The ADL forgets things that we should never forget.

I share wholeheartedly Paul Krugman’s “shock” at the Anti-Defamation League’s opposition to the construction of a mosque near Ground Zero. The temple I grew up as a member of and at which my older son and I each were bar mitzvahed has a long history, exemplified by Rabbi Arthur Lelyveld, in the fight for civil rights and interfaith relations. Even more to the point, however, the temple’s present building was completed in 1957, but only after a bitter lawsuit against the City of Beachwood that required the temple to go all the way to the U.S. Supreme Court. The litigation was over zoning matters, but you’re quite naive if you think the opposition was motivated by zoning concerns.

Goldman Sachs is a bunch of big fat liars.

Let’s make sure we understand why Goldman Sachs was willing to pay $550 million to settle the SEC’s lawsuit against it – “one of the largest penalties ever paid by a Wall Street Firm.” Goldman Sachs committed fraud to get investors to buy into a fund of securities. It isn’t even a difficult fraud to understand.

Goldman agreed with John A. Paulson, a prominent hedge fund manager who earned an estimated $3.7 billion in 2007, that Paulson could choose the particular mortgage-backed securities that Goldman would sell. Paulson chose securities he knew would default. At the same time he bought credit default swaps on those same securities — in essence, insurance policies that would pay him the value of those securities if they defaulted. In short, he chose the securities for the fund because he knew they would fail and their failure would profit him mightily.

Goldman’s problem, of course, is that no one would buy the securities if they knew Paulson had chosen them. As the complaint filed in the case by the SEC (embedded below) states: Goldman “knew that it would be difficult, if not impossible, to” sell the securities in the fund “if they disclosed to investors that” someone who had “shorted” the securities, “such as Paulson, played a significant role in selecting the securities.”

So Goldman went out and got ACA Management LLC, a company with experience in analyzing the credit risks associated with funds like that it was selling, to agree to be “Portfolio Selection Agent” — that is, to represent itself as the entity that had chosen the securities Goldman was selling. Of course, ACA was not the Portfolio Selection Agent, but Goldman knew what it needed. As Goldman’s Fabrice B. Tourre wrote in a memo:

“One thing that we need to make sure ACA understands is that we want their name on this transaction. This is a transaction for which they are acting as portfolio selection agent, this will be important that we can use ACA’s branding to help distribute the bonds.”

Tourre later wrote in another memo:

“We expect to leverage ACA’s credibility and franchise to help distribute this Transaction.”

I’m happy to learn that the settlement does not include any agreement with Tourre personally. One thing I wonder, though: wasn’t Paulson part of a conspiracy to defraud investors? Why has he gotten to go off with his billions untouched by the SEC?

S.E.C.’s Civil Lawsuit Against Goldman Over C.D.O

Legal decisions based on what the law is not — the “permission culture” and copyright overclaiming

One thing law students don’t get at all is the ways lawyers negotiate a world in which legal decisions are based on what the law is not.

Mike Masnick over at techdirt, , writing about the “Permission Culture” (that is, the culture that insists that sampling and quoting should only be done with permission), puts his finger directly on one of the biggest problems — the fear of even frivolous lawsuits, even by big publishing concerns, prevents writers, musicians, and artists from quoting, sampling, and appropriating parts of copyrighted works they don’t need permission to take:

The unfortunate reality these days is that publishers won’t touch such quotes without permission being granted. It’s almost impossible to find a publisher these days that would sign off on even that snippet of eight words, claiming that they don’t want the liability of a lawsuit. I’ve had this discussion a few times with authors and publishers, and they all say the same thing: due to the potential liability of a lawsuit, even if it clearly does appear to be fair use, it’s just not worth using the quote. In fact, we discussed this point here last year, where we wrote about an author who had to drop an entire section of a book, because of a few short quotes. Clear fair use… but his publisher wouldn’t touch it.

I would suggest too that one reason publishers won’t publish books without permission for the use of quotations is that they perceive it to be in their interests not to do so. That way, other publishers will ask and pay for permission to use quotations from their own books. That is why, I am convinced, the music industry never has seriously challenged lower court decisions requiring permission (and, presumably, payment) for the use of any recorded sample — the practice makes each company’s record vault’s sources of income.

The problem, of course is exacerbated considerably because the wealth and of the corporate conglomerates that own so much of our intellectual property. Who is going to fight Disney, even if he’s right? Another problem is the widespread ignorance in the media about copyright. As Richard Posner has written, the fear of litigating against rich copyright holders who place a premium on their fear of losing something of value leads to behavior based on law that isn’t at all what the law is supposed to be:

Look at the copyright page in virtually any book, or the copyright notice at the beginning of a DVD or VHS film recording. The notice will almost always state that no part of the work can be reproduced without the publisher’s (or movie studio’s) permission. This is a flat denial of fair use. The reader or viewer who thumbs his nose at the copyright notice risks receiving a threatening letter from the copyright owner. He doesn’t know whether he will be sued, and because the fair use doctrine is vague, he may not be altogether confident about the outcome of the suit. The would-be fair user is likely to be an author, movie director, etc. and he will find that his publisher or studio is a strict copyright policeman. That is, since a publisher worries about expansive fair uses of the books he publishes, he doesn’t want to encourage such uses by permitting his own authors to copy from other publishers’ works. So you have a whole “law in action” law invented by publishers, including ridiculous rules such as that any quotation of more than two lines of a poem requires a copyright license.

