The source of innovation — as a lawyer, as a business person, or as a designer — is creative thinking.

One of the reasons I was willing and remain committed to writing about law and creativity here at Geniocity is the purpose of this site as Carolyn Jack, its founder, has made clear to me from the beginning: it’s intended to show how innovation works across professions and disciplines normally segregated from one another so that people in those disciplines and fields can learn from one another. Innovation requires a remarkably agile mind — a creative mind — and so anyone wanting to innovate should look to the thinking of creative people no matter where they find them. Businesses should look to artists. Artists should look to game designers. Game designers should look to lawyers. Lawyers should look to fiction writers . . .

Again: no matter what you do — law, business, education, etc. — you should pursue innovation by seeking ideas from people whose job it is to innovate. As Fast Company reports, that’s also precisely the advice Roger Martin gives to businesses:

[T]he dean of the Rotman School of Management at the University of Toronto is traveling the country, throwing down the gauntlet to companies who hope to analyze and strategize their way out of a recession by bringing in armies of management consultants. You’ll get what you pay for, he warns, and it won’t be innovation. “The business world is tired of having armies of analysts descend on their companies,” he says. “You can’t send a 28-year-old with a calculator to solve your problems.”

The problem, says Martin, author of a new book, The Design of Business: Why Design Thinking is the Next Competitive Advantage, is that corporations have pushed analytical thinking so far that it’s unproductive. “No idea in the world has been proved in advance with inductive or deductive reasoning,” he says.

The answer? Bring in the folks whose job it is to imagine the future, and who are experts in intuitive thinking.

As Martin points out, even scientific progress starts with hypotheses; it doesn’t merely apply the known. Which, interestingly, is precisely the point evolutionary biologist Olivia Judson made in the New York Times this week:

One of my favorite things to do is to take a set of facts and use them to imagine how the world might work. In writing about some of these ideas, my aim is not to be correct — how can I be, when the answer isn’t known? — but to be thought-provoking, to ask questions, to make people wonder.

[S]cience is usually presented as a body of knowledge — facts to be memorized, equations to be solved, concepts to be understood, discoveries to be applauded. But this approach can give students two misleading impressions.

One is that science is about what we know. One colleague told me that when he was studying science at school, the relentless focus on the known gave him the impression that almost everything had already been discovered. But in fact, science — as the physicist Richard Feynman once wrote — creates an “expanding frontier of ignorance,” where most discoveries lead to more questions. (This frontier — this peering into the unknown — is what I especially like to write about.) Moreover, insofar as science is a body of knowledge, that body is provisional: much of what we thought we knew in the past has turned out to be incomplete, or plain wrong.

The second misconception that comes from this “facts, facts, facts” method of teaching science is the impression that scientific discovery progresses as an orderly, logical “creep”; that each new discovery points more or less unambiguously to the next. But in reality, while some scientific work does involve the plodding, brick-by-brick accumulation of evidence, much of it requires leaps of imagination and daring speculation. (This raises the interesting question of when speculation is more likely to generate productive lines of enquiry than deductive creep. I don’t know the answer — I’d have to speculate.)

Being effective at anything requires innovation to address an ever changing world. It’s true in law. My students arrive in law school wanting to be told the answers law provides. I hope by the time they leave that what they’ve learned are not answers but, rather, ways to creatively reach answers to questions no one can anticipate they will face.

In other words, the qualities required by effective lawyers are the same qualities  – as Hartmut Esslinger, the founder of frog design, tells Guy Kawasaki — required by effective designers.  Both great designers and great lawyers lawyers have an enormous depth and breadth of knowledge, an ability to connect that knowledge to human lives and human hearts, desire, and persistence:

The artistic talent required is more of an enabler at the end of rational and emotional analysis as well as strategic conceptualization. Therefore, it is vital to learn and study as much as possible especially about business, technology and human nature. In the end, there are flavors in design which are more esthetic—see New York Times “Style Magazine”—but design is only relevant when it improves human lives by appealing both to the mind and the heart. Finally, a young person with the right talents needs to have infinite desire and never give up. I apply a simple test with young students: smash a teapot into pieces and then hand out the glue. Those who rebuild the teapot won’t make it, those who create phantasy animals and spaceships will.

So next time you are looking to innovate (and you always should be), look to creative people to help you do it.

Excellent acount of fair use in educational setting.

The American University Center for Social Media has published a Code of Best Practices in Fair Use for OpenCourseWare. As the site explains, “a code of best practices designed to help those preparing OpenCourseWare (OCW) to interpret and apply fair use under United States copyright law. ” While the document is limited in application (to educational settings), its nuance and sophistication makes it stand out among online discussions of fair use.

