A legal pattern – innovation, slow embrace of the innovation, abuse of the innovation, and gradual control of the abuse

Disputing — a terrific blog dedictated to issues regarding arbitration, mediation, and other means of “alternative” dispute resolution — has given me the honor of writing as a guest. Today on Disputing you can read Part One of

“Alternative” Dispute Resolution, the Rhetoric of Naming, and the Emerging Trend to Invalidate Mandatory Arbitration Clauses and Class Action Waivers in Consumer Agreements

It describes a typical arc for legal innovations. There is innovation, acceptance by the law of the innovation, abuse of the innovation that uses it for purposes other than those it was created to accomplish, and, slowly, the law’s effort to preserve the benefits of the innovation and curb its abuses.

In this case, the innovation is arbitration. As Wikipedia explains, “In the early 20th century, businessmen in New York began promoting the idea of legally binding arbitration to resolve disputes as a less costly alternative to litigation. Courts were hostile to the idea . . . .” Only in the 1950s and 1960s did courts generally accept arbitration and come to universally enforce agreements to arbitrate disputes. During my legal career (I began law school in 1981 and practice in 1984), the enforceability of arbitration agreements became an unquestioned fact.

But, inevitably, businesses began to recognize that requiring their customers to agree to arbitrate disputes rather than engage in litigation in the courts offered other benefits, benefits that had nothing to do with arbitration’s offer of faster and less expensive dispute resolution. And only now (literally, in the last month) are courts both recognizing what is going on and dealing with it effectively.

You can go to Disputing to read part 1 of the story. Part 2 will appear on Disputing tomorrow.

Michael Jackson was a remix artist! I’m shocked, shocked.

Hat tip to Known in the Marts

The fair use test — some cases are easy, some are hard, and some are somewhere in between. A follow up to the dialog regarding the postage stamp and the Korean War Veterans Memorial.

Donn Zaretsky, unsurpisingly, took exception to the post I wrote yesterday, in which I strongly condemned his assertion that “you can make the traditional four-factor fair use analysis do whatever you want it to do. As Judge Kozinski has said, the analysis can always go in either direction.” (emphasis is Zaretsky’s) The back-and-forth originated in our disagreement about the decision that a postage stamp that is a reproduction of a photograph of a sculpture forming part of the Korean War Veterans Monument on the Mall in Washington, D.C. does not infringe the sculptor’s copyright in the sculpture. There is a reproduction of the stamp and a photograph of the sculpture in my original post. I believe the court was right and that the determination that the stamp is a non-infringing fair use is a pretty easy one. Given that he is invested in his belief the law’s 4-part test to determine fair use is an utterly arbitrary one that in every case can as easily support one position as another, Zaretsky thinks I’m wrong.

In response to his latest post, I sent him the following e-mail (hyperlinks added):

Donn -

As I said, judging the competing merits in any case that results in a lawsuit rational parties are willing to take to trial and even up on appeal is almost always a question of choosing between better and worse arguments, not a matter of mechanically applying rules that result in obviously predictable outcomes. But I still haven’t heard your argument that the postage stamp that uses a impressionistic photograph of the sculpture in the Korean War Veterans Monument is not entitled to fair use beyond (1) your mere assertion, borrowed from an IP lawyer, that the stamp is a “derivative,” not a transformative, use and (2) a few unfounded legal contentions regarding the definition of a derivative work and the relevance of the nature of the allegedly infringed work.

First, any work of appropriation art is by definition “derivative”; plainly, the mere fact one work is derived from another does not make it an infringing “derivative” work not entitled to fair use protection. As William Patry puts it in his treatise, Patry on Copyright, “[t]he derivative right is subject to a number of special limitations and one general exception, fair use.” Id., Section 12:24. In other words, calling a work a “derivative” work does not answer the question whether it is fair use. So you can’t evade evaluating the elements of the fair use right merely by denominating a work an allegedly infringing work a ”derivative one.”

Nor is there any basis for the assertion by the IP lawyer on whose opinion you rely that a transformative work can only be a work whose uses and purposes are different than the uses and purposes of the original copyrighted work. First, it is impossible to define a work’s “uses and purposes” in any reasoned way without making that definition the a priori determination of your conclusion regarding whether those uses and purposes are identical to those of another work. You can define the uses and purposes narrowly (the sculpture is intended as a 3 dimensional work of commemorative art displayed in a public forum visited by millions of people every year) or broadly (the sculpture is an expressive aesthetic work)? Are the uses and purposes of the sculpture public art and the stamp a means of governmental commemoration of the sacrifices of our veterans, the creation of a collectible for philatelists, and a means of collecting revenue. If so, the uses and purposes of the works are entirely different. Or are both works expressive works of art? Then they share identical uses and purposes.

Second, even if you’re going to play that logically incoherent definition game, there are numerous cases ruling that works whose uses and purposes were very similar to the uses and purposes of copyrighted works were nonetheless entitled to fair use protection. In Blanch v. Koons, 467 F.3d 244 (2d Cir. 2006),, Jeff Koons’ painting was a two dimensional image, just as was the photograph he appropriated. The court held that Koons’ painting was sufficiently transformative to be a non-infringing fair use of the photograph. In Campbell v. Acuff-Rose Music, 2 Live Crew’s “Pretty Woman” and Roy Orbison’s “Oh, Pretty Woman” were both songs directed at the popular market. The Supreme Court held that 2 Live Crew’s song, despite borrowing almost the entirety of the melody of Orbison’s song, was a non-infringing fair use. In the Wind Done Gone case, both that novel and Gone with the Wind were novels sold for commercial gain. The court held that The Wind Done Gone was a non-infringing fair use despite the fact it borrowed the characters and a lot of the story line from Gone with the Wind.

I could go on, but I’ve made my point: merely stating that the stamp is derived from the sculpture doesn’t begin to answer whether the stamp is a non-infringing fair use, nor is there any legal authority supporting the thought that a transformative work  must be a for different uses purposes than the uses and purposes of the source work.

Which is also to say that the mere fact that someone, even an IP lawyer, believes my position is wrong doesn’t mean her argument is as convincing as mine. Obviously, you and everyone else must judge for themselves, but please give me reasoned argument, not baseless assertion.

Plainly too it is well established that merely transposing a novel into a film is not transformative. That answers your point about the Harry Potter novel’s adaptation into a film. The statutory grant of rights to a copyright holder in “derivative” works sets forth the types of transpositions that generally are considered not to be fair use: these include works “such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, [or] condensation.”

I see Harry Potter movies and I have no question they’re the same stories with the same characters as the books. Many of the characters in the Harry Potter book also are likely merely as characters to be afforded copyright protection as a result of their individuality. In contrast, however, I look at the stamp and a photo of the sculpture and for all I know they’re derived from a common source or similar common sources, not one from the other. (You can see a picture of the stamp and a straightforward photo of the sculpture in my original post.) Moreover, you could hardly call any of the individual figures in the sculpture ones that in themselves are individualized in such a way that they could be considered copyrightable characters; compare those figures to the characters of Harry, Hermione, Ron, and Dumbledore and consider whether your analogy betwen Harry Potter films/Harry Potter books and the stamp/sculpture really is a very compelling analogy.

Nor can you consider the tranformative nature of the allegedly infringing work (part of the factor pertaining to the purpose and character of the challenged work) apart from the other factors in the 4-part test. Among those other factors, the most significant is the effect of the allegedly infringing work on the market for the copyrighted work. I can’t begin to wonder how the stamp could hurt the market the sculptor can exploit with his copyright in the original work. Talk about different uses and purposes! If we take the sculptor’s copyright (as I think we properly should) to extend to straight, “photorealist” depictions of the sculpture (whether in photographs or in other media) that are sold for commercial gain, I can’t see how the stamp would hurt that market. And the sculpture as a sculpture, of course, has no commercial market. It’s public art!

Nor is it legitimate if you are engaging in real legal analysis to dismiss as “completely irrelevant”, as you did in your response to my original post, the fact the sculpture was created for and sold to the government for display in a public area visited by millions of people annually. One of the 4 factors in the 4-factor test is explicitly “the nature of the copyrighted work.” Thus, for example, all else being equal, an appropriating work will have a better shot at being fair use if it appropriates a published work rather than an unpublished work. Why? Because the author of an unpublished work has not yet had an opportunity to exploit the commercial market for his work. For example, J.D. Salinger was able to enjoin the publication of a biography of him that contained large portions of unpublished letters he had written. At the time the biography was scheduled to appear, Salinger had not published
anything for about 30 years. Given this long silence and his immense popularity as a writer, there was a market of readers thirsting to buy anything he’d written that they hadn’t already seen. Thus, regardless of its merits as a biography, the biography was going to be sold to that market, the readers who would buy the book simply because it contained big chunks of previously unpublished writing by Salinger.

In short, the “nature” of the sculpture is very relevant to whether the stamp is entitled to fair use protection. The sculpture is a work of public art on view permanently in a location that is one of the most popular tourist destinations in our country. And it was sold to our government — that is, to the public — rather than to a private art museum. Merely dismissing these facts as “irrelevant” is to ignore that your blog is called the art “law” blog. The law doesn’t ignore these factors. [You might note in connection with this factor that I believe the fact that Mark Cuban sent a message via Twitter to all of his followers demonstrated that he didn't have a very strong interest in controlling the use of the words.]

