Biggest Attorneys' Fee Award Ever?

Mattel asserted a copyright claim that was stunning in scope and unreasonable in the relief it requested. . . . MGA’s successful defense ensured that well-resourced plaintiffs cannot bend the law to suit their pecuniary interests. For these reasons, and pursuant to 17 U.S.C. § 505, the Court awards MGA $105,688,073.00 in attorneys’ fees and $31,677,104.00 in costs.

From here.

The issue at trial regarding the question of whether an MGA line of fashion dolls similar to those of Mattel were copyright infringing, when the line of dolls was invented by a Mattel employee, arguably on his own time, who took the idea to MGA that invested in it and made it a great success through their marketing efforts.

I simply cannot fathom how either side could run up that amount of attorneys' fees in a single copyright infringement case. Actually, I can. I'm sure that a huge amount of money was spent on discovery and expert witness fees. But, there is no way it would have had to cost that much if the case management had been better.

This is a case where the big picture conceptual issues on how the idea was developed and how similar it was to the Mattel idea dwarf the fact intensive details when it comes to liability and where both parties would have had sophisticated managerial accounting systems that would have made damages relatively workable to discern in great detail.

This is a case that could have been litigated quite adequately between two less flush parties for hundreds of thousands of dollars each, instead of hundreds of millions.

Mattel asked for $1 billion in damages but was awarded about $10 million by a jury. The judgment was reversed on an interlocatory appeal and they ended up losing the case.

I don't have great sympathy for either party in this case, and the 10th Circuit's contract interpretation that was central to a defeat for Mattel was somewhat strained. But, it is a symptom of a grossly flawed court process that it is possible to reasonably spend that kind of money on this kind of case.

READ MORE - Biggest Attorneys' Fee Award Ever?

The Economics of Mass Copyright Litigation

The RIAA paid Holmes Roberts & Owen $9,364,901 in 2008, Jenner & Block more than $7,000,000, and Cravath Swain & Moore $1.25 million, to pursue its "copyright infringement" claims, in order to recover a mere $391,000. . . . If the average settlement were $3,900, that would mean 100 settlements for the entire year. . . . it was better than the numbers for 2007, in which more than $21 million was spent on legal fees, and $3.5 million on "investigative operations" ... presumably MediaSentry. And the amount recovered was $515,929. And 2006 was similar: they spent more than $19,000,000 in legal fees and more than $3,600,000 in "investigative operations" expenses to recover $455,000.

So all in all, for a 3 year period, they spent around $64,000,000 in legal and investigative expenses to recover around $1,361,000.

From here.

READ MORE - The Economics of Mass Copyright Litigation

Righthaven Update: Still Crashing and Burning

Eric Goldman has an update on the Righthaven litigation in the last two weeks.

Judge Pro, another U.S. District Court Judge in Nevada has entered another ruling finding that Righthaven lacks standing and that the allegedly infinged work is protected by the fair use doctrine despite the fact that the entire newspaper article was reproduced. A lack of market impact was central to the ruling as was the context of the post in a political discussion and the mostly factual nature of the article reproduced. Collectively, the multiple rulings in the Righthaven fair use cases have greatly expanded the pro-blogger interpretations of the doctrine in cases involving newspaper articles. One pundit, at least, however, thinks that the cases are particular to the situation when the alleged copyright owner is suing over infringements that took place before it owned the copyright and involve an owner who isn't in the business of publishing and hence has no marketplace injury from infringement of its copyrights. A real newspaper that owned the copyrights in question at the time that there was an infringement might obtain different fair use rulings.

Fellow Judge Navarro in the same district, allows Righthaven to survive a Rule 12 motion mostly because there has been insufficient discovery in that case regarding discovery at the pleadings stage.

Righthaven faces a counterclaim for racketeering in one of its cases.

Las Vegas Review-Journal columnist and former Publisher Sherman Frederick who has crassly described Righthaven in a way that implies it is a mafia enforcer is being sued personally in a South Carolina state court suit, that also has named the Denver Post in claims including one related to code inserted when one copies text from its site, and has requested a pre-judgment writ of attachment to freeze Righthaven's assets.

