AS-IS: Ecommerce, Internet, Software & Technology Law and Contracts

This month's Wired magazine has a perceptive article about so-called "data scraping" or "screen scraping" practices.  It discusses the practical aspects of data scraping (such as IP address banning or blocking as a practical remedy to prevent scraping), use of cease and desist letters, and use of properly-licensed web services application programming interfaces (API's) as a way to control such practices.

The article does not provide any detail about underlying legal theories or court cases to prevent data scraping, such as those based on the Computer Fraud and Abuse Act (CFAA) or court cases concerning unfair competition.

Source: Should Web Giants Let Startups Use the Information They Have About You?, by Josh McHugh. 

Posted by Harry at 03:55 PM | Permalink

Web sites and other online services containing content submitted by users (also known as user-generated content) are obviously a hot growth area.

Not so obvious is the fact that these services depend on a little-known statute to protect their providers from legal liability for copyright infringement.  That statute is Section 512 of the Digital Millennium Copyright Act (DMCA).

Section 512 is crucial for online services such as YouTube, where users have been placing third parties' content (such as clips from a TV show or move) without authorization from the copyright owner.  Under the copyright law, the user placing the content on the site without authorization can be liable as a "direct" infringer.  Absent Section 512, the online service provider that hosts such content could be liable as a "contributory" or "vicarious" infringer -- roughly analogous to being an accomplice of the user.  The business impact is that the provider could face large damages in a pre-set statutory amount.  And, officers and directors of corporations and other entities face personal liability for their role in infringing activity.

Typically, the provider posts a policy regarding its copyright law compliance along with contact information for an agent to receive notices of copyright violations.  Providers also must register the agent in a public database at the U.S. Copyright Office to take advantage of Section 512. 

Owners of works that may be infringed then send what is known as a "takedown" notice, following detailed requirements in Section 512, for the work to be removed from the provider's service. The original user may submit a "counter notification" to have the work reinstated on the online service (and face a lawsuit from the copyright owner), again following detailed requirements in Section 512.

I recently attended a seminar of specialists on Section 512, and took away some practical tips on how providers can use the protections of Section 512.  These takeaways are a composite of panelists' opinions:

1. Many sites and services can face issues with user-generated content.  Content sharing sites such as YouTube and Myspace are obvious examples.  Even simple blogs, wikis or guestbooks that permit visitor comments can create similar issues, however.
2. Some copyright owners have hired rooms full of employees to search for infringing works and send take down notices.  One major media company sends more than 100,000 takedown notices -- per day.
3. Users rarely send counter notifications when their works are taken down.  Typically the works that are taken down, remain down.  (Unless, of course, the same or another user re-submits them separately later.)
4. Many providers fail to register their designated agents with the U.S. Copyright Office, and thus miss out on the benefit of Section 512.  (I often assist clients with this simple and inexpensive filing.)
5. Providers need to adopt a policy providing for termination of repeat infringers.
6. Providers should keep good records of all take downs, such as the number of terminated works and user accounts, the reason for termination and the date of notice and date of termination.  This can be very helpful in demonstrating that the provider has a reasonable policy of terminating infringers.
7. Because providers can face liability based on their actual knowledge that the works are infringing, they should be wary of reviewing the user-generated content more thoroughly than required by law. Some seemingly obvious situations (such as a human editor choosing featured content on a home page) might create actual knowledge.
8. Obtaining a financial benefit directly tied to individual pieces of user-generated content is risky. Receiving fees for an overall service (such as setup or periodic subscription fees) should be less risky.  The financial benefit from advertising is currently an open question, so many providers currently do not place ads directly in any problematic content.
9. Several groundbreaking lawsuits are pending in this area in New York federal court. Google and other web services are introducing filtering technology to keep infringing works off of their sites, but such technology is still in early stages.  Web site operators and other online service providers need to keep an eye on this rapidly changing area.