Finally, a “commercial” product is not one that produces revenue. It is a product produced for private commercial gain. Thus, for example, political advertisements plainly directed at raising money are entitled to greater fair use protection than commercial advertisements. And the fact the appropriating work is used by a non-profit entity also
distinguishes it significantly from one used by a commercial entity seeking to raise revenue for the profit of private persons as private persons. I would also suspect that the fact the non-profit use in the case of the postage stamp is a purely public use (rather, than, say, a  use by a private non-profit entity like a foundation) renders it even  less “commercial.”

Finally, you bring up several other cases. I’m not sure how bringing  them up and suggesting they might be difficult cases supports your proposition that the 4-part test is useless and can be equally supportive of any position. Each claim of fair use must be evaluated on its own merits. As you can see in this little back and forth we are having, there are just too many relevant variable to reduce the judgment to simple rules. But again, the fact that the judgments are complex does not mean that, as you implied in your original post, they are arbitrary.

So the fact you might be able to point me to a difficult fair use case doesn’t mean the 4-part test is arbitrary and useless — and that’s what you said. It means that there’s a legal rule under which there are close cases. And there are others that aren’t. Welcome to the law.

But I’ll give you my quick take on each of those cases anyway, and you can make your own judgments (and call me on it when I turn out to be utterly off base).

I can’t really judge the Catcher in the Rye/60 Years On case because, due to the ruling, I have not been able to compare the two works. Nonetheless, having read the decision and the expert opinions in the case, I wouldn’t be shocked if the trial court’s decision is reversed on appeal. The judge who enjoined the publication of 60 Years On largely based her decision on (1) a determination that Holden Caulfield is a copyrighted character, the Holden character in 60 Years On is identical intellectually and emotionally to the Holden character in Catcher in the Rye, and (2) the fact the author and his representatives represented the book as a “sequel” to Catcher in the Rye, only resorting to calling it a ”parody” when they were sued by Salinger. I think one potential defect in her reasoning was her conclusion that the identity of the 2 Holden’s precluded the possibility that 60 Years On commented upon and criticized Catcher in the Rye. What she seemed to miss is the possibility (one that was central to the declaration sworn to in the case by Martha Woodmansee, a very influential and accomplished scholar of conceptions of authorship and the history of copyright) that it was precisely 60 Years On was, precisely, commenting on the observation that Holden showed no emotional or intellectual development in the course of Catcher in the Rye. In other words, depicting the 80 year old Holden as emotionally and intellectually identical to the 16 year old Holden was a commentary on Holden’s failure to change in the course of the original novel. 60 Years On also seems, through the emotional immaturity of Holden and other literary devices, also to critique Salinger for having frozen himself in time in 1964 as far as his reading public is concerned in 1964. Copyright exists to promote creativity. What has Salinger done since 1964 to promote creativity? If anything, he’s only stifled it in himself and in others.

But we’ll see. The Second Circuit will read the two works, review the sworn statements of the experts, and come to its own conclusion. But, as I said above, I wouldn’t be shocked if it reverses the decision of the trial court judge.

As to the Patrick Cariou/Richard Prince case: I strongly suspect Cariou will win. I’ve thought about this case far less than the others you brought up, but I myself don’t find nearly as great a difference between Prince’s collages and Cariou’s photographs as I do between the stamp is of the Korean War Veteran Memorial sculpture. In addition, both Prince and Cariou’s works are graphic, 2-dimensional works made for personal commercial gain by private individuals. Moreover, there appears to be more individual character in the subjects of Cariou’s photographs than in the sculpture’s figures. I would never imagine that Prince’s collages and Cariou’s photographs were derived from a common third source. I myself think there should be much greater latitude given to appropriation art than the law gives, but the way I read the law I feel I’ll stand by my (pretty superficial assessment) that Cariou likely will win.

As to the Shepard Fairey/Manny Garcia dispute, I’m on record with my strong conviction that Fairey will win. You can see what I’ve written in the posts you’ll find here (set forth in reverse chronological order).

Thanks for reading, and for the dialog, and take care,

peter

ADDENDUM: I seem to have gotten under Zaretsky’s skin, which really isn’t my point. I appreciate the dialog. I don’t think I have all the answers. I might be wrong. But I like to see law supporting legal arguments, not unsupported opinions. Before I’d even finished the e-mail above, he had posted another piece, this one arguing I’m wrong to conclude, emphatically, that there’s no way the postage stamp could have an impact on the market the for the sculptor’s copyrighted work. He argues, in essence, that there is an impact on the market for the copyrighted work because if the Postal Service had paid for a license to use an image of his sculpture on their stamp he would have made money and that granting fair use protection to “derivative works” would deprive the copyright holder of the income he is entitled to from derivative works. In support of this argument he relies on a law professor’s statement that “The right way to frame the question [whether a work has an impact on a copyrighted work's market], I think, is whether an artist who creatively appropriates a … photograph needs to pay for a license to do so.”

Again, no cases, no statutes — just opinions. And the point simply doesn’t make sense to me. Maybe someone can make sense of it to me; maybe I’m dense. But, again, this argument seems circular. An artist needs to pay for a license to appropriate a copyrighted work only if the artist’s work is not entitled to fair use protection. The only way to determine whether a work is entitled to fair use protection is to work your way through the 4-part test. If you concluded, for example, that any artist making a collage needed to pay for a license to use any copyrighted work appropriated in the collage, Jeff Koons could not have won in Blanch v. Koons.

While one of the 4 factors in the 4-part test is the impact of the work on the copyrighted work’s markets, it wouldn’t make sense to assume that the copyrighted work’s markets must include the market for all types of works like the challenged one. To do so would be to assume that any appropriating work that produces a revenue stream is not fair use. That is not the law.

Finally, Zaretsky refers again to the decision in the 60 Years On/Catcher in the Rye case. He points out that the judge, in ruling that finding that 60 Years On is entitled to fair use protection would potentially have an impact on the market value inherent in Salinger’s copyright in Catcher in the Rye, stated “it is quite likely that the publishing of 60 Years and similar widespread works could substantially harm the market for a Catcher sequel or other derivative works.”

Besides the fact that I think there is a real possibility that decision will be reversed on appeal, there are a couple of reasons I don’t find this reasoning terribly persuasive. First, the conclusion that there is a potential harm to the market for Catcher sequels or other derivative works assumes the conclusion I suggested above might be the basis of a reversal — the appellate court might well find that 60 Years On is no mere sequel but instead constitues a genuinely creative commentary upon and critique of Catcher in the Rye and Salinger himself.

Second — and this is where I’ll stray much further away from anything I’ve seen in the case law than in anything I’ve written regarding Zaretsky’s statements yesterday or today — this reasoning seems contrary to the entire purpose of copyright: to promote creativity. Let’s suppose copyright law did not prevent people from writing sequels to books by other people and someone wrote a sequel to Catcher in the Rye that in no way, shape, or form consituted a commentary upon or critique of Catcher in the Rye (and let’s assume such a thing were possible). Let’s say too that Salinger himself wrote a sequel to Catcher in the Rye. What would happen? One possibility, the most likely one perhaps, is that the knock-off sequel had no market impact because the market judged it to be a poor substitute for the real thing. In that case Salinger has suffered no harm. Let’s suppose instead that the knock-off was deemed by the market far better than Salinger’s sequel. Then Salinger has suffered harm, but why? Because the audience has determined that the knock-off was better. To prevent its publication, therefore, would be to stifle creativity, not to promote it. The same would be true if the knock-off and other knock-offs competed well but did not overwhelm Salinger’s work. We’d have two or more works the market had judged substantially equal in creative worth. In other words, the market will reward or punish the copyright holder according to the extent he maintains his creative edge. Why should copyright law step in and change that result?

Easy Case: Postage Stamp is Fair Use of Korean War Veterans Memorial

Over at the Art Law Blog, Donn Zaretsky points to Gaylord v. U.S. (pdf), in which the court held that a postage stamp (pictured at right) that reproduces a photograph of many of the 19 stainless steel soldier sculptures that are part of the Korean War Veterans Memorial (pictured at left below) located n Washington, D.C. did not infringe the copyright in the sculptures.

The court found that the stamp was transformative enough to merit fair use protection because the photograph it used “transformed [the sculpture's] expressionand message, creating a surrealistic environment with snow and subdued lighting.” Zaretsky writes that this is “[n]ot a particularly tough standardto meet.” The first problem with the post is that regardless of whetherZaretsky believes the standard is “tough” enough, it is the standard courts apply in determining the “originality” of an allegedly infringing work.

Worse, though, Zaretsky states that the case is “another good example of how you can make the traditional four-factor fair use analysis do whatever you want it to do.” He cites as authority for this damnation of the law Judge Kozinski of the 7th Circuit Court of appeals, who has said that the 4-factor test applied to fair use “can always go in either direction.”

I think Zaretsky’s be;ief that the 4-factor test can support any position is ridiculous. Granted, determinations on the edge are difficult and plainly depend on a case by case judgment, but judgments as to whether (a) the new work is sufficiently transformative to stand on its own without exploiting the market created by the original work and (2) whether the new work has or threatens an adverse impact on the market for the original work are not the arbitrary decisions you assert they are. That’s the way much of law works — it’s a function of better and worse arguments, not bright lines that offer easy predictability. To accept Kozinski’s statement as the truth is to dismiss an enormous amount of law as the utterly rudderless and arbitrary imposition of power. I’ve practiced and taught law too long to believe that’s what it is.

