Update: The action figures are available for purchase! (Hat tip: Ted Janger)

1. Judge Gertner will reduce the damages somewhat.
2. She will find that the statutory damages provisions of the Copyright Act do not contravene constitutional protections under the Gore line of cases.
3. The First Circuit will affirm.
4. The Supreme Court will deny cert.

I think the damages provision might be vulnerable in a specific defendant’s case (though Ms. Thomas-Rasset would be a better test than Mr. Tenenbaum here), but is safe on its face. In lawyerspeak, it’ll survive a facial challenge, but might fail as-applied.

The Gore limits depend in part on the concept of notice: defendants should know ahead of time how much they’d be liable for if they violate the law. No one expects punitive damages of 500:1 (Gore) or 145:1 (State Farm). But predicting liability – at least at its minimum / maximum amounts – is easy for copyright law. That’s a key difference between a statutory damages scheme, with a range specified by the legislature, and a common-law one where juries pick a number from a hat.

Second, the range of damages in the Copyright Act looks reasonable on its face. $30,000 per work (and up to $150,000 for willful infringement) is a lot, especially if it’s just to deter (or compensate for harm by) a single defendant. (General deterrence is out under Philip Morris v. Williams, which is sad for law & econ thinkers.) Imagine a business that runs off copies of “Harry Potter and the Deathly Hallows” in its basement and sells them. Copyright infringement of this one work is clear, but the business carefully shreds all evidence of sales. So, it’s impossible to prove actual damages; businesses are often risk-averse, meaning that higher awards of damages are needed to deter; and there’s only 1 copyrighted work at issue. Statutory damages are important to provide any deterrence – since proof of harm is under the infringer’s control – and since the infringement might be quite profitable, an award might need to be high (even $150K). Hence, the damages scheme is clearly rational in at least some cases.

The harder question is whether the unconstrained jury discretion for statutory damages could run afoul of due process protections. Individual downloaders tend to be pretty similar if you think about it: there’s not much difference between Thomas and Tenenbaum. So why is her penalty almost 4 times more per work than his, for the same type of infringement? Neither has much in the way of monetary resources, so they’re either undeterrable, or able to be deterred at a fairly low amount (marginal value of a dollar and all that). Here is where the damages scheme seems like it might be vulnerable: it does get hard to predict liability in some individual cases, and the wide range of damages looks a bit too much like absolute discretion. (Thought exercise: what if a jury could award any amount of damages per infringement? Would that improve deterrence against Tenenbaum and Thomas? Would it be significantly less accurate than the actual damages, which everyone agrees are pretty low in real terms? But such a framework would likely run afoul of constitutional limits.)

If this is right, it means that both sides should worry – as should Congress. Getting damages right is important, but preserving both procedural and substantive protections for defendants is just as much so. Comments and disagreement welcomed…

I don’t want to be harsh about Kaus – Section 230 is a little obscure – but I think any blogger, and especially one who’s a lawyer, should have some familiarity with it. (Citizen Media Law Project has a great summary of its effects, for example.) Kaus goes on to list five observations, which merit a bit of comment:

1. “lawyers for big journalistic outfits (like the Washington Post, which owns Slate) won’t require blogs to be edited.” Yep. Even some editing may pass 230 muster – see Batzel v. Smith.
2. “Most bloggers themselves are probably poor enough to be judgment-proof.” Also true, at least until Bill, Tim, and I land that lucrative Nike contract.
3. “unverified undernews would now have a prominent, semi-official, de facto-sanctioned home.” Yep – see AutoAdmit.
4. “Are they really going to apply this to organizations that pay freelance bloggers for their submissions?” The FTC doesn’t think so. Bill and I have been trying to figure this out.
5. “What about repeating these protected-by Sec. 230-but-unverified blog allegations in the core MSM?” Ah, the joys of cyberexceptionalism! A blogger posts something saying, “Sarah Palin resigns due to threats from wildlife sick of being shot at from helicopters.” The Boston Globe’s Web site republishes it – they’re immune under 230. The Boston Globe publishes exactly the same content in its print edition – no immunity. (They’ve got to depend on NYT v. Sullivan rather than the 230 shield.) So, the MSM has to be careful about how it deals with Web rumors, at least if they’re going to circulate them offline.