Why are you working harder for less? Scientific Management, management consulting, and leveraged buyouts – a century of being conned.

I described leveraged buyouts the other day — in connection with the demise of the maker of the Simmons Beauty Rest Mattress — as a symptom of why we don’t trust Wall Street. You might wonder why, if I’m right, we allow people again and again to “buy” companies by borrowing enormous sums of money — in essence, we allow the buyers to suck money out of successful companies for their own benefit in the same way we allowed home owners in a rising housing market to suck money out of their homes by means of home equity loans.

It’s perfectly clear why we allowed homeowners to do that — all involved figured the market would continue to rise at least until they could make their money and get out. But why do we let this keep happening on a much larger scale on Wall Street?

I hadn’t considered the question specifically at the moment I wrote that post about Simmons. It was enough for me that throughout the 25 years of my career both practicing (in connection with, among many things, leveraged buyouts) and teaching I’ve seen the phenomenon again and again. But this week I came across Jill Lepore‘s article “Not So Fast” in the New Yorker, an article which asks the question, “Scientific management started as a way to work. How did it become a way of life?” Lepore’s article is about the rise in the early 20th Century of “Scientific Management,” the foundation of modern “Management Consulting.” Scientific Management was created by Fredrick Winslow Taylor, who, as Lepore writes, sold himself as someone able to make businesses more efficient:

Speedy Taylor, as he was called, had invented a new way to make money. He would get himself hired by some business; spend a while watching people work, stopwatch and slide rule in hand; write a report telling them how to do their work faster; and then submit an astronomical bill for his services. He is the “Father of Scientific Management” (it says so on his tombstone), and, by any rational calculation, the grandfather of management consulting.

The problem, as Lepore notes, is that Taylor was a fraud, and Taylorism’s grandchild, management consulting, is as well.

What does all this have to do with leveraged buyouts? Plenty. The entire rationale of the leveraged buyout is that the buyers can take a company with a lot of unrealized value and realize it. How? By making the company more “efficient.” The debt taken on to buy the company (and to reward the “buyers” with profits along the way) will, the argument goes, easily be paid off given the as yet unrealized efficiencies. Thus, we’ve had decades of “downsizing” (massive layoffs), “consolidations” (elimination of competing businesses), and arguments that advances in productivity brought about by our new technologies would redound to the benefit of all (when the only benefit would redound to whoever could pull the money out quickest).

We’ve been had.

At least we have one consolation — none of us have been alone in being conned. The focus of Lepore’s work is Louis Brandeis, someone I’ve always thought was a very bright guy and who against all evidence remained convinced his entire life that Scientific Management would benefit the working person:

Neither unions nor businesses have lived up to Brandeis’s optimism. “If the fruits of Scientific Management are directed into the proper channels,” he wrote, “the workingman will get not only a fair share, but a very large share, of the industrial profits arising from improved industry.” Lately, that share has been going to shareholders and C.E.O.s. Home and work, separated since the first stirrings of the Industrial Revolution, have been growing back together again: BlackBerry on the nightstand, toaster in the photocopy room. Efficiency was meant to lead to a shorter workday, but, in the final two decades of the twentieth century, the average American added a hundred and sixty-four hours of work in the course of a year; that’s a whole extra month’s time, but not, typically, a month’s worth of either happiness minutes or civic participation. Eating dinner standing up while nursing a baby, making a phone call to the office, and supervising a third grader’s homework is not, I don’t think, the hope of democracy.

You’ll also find worthwhile on this topic the New York Times video series entitled “Flipped: How Private Equity Dealmakers Can Win While Their Companies Lose“

A corporation is not a “person” (unless it buys the right to be treated that way).

There’s an interesting addendum to add to my post yesterday about the fact the Supreme Court in the campaign finance case it heard arguments on two days ago seems to be assuming without question that corporations are just like individuals when it comes to constitutional rights. In other words, the Court is assuming, if a limitation on campaign contributions is a limitation on First Amendment free speech rights, then a limitation on campaign contributions by corporations is unconstitutional.

The case on which everyone founds the concept that a corporation is a person entitled to constitutional protections afforded to individuals did not even decide that question. Rather, in Santa Clara County v. Southern Pacific Railroad Co., 118 U.S. 394 (1886), “[a]ccording to the official case record, Supreme Court Justice Morrison Remick Waite simply pronounced before the beginning of arguement in the case of Santa Clara County . . . that:

The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of opinion that it does.

The court reporter duly entered into the summary record of the Court’s findings that

The defendant Corporations are persons within the intent of the clause in section 1 of the Fourteen Amendment to the Constitution of the United States, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws.