Moreover, the sculpture allegedly infringed by the stamp, called “The Column,” is not, as Zaretsky asserts, a “good example” of the 4-factor test’s arbitrary nature. In fact, it’s an excellent example of a situation in which the 4-factor test leads pretty easily to the conclusion reached by the court. The court’s conclusion that the stamp significantly reworks the sculpture is pretty convincing. Looking at the stamp you can’t tell you’re looking at figures that originate in a sculpture, and other than the figures themselves the entire image set forth on the stamp is not present in the sculpture. Moreover, it’s laughable to suggest the stamp adversely affects the value of the sculpture. And if you want to look at the other factors, those too are pretty convincingly on the side of fair use: the sculpture is public art and therefore is constantly viewed for free. Moreover, it was done for the government, which, last I heard, is one of the people, by the people, and for the people. Finally, the stamp itself is a governmental product — in other words, it’s a non-profit product.

In making the accusation that the fair use analysis employed by the courts is entirely arbitrary without having engaged in any analysis of his own to suggest the ways in which the analysis might support the sculptor Zaretsky may be acting in a disingenuous fashion. But I suspect what he is really bemoaning is that the fair use test is so case specific it is difficult for artists to know exactly whether, in appropriating copyrighted works, they are acting in legitimate or infringing ways. It is a very fair common complaint. I have yet to see, however, any test that would better draw the line. More importantly, the test is one developed by our courts on a case by case basis for over one hundred years. While it is now embodied as a statute in the 1976 Copyright Act, the legislative history of that act makes clear that the statutory language is meant to incorporate that court-made common law, not supplant it, and courts are not limited to considering those 4 factors in making their fair use determinations.

Tort law serves a lot of purposes tort reformers don’t recognize, though Robert Bork might have changed his mind.

The law tends to be rational, though the rationale behind it is not always apparent. But when you see people screaming about irrational laws, they’re often failing to see, if not ignoring, what the laws do accomplish.

You’ll hear again and again in connection with proposals to reform our system of health insurance that the real way to cut medical costs is to reform our tort system so that doctors don’t practice excessively expensive “defensive medicine.” Don’t believe it. I’m not saying that our malpractice system is perfect, but merely cutting back on malpractice cases and recoveries because of their impact on the practice of medicine ignores two important consequences of the malpractice system that we better be sure are provided in other ways before we significantly cut it back.

First, the malpractice system maintains the high quality of health care we do have. My dentist, who is German, told me she hates practicing dental surgery in Germany because the standard of care is so low. She’s always afraid the anaesthesiologists will kill the patients. In contrast, she explains that the standard of care is so good here precisely because of the fear of malpractice liability.

Second, judges and juries in some jurisdictions likely do err in favor of patients in finding doctors at fault. Why? Because our health insurance system is so inadequate and, regardless of the doctor’s wrongdoing, a patient who suffers a bad outcome from a medical procedure is going to need money to take care of the bad outcome. If it isn’t going to come from health insurance, why not from the doctor’s malpractice carrier?

The second problem would be better taken care of by instituting a no-fault compensation scheme for people who suffer bad outcomes from medical procedures. But doctors have always, for reasons I do not fathom, resisted such a system, while at the same time they cry, understandably, about the blame game played in malpractice cases.

There have to be better ways than the malpractice system to maintain our nation’s high standard of medical care. But until we’ve devised such a system, we ought to be cautious about dismantling the system that currently maintains that high standard.

The funny thing is that no one likes a personal injury lawyer until they need one. Robert Bork, of course, is a notorious conservative critic of our legal system who is often portrayed as a victim as a result of the rejection of his nomination by Ronald Reagan to the Supreme Court. Bork’s critique of the legal system has included an attack on the tort system, calling it, as Bloomberg News reported last month, an irrational and unpredictable process that subjects businesses to the kind of predation practiced by pirates:

In a 1995 opinion piece published in the Washington Times, Bork and Theodore Olson, who later became a top Justice Department official, criticized what they called the “expensive, capricious and unpredictable” civil justice system in the U.S.

“Today’s merchant enters the marketplace with trepidation — anticipating from the civil justice system the treatment that his ancestors experienced with the Barbary pirates,” they wrote.

But Bork recently sued the Yale Club of New York City, “claiming he tripped and fell because of the club’s negligence as he ascended a dais to give a speech.” His amended complaint alleges that “[w]hen it was his turn to deliver” a speech at the Yale Club, he “approached the dais. Because of the unreasonable height of the dais, without stairs or a handrail, Mr. Bork fell backwards as he attempted to mount the dais, striking his left leg on the side of the dais and striking his head on a heat register.” Among other defensess asserted by the Yale Club in its answer are that the risks of mounting the dais were “open and obvious” and that Bork has already been compensated (no doubt through his health insurance, which I bet is as good as it comes) for some or all of his economic loss.

Bork isn’t the first “hypocrite of tort reform,” nor will he be the last. But next time you know someone who’s been badly injured, you might want to keep in mind the ways he or she might get compensated for the costs arising from the injury and the ways the law discourages the conditions that caused the injury.

Don’t forget to call your mashup a reflection and critique of the works it appropriates!

In determining whether a work that appropriates a copyrighted work is a non-infringing fair use, the fundamental issue is whether the new work transforms the copyrighted work to a degree that makes the new work so creative it stands on its own. One thing that puzzles me is the degree to which courts rely on the artist’s expressed intent in deciding whether the new work is transformative. Are we really supposed to ground our determination of whether a work is “transformative” in the artist’s own expressed purposes?

To do so poses all sorts of problems. As Sister Wendy Beckett explains in the Encyclopedia Britannica Online in words that are so well accepted they are almost trite,

The passageway provided by art is very wide. No single interpretation of art is ever “right,” not even the artist’s own. He or she can tell us the intent of the work, but the actual meaning and significance of the art, what the artist achieved, is a very different matter. (It is pitiable to hear the grandiose discussions of artists’ work by the least talented of our contemporaries.) We should listen to the appreciations of others, but then we should put them aside and advance toward a work of art in the loneliness of our own truth. Each of us encounters the work alone, and how much we receive from it is wholly the effect of our will to accept this responsibility.

What was Jackson Pollock’s purpose in painting Lavender Mist? Van Gogh’s in painting The Irises? Haven’t we accepted by now the limitations focus on artistic intention would impose on our appreciation of art?

Not only does art live in its relationship with its audience, not in its creator’s mind, but to explore questions of intent in determining a work’s originality inevitably will raise questions of an artist’s stature. Is Jeff Koons original? According to Wikipedia, ‘[s]upporters claim (for Balloon Dog) “an awesome presence… a massive durable monument’ (Amy Dempsey, ed. Styles, Schools and Movements, 2002, Thames & Hudson), and for other work that it is possible to be ‘wowed by the technical virtuosity and eye-popping visual blast’ (Jerry Saltz, art critic). On the other hand, “Mark Stevens of The New Republic dismissed [Koons] as a ‘decadent artist [who] lacks the imaginative will to do more than trivialize and italicise his themes and the tradition in which he works… He is another of those who serve the tacky rich.’ Michael Kimmelman of The New York Times saw ‘one last, pathetic gasp of the sort of self-promoting hype and sensationalism that characterized the worst of the 1980s’ and threw in for good measure “artificial,” cheap” and “unabashedly cynical.”‘”

It seems likely a lot of people would have a difficult time considering anything by Koons original.

Yet, in Blanch v. Koons, 467 F.3d 244, 252-53 (2d Cir. 2007)(emphasis added), the U.S. Court of Appeals for the Second Circuit, in holding that Koons’ appropriation of a copyrighted photograph constituted fair use, based its conclusion that the new work was “transformative” precisely on Koons’ statements regarding what he intended:

Koons asserts — and Blanch does not deny — that his purposes in using Blanch’s image are sharply different from Blanch’s goals in creating it. Compare Koons Aff. at P4 (“I want the viewer to think about his/her personal experience with these objects, products, and images and at the same time gain new insight into how these affect our lives.”) with Blanch Dep. at 112-113 (“I wanted to show some sort of erotic sense[;] . . . to get . . . more of a sexuality to the photographs.”). The sharply different objectives that Koons had in using, and Blanch had in creating, “Silk Sandals” confirms the transformative nature of the use. See Bill Graham Archives, 448 F.3d at 609 (finding transformative use when defendant’s purpose in using copyrighted concert poster was “plainly different from the [*253] original purpose for which they were created”); see also 17 U.S.C. § 107(1) (first fair-use factor is the “purpose and character of the use” (emphasis added)).