Righthaven's attorney fee requests have also been treated skeptically.

A pro se party who have settled has asked a judge to set aside the settlement and make an award against Righthaven.

In sum, according to Goldman, "Righthaven's business is in tatters.", monetary sanctions are imminent, professional conduct investigations are ongoing, they are experiencing staff turnover, they have alienated a lot of judges, and they have made their business unattractive to future and renewing clients. Goldman characterizes efforts to overturn these rulings in the 9th Circuit Court of Appeals as a "hail mary" attempt.

READ MORE - Righthaven Update: Still Crashing and Burning

Second Circuit Rejects Hot News Doctrine In New York State Case

Thwarted in their efforts to use copyright law to legally prohibit others from referencing the content that they produce, some newspapers and news services have been attempting to reinvigorate the common law "hot news" doctrine to make their publications truly "exclusive" for a little while at least.

A ruling released yesterday in the case Barclays Capital, Inc. v. theflyonthewall.com, Inc., from the United States Court of Appeals for the Second Circuit, in which the trial court had issued an injunction protecting Wall Street analyst newsletters based upon the doctrine, dealt a serious blow to that theory.

The core holding of the case is that:

We conclude that under principles that are well established in this Circuit, the plaintiffs' claim against the defendant for "hot news" misappropriation of the plaintiff financial firms'recommendations to clients and prospective clients as to trading in corporate securities is preempted by federal copyright law.

The ruling does not hold that the "hot news" tort is unconstitutional, or even that it is always pre-empted by copyright law, although the analysis does give the First Amendment considerations weight in determining the scope of copyright pre-emption of the doctrine. But, it does dramatically narrow the class of "hot news" cases that are not pre-empted by copyright law from what the leading "hot news" precedent in the Second Circuit, National Basketball Association v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997), had been understood to provide. It distinguishes and greatly narrows NBA, rather than overruling it.

Since the NBA case is the leading precedent in any United States Court of Appeals Circuit holding that the "hot news" doctrine is neither unconstitutional nor fully pre-empted by federal copyright law, the ruling deals a serious blow to the litigation strategy of traditional media outlets seeking to use the doctrine to restrain online news reporting that used traditional media sources.

Some central stated motives for the broader reading of pre-emption doctrines were both (1) the lack of protection afforded the underlying facts that suing media outlets reported, which were historical facts or financial market data, and (2) the concern that media outlets that are targets of "hot news" suits are often Internet based media ventures with sources in many states who would be unfairly subject to state law versions of the common law doctrine that differed materially from state to state, undermining the policy of uniformity that the federal copyright laws were intended to establish.

The blow this ruling presents to litigation strategies designed to give one media outlet exclusive intellectual property rights to a story is particularly great given the surprisingly blog friendly rulings that courts gave to websites republishing substantial parts of newspaper stories on the web under the copyright law's fair use doctrine, sometimes finding that it applied even in verbatim reprints of medium sized news stories or entire news photographs when other favorable conditions (like the limited negative impact a republisher was likely to have on the market for the original work).

READ MORE - Second Circuit Rejects Hot News Doctrine In New York State Case

Righthaven Suffers Potential Death Blow To Business Model

In a post yesterday, Technology and Marketing Law professor Eric Goldman summarizes a judge's June 14, 2011 order dealing a major defeat to Righthaven, a Internet copyright violation litigation company with the parent companies of the Denver Post and Las Vegas Review-Journal as major clients that has employed a very aggressive litigation strategy against bloggers who quote newspaper reports in their posts. 

An ongoing dispute over a cease and desist letter sent by Righthaven on behalf of the owner of the Denver Post to Colorado Pols, asserting rights in excess of those legally available to the newspapers under copyright law and largely complied with by the Colorado Pols blog to the detriment of the newspapers has earned Righthaven infamy in Colorado's political blogosphere.