The seminar was "Viacom v. YouTube (Google) Case: A Review of Section 512 (DMCA)" at the High Tech Law Institute (HTLI) of Santa Clara Law School, on October 23, 2007.  The panel consisted of Mindy Morton, associate, Bergeson LLP; Professor Tyler Ochoa of Santa Clara Law School; Fred von Lohmann, Senior Counsel of the Electronic Frontier Foundation (EFF); and Jenny Lynn Cox, Moderator and Executive Director of HTLI.

Posted by Harry at 04:50 PM | Permalink

Posted by Harry at 04:01 PM | Permalink

User-generated content took the Internet by storm last year - even as Time Magazine's Person of the Year 2006.  This content includes postings on forums, photos on Flickr, videos on YouTube, and all sorts of media on MySpace and other social networking web sites.  It's a new outlet for millions of web users who want to mix and mash their media as a way of communicating with their friends and a vast anonymous web audience.

The rub is that much of the content is protected by copyright, and the users who post the content have no legal right to do so.  This is especially true of television shows, movies, and other popular content that is posted with little if any justification as a fair use.  Truly fair uses might include postings of short portions of works along with critical or political commentary.

Since 1998, the Digital Millennium Copyright Act (DMCA) has provided legal protection (a "safe harbor") to web hosts who offer user-generated content, but who agree to remove it (or "take it down") in response to a valid notice (a "take down notice") from the copyright owner. 

This placed the burden of enforcement on the copyright owners.  It also may have aided the development of web 2.0 services that offer user-generated content. 

I often recommend to my clients that they utilize the DMCA protections if their websites include user-generated content (such as forums or postings open to user comments).  Clients need to follow a simple registration procedure with the U.S. Copyright Office, and publicly describe a take down procedure in their website terms and conditions.

Viacom's recent lawsuit against Google concerning YouTube may place these DMCA protections at risk.

The question could extend much further than Google.  "If Viacom wins it really casts doubt on a number of businesses that rely on hosting information for users.... Google has basically been following the advice of the best lawyers in Silicon Valley.  If Viacom wins, that would call into doubt all of the business models that relied on the same kinds of legal advice," said Fred von Lohmann, attorney with the Electronic Freedom Foundation, in a recent interview with The San Jose Mercury News.

The Wall Street Journals calls this "the $1 Billion Question".  Yes, that and more.

Additional resources:

Viacom vs. Google: Test of key online law, by Elise Ackerman, The San Jose Mercury News, March 14, 2007.

Viacom v. Google Could Shape Digital Future: Lawsuit Hinges on 1998 Act Protecting Net Copyrights: Does YouTube Qualify?, by Kevein J. Delaney and Matthew Karnitschnig, March 14, 2007.

Whose Tube? Viacom Sues Google Over Video Clilps on Its Sharing Web Site, by Miguel Helft and Geraldine Fabrikant, The New York Times, March 14, 2007.

Posted by Harry at 07:56 AM | Permalink

Knowledge@Wharton has an interesting perspective on new softwawre business models, in Why Software Business Models of the Future Probably Won't Come in a Box.

Kartik Hosanagar, an operations and information management professor at Wharton, believes that "a hybrid business model -- consisting of parts of traditional licensing, on-demand, ad supported and even open source" will emerge and be the "winning model of the future". 

My take: I generally agree.  I supported multiple hybrid Software-Internet business models when I worked at Intuit.  But this transition won't be easy.  Just as Google Adsense, Craig's List free classifieds, and the general move to performance-based marketing on the internet have confounded the newspaper industry, there are going to be wrenching changes ahead for business people who can't broaden their perspective. 

And, that doesn't even begin to raise the equally significant mindset change needed to cope with mobility (an all-the-time, everywhere wireless mobile environment).

Posted by Harry at 01:56 PM | Permalink

Welcome to the AS-IS blog, where I plan to discuss ecommerce, internet, software and technology contracts and licenses, as well as the laws affecting internet and software companies, both large and small.  My focus is on California law and Silicon Valley.

 This blog is sponsored by the Boadwee Law Office.  Please visit that site to learn more about me (attorney Harry Boadwee).

Posted by Harry at 10:53 PM | Permalink