-Lerner outlined the basic tenets for patents. The scholars noted the relationship between innovation costs and marketing, as well as the role of commercialization. Its significant that in a book critiquing the current patent system, Jaffe-Lerner highlighted baselines for IPRs that critics have overlooked.

If there were no incentives for those who discover and develop new technology, it is likely that fewer innovations would be developed, slowing progress and the benefits it brings. Potential inventors realize that without adequate protection rivals will rapidly copy their discoveries, and that therefore innovation is at best an uncertain route to future profits. As a result, companies would be unlikely to spend significant amounts of money on R&D that is the source of new products and processes in a modern economy. They would instead choose to spend their money pursuing other activities- for example, marketing campaigns...
…
…our capitalist free-enterprise systems has demonstrated a unique ability to generate new technology: industrialized economies have increased their economic productivity more in the last two centuries than in all the millennia of previous human history. The basis for this advance is firms’ pursuit of profit, which forces them to innovate.

Society benefits from creators and innovators investing in more than selling t-shirts. Society needs innovation in IT, not ways of marketing t-shirts! Basic research-product development are high risk ventures, advertising for t-shirts is not. It’s a bit ironic that IPR critics would not have creators leverage the phenomenon known as the Internet for anything more than advertising. The difference in margins between delivering products/services online versus selling t-shirts alone suggest that enabling creators to tap the Internet would lend to more innovation and consumer welfare.

The second argument of IPR critics addressed by Jaffe-Lerner is equally problematic. FOSS, the holy grail of the peer-production movement, exemplifies why commercialization and profit motive remain important to society. The informal peer-production of FOSS has had limited success, and is only improving as it formalizes and receives commercial backing. Peer-production supporters may posit that IP holders are stifling innovation, but the argument is confused. Stifled innovation would resemble the FOSS movement but the FOSS movement is not the result of it.

While IPR critics may be passionate about their views, they would little serve innovation nor other important societal interests.

posted by Noel Le @ 3:21 PM | Academia , DMCA , DRM & Watermarks, etc. , Free Culture Movement , Patents

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08. 5.2007

Fricklas and Copyright Enforcement

Michael Fricklas, Viacom's Executive Vice President, General Counsel and Secretary, commented on my IPcentral post.

Defending against unauthorized uses is expensive - only the biggest of companies can afford the apparatus to do it.

Allowing distributors and end users to freely override the creator's choice of licensing models means that the independent artist must accede to free distribution or have no distribution at all. But if the artist wants to pursue the rational business model of using the free internet to distribute promotional material and then licenses or subscriptions to get paid? - your approach is to make that impossible!

Better to empower the artist with tools to transact as the artist sees fit - and therefore prevent "new channels of distribution" built on free-riding and overriding -- as a way to ensure the robust creation of the content that the new channels of distribution depend upon.

You can't forget that the internet runs not just on technical innovation but on the constant creation of new works. And while some parasitic behavior can be tolerated- too much parasitic behavior kills not only the host but also the parasite!

Right on... Fricklas raises a number of good points. First, that independent creators may benefit from aggressive copyright enforcement by larger entities, as that enforcement can deter broad illegal activity that small creators cannot combat. Second, creators should be able to tap the Internet for revenue. Third, the Internet's value lies partially in how it enables the creation of new works, and its ability to do so rests on how well creators can leverage it.

posted by Noel Le @ 3:28 PM | DMCA

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07.16.2007

DRMWatch on GPL3

Bill Rosenblatt on GPL3 on DRM.

posted by Solveig Singleton @ 9:11 AM | DMCA , DRM & Watermarks, etc. , Software

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06. 6.2007

Bizarre lawsuit Watch

Bill Rosenblatt comments on the "bizarre" lawsuit that Media Rights Technologies has brought against Apple and other big players for not using their technology.