The judge found that Righthaven didn't own the copyrights it claimed to be suing under its contract with the media company, and according to Goldman that judge ruled "that Righthaven can't fix the existing contract defect for the existing litigation because standing is measured when the complaint is filed. This could lead to dismissal of all pending Review-Journal litigation and, depending on the exact wording of the MediaNews contract, possibly the Denver Post litigation as well."

The ruling is a blow to Righthaven's entire business model:

"If Righthaven can't get this opinion reversed on appeal and other judges defer to this opinion on the standing question (which I think it likely), Righthaven may be back at square one with its entire business. Thus, I assume Righthaven will appeal this decision. However, this is a pretty well-constructed opinion, so Righthaven will have an uphill battle overturning it on appeal."

The judge also severely criticized Righthaven's litigation conduct and is likely to impose sanctions:

* the judge rejects Righthaven's basic substantive argument as "flagrantly false—to the point that the claim is disingenuous, if not outright deceitful."
* . . . "the Court believes that Righthaven has made multiple inaccurate and likely dishonest statements to the Court."
* the judge then goes on to lambaste Righthaven for not identifying [Las Vegas Review-Journal Owner] Stephens Media as an interested party in the lawsuit, calling that omission "brazen" and "egregious."

[As the order explains: "not only did Righthaven fail to identify Stephens Media as an interested party in this suit, the Court believes that Righthaven failed to disclose Stephens Media as an interested party in any of its approximately 200 cases filed in this District. Accordingly, the Court orders Righthaven to show cause, in writing, no later than two (2) weeks from the date of this order, why it should not be sanctioned for this flagrant misrepresentation to the Court."]

The judge requires Righthaven to explain why the judge should not order sanctions. Given the tenor of this opinion, it seems like a sanctions order is inevitable. The opinion also hints that Democratic Underground may get its attorneys' fees. All told, this case is probably going to cost Righthaven dearly. And after a ruling like this, Righthaven's entire enterprise is on the ropes.

Since standing goes to the subject-matter jurisdiction of the federal courts in which Righthaven has already obtained judgments and settlements resulting from federal court litigation, it is not impossible that litigation to set aside those ruling and even to obtain restitution of the settlements paid based on litigation premised on misrepresentations to the Courts by Righthaven could be brought successfully if this judge's order survives attempts to set it aside on appeal.

The Electronic Frontier Foundation, which provided a legal defense to the Democratic Underground also noted that:

"The Court permitted Democratic Underground's counterclaim to continue against Stephens Media -- the publisher of the Review Journal -- allowing Democratic Underground to show that it did nothing wrong in allowing a user to post a five-sentence excerpt of a 50-sentence article."

More details are found in my diary at Colorado Pols on the subject and the comments therein.

READ MORE - Righthaven Suffers Potential Death Blow To Business Model

Righthaven Appears To Have Lied About Standing In Copyright Suits

Righthaven, [is] a new . . . venture that says it acquires copyrights from Stephens Media and sues bloggers for unauthorized display of those stories — about 200 cases in all since Righthaven was founded last year. . . . U.S. District Judge Judge Roger Hunt . . . ordered Stephens Media and Righthaven last month to respond to internal documents revealed in a case before his court. The documents seemingly showed that Stephens did not actually convey the copyrights to Righthaven, although Righthaven claims in court documents that it is the copyright owner. The Electronic Frontier Foundation told the judge that the arrangement was a “sham” and that Righthaven has no legal standing to sue.

From here.

While the contract between Stephens Media and Righthaven was and is easily amended to cure the problem (apparently granting Righthaven what amounts to a 50% contingent fee), the disclosure appears to betray a serious pattern of litigation misconduct by Righthaven's attorneys and to cast doubt on judgments and settlements that it has obtained from its litigation strategy to date in its campaign of copyright enforcement.

The publisher of the Denver Post has a similar arrangement with Righthaven.

READ MORE - Righthaven Appears To Have Lied About Standing In Copyright Suits

Selected Bad Precedents and Rules of Law

What rules of law (other than those in the U.S. Constitution) and court precedents, that remain good law, are on my list of the worst precedents and rules of law?  I supply the bad holdings only below, rather than presenting a more scholarly version that cites the case making that law in this post.