Kaus then confidently predicts Congress will amend the statute (”"But I find it difficult to believe that the broad web-site-protecting reading of Section 230 will hold up… When Congress sees how that phrase has been interpreted, it may (as they say) revisit the issue”). Um, no. It’s been around since 1996, and I know of no serious effort to amend it since. Scholars keep putting up alternatives, but Congress seems quite happy with Section 230, even when it gets interpreted in ways that prevent children who are sexually assaulted from recovering against the on-line sites where they met their assailants. If Congress isn’t going to help the kids, it’s not going to be too worried about Palin’s press image…

You got to know when to hold em, know when to fold em,
Know when to walk away and know when to run.

The department wisely ran.

The complaint in the lawsuit makes for interesting reading. First, I’m depressed that a complaint still has to describe the Internet. Second, iMEGA rightly argues that ISPs are not common carriers, and hence not subject to the Wire Act’s demands about leasing, furnishing, or maintaining a facility whereby gambling information is transmitted. (See 18 U.S.C. 1084(d).) Third, I think it’s undesirable to have states making content blocking decisions, especially ones that apply to national and international carriers – it has the risk of increasing access costs, and of leading to overblocking if providers want to reduce those costs. (Cheaper and simpler to block a site for everyone than to differentiate by geographic location.)

But the neatest, and most brilliant, part of the complaint is that it throws Minnesota between Scylla and Charybdis: if ISPs block gambling sites by fully-qualified domain name or IP address, they’ll prevent access to lawful information (such as a history of blackjack) protected by the First Amendment – but if they block at a deeper level, such as individual URLs, it’ll be under-inclusive. This is clever, probably accurate, and diabolical. It points out the flaws in filtering: either it’s easily evaded, or it’s going to sweep up content that is permissible. The First Amendment frowns on both.

I don’t know why Minnesota started down this path. My intuition is that there’s either a norms-based goal, or a political one. The norms-based goal would be to signal Minnesota’s disapproval of on-line gambling. The political one would be to advance someone’s career by appearing to tackle (mostly out-of-state) gambling interests, even in a losing battle. (Battle of Thermopylae metaphor, anyone?)

Prediction: there will be more state-based filtering efforts, and soon. Pick your targeted material: a) child porn, b) terrorism materials, c) gambling, or d) “obscene” content. Any bets?

Hat tip, and serious props, to my colleague Karen Schneiderman for great research following this case…

My friend and colleague Colette Routel has written an amicus brief on the Exxon case (that’s the Exxon Valdez case). She’s also explained the case to the public on a C-SPAN debate this morning. (AOL version) (The perils of live TV: check out the first caller, around 8 minutes 50 seconds into the program. Warning: NOT work-friendly.) Colette’s brief is on the workplace culture of alcohol. Her areas of expertise include Native American law, natural resources law, civil procedure, and destroying the other side in litigation. (Jonathan Hacker is lucky she wasn’t the plaintiffs’ attorney…)

The case itself raises fun questions about the proper incentive role of punitive damages and how these function in pressing corporations to adopt proper safety, training, and monitoring programs. (Surprisingly, it’s not good to let a known drunk pilot your oil-filled supertankers. Who knew?) Let’s hope the justices get it right.

Update: Here’s a wonderful quote from Colette’s brief, which exemplifies why the Court should uphold the punitive damages award against Exxon: “[W]hen Captain Hazelwood returned to work after attending an out-patient treatment program, his supervisor actually held his back-to-work meeting at a bar, and ordered a beer.” (Brief at 29-30.) Having a corporate culture that enables alcoholism among supertanker captains and crew is the literal definition of “reckless.”

For sports fans, this is a question of when coaches can leave their positions for a new job; of whether Rodriguez will be distracted from his work to strengthen the Wolverines’ program; and of whether WVU will be able to maintain its level of success.