I note an aspect of this analysis with which I do not entirely agree. Bill argues that the DMCA allows content companies to avoid bearing the costs and consequences of lousy DRM--because they can sue for defeating even very low technological barriers to access. I've pondered this before. First, the DMCA does require that the barrier be "effective." That is part of the answer.

Second, it seemed to me that bringing suit after multiple holes have been poked in a weak DRM would not be an ideal business strategy to me. That is, having weak DRM turns what would be a (relatively) low-cost way to protect the mass market for your stuff--before-the-fact operational technology-- into a relatively expensive way to protect your stuff--an after-the-fact lawsuit.

Continue reading Bizarre lawsuit Watch . . .

posted by Solveig Singleton @ 9:51 AM | DMCA

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05. 8.2007

Technologists & the DMCA

In an excellent article for the Institute for Policy Innovation, Professor of Computer Science Lee Hollaar argues that:

Technologists, and particularly computer programmers, seem to fixate on unlikely scenarios while giving only lip service to the massive copyright infringement now happening. When they do look at problems, they dismiss technical solutions because they are not perfect. And they ignore how laws can support or work alongside technology, because law is unfamiliar to them. By putting problems in perspective, technologists can be particularly effective in finding approaches to the real problems in today’s digital world.

Mountains Out of Molehills: How Believing the Worst Makes Technologists Ineffective, and What They Can Do About It.

Using as illustrations recent anti-DMCA papers from the EFF and Cato, he notes that the real story is how little harm can be attributed to the DMCA, and how the authors are forced to recycle the same few stories repeatedly in an effort to maintain the desired level of righteous indignation:

Continue reading Technologists & the DMCA . . .

posted by James DeLong @ 3:00 PM | DMCA

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NBC & YouTube

Breitbard.com says that NBC has enlisted in the content-creators' offensive against YouTube, joining Viacom on a brief in the Tur litigation in Los Angeles.

An English football league has also sued YouTube, in NY.

ADDENDUM (09:40 A.M.): As Tomas points out in his comment, I have just shown my abysmal ignorance of the sporting scene, and of the importance of this second law suit: "An English football league? AN? The Premiership is only the biggest and most prestigious sports league in the world!"

posted by James DeLong @ 7:08 AM | DMCA , Internet: P2P, Search Engines...

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05. 3.2007

Professor Randy Picker on Digg

The professor writes, on Digg and civil disobedience:

...there are some laws that individuals will appropriately conclude that they should disobey, laws that while enacted pursuant to the extant applicable procedures, are nonetheless beyond the scope of what should be law in a well-constituted society. In those circumstances, civil disobedience will be appropriate and we should be grateful to those who are willing to suffer the consequences of disobeying illegitimate law.
I wouldn’t think that not being able to play an encrypted high-definition DVD on your platform of choice would fall into that category. I understand fully that people disagree about whether digital rights management and the Digital Millennium Copyright Act are good copyright policy. I also understand that users can be frustrated by limitations imposed by DRM (I’ve run into those myself). But I think the DMCA (and the DRM that it makes possible) is a long, long way from the sorts of laws for which civil disobedience is an appropriate response. Simply not liking the law is not enough. There must be more, something that recognizes the nature of reasonable disagreement over law, and the range of possible legitimate variations about those laws.

Yesterday, Digg probably made a business decision: it can litigate tomorrow but it was going to lose customers today. I doubt that it made a decision about the need for civil disobedience, and as I have suggested already, I am skeptical that it could justify its decision in those terms...

posted by Solveig Singleton @ 2:27 PM | DMCA , DRM & Watermarks, etc. , Liberty and IP

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05. 1.2007

YouTube Responds to Viacom

posted by James DeLong @ 2:21 PM | DMCA , Internet: P2P, Search Engines...

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04.17.2007

The RIAA and MPAA Should Pursue Actual Infringers

posted by Noel Le @ 7:20 AM | DMCA , Free Culture Movement

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04. 4.2007

Notice and Shakedown Revisited