Criminal Justice

1.  Acquitted conduct may be considered when calculating a sentence under the U.S. Sentencing Guidelines, or in general, as a basis for a sentence by a judge following a jury verdict.

2. It is constitutional to try guilt or innocence for a death penalty crime before a "death qualified" jury.
3. The death penalty is permitted in felony-murder cases where the convicted defendant was not a trigger man and did not solicit a murder or conspire with the intent of causing a murder.

4. No imprisonment sentence for a recidivist felony offender, no matter how trivial the current offense, violates the 8th Amendment protection against cruel and unusual punishment.

5. There is no constitutional requirement that criminal sentences for clearly lesser crimes be no more severe than clearly greater crimes (e.g. child rape is often punishable by a shorter sentence than non-commercial possession of child pornography).

6. Photographs of lawful conduct can be criminal to produce and distribute (e.g. in child pornography cases involving adolescents above the age of consent engaged in consensual, non-commercial sex).

7. Neo-natal homicide by women in the throes of childbirth constitutes first degree murder (true in Colorado and in some other states).

8. Criminal defendants who have been convicted are not generally permitted to benefit from subsequent reductions in the sentence for the crime of conviction.

9. A decision of a criminal defendant to testify in his or her own defense opens the door to introduction of evidence of prior criminal convictions that would otherwise be inadmissible.  (Note that there is not a single alternative to this rule, but the rule as currently posed is problematic.)

10.  Plea bargain offers are not relevant in any legally binding way to the validity of a later sentence upon conviction.

11.  Acquittal of an offense in a state court does not trigger double jeopardy protections in a criminal prosecution by another state or the federal government (and likewise acquittal of a offense in a federal court does not trigger double jeopardy protections in state court).

12. Federal habeas corpus review is limited the violations of constitutional rights that took place through the conviction, even if after acquired evidence can establish innocence or cast substantial doubt on the accuracy of the verdict.

13. Forfeitures of rights in a criminal case as a result of the failure of court appointed counsel to act is not, per se, unconstitutional ineffective assistance of counsel.

14. The exclusionary rule applies to physical evidence obtained in violation of the 4th Amendment.  (In such cases, damage awards would be more appropriate.)

15. Defects in grand jury indictment process, or preliminary hearing process can constitute a basis for the reversal of a conviction in a criminal case.

16. Multiple offenses, not interrupted by a period of incarceration or a criminal proceeding, often lead to consecutive rather than concurrent sentences of imprisonment.

17.  State court criminal juries need not be unanimous as a matter of constitutional law.
Governmental Liability

1. Liability for civil rights violations is not vicarious. Employers of civil rights violators are only liable if affirmative misconduct is shown.
2. The 11th Amendment establishes a substantive principle of state sovereign immunity, rather than merely limiting venue in select types of lawsuits.

3. Qualified immunity for civil rights violations of constitutional rights that are not well established extends to all liability, rather than merely to liability for punitive damages.

4. Imprisonment as a result of a wrongful conviction does not give rise to liability under the takings clause of the due process clause of the 5th and 14th Amendments.

5. Judicial enforcement of a legal right does not constitute state action for civil rights action purposes.

Civil Procedure and Choice of Law

1.  A federal court complaint fails to state a claim in cases where an alleged civil liability arises from acts that only the alleged offender is in a position to know absent espionage or whistle-blowing for failure to establish that it is "plausible" that such secret action took place.

2.  A federal law counterclaim does not give rise to federal court jurisdiction in a civil action.

3.  Corporations not treated a residents of every state where they have a regular place of business for diversity jurisdiction purposes.

4.  Appeals from courts of inferior jurisdiction (at least in Colorado, New York, and some federal court contexts) are to the court of general jurisdiction rather than to the intermediate court of appeals.