Koons is, by his own undisputed description, using Blanch’s image as fodder for his commentary on the social and aesthetic consequences of mass media. Castle Rock Entm’t, 150 F.3d at 142 (quoting Leval, supra, 103 Harv. L. Rev, at 1111). When, as here, the copyrighted work is used as “raw material,” Castle Rock Entm’t, 150 F.3d at 142 (internal quotation marks and citation omitted), in the furtherance of distinct creative or communicative objectives, the use is transformative. Id.; see also Bill Graham Archives, 448 F.3d at 609 (use of concert posters “as historical artifacts” in a biography was transformative); Leibovitz v. Paramount Pictures Corp., 137 F.3d 109, 113 (2d Cir. 1998) (parody of a photograph in a movie poster was transformative when “the ad [was] not merely different; it differ[ed] in a way that may reasonably be perceived as commenting” on the original). His stated objective is thus not to repackage Blanch’s “Silk Sandals,” but to employ it “‘in the creation of new information, new aesthetics, new insights and understandings.’”

The test for whether “Niagara’s” use of “Silk Sandals” is “transformative,” then, is whether it “merely supersedes the objects of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.” Campbell, 510 U.S. at 579 (internal quotation marks and citation omitted, alteration incorporated); Davis, 246 F.3d at 174 (same). The test almost perfectly describes Koons’s adaptation of “Silk Sandals”: the use of a fashion photograph created for publication in a glossy American “lifestyles” magazine — with changes of its colors, the background against which it is portrayed, the medium, the size of the objects pictured, the objects’ details and, crucially, their entirely different purpose and meaning — as part of a massive painting commissioned for exhibition in a German art-gallery space. We therefore conclude that the use in question was transformative.

Given the focus on an artist’s expressed intent in making a work of art, it would seem wise for appropriation artists to be versed in the proper lingo. Call your work “a reflection and criticism of the themes evoked by the original.” You might even want to call your work a “parody” of the original, but doing so might be a little too blatant. It is plain that in the recent decision enjoining the publication of a “sequel” to The Catcher in the Rye, the judge was significantly influenced by the fact the author and his representatives had described the work in words that didn’t fit the legal standard they wanted to meet. The judge’s opinion seems in fact to indicate that if only the author had used the magic words to describe his work the outcome might have been different:

Until the present lawsuit was filed, Defendants made no indication that 60 Years [the new work] was in any way a parody or critique of Catcher [in the Rye]. Quite to the contrary, the original jacket of 60 Years states that it is “. . . a marvelous sequel t one of our most beloved classics.” . . . Additionally, when initially confronted with the similarities between the two works, rather than explaining that 60 Years was a parody or critique of Catcher, Colting’s [the new work’s author] literary agent, Mr. Sane, contended that 60 Years “is a completely freestanding novel that has nothing to do with the original Catcher in the Rye.”

Opinion and Order at 16, n. 3.

Colting, obviously, should have called his work a parody and critique, not a sequel or a “freestanding novel.” It’s odd to think that makes a difference, though. No matter what he said, his work would be the same.

Amazon, EULAs, and Orwell’s memory hole.

Can Amazon take back from y0ur Kindle a book you thought you’d purchased? Well, it did exactly that — Kindle owners who’d obtained ebooks of George Orwell’s 1984 and Animal Farm discovered last week that Amazon had simply deleted those books from their Kindles. No one seems to have known Amazon could do that — the fact the Kindle connects electronically to the internet has until now always been considered a reason the Kindle is better than competing ebook readers.

But did Amazon have the contractual right to do what it did?

The first thing to note is that you don’t “buy” ebooks from Amazon. As the Kindle’s End User License Agreement (“EULA”) states, you merely purchase a “license” to use the ebooks. The license is the right to use the ebooks under the terms of the EULA.

But does the EULA allow Amazon to unilaterally take back a book? I’m not so sure. I think likely Amazon is in breach. Nowhere in the agreement do I see any provision that gives Amazon the right to do what it did. Moroever, the EULA states that the license is one to keep a “permanent” copy of the text you are obtaining and to view, use, and display that text an “unlimited number of times”:

Upon your payment of the applicable fees set by Amazon, Amazon grants you the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times.

The fact Amazon refunded the price of the Orwell books would not excuse its breach. You can’t enter a contract and then unilaterally tell the other side to the deal you want to undo it.

So Amazon may indeed be in breach. But does it matter? First, it would be difficult to prove any damage over and above the “purchase” price, which Amazon has refunded. But there are two more important points. First, as I’ve written before about EULAs, anytime you enter one online you are probably agreeing that the agreement can be amended at any time without even any notice to you. Amazon may simply argue that its recall of the books was an amendment of the agreement.

Second, what are you going to do, sue? You can’t. The EULA requires any dispute arising under it to be arbitrated in Seatlle! Are you going to go to the trouble of hiring a lawyer in Seattle to start an arbitration proceeding so that you might be able to recover a few more bucks? Of course not.

Actions like these are why class actions exist — where a company engages in actions that cause small amounts of damage to many people, it’s not worth any individual’s time or money to pursue a remedy, and even if it were the remedy is so small that the company’s gains from the improper conduct are worth it. As Wikipedia explains:

[A] class action may overcome “the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997) (quoting Mace v. Van Ru Credit Corp., 109 F.3d 388, 344 (7th Cir. 1997)). “A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually an attorney’s) labor.” Amchem Prods., Inc., 521 U.S. at 617 (quoting Mace, 109 F.3d at 344). In other words, a class action ensures that a defendant who engages in widespread harm – but does so minimally against each individual plaintiff – must compensate those individuals for their injuries. For example, thousands of shareholders of a public company may have losses too small to justify separate lawsuits, but a class action can be brought efficiently on behalf of all shareholders. Perhaps even more important than compensation is that class treatment of claims may be the only way to impose the costs of wrongdoing on the wrongdoer, thus deterring future wrongdoing.

But you can’t bring a class action in arbitration. That’s why all these EULAs require arbitration — so that there’s no opportunity for a class action that would impose on the company the real damages it would be liable for to all the people it has wronged by its conduct.

Pretty clever, eh? Just remember, when you push for “tort reform,” you’re really looking to benefit wrongdoers, not to right the defects of a “broken” litigation system.

ADDENDUM: Maybe there is hope after all – in Harris v. Blockbuster, a federal district court in Texas ruling under Texas state law refused to enforce an arbitration provision precisely because the contract provided a unilateral right to amend. I’ve got to research this point more, but it seems on its face to be consistent with Texas law. I see reason, though, to think it wouldn’t be under the law of many states. The court says the agreement to arbitrate is “illusory” because it can be amended without notice. I would think that in most states the un-amended contract would be enforceable and terms that were added by amendment MIGHT be deemed illusory.

Applying the law to the facts — where empathy must be part of judging.

There’s been a lot of argument recently about President Obama’s rather innocuous statement that “empathy” is a big part of judging. Thus, I wasn’t surprised that Sonia Sotomayor insisted that all she does is apply the law to the facts in acting as a judge. And, in fact, one of the things I’ve been impressed by in her decisions and statements is her emphasis on facts. Too many law professors and commentators focus on the law as a set of abstract principles and theories rather than what it is — the judgment of how the laws apply to the specific circumstances of the specific case they happen to be judging.

But I think it’s precisely in the importance of facts that empathy does play a part. One judge will consider a given fact crucial, while another judge won’t, and that difference will make a difference in judicial outcomes. In 2008, the Supreme Court upheld Indiana’s requirement of a government-issued identification card to vote. The majority opinion, written by Justice Stevens and joined by Justice Kennedy and Chief Justice Roberts (he who told the Senate in his confirmation hearings that he judges by merely “calling balls and strikes”), stated that “the fact that public transportation is not available in some Indiana counties tells us nothing about how often elderly and indigent citizens have an opportunity to obtain a photo identification at the BMV, either during a routine outing with family or friends or during a special visit to the BMV arranged by a civic or political group such as the League of Women Voters or a political party.” In his concurring opinion, Justice Scalia, joined by Justices Thomas and Alito, wrote that “[t]he burden of acquiring, possessing, and showing a free photo identification is simply not severe, because it does not “‘even represent a significant increase over the usual burdens of voting.’”

In contrast, in one of the dissenting opinions in the case, Justice Breyer considered the burden imposed by the voter i.d. requirement far more significant, seeming to perhaps even “emphasize” with specific types of voters:

For one thing, an Indiana nondriver, most likely to be poor, elderly, or disabled, will find it difficult and expensive to travel to the Bureau of Motor Vehicles, particularly if he or she resides in one of the many Indiana counties lacking a public transportation system. See ante, at 6-7 (Souter, J., dissenting) (noting that out of Indiana’s 92 counties, 21 have no public transportation system at all and 32 others restrict public transportation to regional county service). For another, many of these individuals may be uncertain about how to obtain the underlying documentation, usually a passport or a birth certificate, upon which the statute insists. And some may find the costs associated with these documents unduly burdensome (up to $12 for a copy of a birth certificate; up to $100 for a passport). By way of comparison, this Court previously found unconstitutionally burdensome a poll tax of $1.50 (less than $10 today, inflation-adjusted). See Harper v. Virginia Bd. of Elections, 383 U. S. 663, 664 n. 1, 666 (1966); ante, at 30 (Souter, J., dissenting). Further, Indiana’s exception for voters who cannot afford this cost imposes its own burden: a postelection trip to the county clerk or county election board to sign an indigency affidavit after each election. See ante, at 8-10 (same).

Both sides are looking at facts. Both sides are applying the same rules (which require, among other things, looking at the burden imposed by the state by its requirements for voters). They are coming to very different views of the matter. Is empathy at work? Of course it is, but it is inescapable too.