For lawyers, this case is great fun: did Rodriguez breach the contract by leaving, or did WVU breach first? Can Rodriguez remove the case to federal court? (Two questions: is he a citizen of Michigan, and does WVU count as a citizen of West Virginia for diversity purposes?) Is the $4 million buyout clause a legitimate liquidated damages provision, or a penalty clause? Why did Rodriguez put up the letter of credit? And since the federal court in West Virginia also draws jurors from that state, is it really a good idea for Rodriguez’s lawyers to say he can’t get a fair trial in Morgantown?

I suspect this case will end with a whimper, not a bang: the parties will settle, money will change hands, and coaches will continue to change jobs. Now if Rodriguez turns into John L. Smith, that will be a big story…

then try contacting my boss! [See analysis of the latest order in the case, above.]

Recently, I wrote a post on Garrido v. Krasnansky, where a Vermont family court judge ordered the husband in a divorce case to take down his blog postings about the marriage. Unsurprisingly, I was skeptical that the order was constitutionally permissible. Shortly thereafter, I received a letter from Susan Ellwood, Ms. Garrido’s attorney, disputing part of the post and asking me to edit that part. I declined.

Now, Ms. Ellwood has written to my dean, Frank Wu, at Wayne State, to request his assistance in having me take down the part to which she objects. (Practically speaking, it’s not clear how this would work; a proposal to cane recalcitrant faculty was narrowly voted down last fall.) Dean Wu has been strongly supportive on this issue and vigilantly defends academic freedom; the idea that he would pressure a colleague into self-censorship is risible. (And, of course, he understands the blogosphere as a prolific poster himself.)

To be clear: I believe strongly in debate, disagreement, and transparency. Ms. Ellwood’s assertion that my “statements on [the] blog are inappropriate and quite possibly defamatory” is pretty clearly meritless, but I’m posting her letter so you can judge for yourself. That’s the point of blogging, and the conversation it creates. So, the post stays up, unedited, and I’ll put up any further correspondence to me, the Dean, my landlord, etc.

And of course I lack “general common sense”: I’m a life-long Red Sox fan!

If anyone has a copy of the complete filings in the case, I’d be interested to read them…

Update: [moved case analysis to new post above, 26 January 2008]

1. Consent

Chris Kelly, Facebook’s Chief Privacy Officer, responded to the Times essentially by emphasizing that the site obtains enough consent from users to feature their names and likenesses in advertising:

Mr. Kelly said the advertisements are simply a “representation” of the action users have taken: choosing to link themselves to a product. … And he argued that it would be difficult for someone used in one of these ads to object because that person had already chosen to publicly identify themselves with the brand doing the advertising.

I think that may depend on the nature of the disclosure to the user and of the design of the advertiser’s Facebook page or application. Take Facebook’s own sample Social Ad — it has a user’s name and picture, her rating for a movie, and a plug for Blockbuster, all arranged in a way that makes it look like the user is a celebrity endorser for Blockbuster. The key question: even if this user understands she is sending her movie ratings to her friends, does she understand that she’s also starring in a Blockbuster ad? If there are clear disclosures — not just that information-sharing is happening but also that your identity will be used for promotional purposes — as well as an affirmative opt-in, then there is no problem under these privacy laws. Surely some Facebook users want to plug products they use and enjoy, and I have no quarrel with them — as long as they truly consent.

But consent is slippery in this space, and my sense is that, as with the News Feeds debacle, Facebook is assuming that social networkers have no appreciable privacy boundaries. That’s not so. And you shouldn’t transfer consent for some sharing into consent for all sharing, including sharing placed in a different context that implies endorsement.

2. Damages

As I noted in an update to the original post, even those who are annoyed by the use of their image in Social Ads may not have legally cognizable damages. Celebrities who object to being used in advertisements have clearer financial losses to claim in a lawsuit — their value as paid endorsers could be destroyed. The rest of us wouldn’t experience such tangible losses. California’s statute includes a fixed $750 penalty for plaintiffs who can’t otherwise prove damages, but of course that’s a tiny gnat on the hide of a behemoth like Facebook.

This explains why such cases are not common, and may also indicate that Facebook’s exposure to a realistic prospect of liability is miniscule. But if this program does violate privacy laws, the fact that you can get away with it is not a satisfying rationale for going ahead.

