In light of the financial meltdown of 2008, it is reasonable to question whether the prior decade’s emphasis on corporate compliance – the internal programs that corporations adopt in order to educate employees, improve ethical norms, and detect and prevent violations of law – has been fruitful. This Article contends that the key problem with compliance is that we regulate it through an adversarial system that pits federal prosecutors against corporate defense counsel, fueling distrust between corporate entities and the government, and between the corporate employees and the internal monitors tasked with ensuring compliance. Despite this adversarial atmosphere, a number of scholars have suggested that corporate compliance is an example of a more collaborative regulatory approach known as “New Governance.” This Article challenges that notion, arguing that the government’s adversarial stance all but eliminates the experimental and collaborative approach championed by the New Governance movement. The Article further concludes that a New Governance model of compliance regulation is unlikely to take hold. Nevertheless, policymakers should consider New Governance’s administrative stance in lieu of the more punitive, “war-driven” approach that adjudication usually encourages.

We’ve seen a wave of compliance-oriented information law in recent years – perhaps most notably Sarbanes-Oxley – and it’s useful to ponder how worthwhile this approach is likely to prove.

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…

A couple of idiosyncratic highlights for me so far include:

Tom Lee’s empirical analysis of how consumers perceive the semantic or linguistic content of trademarks as opposed to their context (as in placement on packaging). While it only addresses certain kinds of situations–that is, situations where there is lots of context available for the consumer–it provided interesting data.

Laura Heymann’s presentation about the law’s treatment of personal names and how it does or does not resemble the regime for trademark law, with a focus on the interaction between denotative (source-based) and connotative (association-based) meanings of both types of names. Legal regulation (or lack of it) of name changes of both kinds raises fascinating issues.

Lisa Ramsey’s discussion of brandjacking on social network sites, which can lead to serious harms but maybe not the kind of harm trademark law addresses. (I wondered if it is possible to make a clean and principled distinction between impersonation of a trademark or its holder vs. a misleading association with one.)

My good friend Jessica Silbey’s analysis, based on narrative theory, of the rhetoric used by “access movements” such as Free Culture, A2K, free software activism, and the like. She finds that these protests against existing IP law ironically share certain key features of the traditional story told to support expanded IP rights.

Mark Lemley and Mark McKenna’s article, “Irrelevant Confusion,” which I think is destined to become a watershed in trademark scholarship.

James Grimmelmann’s presentation of a piece he is writing with Paul Ohm where they identify a coherent school of thought within cyberlaw they call (for now) “architecturalism,” typified by Jonathan Zittrain’s recent book.

Surely others would make different lists out of the nearly 100 papers. (Maybe someone might even pick mine!). As usual, Rebecca Tushnet is providing great live-blogging of the sessions she attends. Thanks to the organizers for an incredibly stimulating event.

I wasn’t at the courtroom, so I’m relying on reporting / blogs, but I think they’re wrong. Here’s why.

First, Tenenbaum’s attorneys failed to object to the liability question. So, it’s not preserved for appeal. That’s bad, unless the First Circuit decides to tackle it sua sponte, which they won’t.

Second, look at Joel’s actual testimony (quotes from Ray Beckerman’s helpful site, emphasis mine):

“He also testified that he had used the sublimeguy14 username, admitted that he had used KaZaA, and that the KaZaA shared folder in the screenshots from MediaSentry were his. He also testified that it was not uncommon for him to see other people uploading files from him on the KaZaA traffic tab.”

“He testified that he had burned CDs of the music in his shared, and testified that he had ripped CDs to his computer.”

“He testified that he had listened to, talked about, made mixes of, and made available for distribution all of the music in his shared folder.” [ignore the distribution part]

“The redirect was very short… He was asked if he was now admitting liability, to which he said yes. ”

Even throwing out the redirect, if Beckerman is reporting this accurately (I trust him), Tenenbaum has admitted to facts that constitute violations of 17 USC 106(1), 106(2), and 106(3). The liability bit came on redirect and can be ignored without affecting the outcome. The plaintiffs thus clearly made out their case on chief on infringement, and since Tenenbaum’s fair use defense was shot down ahead of time, it was all over but the shouting (and the damages calculation)…

The judge in the copyright infringement lawsuit against Joel Tenenbaum has issued a directed verdict on the issue of infringement liability. The only remaining issue for the trial is that of damages. I predict Joel is going to get whacked: he admitted to lying in a deposition, and suggested that “burglars” might have downloaded the songs to his computer. (Increasingly tech-literate, those burglars!) The jury in the Thomas-Rasset case seemed to think that her somewhat incredible story counted against her in terms of damages, and it may be the same here.

On the other hand, Tenenbaum’s defense team has substantial ammunition on its side regarding damages. Pam Samuelson’s paper makes a compelling case that the Copyright Act’s damages scheme should not only be interpreted differently by courts, but may in fact be constitutional. This could well be the most important aspect of this case.

Stay tuned – via Ben Sheffner and Brent Whelan. Predictions on the size of damages welcomed in the comments.

Here, you can browse and annotate the proposed settlement, section-by-section. … In addition, you can:

• Study our reading room of lawsuit documents
• Join the conversation in our forums
• Draft an amicus brief to the court on the wiki

This is a potentially exciting venture on two fronts. First, it may foster dialogue about the fiendishly complex settlement, which could have a huge impact on the shape of copyright law and the public domain for years to come. Because it is so complicated and doesn’t include much flash (and perhaps because so much attention is going to health care, climate change, Jon & Kate, and other pressing issues of the day), the settlement has not been as widely debated as it should be. Second, it will be another experiment in using the tools of the interactive internet to promote true civic engagement and debate.

But whether it will work depends in large part on whether people participate, so go check it out. The links posted on the site’s Introduction are a good place to start.

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…