Paris Hilton as law professor: each judge is your BFF, and remedies are everything.

Knowing the law and being a lawyer are two entirely different things. If something is illegal, does that mean you can’t do it? That would mean you can’t drive 26 mph in a 25 mph zone. In other words, it’s not about whether something is legal or illegal; it’s about consequences, remedies. If you’re in breach of contract, it doesn’t matter much if the party suing you doesn’t have proof that your failure to live up to your promise actually caused the harm you’re thinking of.

Paris Hilton understands that. She also understands how to get a judge on her side. As Law.com reports, “Hilton flirted with a Miami federal judge and mentioned her Zodiac sign as she testified Friday in a civil trial seeking the full production cost of the box office bomb “Pledge This!” for allegedly scanty promotional work.” The plaintiff in the case is “Worldwide Entertainment Group, which was seized by federal regulators as a Ponzi scheme after producing Hilton’s 2006 movie.” Hilton is arguing that she fulfilled all her contractual obligations to promote the film and that her schedule is booked months in advance. To illustrate, she explained that last week she was filming her new reality show, “My New BFF,” in Dubai. “This prompted Moreno to ask what ‘BFF’ stood for. Hilton explained the acronym is short for ‘best friend forever’ and added, ‘You’re my best judge forever.’ Spectators applauded.”

Hilton’s lawyer is arguing not only that she fulfilled her contractual obligations, but also that even if she didn’t the World Wide Entertainment can’t show her failure to do so is the reason the film only made $2.9 million in theatrical release. The judge, apparently won over by Paris, seemed open to that argument — “Moreno said even if he finds Hilton could have done more to boost the movie, he doesn’t know how he can translate that into damages. ‘I know even some of the greatest actors flopped in the movies economically,’ he said.”

Did you hate cliques in high school? You should hate them as an adult too.

How can you tell when your organization is in trouble? “[E]mployees start talking directly to people they feel comfortable with, and stop sharing information more widely.” It may not be the most surprising insight I’ve ever come across, but it is an important point, and it’s the conclusion reached in a study of the emails sent by Enron employees during the company’s final 18 months. According to New Scientist, the study showed that “the number of active email cliques, defined as groups in which every member has had direct email contact with every other member, jumped from 100 to almost 800 around a month before the December 2001 collapse. Messages were also increasingly exchanged within these groups and not shared with other employees.”

Manny Garcia’s own words betray the weakness of his case.

Manny Garcia, who actually shot the photo at issue in the lawsuit between Shepard Fairey and the Associated Press — the photo that allegedly was the source of Shepard Fairey’s Obama Hope poster — is intervening in that lawsuit on the grounds that he, not AP, owns the copyright in the photo. On page 5 of the brief in support of his motion he makes clear he is arguing too that Fairey infringed his alleged copyright in the photo he shot.

I’ve said it before — one of the best ways to defeat an adversary in litigation is to use his own words against him. Garcia now seems to think there’s a principle he has to defend in arguing that Fairey’s poster infringed his copyright in his photograph. AP also thinks Fairey’s work was an infringement but that it owns the copyright in the photograph on the grounds that it was a “work for hire.” Be that as it may, if Garcia thinks Fairey’s work is sufficiently transformative that it stands on its own as an original work, that would be pretty harmful to his and AP’s arguments, wouldn’t it?

Well, for a long time Garcia himself didn’t realize Fairey’s poster might’ve been made from his photograph. As Scene on the Road reported last January, Garcia, after learning that many thought his photo was the original source said, “I’ve been on the campaign for twenty something months, so I would see the artwork, I would photograph it, and think what is with this image? But it didn’t snap. It never occurred to me it was my picture.” (emphasis added)

Moreover, he said he wasn’t interested in a lawsuit because he understood that artists create by remixing the “things” around them:

[Garcia] was quick to add he is not mad at Fairey, and he’s not looking at any lawsuits. “I know artists like to look at things; they see things and they make stuff. It’s a really cool piece of work. I wouldn’t mind getting a signed litho or something from the artist to put up on my wall.”

So let’s see: Garcia didn’t recognize his own photo was the source of Fairey’s work even after regularly seeing and photographing Fairey’s poster. In fact, it took someone else to point out that Garcia’s work might have been the source. And Garcia himself thinks Fairey’s poster is “a really cool piece of work” and knows “artists” work by doing what Fairey allegedly did with his photo. I don’t know how better to identify and define a work that stands on its own as an original piece of art.

But later, in an interview with NPR’s Terry Gross at the end of February, Garcia seemed to be singing a different tune, saying that Fairey had taken something “that didn’t belong to him”:

Initially when I found out, I was disappointed in the fact that, you know, someone had – was able to go onto the Internet and take something that doesn’t belong to them and then use it. I think that that part of this whole story is crucial for people to understand that simply because it’s on the Internet doesn’t mean it’s free for the taking, and just because you can take it, doesn’t mean it belongs to you.

So which was it Manny — your first take that what Fairey did was “cool,” that you’d like to have a “signed litho,” and that Fairey had merely done what artists do in taking and reworking the photo, or your second take that he had taken something that didn’t belong to him and used it? And why was it you didn’t recognize the poster was taken from your photo?

Negativland was way ahead of Girl Talk, and still is.

On September 2, I will have the honor of being part of a seminar, sponsored by the Arts Network of the Council on Smaller Enterprises (COSE), that “will feature a multimedia presentation by independent musician, arts activist and “citizen lobbyist” Mark Hosler from Ashville, North Carolina. Mr. Hosler, well known [as one of the founding members of] the band Negativland for his experiences fighting legal battles over copywright, intellectual property and fair use in art and music, will present a mixed media lecture about his first hand experience with these topics.” Negativland was way ahead of Girl Talk. Holser’s encounters with the inanities of copyright law are legendary and illustrative. Most importantly, Holser is remarkably articulate on these issues. Negativland’s entire site is worth a visit; here is one of Holser’s most recent writings:

From our 28 years of being creators, observers, and consumers of music, art, and video, our group, Negativland, has witnessed incredible and wonderful shifts in the ways that the public is now able to create and distribute new work via digital technologies. We’ve also witnessed amazing changes in the way that money and corporate power has increasingly influenced policy, Congress, and the laws of our nation. At times, these changes are good. At other times, as I am sure you know, they benefit no one except the businesses lobbying you. We are concerned when this does not serve the public interest.

We believe that the healthy evolution of art and creativity has more value than simply counting how much money is lost or made. Art, science and technology have evolved because of how we all build upon the ideas and works of those who came before us. Copyright was always intended as a balancing act between giving ownership to creators so as to provide incentive to create new works, and allowing works to lapse into the public domain so that new ideas could develop. But our founding fathers could never have imagined the kind of world we live in today and the amazing new technologies that we are surrounded with – technologies that encourage and inspire us to interact with the world and create in unprecedented new ways. Protecting the author of a creative work is a good thing, but the benefits of copyright have been thrown off balance by the disproportionate influence of those with the most money. In fact, the more recent expansions of our nations copyright laws represents a break from our nations past and from the intentions of our own Constitution.

Did you know that copyright originally lasted only 14 years, and then all work fell into the public domain? The limit now is 70 years plus the life of the creator, meaning that nothing made in our lifetimes will fall into the public domain. This does not strike us as a very good public good. Even patents, which govern everything from industrial processes to pharmaceuticals, are given only a 20 year period before other manufacturers have access to them and this system seems to have done nothing to discourage innovation, creation, and especially remuneration in the fields of science and technology with this relatively short time span.

But art is neither science nor technology. Why make art out of things originated by others? We think that unless one is lucky enough to live on a remote island somewhere, we all live in a world surrounded by news, music, movies, ads, logos and messages. We are, quite literally, bombarded with media. It has always been a part of human nature to make art in response to and using material from the world around us. Nowadays, anyone with a small computer can easily make, remake, slice, dice, mix, and remix from any electronic media they can get their hands on. And because we can, we often do. Besides being fun, this kind of work creates a new type of cultural “conversation” that we can all have with the media around us, a conversation that we believe is healthy for a vibrant democracy that aspires to true freedom of speech.

Copying has gone on in art and music throughout the ages, from “quoting” in classical music compostions, to homage and parody. In much of the last century, these “appropriation” practices were the province of the avant-garde and the fine art world. But with the Internet, the ever-growing speed of computing, YouTube, MySpace, file-sharing, and other recent developments, they have now moved wholly and firmly into the mainstream. And yet our laws strive to criminalize all of this behavior. Ours is a world in which copyright has fallen woefully behind the curve of what the public actually wants to do with all that digital “stuff” out there. Millions world wide are creating art, music and video that incorporate elements of existing work – cutting and pasting bits and pieces of music, video, text, and pictures made by others to create new works. Millions of web pages now use various Creative Commons licenses to provide a nuanced alternative to traditionally black and white interpretations of copyright laws (one such license Negativland helped to write). The prevalence of these alternative copyright strategies is a testament to how many of your constituents are not at all happy with copyright as it stands now.