3. Torts and Statutes

I talked mostly about the New York law because it’s well known. But there are statutes in other states, and there are appropriation torts in even more states. A tort is not some exotic rara avis; many of the lawsuits that individuals bring, from defamation to car-crash negligence actions, are torts that may not be embodied in statutes. Bottom line: this privacy law is not some weird New York exception, but a common requirement, in some form or other, in many states.

4. Jurisdiction

Saul Hansell, the Times reporter/blogger, asked me if the New York law applied when the user wasn’t in New York. That sounds like a question from a first-year civil procedure exam (take it from me, who teaches that course). So I told him that opened up a whole other can of worms. Internet jurisdiction is very complicated and will take this post way off topic.

Suffice to say that the issue generally turns on the purposeful connection of the activity to a state. It seems to me that Facebook knows where all its users are located (and a whole lot more, of course…). If a Social Ad generated from a user’s behavior is sent to the person’s friend in New York, then likely that ad is subject to the New York law.

5. Conclusion

There is so much power and promise in various embodiments of social networking. But the privacy issues involved are profound and I am concerned that this Social Ads innovation may indicate a cavalier attitude to consent and an incorrect presumption that social networkers don’t care about their privacy. They do, they should, and so should the companies seeking to harness the power of social networks for their own benefit.

[UPDATE: Facebook has retreated somewhat in its new advertising plans after getting a lot of heat for them, but it's unclear whether their improved policy includes Social Ads.]

[Comments closed -- comment on the original post please...]

The jury is now deliberating in the first-ever trial arising from the RIAA’s campaign against music downloaders for alleged copyright infringement. The trial was held in Duluth, Minnesota, the location of the federal court nearest the Brainerd, Minnesota home of defendant Jammie Thomas. That makes this big news in my home state. I spoke to one of our local news stations about it and the newspapers have covered it too. The most detailed updates I’ve seen are these continuous reports from the Threat Level blog at Wired magazine, which has somebody attending the trial.

The RIAA has brought more than 25,000 of these complaints, and Thomas is the first ever to go to trial. Almost all the cases settle out of court. She is taking a pretty big gamble. She put in no evidence or witnesses, merely resting her defense on the hope that the plaintiffs cannot prove the elements of their case to the jury’s satisfaction: that a Kazaa user with the screen name “tereastarr” made 1700 files with copyrighted music available to other users; that Ms. Thomas is “tereastarr;” that she was the one who made the music available; and that the plaintiffs own the copyrights. The judge has agreed to instruct the jury that the act of making the music available by itself constitutes infringement, which is in line with other case law on the issue. There was a pretrial skirmish over the record companies’ failure to provide proof of their ownership of some of the copyrights at issue in a timely fashion, and the judge dropped those songs from the suit. At present, the claims are limited to just 24 music files — but that still could result in hundreds of thousands of dollars in damages if the jury finds willful infringement.

One crucial point here is the burden of proof in a civil case: it requires only a preponderance of the evidence — that is, a finding of infringement merely means the plaintiff’s claims are more likely to be true than not. And there are some very bad facts for Ms. Thomas: she uses that screen name elsewhere on the internet; RIAA investigators tied the Kazaa account to an IP address that her ISP testified was associated with her; and she appears to have replaced her hard drive under at least suspicious circumstances and her testimony about that replacement was not consistent. Her only hope is that a jury believes her steadfast denials, perhaps influenced by their sympathies to her as a single mother, an American Indian, and a Minnesotan. That might work if this were a criminal prosecution where the RIAA had to prove its case beyond a shadow of a doubt, but I think she may be in trouble here. We’ll find out soon.

Just as it did last year, the case provided my class a great primer not only on the relevant internet law, but also on a fundamental point of civil procedure. That issue is: when can a court dismiss a complaint — before any factfinding or further activity — because of its “failure to state a claim upon which relief can be granted.” While that’s generally judged by a pretty forgiving standard, the legal immunity here resulted in dismissal.

Now Eric Goldman reports that the Third Circuit has affirmed the dismissal. The appellate decision (written by Federal Circuit Judge Michel, sitting by designation) is a lot less colorful than the district court’s. But it marks the end of the story.