Our courts and legislatures are bought and paid for — the laws they’ve made with respect to oil spills prove it.

In March, I emphasized — not for the first time — the insanity of considering corporate and other business entities as rational actors of the sort many economists consider people to be. The problem is that corporate decisions are made by individuals and are therefore driven to benefit those individuals, not the corporations (and their shareholders).”

One reason corporations focus on short-term profits is that the individuals making the decisions for a company will often take the cash made in the short term out of the company (by paying special dividends, for example) and then sell there stock, evading the long-term loss. Even if they hold onto their stock, they may have taken so much cash out of the company before the stock crashes in value that they’ve profited mightily from their holdings regardless of the company’s failures.

But still another reason is the idiocy of the regulation that is in place, regulation that instead of imposing responsibility on the companies for problems they cause limits that responsibility.

10 days ago David Leonhardt wrote about the  perversity of the federal limitations on corporate liability for oil spills and how they made BP’s oil spill, in retrospect, no great surprise:

In a little-noticed provision in a 1990 law passed after the Exxon Valdez spill, Congress capped a spiller’s liability over and above cleanup costs at $75 million for a rig spill. Even if the economic damages — to tourism, fishing and the like — stretch into the billions, the responsible party is on the hook for only $75 million. (In this instance, BP has agreed to waive the cap for claims it deems legitimate.) Michael Greenstone, an M.I.T. economist who runs the Hamilton Project in Washington, says the law fundamentally distorts a company’s decision making. Without the cap, executives would have to weigh the possible revenue from a well against the cost of drilling there and the risk of damage. With the cap, they can largely ignore the potential damage beyond cleanup costs. So they end up drilling wells even in places where the damage can be horrific, like close to a shoreline. To put it another way, human frailty helped BP’s executives underestimate the chance of a low-probability, high-cost event. Federal law helped them underestimate the costs.

We shouldn’t be surprised, then, at BP’s pathetic safety record and the retrospective inevitability of the Gulf spill:

Years before the Deepwater Horizon rig blew, BP was developing a reputation as an oil company that took safety risks to save money. An explosion at a Texas refinery killed 15 workers in 2005, and federal regulators and a panel led by James A. Baker III, the former secretary of state, said that cost cutting was partly to blame. The next year, a corroded pipeline in Alaska poured oil into Prudhoe Bay. None other than Joe Barton, a Republican congressman from Texas and a global-warming skeptic, upbraided BP managers for their “seeming indifference to safety and environmental issues.”

BP was only acting rationally!

Unsurprisingly, the Supreme Court has teamed with Congress in being an accessory to the corporate rape of the country. Even if compensatory damages are capped, conceivably courts can impose punitive damages in civil lawsuits to deter particularly egregious conduct. And, indeed, courts reacted precisely that way to the Exxon Valdez oil spill — that is, until the Supreme Court stepped in. In 1994, a jury imposed $5 billion in punitive damages on ExxonMobil for the Exxon Valdez  oil spill. 12 years later an appellate court reduced that amount to $2.5 billion, half the original amount.

2 years later, in a 5-3 vote (Sam Alito recused himself from the case because he owned Exxon stock), the Supreme Court reduced the amount to $507.5 million, about 10% of the jury’s award. The Court ruled that punitive damages (intended to punish bad behavior, not to compensate a plaintiff for his losses caused by that behavior) cannot be greater than compensatory damages (which compensate victims for their economic losses). As reported at the time, the reduced amount represented “about 12 hours of revenue for [Exxon], which reported record profits of $40.6 billion in February.” Justice Souter, writing for the Court, explained that “a penalty should be reasonably predictable in its severity, so that even Justice Holmes’s ‘bad man’ can look ahead with some ability to know what the stakes are in choosing one course of action or another. See The Path of the Law, 10 Harv. L. Rev. 457, 459 (1897). Exxon Shipping Co. v. Baker (U.S. 2008)(hyperlink added).

Of course, one might argue pretty cogently that neither the Exxon Valdez spill nor the BP Gulf spill were conceivable in the minds of the people who made the decisions that resulted in disasters and that it is precisely that failure to conceive of, much less consider, those consequences that is what the courts should retain the power to punish.

Law struggling with changes in material reality: corporate confidentiality this time

I have emphasized again and again the difficulties law faces when there are profound changes in the material reality of our lives, including, for example, demand for new sources of energy. Law is not a set of rules good for all time in all places and all things. It is, rather, an evolving system that tries to do justice in the particular situations it addresses.

The new technologies for copying and disseminating information have of course thrown our legal system into confusion over copyright. Those technologies also are having a profound impact over notions of confidentiality and privacy. Wikileaks is of course in the news in connection with its disclosures of U.S. military secrets, including its release of an Apache helicopter attack in Iraq.

The efforts of a British court to deal with Wikileaks illustrate the difficulties courts often have in applying legal rules that grow out of an era already long past to the new world. Wikileaks’ released of documents from Barclays Bank detailing Barclays’ efforts to use offshore affiliates to evade taxes in Great Britain. A judge ordered the Guardian newspaper, which had published the documents, to take the material down because, he reasoned, the bank had a right to confidentiality.” He also ordered the Guardian not to publish links or other directions for finding the documents on the internet even though they were widely available on sites not based in Great Britain.

As Alan Rusbridger, the editor of the Guardian, explains, the disconnect between the court’s view of confidentiality and the realities of the internet expose a certain degree of absurdity:

The Internet is throwing sharp relief to the illogical nature of our system. Technology is way ahead of the law, and the law is limping along trying to make sense of it.