At this juncture, we feel it’s necessary to point out that we support artists and creators being paid for the work they produce. We believe copyright was correctly intended as a judicious balance between providing for the creator as well as providing for the public commons, a balance which Negativland believes has been largely forgotten by the big businesses who produce and sell most media and entertainment. And we should also mention that all this creative re-use of material rarely if ever puts new work in economic competition with its sources. It does not pose any reasonable economic threat to the original source in any marketplace that they share. In an ideal world, Negativland would like to see the notion of Fair Use expanded to accommodate, accept, and protect these new practices.

How good a literary critic was the judge in the Catcher in the Rye case?

Will the judge’s decision that 60 Years Later: Coming Through the Rye infringes J.D. Salinger’s copyright in Catcher in the Rye stand up on appeal? My judgment is necessarily a qualified one. I haven’t read Coming through the Rye, and a truly informed judgment would require me to do so — in essence, the decision turns on whether Coming through the Rye is a commentary and criticism of Catcher in the Rye or, instead, an effort to cash in on the copyrighted character of Holden Caulfield. In other words, is Coming through the Rye original or not? I can’t tell for sure without reading it myself. Nevertheless, there are problems in the judge’s decision that cast it, in my mind, in some doubt.

Most troubling is the judge’s conclusion that Coming through the Rye cannot be deemed to comment on the original because Holden in the former is identical to Holden in the latter. The judge stated: “First, Colting’s assertion that his purpose in writing was to ‘critically examin[e] the character Holden, and his presentation in Catcher [in the Rye] as an authentic and admirable (maybe even heroic figure” is problematic and lacking in credibility.” To support that point, the judge refers to the sworn declaration submitted by Martha Woodmansee on behalf of Colting, quoting Woodmansee’s statement that “[r]eaders familiar with [Cather in the Rye] will anticipate the same laconic observations and reflections they associate with Holden Caulfield. What do they get from the 76 year old C? They get much the same kinds of observations and freflections, but coming from a 76 year old and applied to a world much changed in the 60 intervening years, such observations and reflections fall flat. They reveal a character whose development was arrested at 16, who instead of growin g up could only grow old.” The judge also quotes Woodmansee’s statement that the observations and reflections of Mr. C evoke “[in style and content . . . vintage Holden Caulfield, and coming from a 16 year old, they seemed honest and endearing. Coming from the 76 year old C, however, they seem pathetic.”

In short, the judge concluded that Coming through the Rye was not a parody of Catcher in the Rye because Holden in the new work was merely a copy, not an original character. She stated that it is hardly a parody to merely put the same character in a new situation: “It is hardly parodic to repeat that same exercise in contrast, just because society and the characters have aged.”

That is odd reasoning. One of the principal criticisms of Catcher in the Rye since its publication is that Holden did not develop at all emotionally or intellectually through the course of the book's story. "John Aldrige wrote that in the end, Holden remains what he was in the beginning -- cynical, defiant, and blind. As for the reader, there is identification but no insight, a sense of"pathos but not tragedy." This may be Salinger's intent, as Holden's world does not possess sufficient humanity to make the search for humanity dramatically feasible." In other words, by depicting a 76 year old Holden who is no different than Salinger's 16 year old Holden, one might conclude that the author was parodying the self-absorbed, dense, and unreflective 16 year old (as well as the author, who has contributed nothing to the creative life of the society from which he has done everything to withdraw since 1964). And indeed, Woodmansee takes the same characterization of the "young" and the "old" Holden the judge seizes upon and sees it precisely as parody. Her testimony is that "Mr. C" in Coming through the Rye is  "a character whose development was arrested at 16, who instead of growing up only grows old. This is a devastating critique of Holden Caulfield in particular, of [Catcher in the Rye] generally, and of its author J.D. Salinger, whose apparent inability to ‘develop’ his hero reveals him to be ‘burned out.’” (emphasis added)

Is Coming through the Rye fair use.? I think on appeal it might well be found to be . It’s interesting that we make our judges literary critics in these cases. Why do I doubt the judge’s crtiticism? Because it seems to simplistic and because, knowing Martha Woodmansee personally, I feel far more confident in her abilities as a literary critic than I do in the judge’s.

New technology means the old ways of doing business won’t survive — how much longer will we have newsprint?

The ways changing reality forces change in the ways business is done: Nicholas Cohen wrote in January that it costs the New York Times “about twice as much money to print and deliver the newspaper over a year as it would cost to send each of its subscribers a brand new Amazon Kindle instead.” Cohen concludes that, “as a technology for delivering the news, newsprint isn’t just expensive and inefficient; it’s laughably so.” In taking down the pay wall to some its contentmaking Web, the Times recognzied that “site visitors pay for content would not bring in as much money as making it available for free and supporting it with advertising.” We’ll see what happens with the newsprint . . .

James Boyle: “A Song’s Tale: Mashups, Borrowing, and the Law”

Professor James Boyle lectures on the 199 year history of a song protesting the government’s inept response after Hurricane Katrina, tracing its sources back over 100 years through the work of, among others, Kanye West, Ray Charles, and Clara Ward. Each (I’m shocked, shocked) of these musicians borrowed from the music of others before them, yet they borrowed in different ways, under different legal rules, in a different musical culture. Their music was shaped, for better and worse, by those constraints. At the end of the 100 year journey, we can have a sense of how the music of the future may be shaped, and of what our musical culture will give up in the process.

Think for a moment whether you can imagine Socrates saying, “Let’s stop talking and go play; we all know you can learn as much about a person in an hour of play as in a year of conversation.”

One of Sarah Palin’s favorite rhetorical moves is the maxim. She resorts again and again to brief sayings she intends to be pithy and apt. Just off the top of my head on Friday I remember her mentioning that only dead fish go with the flow and that, as her parents’ refrigerator stated, your friends don’t need explanations and your enemies won’t believe them.

She often too attributes the maxim she is quoting to some authority or other. One danger in doing this type of thing, especially if you do so without having done more than cursory research or are speaking off the top of your head, is attribution to the wrong source. When she stated that General McArthur had said, “We’re not retreating, we are advancing in a different direction,” she apparently was quoting  General Lewis B. “Chesty” Puller, not Douglas McArthur. Of course, Puller isn’t known to her audience (nor to me or, likely, to her), so the quote would not pack the same impact if properly attributed.

The bigger problem, though, is the credibility lost due to improper attribution. But there’s even more danger. You can look just plain stupid. In her Runner’s World interview last week, she said, “We like to have other people participate in these activities with us because, as Plato said, ‘You learn more about a person in an hour of play than in a year of conversation.’” The Weekly Standard (in a post actually entitled “The Philosopher Queen” and now mysteriously gone from its web site(Google cached version), blogged on Wednesday, June 29th: “Sarah Palin mentions a (perhaps apocryphal) quote fromPlat0 in her fascinating interview with Runner’s World.”

Perhaps apocryphal? Could anyone who thinks about Plato for one minute doubt the quote does not come from Plato? Plato’s entire corpus is in dialogue form. His version of Socrates is the foundation of Western philosophy. How is Socrates always portrayed? In conversation. Could you imagine Socrates and Plato suggesting that the dialogues Socrates engaged in should be broken up for some play because “you learn more about a person in an hour of play than in a year of conversation”? It’s ridiculous. It’s ridiculous to even think so, and it betrays nothing but thoughtlessness.

Why is music the main battleground in the copyright wars?

Andrew Dubber is an established scholar working in Britain, an author, and an online music consultant writing a book “about the music industries and intellectual property in the digital age.” He’s also writing a blog as “a scrapbook of material for” the book. The book and the blog, Deleting Music, are “[s]pecifically . . . about the problems that arise when music is only considered in terms of its function as commerce, rather than as culture.”

Two days ago Dubber raised this question: why is his focus on music when the issues he is exploring “extend[] way beyond popular music into books, visual arts, academic works, medicine… and extend[] into the realms of international trade, global politics and genuine life and death issues”? He believes that the reason is that the music industry is uniquely threatened by the commercialization of culture:

There’s a genuine cultural crisis going on in the music industries. Master tapes are decaying in vaults. Original works – by artists you’ve heard of, not just obscure and irrelevant wannabes – are not being preserved. Archives and libraries are only reluctantly being supplied with copies of released material – and not reliably so.

In music, perhaps in more than any other field, culture is not merely being prevented from being remixed – it’s completely disappearing, preventing it from forming the basis of any future works or research. And it’s that, more than anything else, that I want to communicate through this book.

This is not a hypothetical problem, or merely an unfair distribution of power. Popular music culture is literally vanishing right now. Magnetically-charged metal oxide particles are falling from master tapes as we speak.

To me, that’s important, urgent – and worthy of its own book

Music has been the center-piece in the recent copyright wars. Dubber knows better than I the impact of the music industry’s practices on the culture, but I think there’s a very good legal explanation for the music industry’s centrality to today’s copyright disputes.

In both the plastic arts and in literature there is a long history of, well, “remixing” as a legitimate method of creation. There has been in music as well, but not in quite the concrete and specific way there can be in painting and literature. Collage is a long-established artistic genre, and in literature the wholesale copying and rearranging of existing work as a composition method goes back to the foundation of Western literature in Homer. In music, on the other hand, while composition has always been a matter of reworking existing formulas, we’ve been operating in recent times on a general assumption that lifting a single note from an earlier recording constitutes copyright infringement. For long enough this practice has been the norm in the music industry that most people I know simply assume it’s an indisputable fact that if you sample anything from a copyrighted work you must pay for the sample.