5.  Default civil judgments cannot be set aside for mistake, inadvertence, surprise, execusible neglect, fraud, misrepresentation or other misconduct of an adverse party more than six months after the judgment is entered, even if no action is taken to enforce the judgment in that time period.  (Many defendants don't recognize that a default judgment has been entered or is a problem and have an incentive to do something about it, until it is enforced.)

6.  Judges are not permitted to resolve disputed issues of fact prior to trial in actions where the right to a jury trial has been waived.

7.  The right to a jury trial depends upon the classification of an action as arising in law or in equity, rather than expressly on facts such as the availability of money damages v. injunctive or declaratory relief, the availability of damages for non-economic damages, or allegations of fraud.

8.  Personal jurisdiction is available in defamation actions in forums other than the forum in which the allegedly defaming party resides, or was present when the defamatory statement was allegedly made by the defaming party.

9.  Personal jurisdiction is available in contract actions in forums other than the forum in which the allegedly breaching party resides, where the allegedly breaching party was present when executing the contract, where the contract provides that jurisdiction shall be available, or where the contract duties other than payment are to be performed (e.g. where the non-breaching party resides, or where contract negotiations took place).

10.  The U.S. Supreme Court and federal courts have jurisdiction to review disputes concerning the outcome of federal elections (i.e. U.S. House of Representatives, U.S. Senate, electoral college votes) made by state courts and by state and local governments, as opposed to confining these decisions exclusive to state courts and Congress.

Constitutional Law Other Than Individual Rights

1.  Treaties may be unilaterally repealed by an ordinary law enacted by Congress and are not generallly viewed as self-executing.

2.  The filibuster has the practical effect of imposing a sixty vote supermajority requirement on all legislation in the U.S. Senate for which a higher supermajority requirement is not imposed.
Tort and Environmental Law

1.  The CERCLA (superfund) liability exception for innocent property owners is not sufficiently narrow to protect innocent property owners from all liability in excess of forfeiture of the property and forfeiture any profit received from the property.

2.  There is no vicarious liability for medical malpractice.

3.  Warnings that it is foreseeable that an ordinary user of a product will not read are relevant to product liability.

4.  Ordinances requiring property owners to clear their sidewalks of snow do not give rise to negligence per se civil liability in Colorado.

Intellectual Property Law

1.  Intellectual property protection is available for images of publicly available buildings.

2.  Intellectual property protection is not per se unavailable for materials delivered voluntarily to an intended receipient on a non-commercial basis.

3.  Statutory damages are permitted in intellectual property actions in cases where the existence of a market for identical or closely comparable intellectual property and a calculation of attorneys' fees permits accurate determination of the damages actually suffered by a defendant.

4.  Stautory damages are determined per infringing work rather than per defendant.

5.  Injunctive relief is available for patent law violations even when the holder of the patent has known about the infringement and has failed to assert any rights until the economic impact of an injunction far exceeds the economic impact had the infringement been alleged when the infringement was first discovered, or when the patent holder is not engaged in the production of a competing product.  (In such cases, a court imposed accounting for profits on the basis of the licensing agreement that would have been made if the parties had negotiated a license should be imposed instead).

6. Intellectual property protection is available for public performance without modification of intellectual property made available for free, for example, via broadcast television or radio.

7. Copyrighted works take an extremely long time to enter the public domain, even if the owner has taken no action whatsoever, even a copyright registration, to assert copyright protection.

Bankruptcy

1. There is no general priority for trade creditors.

2.  It is not generally possible to cramdown a personal residence mortgage in bankruptcy.

3.  Replacement value, rather than the value of a debtor's assets to a creditor if obtained via a writ of execution, is used to value tangible personal property in bankruptcy.

4.  Default interest in excess of pre-default interest rates, late payment fees, and punitive damages have the same priority as general creditor claims as pre-default interest rates and principal claims.