Professor James Edelman of Oxford believes the court order in connection with the Barclays documents might be the last example of this particular type of confusion, particularly because Barclays may realize that its legal efforts, even if “successful” in getting an order barring publication in the U.K., only serve to publicize the existence of the documents the bank is trying to keep hidden:

“What is significant about the ruling,” he said, “is that it will open people’s eyes that even if you can get an injunction to preserve information that is able to be obtained over the Internet, I suspect that the injunction won’t last.” The publicity over the injunction creates more interest in the material, leading other sites to publish it. The Guardian will be able to return to court, he said, and argue the injunction no longer serves any purpose.

Mr. Rusbridger said that the newspaper still had not decided whether to do that. The cost for being wrong, he said, could be as much $300,000 in legal fees.

Seeming to prove Professor Edelman’s larger point, however, when Wikileaks became overloaded by the traffic about a week ago, another site, techcrunch.org, published the seven memos under the heading “How Barclays Ensured That Everyone Would See Their Confidential Tax Documents.”

Is “mistaken” slot machine award of $11 million a “mistake” that excuses the casino from paying?

Contract law problem: couple walks into a casino, plays a slot machine, and wins $11 million. Casino representative claims the award was a mistake caused by a computer glitch and that the proper the couple “actually won $1627.82. The $11 million was what we call a ‘reset value.’ It’s what the jackpot would have been after the prize was claimed.”

It’s a real situation, and, apparently, “the second time in three months a Colorado slot machine has made a multi-million dollar mistake. In March, a machine malfunction was blamed for a $42 million dollar jackpot.” (hat tip to techdirt.)

But here’s the question the stories don’t resolve: is the casino entitled to pay only $1,627.82? In legal jargon, the casino is seeking “reformation” of the contract it had entered into with the couple — that is, the casino is claiming it can “rewrite” the contract it had with the couple. I put “rewrite” in quotation marks because the contract was not written but, instead, was implicitly understood by the couple and the casino to provide that if they paid their money and pulled the lever on the slot machine they’d be entitled to the winnings that appeared, if any. The reformed contract would be that the casino agreed to pay any amount up to $1,627,82 in exchange for the couple paying the money necessary to play the game.

I don’t know enough about the regulation of casinos to supply the answer to this problem. It may well be that casino bets are treated differently than other contracts. Nevertheless, if standard contract law does apply, the basis of the casino’s position would be a claim that it had made a mistake — that it understood the machine would operate in a manner that would make the top prize the lower amount but, as events proved, that understanding was mistaken. The mistake would be “unilateral” rather than “mutual” because the couple would not have been operating under the same assumption.

In order to prevail on a defense of mistake, mutual or unilateral, the person asserting the defense must establish it did not “assume the risk” of the mistake.” To prevail on a defense of unilateral mistake, the person must also establish either (1) that enforcing the mistaken contract would be “unconscionable”  or (2) the other party knew of or caused the mistake.

Plainly, the couple did not know of or cause the mistake. Whether enforcement of the deal the couple thought it was getting would be “unconscionable” is a difficult question to answer. A deal is “unconscionable” if it is so grossly unfair it would the court won’t enforce it. The mere fact the casino makes out so badly isn’t “unconscionable.” We enjoy the “freedom of contract,” which means we are entitled to take stupid risks and courts will enforce the deals we made that subjected us to those risks (unless, of course, you’re an investment bank).

But whether the deal is “unconscionable” really turns, to my mind, on the other question: did the casino assume t his risk? On the one hand, the casino is the one responsible for the hardware or software that caused the glitch. Moreover, if I read the casino’s explanation correctly, the $11 million the machine originally indicated the couple had won is within the realm of reasonable payoffs on that machine. “It’s what the jackpot would have been after the prize [I presume the $1,672] was claimed.” But, given the casino’s online page of “jackpot winners” — none of whom won more than $10,500 — that doesn’t really seem to be what the casino intended to say.

Finally, the “glitch” is one the casino had reason to know might happen. It was the second time in three months a Colorado slot machine had made a multi-million dollar mistake, and the earlier one was for quite a bit more ($42 million rather than “merely” $11 million).

On the other hand, if the couple had no reasonable grounds to believe their bet could earn them $11 million, it seems a lot less likely they could prevail. In essence, the defense of mistake does not enforce a deal when it turns out the deal literally enforced would turn out to be something entirely different than what the parties believed they were agreeing to. Were they entering into a bet that they knew might pay $11 million? If so, the couple ought to win. If not, the casino ought to win.

A lesson for Rand Paul in the differences between the Constitution and statutory law

In the interview below with Rachel Maddow, Rand Paul is taking the position that got Robert Bork’s nomination to the Supreme Court rejected — that the federal government in the Civil Rights Act of 1964 should not have outlawed private businesses open to the public from discriminating based on race.

Moreover, he is just plain wrong to suggest that the impact of the Civil Rights Act on private businesses is the same as the impact gun rights advocates argue the 2d Amendment to the Constitution should have — Paul says those gun rights activists are arguing that private businesses, including restaurants, do not have the right to ban them from carrying guns inside those businesses.

He’s just plain wrong because the Constitution only bans discrimination based on race by government, and it only protects the right to bear arms against restrictions imposed by the government. It is a statute passed by Congress – the Civil Rights Act of 1964 — that bans private businesses open to the public from discriminating based on race. There is no such statute requiring private businesses to restrict one’s right to bear arms.