But that’s a very debatable proposition. So where did it come from?

Paying for every last sampled note from a copyrighted song only became standard industry practice beginning in 1991 practice after Judge Kevin Duffy in Grand Upright Music, Ltd v. Warner Bros. Records, Inc. , 780 F. Supp. 182 (S.D.N.Y. 1991), in a decision that did not even consider issues pertaining to fair use, enjoined the distribution of Biz Markie’s third album because one of its songs sampled three words and the accompaniment ostinato of Gilbert O’Sullivan’s cheesy hit “Alone Again, Naturally.” Duffy wasn’t satisfied with a mere injunction; he also referred the defendants to the U.S. Attorney’s office for criminal prosecution and began his opinion, like a preacher from the pulpit with these words:

“Thou shalt not steal” has been an admonition followed since the dawn of civilization Unfortunately, in the modern world of business this admonition is not always followed.

The U.S. Attorney’s office exercised its prosecutorial discretion and refused to seek an indictment against Biz Markie or his producers. One likes to think the prosecutors were more thoughtful about the copyright issues the case raised than was Judge Duffy.

But Biz Markie’s record company did not appeal the decision and, in fact, the decision marked the beginning of the music industry’s practice of requiring permission and payment for any sample. The companies that at the time constituted the industry had a strong interest in maintaining the regime Duffy’s decision put into place (a regime bolstered in 2004 by the decision in  Bridgeport Music, Inc. v. Dimension Films, 410 F.3d 792 (6th Cir. 2004), in which the court ruled that the defendant had committed copyright infringement by using in his own musical recording a two-second sample from an earlier copyrighted recording, lowering the pitch, and looping the sample to extend it to 16 beats). Deference to this legal regime meant that each company’s recordings were inviolate without payment. There was no economic reason to challenge the right of another recording company to require payment for any sample, no matter how small, no matter transformative its use was, and no matter how little impact it would have had on the market for the sampled piece. Moreover, artists who would have challenged the existing regime hardly had the financial wherewithal to take on the industry and the enormously successful artists who benefit from it. Thus, as John Pareles has written, “[a]lthough sampling was just a technological extension of the age-old process of learning through imitation, producers who use samples now pay up instead of trying to set precedents for fair use. “

Thus, the the RIAA states “generally speaking, the use of any part of a song requires a license.”

But, as I have emphasized again and on this blog, law is forced to change when the material conditions it governs change, and the ability to make and stitch together samples into compositions that can be disseminated world-wide — an ability that in 1991 was held almost exclusive by the recording industry — is now within reach of, literally, millions of people. It is inevitable that with this change the deference given to a trial court decision in 1991 would be challenged and that the arguments Judge Duffy entirely ignored in that decision would be examined anew.

But when, and in what circumstances? That is the interesting legal question right now. As I’ve previously written, Greg Gillis, who performs as Girl Talk, creates music that does nothing but violate the rule Judge Duffy declared inviolate since the dawn of civilization — Girl Talk’s work consists entirely of samples of recordings (virtually all copyrighted) stitched together into entirely new works.

Girl Talk’s work therefore has been described as a “lawsuit waiting to happen.” Gillis’s compositions include samples of recordings made by such artists as Metallica, who have demonstrated their willingness to sue people they believe have violated their copyrights, and the Guess Who, whose representative has stated ,  “We’ll chase [Girl Talk] down. What more can you do?” Yet no one, as far as I know, has yet sued Gillis. Why?

Well, I think I am a lawyer just like the lawyers representing Metallica, the Guess Who, and anyone else whose work has been sampled and repurposed by Gillis. And if were advising one of these clients (or I were representing the RIAA and could influence the lawyers for Metallica and the Guess Who), I would advise that client not to sue Girl Talk; Gillis’s argument that he has transformed the copyrighted materials sufficiently that his work constitutes non-inringing fair use is just too good. I’d go after someone I am more likely to beat. Othewise, I’d lose all the leverage I have with the existence, as yet undisputed in case law, of the decisions in Grand Upright Music and Bridgeport Music.

KLF: “Don’t worry about being accused of being a thief.”

By sheer chance as far as I can remember I came across the KLF as the inspiration for the fictional problem (scroll down and look at the right hand column) based on real songs I constructed once for a legal writing class I taught. It seems fate in that the guys who constituted the KLF turned out to be remarkably aware of and articulate about the realities underlying the issues the problem involved — copyright and fair use. Their book, The Manual (How to have a Number One the Easy Way), published after their own rise to the top of the British pop charts, is by turns satiric, insightful, and sarcastic, but it isn’t what many of my students took it as: a cynical effort to give people an easy way to cash in. It isn’t. It’s thoughtful, funny, and honest, and it makes a lot of sense.

So how do you create a number 1 pop hit?

It is going to be a construction job, fitting bits together. You will have to find the Frankenstein in you to make it work. Your magpie instincts must come to the fore. If you think this just sounds like a recipe for some horrific monster, be reassured by us, all music can only be the sum or part total of what has gone before. Every Number One song ever written is only made up from bits from other songs. There is no lost chord. No changes untried. No extra notes to the scale or hidden beats to the bar. There is no point in searching for originality. In the past, most writers of songs spent months in their lonely rooms strumming their guitars or bands in rehearsals have ground their way through endless riffs before arriving at the song that takes them to the very top. Of course, most of them would be mortally upset to be told that all they were doing was leaving it to chance before they stumbled across the tried and tested. They have to believe it is through this sojourn they arrive at the grail; the great and original song that the world will be unable to resist.

But don’t leap to the conclusion the KLF believed that there was no such thing as genuine creativity:

So why don’t all songs sound the same? Why are some artists great, write dozens of classics that move you to tears, say it like it’s never been said before, make you laugh, dance, blow your mind, fall in love, take to the streets and riot? Well, it’s because although the chords, notes, harmonies, beats and words have all been used before their own soul shines through; their personality demands attention. This doesn’t just come via the great vocalist or virtuoso instrumentalist. The Techno sound of Detroit, the most totally linear programmed music ever, lacking any human musicianship in its execution reeks of sweat, sex and desire. The creators of that music just press a few buttons and out comes – a million years of pain and lust.

. . .

What we are basically saying is, if you have anything in you, anything unique, what others might term as originality, it will come through whatever the component parts used in your future Number One are made up from.

Just fifteen minutes ago I was listening to an interview with John Mellencamp. Asked about his sonwriting, he said something along these lines: “If it’s out there, it’s mine. Whether it was written by Shakespeare or Dylan, if I hear it, it becomes mine and I can use it . . . ”

J.D. Salinger does not get it at all. Is there anything he’s done since 1964 that could be said to promote creation?

The KLF’s composition method for their first hit, “Doctorin’ the Tardis”?

The complete history of the blues is based on one chord structure, hundreds of thousands of songs using the same three basic chords in the same pattern. Through this seemingly rigid formula has come some of the twentieth century’s greatest music. In our case we used parts from thrcc very famous songs, Gary Glitter’s “Rock ‘n’ Roll”, “The Doctor Who Theme” and the Sweet’s “Blockbuster” and pasted them together, neither of us playing a note on the record. We know that the finished record contains as much of us in it as if we had spent three months locked away somewhere trying to create our master-work. The people who bought the record and who probably do not give a blot about the inner souls of Rockman Rock or King Boy D knew they were getting a record of supreme originality.

The Madoff Investigation Should Focus on the SEC.

Ever since the Bernie Madoff scandal broke, I’ve wondered: was the SEC paid off? It’s hard to believe the SEC could have investigated Madoff as it did, see what anyone who looked closely could see, and not dig sufficiently to uncover the fraud. And a story today from the Washington Post only adds gasoline to the fire of that suspicion. An SEC lawyer told her superiors in 2004 that “information provided by Madoff during her review didn’t add up and suggest[ed] a set of questions to ask his firm.” She was instructed in response to focus on other matters. And her immediate supervisor’s boss later married Madoff’s niece!

The suspicious SEC lawyer, Genevievette Walker-Lightfoot, “had previously worked at the American Stock Exchange, where she developed an expertise in specialized trading strategies.” After she was diverted to other matters, she never was asked about the Madoff investigation again, even during an agency investigation into Madoff in 2005 which only “found three violations of minor rules.” In 2006, Walker-Lightfoot left the SEC after filing a complaint with the agency alleging that she’d been subjected to a hostile workplace. A person familiar with the complaint said it was settled in Walker-Lightfoot’s favor.”

Madoff, incidentally, once “boasted at a business roundtable discussion about his close relationship with SEC regulators, saying “my niece just married one.”