5.  Exemptions from creditors in bankruptcy vary from state to state.

Trusts and Estates

1. Beneficiary designations supercede later executed probates wills.

READ MORE - Selected Bad Precedents and Rules of Law

Righthaven Loses Fair Use Suit At Trial Court Level

Steve Green reports in the Las Vegas Sun that US District Judge James Mahan has ruled that the Center for Intercultural Organizing, an Oregon nonprofit, did not infringe on copyrights when it posted an entire Las Vegas Review-Journal story on its website without authorization and that there was no harm to the market for the story.

Mahan stressed that his ruling hinged largely on the CIO's nonprofit status and said the copyright lawsuit would be dismissed because the nonprofit used it in an educational way, didn't try to use the story to raise money, and because the story in question was primarily factual as opposed to being creative. 'The market (served by the CIO) is not the R-J's market,' says Mahan.

This is the second fair use defeat for Righthaven and is significant since it involved an entire story post rather than a partial story post. Green says that Righthaven's strategy of suing 250 web site and demanding $150,000 in damages plus forfeiture of the web site's domain name has clearly backfired and now Righthaven, the self-appointed protector of the newspaper industry, has left the newspaper industry with less copyright protection than if they never filed their lawsuits at all.

Slashdot summarizes the story here. (Hat Tip: Colorado Pols).

Righthaven is also making aggressive efforts using the same business model with regard to quotations from Denver Post articles.

This is a positive development for a blogger being sued for the non-commercial use of a single Denver Post photo, where attorneys' pressing copyright violation suits argue that use of a complete picture, even if it is only one in the context of a periodical full of pictures, can never constitute fair use. Text is much more easily excerpted.

Of course, since this ruling is simply a trial court ruling, Righthaven can, and surely will, appeal to the United States Court of Appeals for the 9th Circuit. At that point, the 9th Circuit will evaluate the case under the applicable law given the facts found by the trial court.

A prior motion to dismiss defeat for Righthaven is discussed here.

READ MORE - Righthaven Loses Fair Use Suit At Trial Court Level

Obama Copyright Proposals Counterproductive

When it comes to intellectual property, the Obama Administration has been captured by special interests and just doesn't get it. An administration white paper on the issue points entirely in the wrong direction.

Simply put, our nation's problem is not that punishments for non-violent offenders violating intellectual property laws are not harsh enough (if prison sentence of up to fifteen years won't encourage someone not to steal intellectual property, a twenty year prison sentence won't either, but the longer sentences will cost taxpayers a great deal of money), nor is our nation's problem the fact that we aren't punishing people who play broadcast radio for their customers.

Apparently the folks in copyright enforcement in the United States government don't realize that broadcast radio stations make their money from selling advertising based on their listenership, including non-paying customers of businesses, not by trying to make broadcast radio listeners pay royalties. Recording companies are getting paid for the people in bars and hair salons and in buses who are listening to their music on the radio, indirectly, through the impact that listenership has on advertising rates. In pay radio cases (like satellite radio), contract law provides a better solution the statutory copyright law enforcement.

When I ask myself, "what is wrong with public policy related to intellectual property in the United States?" I do not answer, "recording studios aren't making enough money from radio broadcasts," or "country music stars aren't making enough money." In my admittedly limited experience, it is the people who don't have recording contracts and aren't getting air play on the radio in the music business who are undercompensated, not the ones whose songs are played a dozen times a day on every radio station in their format.

Likewise, felony prison sentences rather than misdemeanor jail sentences for people who stream video illegally should not be a national priority, and devoting more federal resources to enforcing the legal rights of movie studios and recording companies that have ample resources to enforce their rights with private litigation does not make sense at a time when we are cutting the federal budget and reducing the size of the federal workforce. Allowing government officials to impose copyright law penalties without judicial involvement is also bad policy.

This plan was put together by:

[T]he U.S. Intellectual Property Enforcement Coordinator (IPEC) [Victoria Espinel] . . . in coordination with many Federal agencies, including the Departments of Commerce, Health and Human Services, Homeland Security (DHS), Justice (DOJ), and State, and the U.S. Trade Representative.

Simply put, the President should immediately fire everyone involved in preparing the plan who is a political appointee, and should reassign to new duties all of the senior civil servants involved in crafting it. The lot of them are pushing to shift our nation's laws in the wrong direction.