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Kent State 40 years ago, and making up facts to fit today’s world view.

Few things frustrate me in my teaching than my students ignorance of history that predates their adolescence.

Last week, on the 40th anniversary of the Kent State shootings, I wrote about both their impact on me then, and the frightening disconnect I see between current political rhetoric that compares President Obama’s policies to “fascism” and the very different reality of 40 years ago, when National Guard troops really did engage in activity that might genuinely be equated to fascism. I guess I shouldn’t have been surprised that I was attacked for thinking that calling President Obama a “fascist” seems silly to someone who remembers students being shot dead for protesting the invasion of Cambodia in 1970.

But I genuinely was surprised when in the comments to the post criticizing me another blogger stated that in discussing the Kent State shootings I “neglected” to mention that “the National Guard were shot at first” and that the host of the site in response to that comment wrote: ” Thank you very much for the historical accuracy you add to this issue. You are correct. Mr. Friedman has selective memory.”

The problem, of course, is that this purported “historical accuracy” is pure fantasy. There never has been any evidence that the students at Kent State were armed, much less that they shot at the National Guard. As the Cleveland Plain Dealer reports today, [t]wo trials and a presidential commission’s investigation could not determine what initiated the gunfire, although the presidential commission concluded that ‘the indiscriminate firing of rifles into a crowd of students and the deaths that followed were unnecessary, unwarranted and inexcusable.’” Why is this news now? Because the Plain Dealer reported the following 2 days ago:

The Ohio National Guardsmen who fired on students and antiwar protesters at Kent State University on May 4, 1970 were given an order to prepare to shoot, according to a new analysis of a 40-year-old audio tape of the event.

“Guard!” says a male voice on the recording, which two forensic audio experts enhanced and evaluated at the request of The Plain Dealer. Several seconds pass. Then, “All right, prepare to fire!”

“Get down!” someone shouts urgently, presumably in the crowd. Finally, “Guard! . . . ” followed two seconds later by a long, booming volley of gunshots. The entire spoken sequence lasts 17 seconds.

The previously undetected command could begin to explain the central mystery of the Kent State tragedy – why 28 Guardsmen pivoted in unison atop Blanket Hill, raised their rifles and pistols and fired 67 times, killing four students and wounding nine others in an act that galvanized sentiment against the Vietnam War.

People should know that before they begin spouting off about the policies of an American President they perhaps ought to know a little about history. And they certainly should know better than simply to make up facts that fit their world view.

ADDENDUM:

KENT STATE (trailer) from Mark Mori on Vimeo.

New force for the irreparable harm requirement in copyright preliminary injunction decisions? And might we see the Holden Caulfield sequel after all?

One week ago, the U.S. Court of Appeals for the 2d Circuit issued a very interesting ruling (inserted below)  in the case in which J.D. Salinger sued Frederik Colting, alleging that Colting’s work, 60 Years Later Coming Through the Rye, infringes Salinger’s copyright in Catcher in the Rye. First, and perhaps most importantly, the 2d Circuit stated that “we conclude that the District Court properly determined that Salinger has a likelihood of success on the merits.” In other words, the 2d Circuit concluded that based on the evidence already presented to the trial court, it is likely Salinger (who, since his death, has been replaced as the plaintiff by Coleen Salinger and Matthew Salinger as trustees of the Salinger Literary Trust) it has concluded that 60 Years Later is likely an infringement of Catcher in the Rye.

Nevertheless, the 2d Circuit vacated the trial court’s preliminary injunction forbidding U.S. publication of 60 Years Later and instructed the trial court to reconsider whether a preliminary injunction should issue because, according to the 2d Circuit, the trial court did not apply the appropriate standard in determining whether a preliminary injunction should have been issued. Most importantly, the trial court had not considered whether, assuming it prevails in the end in the case, the Salinger Trust would suffer harm that it could not be compensated for at final judgment in the absence of the preliminary injunction.

It is important to note that a preliminary injunction is an order that someone should do or not do something that is in effect only until the final verdict is rendered in a case. A preliminary injunction is intended to preserve the status quo during trial of a case in situations in which the failure of the court to ensure the preservation of the status quo would somehow damage the party seeking the injunction in a way that would prevent him from being made whole by a final judgment.

Thus, the trial court in the Salinger case only determined that Salinger’s infringement claim had a likelihood of success on the merits. That means that the court leaves open the possibility that after the parties have had a chance to fully develop their evidence and the court has had the opportunity to see witnesses testify live (rather than just via the written affidavits the court earlier considered), it might change its mind on whether Salinger in fact has successfully established an infringement.

More importantly, perhaps, the 2d Circuit made clear that the trial court also needs to consider factors other than the likelihood of the success of the infringement claim. The 2d Circuit stated that the trial court must reconsider whether to grant the preliminary injunction under the standard the U.S. Supreme Court applied in determining the legitimacy of a permanent injunction (that is, an injunction issued at the end of a case as a final judgment) a patent infringement action in eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). That standard (the typical standard applied in most injunction cases) requires the court to consider four factors: “(1) that [the party seeking the injunction] has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.”