Did Apple Mislead Investors Regarding Steve Jobs’ Health? Almost certainly, yes. Then why did it not disclose the medical facts? (Part I)

Steve Jobs had a liver transplant last week, and, the L.A. times and others report, the “doctor who led the transplant team said this week that Jobs was ‘the sickest patient on the waiting list’ at the time a donor liver became available.” All Apple had earlier disclosed to the public regarding Jobs’ health was set forth in 2 statements written by Jobs and posted on Apple’s website posted last January. The first, in connection with his widely reported drastic weight loss in 2008, stated that “my doctors think they have found the cause—a hormone imbalance that has been ‘robbing’ me of the proteins my body needs to be healthy. Sophisticated blood tests have confirmed this diagnosis. The remedy for this nutritional problem is relatively simple and straightforward, and I’ve already begun treatment. But, just like I didn’t lose this much weight and body mass in a week or a month, my doctors expect it will take me until late this Spring to regain it. I will continue as Apple’s CEO during my recovery.” (emphasis added) The second letter, posted one week later, stated that “during the past week I have learned that my health-related issues are more complex than I originally thought. In order to . . . focus on my health, and to allow everyone at Apple to focus on delivering extraordinary products, I have decided to take a medical leave of absence until the end of June.” (emphasis added) In April, “[a]ccording to unnamed sources . . . Jobs continue[d] to work on the “most important strategies and products from home,” though Apple’s only official statement was that “Steve continues to look forward to returning to Apple at the end of June.”

Inevitably, people are asking a question lawyers representing a company whose stock is traded on public exchanges always have to ask themsevles about any facts that might affect the company’s’ value: is the information “material”? On the one hand, the L.A. Times story states: “Companies are not required to divulge medical details about executives, lawyers said.” But the story also quotes a lawyer stating that “If [Apple] tried to lessen the disclosure and make it misleading by omission, that’s just as bad as telling something that flat isn’t true . . . . ” And Warren Buffet is quoted stating: “Certainly Steve Jobs is important to Apple. . . Whether he is facing serious surgery or not is a material fact.” (emphasis added).

What’s going on? What information is “material” and therefore has to be disclosed to the public by a publicly traded company? Well, Neil Lipschutz is right that “something is material if ‘there is a substantial likelihood that a reasonable shareholder would consider it important” in making an investment decision. Also, if there was a substantial likelihood a reasonable investor would think the information ’significantly altered the total mix of information available’ about a company.’”

Do we have anything better to guide us than (1) what seems a terribly subjective test, (2) the gut reactions of lawyers and of Warren Buffett, and (3) the almost certain fact that Apple, after close consideration of the facts and the law by its lawyers, made the business decision that the risks and probabilities of disclosure last January (or at any time between when Jobs first got sick and now) were outweighed by the risks and probabilities of liability for securities fraud if and when its lack of candor became known?

Well, if what you’re seeking is guidance in the way beginning law students and most non-lawyers want the law to provide guidance — articulation of rule that makes it easy to decide the question — the answer is a resounding NO. These are judgment calls based on the specific evidence of each case. In order to determine if a set of facts would matter to an investor, you need to look at those specific facts. And plainly I have not had available to me all the evidence that might eventually be considered to judge the question in this case. But there is a lot available, and based on only that, I have to agree with Warren Buffet that the fact Steve Jobs was so ill he required a liver transplant certainly is material.

But, again, my certainty is not a product of pointing to a “law” and having you nod your head in agreement. I have to look at the specific evidence regarding Apple, the law, and the facts in the cases in which courts have concluded that events are material and in which courts have concluded the events are not material. By doing that, I hope I can convince you that my certainty is well founded. That’s the best I can do.

Moreover, that’s not the end of the lawyer’s job. Even if the lawyers concluded that the facts regarding Jobs’ health prior became “material” at any time before the next week would not mean Apple necessarily would disclose those facts. Apple’s lawyers would have to consider what potential downside its failure to disclose those facts would present and the likelihood that downside would occur. Then Apple, not the lawyers, would have to decide if those risks and probabilities would outweigh the likelihood and degree of the impact disclosure would have on Apple’s value.

There are a number of rules under which a publicly traded company is obligated to disclose “material” information to the public or face criminal and civil liability, but the definition of “materiality” is the same under all of them. One is a regulation known in the trade as “Rule 10b-5″ [17 CFR 240.10b-5], which makes it a crime and a civil wrong for any a company or an individual purchasing or selling stock “to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, . . ” As the United States Court of Appeals for the 2d Circuit stated in SEC v. Texas Gulf Sulphur Co., 401 F.2d at 833, 848 (2d Cir. 1968), this requirement to disclose material facts is based “on the justifiable expectation of the securities marketplace that all investors trading on impersonal exchanges have relatively equal access to material information . . . .” The requirement originates in the Securities Exchange Act of 1934 (15 U.S.C. § 78j(b)), one of the keystones of the New Deal passed in response to the practices prevalent on Wall Street that had led to the 1929 stock market crash.

As the court further stated in Texas Gulf Sulfur, “[t]he basic test of materiality * * * is whether a reasonable man would attach importance * * * in determining his choice of action in the transaction in question.” Thus, material facts include any facts “which affect the probable future of the company and those which may affect the desire of investors to buy, sell, or hold the company’s securities.”

The defendants in Texas Gulf Sulfur had argued that tests showing one of their company’s mines was likely a rich one were not material because there was nothing certain to report until mining had actually begun and there was more certainty than the tests could provide.  The Second Circuit rejectted their argument, ruling that even possibilities that never occur might be material. One must look at the probability the fact would have an impact on the company’s value and the magnitude of that potential impact: “whether facts are material . . . will depend at any given time upon a balancing of both the indicated probability that the event will occur and the anticipated magnitude of the event in light of the totality of the company activity.” 401 F.2d at 849. Thus, the court reversed the trial court’s decison to dismiss the criminal charges against the defedants because, the Second Circuit decided, they would be guilty if it were true that they had failed to disclose “the possibility, which surely was more than marginal, of the existence of a mine of the vast magnitude” as a result of a “remarkably rich” sample taken  ”close to the surface (suggesting mineability by the less expensive openpit method) within the confines of a large anomaly (suggesting an extensive region of mineralization).” That mere “suggestion . . . would certainly have been an important fact to a reasonable, if speculative,  investor in deciding whether he should buy, sell, or hold” stock in the mining company the defendants controlled. Id. at 849-50 (emphasis added).

The U.S. Supreme Court expressly adopted the Second Circuit’s test in 1988 in Basic, Inc. v. Levinson, 485 U.S. 224 (1988), a case in which the Court determined that corporate insiders might have had the duty to disclose negotiations for a corporate merger before the merger was concluded. Some courts outside the 2d Circuit prior to that time had ruled that a deal didn’t have to be disclosed until it was a binding deal. The Supreme Court rejected the reasoning of those courts and made plain that an event that might not ever happen nevertheless might at some point be likely enough and big enough that it would affect a reasonble investor’s investment decisions.

So the questions Apple’s lawyers had to be asking themselves all the time ever since they learned in 2004 that Jobs had pancreatic cancer, are the following:

(1) Is Jobs so important to Apple that an investor would make a decision to sell, buy, or hold on to Apple stock based on his ability to do his job?

(2) Do the medical facts demonstrate with sufficient probability that Jobs’ condition is threatened enough that those facts would cause an investor to sell, buy, or hold on to Apple stock?

(3) Did Apple’s words or omissions mislead reasonable investors in evaluating whether Jobs could continue to do his job well enough to not affect their investment decisions.

Let’s get the easy stuff out of the way. Jobs’ health and its impact on his ability to do his job  are so plainly material that to argue otherwise wouldn’t pass the “giggle test.”  I would therefore, if I were representing Apple in litigation, advise the company simply to admit this point in the answer to any complaint anyone filed. To admit the point would at least minimize attention to something that, if Apple did dispute it, would only increase attention to a weakness in the company’s case. But just in case you think I don’t understand when it’s smart lawyering to concede a point, remember these things — someone’s own words are taken by a court as “admissions.” In other words, if someone admits something that is harmful to his legal position, the court will assume the facts are at least that bad. In the letter posted online last January, addressed to the “Apple Community,” Jobs ended with this: “So now I’ve said more than I wanted to say, and all that I am going to say, about this.” I’d love to ask him in a deposition why, if he didn’t want to write what he wrote, he did. The probelm, if Apple had decided to dispute the materiality of Jobs to the company’s value, is that he’d have to deny and dance around the obvous: his lawyers told him he had to write the letter because his health and its impact on his capacity to do his job is material to Apple’s shareholders and potential shareholders.

Don’t assume I haven’t considered the arguments I could make on Apple’s behalf on this point — I could point out, for example, as MacNewsWord did yesterday, that since January, when Jobs wrote the letter he didn’t want to write, Apple stock has almost doubled in value. The Apple loving outlet implied that market shows that investors have been confident that Apple was fine without Jobs:  ”This could be due to general belief among investors that Apple has a good management team in place which has kept the company running on an even keel despite the CEO’s absence.”  Or it could mean the market had already accounted for Jobs’ illness.  Or it could be that the market is driven by unreasonable investors.  It could be for any number of reasons. Regardless, I am convinced  that a strategy to fight a securities fraud case on the grounds that Jobs isn’t important enough to be material to Apple is not going to make winning the case more likely. I could go on and on . . . Last October, just to take at random one piece of evidence easy to find via a mere Google search, (according to CSnews) “Some individual had posted a fake report . . . claiming Steve Jobs had suffered from a heart attack and was rushed into the hospital. As a result, Apple’s stock made a 10% nosedive.”

NEXT: (a) was Jobs’ health so dire its specifics would have made a difference to people thinking about buying, selling or holding on to Apple stock, (b) did Apple’s statment’s or silences mislead investors about Jobs’ health, and (c) why would Apple choose not to disclose specifics regarding Jobs’ health even if its lawyers were telling it that those were material facts?