Excessive intellectual property protection is damaging our economy, and intellectual property penalties are already excessive. Broadening the scope of copyright and making punishments more harsh will not help our economy or create jobs.

READ MORE - Obama Copyright Proposals Counterproductive

Political Economy Quote of the Day

In short, what the economy could use is a debate over medium-term entitlement and tax changes. Instead what it's getting is a debate over near-term non-security discretionary spending.

From Tom Gallagher via Brad DeLong.

I also think we need a debate over the medium-term defense budget and note that while some entitlements are out of whack, that Social Security is not one of them. Medicare and Medicaid are the principal out of control entitlement programs. But, at any rate, it is clear that Republicans Congress and the President aren't addressing the real causes of the deficit, and that the voters don't really care.

A case in point, the R&D tax credit, a dreadfully complex part of our tax code that costs about $7 billion a year.

I was dismayed, for example, to learn today that the President's budget proposed a 20% increase in the research and development tax credit which he also proposes to make permanent. I was once a fan of it (who doesn't like new technology), but increasingly clear evidence from media accounts makes clear that it is a key factor driving the low effective corporate tax rates of some of the nation's biggest businesses, and an important cause of disparities across industries in effective corporate tax rates, is the R&D tax credit.

The R&D tax credit is at the heart of what is wrong with our corporate income tax; it is not a solution to be touted as a success and expanded. The immense tax expenditure of the R&D tax credit would be better spent as grant money than on the research ventures it is devoted to now. We already have a market driven government incentive for research and development. It's called intellectual property rights.

The R&D that needs government subsidies in a world with strong intellectual property rights is the kind that is not now and will not in the short run be profitable, like basic research and medicines that help those who can't afford to pay for them.

READ MORE - Political Economy Quote of the Day

Does Intellectual Property Promote Growth?

The historical case that strong intellectual property laws promote economic growth is a weak one.

Talking about Chinese industrial growth, Americans are in the position of 19th-century Europeans who acted as if America’s industrial rise could be explained simply by its vast natural resources and its exploitation of immigrant and slave labor, plus its very casual attitude toward copyright and patent laws protecting foreign, mainly British, books and inventions. (Today, Americans walk the streets of China and see their movies, music, software, and books sold everywhere in cheap pirate versions. A century and a half ago, Charles Dickens walked the streets of young America and fumed to see his novels in cheap pirate versions.)

From here.

READ MORE - Does Intellectual Property Promote Growth?

Bing As Malware

Bing is Microsoft's search engine answer to Google. Like all things Microsoft touches these days, it is inferior in quality. It just isn't a good search engine. Its results are less often what you want and are hard to use.

In addition to being an inferior search engine to Google, Bing is aggressive to an almost malware degree. When you start up a new system and use Internet Explorer, the Bing software is very insistant on taking a prominent place in your system until you root it out and remove it, even if you have no interest is using it. It shows up on your screen when you don't ask it to, it installs itself, it makes itself hard to ignore when it appears on the screen. When I bought my wife a new computer recently, one of my first acts was to devote the roughly 45 minutes that was required to remove Bing from her system.

I have yet to meet a satisfied Bing customer.

Apparently, Bing also systematically uses information gathered from users who make Google searches while it is installed, effectively acting as spyware, to reverse engineer Google's search engine tricks.

While I have no problem, in general, with reverse engineering other people's technology that doesn't have formal legal intellectual property protection, and there are far more harmful ends to which information gathered with spyware can be put, I still am not happy about any software that secretly enlists millions of users into a program of mass information sharing for undisclosed reasons. I don't think that Google has any legitimate legal grievance against Microsoft for this conduct, but I also don't think that it is appropriate for Microsoft as a legitimate software company to be inserting software so close to malware and spyware into people's computers while passing off what they are doing as offering the same kind of far less intrusive service as Google and Yahoo.