No single factor is dispositive, nor are the factors given equal weight and considered together in any easy formulaic way. All the factors are considered in a holistic evaluation. Interestingly, however, the right to non-monetary, injunctive relief typically requires that the availability of monetary relief be inadequate to make the party seeking the injunction whole. It may be possible for Colting to argue on remand that even should, his work be found to infringe the Salinger Trust’s copyright in Catcher in the Rye, should he be able to publish 60 Years On during the pendency of the case, the Salinger Trust can be made whole by recovering whatever profits have in the meantime been made on the book. The Salinger Trust, in the meantime, is likely to argue the mere publication of the book in the U.S. will harm the Trust in a way that cannot be remedied by money because the mere presence of the book will detract from the value of the Trust’s copyright in the character of Holden Caulfield.

William Patry, in his treatise on copyright, has noted that courts in copyright cases have in the past rarely given real consideration to the “irreparable harm” argument in issuing preliminary injunctions “The gutting is accomplished definitionally: rather than reject the requirement outright, courts define the adequacy of legal remedies in such a way that those remedies can never be considered a substitute for plaintiff’s alleged losses.” William F. Patry, Patry on Copyright, §22:12, citing Douglas Laycock, The Death of the Irreparable Injury Rule, 103 Harv. L. Rev. 687, 692 (1990). Thus, Patry writes, “Preliminary injunctions are issued far more often than they should be, at least from a review of available decisions.”

It makes me wonder whether the 2d Circuit is taking a stand here and insisting that the trial court give real consideration to the requirement that the Salinger Trust could not be made whole, even if it eventually prevails on its infringement claim, in the absence of a preliminary injunction. If so, we may yet see 60 Years On published in the U.S., even if for only a brief time.

Salinger v Colting 2d Circuit Appeal of Prelim Injunction Decision

40 years ago (4 dead in Ohio) and today.

40 years ago today (May 4) I was 10 years old, sitting at home, when I heard about something I thought unthinkable that had just happened about 40 miles away from my home. National guard troops had fired on unarmed students at Kent State protesting the Vietnam War, killing 4 and wounding another 9. Nine days later at Jackson State, police killed students and wounded another 12 who were protesting the war and the killings at Kent State.

It was inconceivable to me that unarmed students exercising their First Amendment rights had been shot to death in the United States,  but my childhood was filled with nightmares of that sort. In 1967 I remember driving through parts of Cleveland that were under military occupation as a result of just one U.S. city among hundreds that had had exploded that year and the previous one. And, of course, in 1968, Martin Luther King and Robert Kennedy were assassinated in little more than 2 months, disappearing the 2 most prominent voices calling for the U.S. to pull its troops out of Vietnam.

And, of course, we were all at the time convinced of the inevitability of nuclear holocaust.

So I laugh when I hear earnest students of mine who insist that terrorism is the greatest threat this country has ever faced. And when conservatives express the fear that President Obama threatens us with fascism. We should not be fighting wars we can’t win in support of corrupt regimes. And we have huge problems at home:

In 2005, 21.2 percent of U.S. national income accrued to just 1 percent of earners. Contrast 1968, when the CEO of General Motors took home, in pay and benefits, about sixty-six times the amount paid to a typical GM worker. Today the CEO of Wal-Mart earns nine hundred times the wages of his average employee. Indeed, the wealth of the Wal-Mart founder’s family in 2005 was estimated at about the same ($90 billion) as that of the bottom 40 percent of the U.S. population: 120 million people.

But I remember vividly how sad I was on May 4, 1970.

Challenging automated YouTube takedowns (and don’t forget to think through the ramifications)

Chris Walters at The Consumerist provides an excellent account of the whys and wherefores of takedowns of YouTube videos.  In addition to explaining why YouTube’s automated Content ID tracking system results in the kind of baseless deletions I referred to the other day, Walters also explains that “[Y]ou can dispute any Content ID claim. If you have a clip that’s been targeted, you’ll see a notice about it on your YouTube account page. From there you can access a dispute page where you can affirm that you believe your clip falls under fair use, and the clip will immediately become public again. The copyright holder will receive notice that you’ve disputed the clip, and must then decide to leave you alone, send a DMCA takedown notice, or sue.”

Importantly, too, he explains that you want to give some thought to the ramifications of disputing an automated takedown: “There are legal ramifications to this, which YouTube hints at and the EFF explains very clearly. If you decide to fight copyright abuse by a large company, you should make sure that you’re on the right side of the fight, that you have a sensible chance of winning a possible lawsuit, and that you’re willing to assume the financial risk. All three of those determinations probably require some serious meetings with a lawyer.”

On the other hand, any copyright owner sending a takedown notice ought to consider the legal ramifications of doing so, since a baseless one relying on the power to outspend an individual fair use claimant might have its own legal downside.

Should we allow people to sell their souls to the devil? Freedom of contract confronts the fact people don’t read the contracts they enter.

I don’t think Robert Johnson made any deal with Satan to obtain his remarkable talents; he listened to and made his own the sounds of his contemporaries. Apparently, however, the British game retailer GameStation is counting on its customers believing talent is more a matter of divine or satanic inspiration than the creative reworking of existing culture. GameStation’s current end user license agreement requires online purchasers of its products to agree to the following: “ By placing an order via this Web site on the first day of the fourth month of the year 2010 Anno Domini, you agree to grant Us a non transferable option to claim, for now and for ever more, your immortal soul. Should We wish to exercise this option, you agree to surrender your immortal soul, and any claim you may have on it, within 5 (five) working days of receiving written notification from gamesation.co.uk or one of its duly authorised minions.”

As further reported, “While all shoppers during the test were given a simple tick box option to opt out, very few did this, which would have also rewarded them with a £5 voucher, according to news:lite. Due to the number of people who ticked the box, GameStation claimsbelieves as many as 88 percent of people do not read the terms and conditions of a Web site before they make a purchase.” The fact that so few people read the contracts they sign is no news to me. The troublesome part is that these contracts are generally enforced, although GameStop “noted that it would not be enforcing the ownership rights, and planned to e-mail customers nullifying any claim on their soul.” They are enforced because contract law is founded on the notion that we are all free and equal individuals left to our own devices to enter those transactions we wish. Moreover, many believe that any limitations on what individuals can be allowed to agree to (within certain well-accepted limits) are counter to economic wisdom. But when we face up to the fact so few people actually read these agreements, sooner or later we’re likely to have to face the fact we’ll have to limit what consumer retailers can require in these agreements.

There are a lot of good reasons to be skeptical of evidence, especially of the sort that can be edited and appears to tell stories that are incredible.

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What if corporate decision makers lost money when they made bad decisions?

Back in January, criticizing the Supreme Court decision equating the free speech rights of corporations with those of individuals, I pointed out the insanity of considering corporate and other business entities as rational actors of the sort many economists consider people to be. The problem is that corporate decisions are made by individuals and are therefore driven to benefit those individuals, not the corporations (and their shareholders). As I wrote:

Individuals at AIG were making individual fortunes based on the income they were bringing into AIG for selling credit default swaps. Those individuals were making and would retain those fortunes even if, as turned out to be the case, AIG might not have sufficient funds to pay off the obligations those credit default swaps imposed on AIG. In other words, if one treated AIG as a rational person, one would suppose AIG would never expose itself to a real risk of obligating itself to pay more than it had in reserve. But AIG is merely a corporation, and the individuals actually making the decisions on behalf of AIG had every incentive to get what they could, subject AIG to irrational risk, and be able to walk away with their tens of millions of dollars.

I wasn’t just engaging in paranoia. I spent too many years with investment bankers to entirely forget their reality. And I have data to back me up:

In a study late last year, three Harvard Law School researchers examined public documents to assess whether one “standard narrative” of the crash was true — that “the meltdown of Bear Stearns and Lehman Brothers largely wiped out the wealth of their top executives.” It turned out to be a fairy tale. “In contrast to what has been thus far largely assumed, the executives were richly rewarded for, not financially devastated by, their leadership of their banks during this decade,” the Harvard Law team wrote. The top five executives at both Lehman and Bear collectively took home $2.4 billion in bonuses and equity sales — that’s nearly a quarter-billion dollars each — between 2000 and their 2008 demise.

Last week, William D. Cohan made much the same point in connection with the entire Wall Street ethic:

What if the biggest rewards on Wall Street went to those who thwarted dangerous and excessive risk-taking instead of to those who enabled, approved or simply ignored it?

What if every senior Wall Street executive had to worry that he could lose his entire net worth at any moment — including his mansions in Greenwich, Conn., and Palm Beach to say nothing of his job — if the revenue he was generating turned out to be unprofitable or excessively risky?

Wouldn’t that combination of potential rewards and fear of calamitous personal loss instill in every Wall Streeter a zealous desire to insist that the products his firm was peddling were safe for others to buy?

If such simple incentives had been in place on Wall Street, wouldn’t the latest crisis — as well as the multitude of others that have been perpetrated on us in the past 25 years — been largely avoided? . . .

The obvious answer to these questions is that human beings always do what they are rewarded to do and always have, especially on Wall Street. Rewarding prudent risk-taking on Wall Street while punishing recklessness would result in a new ethic on Wall Street, one not solely driven by generating as much revenue as possible in a given fiscal year with no regard to the long term.

To that end, shareholders must demand that corporate boards of directors revamp the entire compensation structure on Wall Street away from one based on revenue generation to one that rewards long-term profits. For goodness sake, what other business on the face of the earth, aside from Wall Street, pays out between 50 percent and 60 percent of each dollar of revenue generated to employees in the form of compensation!

And yet the Wall Street Journal’s stance on financial reform is the same as its stance on health care reform: “Once ObamaCare becomes law, the next big legislative rush is going to be for financial reform, but as we look at Senate Banking Chairman Chris Dodd’s latest draft we can’t help but wonder: Why the hurry?”

Indeed, why? There’s money still to be made . . .

Thank god for our founding fathers — John Adams, honorable lawyer.

Whose values do the lawyers for Guantanamo detainees share? John Adams’, for one:

John Adams, in his old age, called his defense of British soldiers in 1770 “one of the most gallant, generous, manly, and disinterested actions of my whole life, and one of the best pieces of service I ever rendered my country.” That’s quite a statement, coming as it does from perhaps the most underappreciated great man in American history.

The day after British soldiers mortally wounded five Americans on a cobbled square in Boston, thirty-four-year-old Adams was visted in his office near the stairs of the Town Office by a Boston merchant , James Forest. “With tears streaming from his eyes” (according to the recollection of Adams), Forest asked Adams to defend the soldiers and their captain, Thomas Preston. Adams understood that taking the case would not only subject him to criticism, but might jeopardize his legal practice or even risk the safety of himself and his family. But Adams believed deeply that every person deserved a defense, and he took on the case without hesitation. For his efforts, he would receive the modest sum of eighteen guineas.