Indeed, perhaps the most appropriate response would be for major Internet Security firms like Norton, AVG and McAfee to decide to classify it as a security threat and automatically prompt users to remove it from their systems with a description of Bing's defects similar to that made available to explain the threat caused by other security threats it flags from tracking cookies ot phishing websites to trojans. These companies aren't required to determine that software is illegal. They are simply in the business of identifying stuff on your computer or the Internet that you don't want. Malware status is a matter of opinion, so long as the basis of that classification is disclosed, and these companies would be well within their rights to classify Bing as malware based on what it does.

READ MORE - Bing As Malware

The Problem Of Apathetic Copyright Owners

One of the big problems in the current regime of copyright, and more generally, intellectual property, is that the economic value of the right to be licensed is often modest relative to the transaction costs that go into locating an order and reaching a licensing agreement. This is a particular problem now, because the information technology revolution, in the patent area, and the Internet, in the content area, has favored innovations and new works that involve very small contributions from very large numbers of protected intellectual properties. The fair use doctrine addresses some of this problematic territory, but is not a comprehensive solution to the "micro-licensing" problem, nor is it a solution to the orphan copyright problem in which the copyright owner cannot be located to conduct negotiations with at an economically practicable price, or the apathetic intellectual property owner problem, in which the copyright owner is simply too distracted or busy to focus on a licensing possibility, even if it would make economic sense.

All of these problems flow from the default assumption in property law that non-responsiveness regarding a use of property means that it is a crime to use that property without express permission. But, since intellectual property can have more than one user at a single time, and is for practical purposes less amenable to locating an owner (e.g. because unlike real property it is often not "possessed" in a tangible sense and is not subject to annual taxation that keeps contact information current), this may not be an appropriate default assumption for intellectual property.

To the extent that intellectual property owners do not have ulterior non-economic motives for their behavior (and further, to the extent that we are not interested in providing strong legal protections to such ulterior motives out of free speech and anti-trust law concerns), it is reasonable to suppose that transaction costs and owner identification difficulties are important barriers that tempt those wishing to use intellectual property to neglect to obtain licensing rights at a market rate for the intellectual property, and that transaction costs are a key reason that intellectual property owners don't bother to make it easy to obtain licensing.

In circumstances where these transaction costs are avoided with a centralized and regularized system, such as the one used by newspapers within the Associated Press, or the one used by radio stations licensed by the major recording studios in omnibus agreements, the volume of individually low value use of intellectual property that would otherwise belong to someone else is very high and economically significant in the aggregate, and no one involved finds the absence of individualized consent to licensed uses from the authors of the works troubling.

One way to prevent copyright from posing the barrier it does to productive intelletual property activity in cases of micro-licenses, orphan works, and apathetic copyright owners would be to change the default rule from one requiring affirmative express consent, to one that would allow a license to be entered into according to some standardized default rate arrangement, similar to the one that exists for artists who wish to do a cover version of a song today without the owners permission, with royalties deposited into an account with the registrar of copyrights or patent office, as the case might be, until claimed by the owner, upon deliver of a notice of intent to use a work that does not receive a response within some reasonable time period, perhaps a month.

Apathetic owners who received a notice and ignored it, would have funds deposited at a standard rate into an account for their benefit that they could claim at any time. Owners who felt that the standard deal with inadequate could respond to the notice and expressly deny permission to use the work within the time period, or for any future new use of the work for which a standard rate contract had been established due to non-response the first time around.

This would be a middle ground between a pure property by analogy regime, and one that reconceptualized intellectual property as something actually more akin to a right to bring suit for unjust enrichment.

READ MORE - The Problem Of Apathetic Copyright Owners

Denver Post Copyright Enforcement Still Sucks

Jason Salzman explains the state of the ongoing effort of the Denver Post and other newspapers to use the legal system to protect copyrights in freely available content, republished in part under fair use standards in many cases, with the help of draconian copyright law penalties. Its dubious litigation strategies are managed by Righthaven, the Las Vegas based law firm coordinating the effort, which is to a great extent a war on blogs.

READ MORE - Denver Post Copyright Enforcement Still Sucks