So when Lynn Cheney’s group, keepamericasafe.com, suggests that there’s something un-American about the fact that lawyers in the Justice Department have defended Guantanamo detainees, the real question is this: why is keepamericasafe.com spouting the un-American propaganda that those accused of wrongdoing are not entitled to a defense and to requiring proof of their wrongdoing? In fact, as Adam Serwer reports,

Lt. Col. David Frakt, who has represented detainees both in military and civilian courts, said that the lawyers who secured due process rights for detainees were ultimately vindicated. “There is an assumption there that has proven to be a fallacy, which is that everyone at Guantanamo was a terrorist,” Frakt says, pointing to the fact that the government has lost three-quarters of the habeas petitions filed by detainees at Guantanamo. “What we have seen over and over and over is that the vast majority of detainees at Guantanamo are innocent.”

This is, in short, ugly, anti-American propaganda:

Our capacity to be just is measured by our capacity to do justice to those most in need of it.

The only way to do justice is to provide opportunities for justice. 50 years ago, in Gideon v. Wainwright, the Supreme Court ruled that a criminal defendant has a constitutional right to representation by a lawyer and that, if he cannot afford one, the state must provide him with one. Now, with our states and local governments starving for money, this foundation of our justice system is sorely threatened. Two lawyers whose careers have been devoted to these issues, Virginia Sloan and (my good friend) Cait Clarke, write:

The report of the Constitution Project’s National Right to Counsel Committee, Justice Denied: America’s Continuing Neglect of Our Constitutional Right to Counsel, is the most comprehensive examination of the indigent defense crisis in over 30 years. The Committee, whose members represent every relevant part of the criminal justice system, including prosecutors, judges, victim advocates, defenders, bar leaders, and scholars, unanimously concluded that this country’s indigent defense system is in crisis, that the government has for too long ignored its obligation to provide lawyers in these cases, and that it cannot be ignored anymore. The report outlines 22 urgently-needed recommendations for reform.

One of the most important recommendations is that indigent defense should be provided through an independent, non-partisan authority that appoints qualified, experienced lawyers who have adequate resources. Of equal significance is the recommendation that the federal government assist the states in ensuring that the Sixth Amendment is protected and that poor people have the kind of lawyers to which they are constitutionally entitled. The federal government provides badly-needed funding for law enforcement and prosecutors, but to continue doing so without also providing funding for public defense services simply exacerbates the already untenable situation.

Another recommendation is that the federal government should create a federal office of public defense services to distribute funds, collect data, promulgate standards, and develop and deliver training similar to the federally-supported training for state and local prosecutors. Additionally, the federal government should require all states to abide by national standards for public defense. Adoption of the American Bar Association’s Ten Principles would provide constitutionally adequate legal representation for criminal defendants unable to afford an attorney.

One innovative idea that will improve the quality of representation for indigent defendants is to create a national fellowship program to cultivate and train the next generation of indigent defense lawyers. This would dramatically increase the number and caliber of lawyers working to secure justice for clients and communities. Equal Justice Works, working in partnership with the Southern Public Defender Training Center (SPDTC), is proposing to do just that.

Justice Department: Torture Memos were “insane” but not the product of professional misconduct

From Jurist

The US Department of Justice (DOJ) [official website] has overruled the findings of a report [DOJ Ethics Report] released Friday concluding that two Bush administration lawyers committed professional misconduct when they wrote memos [JURIST news archive] authorizing the use of certain interrogation techniques that critics have called torture. Instead, the DOJ said that John Yoo [academic profile; JURIST news archive], and Jay Bybee [official profile; JURIST news archive] were only guilty of “poor judgment” in writing the memos. An internal ethics investigation by the Office of Professional Responsibility (OPR) concluded that Yoo had committed “intentional professional misconduct when he violated his duty to exercise independent legal judgment and render thorough, objective and candid legal advice.” The report also found that Bybee had committed professional misconduct when he acted in “reckless disregard” of his duty to exercise independent legal advice. However, David Margolis, an associate deputy attorney general, released a separate memo [DOJ Margolis Report] overruling the OPR’s report, finding its analysis was flawed because it did not have a clear definition of what constitutes professional misconduct.

Back in August of 2008, when I began writing this blog, I explained my then long-held conviction that the White House Office of Legal Counsel — and in particular Jay Bybee (now a federal judge) and John Yoo (a tenured law professor) had acted immorally and in violation of their professional duties as lawyers in writing the so-called “torture memos” that gave legal approval to the torture the Bush Administration began. Both the DOJ Report and the DOJ Margolis Report confirm the details of  what I wrote back in 2008 — the memos were plainly written to justify a pre-determined conclusion. As I wrote then:

Somehow a justice department lawyer who is now a tenured professor at Boalt Hall Law School at U.C. Berkeley, along with his boss, who is now a judge on the U.S. Court of Appeals for the Ninth Circuit, thought they could get away with this utterly fictional definition of “severe pain.” And they did. Plainly, though, Yoo does not believe in constraints. In December 2005 he stated in a Chicago debate that there is no law that could prevent the President from theoretically ordering the torture of a child of a suspect in custody – including by crushing that child’s testicles.”

And now the DOJ Margolis Report concludes that “the’ evidence of the knowing violations . . . led us to conclude that Yoo put his desire to accommodate the client above his obligation to provide thorough, objective, and candid. legal advice, and that he thereforecommitted intentional professional misconduct.”

Mr. Margolis in the DOJ Margolis Report also stated:

While I have declined to adopt O.P.R.’s findings of misconduct, I fear that John Yoo’s loyalty to his own ideology and convictions clouded his view of his obligation to his client and led him to author opinions that reflected his own extreme, albeit sincerely held, view of executive power while speaking for an institutional client.

The reports really are remarkable testaments to how far the Bush Administration went to force its desire to torture within a rule of law that does not permit torture. Among other things, the DOJ Ethics Report quotes other Bush Justice Department appointees stating that John Yoo needed “adult supervision” and describing the torture memos as “insane,” a “one-sided effort to eliminate any hurdles posed by the torture law,” “plainly wrong,”  and “slovenly”:

Our view that the memoranda were seriously deficient was consistent with comments made by some of tlie former Department officials we interviewed, even though those individuals would not necessarily agree witl! some of our findings in this matter. [Daniel] Levin stated that when he first read the Bybee Memo, “[I had} the same reaction I think everybody who reads it has - 'this is insane, who wrote this?'". Jack Goldsmith found that the memoranda were "riddled with error," concluded that key portions were "plainly wrong," .and characterized them as a "one-sided effort to eliminate any hurdles posed by the torture law." [Steven G.] Bradbury told us that Yoo did not adequately consider counter arguments in writing the memoranda and that “somebody should have exercised some adult leadership” with respect to Yoo’s section on the Commander-tn-Chief powers. [Michael] Mukasey acknowledged that the Bybee Memo was “a slovenly mistake,” even though he urged us not to find misconduct.

” Insane” about sums it up. You’re not acting as a lawyer if the research and analysis you do is insane. But, I guess, “insane” is not a sufficiently firm legal standard for Mr. Margolis. The funny thing is that I’d expect any reviewing official who didn’t see discern a standard in the report he was reviewing to state the proper standard and make his own determination whether the facts set forth satisfied or did not satisfy that standard. Or he could have sent the matter back to the ethics people with instruction to set forth a clear standard. Instead, he plainly was looking for a way to find no ethical violations here. Honestly, if the flat out lies about the law contained in the torture memos is permitted, then anything is permitted in the “war on terror.” Which, of course, is exactly Yoo’s position.

Archers Daniel Midland abuses copyright law to censor criticism — corporations have the right to free speech, but not the people who criticize them?

Some corporations apparently believe in free speech for themselves but not for individuals. The first video below is a deadly dull piece of propagandistic pap in which Patricia A. Woertz, Chairman, President and CEO of Archer Daniels Midland (ADM), USA drones on (someone get her better training for dealing with the media!) about ADM’s profound importance to feeding the world. The piece was produced in advance of the recent Annual Meeting of the World Economic Forum in Davos, Switzerland.

ADM has, top it mildly, been the subject of considerable ire, criticism, and even criminal prosecution for price fixing (the subject of Matt Damon’s recent film The Informant and Fair Fight in the Marketplace, an excerpt of which appears below’s Woertz’s blathering), political corruption, destruction of the rainforests, and the forced labor of children.

A couple of days ago I posted on my Facebook page what I thought was a hilarious edit of the Woertz video in which some of her original words were retained and many were dubbed over to make it appear as if she were speaking openly on behalf of an evil multinational bent on the gross and horrific exploitation of the world and especially of multinational food markets. I thought it was hilarious piece of political critique. No one could have mistaken it as an “official” ADM production, but plainly it hit a nerve at ADM.

Today I noticed that when I click on the video on my Facebook profile a message appears that it is “no longer available due to a copyright claim by Archers Daniel Midland Company” and that if I click through to YouTube there’s no page for the video at all, not even a page with the same empty video box and takedown message.

This is outright copyright abuse. Criticism is fair use. When anyone asks whether in fact fair use is grounded in the Constitution’s guarantee of free speech, all you need is to think of a situation like this — one can appropriate copyrighted works to criticize and parody the copyright holder. And to use the copyright laws to silence that critique has nothing to do with protecting intellectual property and the rights of a creator to profit from his, her, or its creation: it’s unconstitutional censorship! (Peter Bouchard wrote a good summary yesterday on ” The Battle against Bogus Takedowns, a topic I’ve touched on in the past.”

Learn that government regulation can be very effective in under 2 minutes.

Next time someone tells you government regulation doesn’t do any good, ask them to watch the video below and whether they’d rather be driving a car built before the government started regulating automobile safety.

We can’t trust eye witnesses.

I tell my students the jury is our truth-telling machine. We don’t have God’s Videotape of reality. (Even if we did, would he have enough camera angles and high enough resolution to give us complete confidence in what the tape seems to show?)

But juries, of course, depend on evidence, a substantial amount of which is the evidence of witnesses. As US Supreme Court Justice William J. Brennan stated in his dissent in Watkins v. U.S., 449 U.S. 341, 352 (1982), there is “nothing more convincing [to a jury] than a live human being who takes the stand, points a finger at the defendant, and says ‘That’s the one!’”

But eyewitness identification evidence is the leading cause of wrongful conviction in the United States. There’s a lot of scholarship on perceptual biases — ways our perception is shaped not by reality but, rather, by assumptions our minds impose on our perceptions — but I think the study discussed and shown below is one of the most vivid demonstrations I’ve ever seen of the unreliability of eyewitness testimony. 75% of the subjects did not even notice that the person for whom they began filling out the experimental consent form, after he’d bent down behind the counter, had been replaced by a different person!