Thus it was that a two-sentence assertion by a single judge elevated corporations to the status of persons under the law, prepared the way for the rise of global corporate rule, and thereby changed the course of history.”

Moreover, the decision did not even rest on the constitutional assumption but, rather, on statutory grounds. Thus, Santa Clara County does not in any way stand for the proposition it is always relied on for — that corporations are persons for purposes of the individual rights protected by the Constitution.

It should be no great surprise that in 1886 the Court simply asserted without any consideration that a railroad was a legal person for constitutional purposes. It was a time when railroad companies owned the country. Who owns it now?

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.

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.

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.

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.

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?

Yes, lawyers need to be experts in design and typography too.

I always tell my students that one of the reasons the first year of law school is so difficult is that they come to law school thinking their time and effort will be completely exhausted by the effort to learn all the law. But, I go on to tell them, learning the legal rules is the easy part. You read statutes and case law and regulations and secondary source interpretations to find the rules. Applying them is a whole different thing. That’s probably the hardest part.

But one of the most difficult parts of lawyering, one most students take a particularly  long time to grasp, is that you have to pay attention to everything. So you act like a professional: you show up on time; you use professional language, not the language you use with your friends or on Facebook; you take criticism as an opportunity to learn what you did wrong; you take disagreement as a necessary part of the profession you are becoming part of, not as a personal attack; the point of your efforts is to learn to be a good lawyer, not to earn a good grade.

It never ends. But that’s okay — there’s just always room to get better.

And now comes, to fill an aching need, Typography for Lawyers, a site by Matthew Butterick, a civil litigator in L.A. who majored in art as an undergrad at Harvard, where he focused on design and typography. I’m very impressed by his recognition of the reason his expertise is needed. He explains that using good typography is like dressing well for court, a way “we signal to clients, other attorneys, and judges that we take our work seriously and we take court seriously.” Moreover, bad typography detracts from your goal of persuading your audience your client is right. “When you show up to make an oral argument, you make sure that you present yourself as professionally and persuasively as possible. Similarly, your written documents should reflect the same level of attention to typography.”

In general, the importance of graphic design to effective communication is woefully unappreciated. Butterick points to the design of the butterfly ballots that caused the 200 presidential election fiasco in Palm Beach County, Florida as an historic example of the bad consequences of bad design.

What caused the Challenger shuttle disaster? You might think it was defective O-rings, but that would be to fail to appreciate that the defect would likely have been known and its consequences guarded against, according to Edward Tufte, if the charts presenting the critical information to the decision makers had been rationally designed. Tufte‘s expertise is in the effective use of graphics in conveying information. He’s a genius, and the dedication to his craft is made clear by the fact he self-publishes his books so that he can control the design of every element of them. And his advice on the use of PowerPoint is priceless.

John Lennon: an original, or a remixer? Or are they really the same?

The (Iranian) Revolution will not be Televised

Gil Scott Heron’s song seems timely these days:

Robert Johnson made no deal with the devil; he listened to and learned from his colleagues.

In “Beyond Authorship: Refiguring Rights in Traditional Culture and Bioknowledge,” the Case Western Reserve University English Department’s Authorship Collaborative (building on the work of my colleague and friend Martha Woodmansee) explains that the prevailing view of an author as the originator of new works is a relatively recent phenomenon arising out of the Romantic Movement and its view of an artist as someone uniquely inspired. This view of authorship stands in stark contrast to an older view becoming new again in today’s remix cutlure — a view that creative endeavors are derivative and collaborative, that originality is not the product of isolated genius but of, well, remixing:

An “author” in the modern sense is the creator of unique literary, or artistic, “works” the originality of which warrants their protection under laws of intellectual property — Anglo American “copyright” and European “authors’ rights.” This notion is so firmly established that it persists and flourishes even in the face of contrary experience. Experience tells us that our creative practices are largely derivative, generally collective, and increasingly corporate and collaborative. Yet we nevertheless tend to think of genuine authorship as solitary and originary. This individualistic construction of authorship is a relatively recent invention, the result of a radical reconceptualization of the creative process that culminated less than two centuries ago in the heroic self-presentation of Romantic poets. In the view of poets from Herder and Goethe to Wordsworth and Coleridge genuine authorship is originary in the sense that it results not in a variation, an imitation, or an adaptation, and certainly not in a mere reproduction, but in a new, unique — in a word, “original” — work which, accordingly, may be said to be the property of its creator and to merit the law’s protection as such. See Martha Woodmansee, “The Genius and the Copyright: Economic and Legal Conditions of the Emergence of the ‘Author’”; reprinted in Woodmansee, The Author, Art, and the Market, 35-55.

The post I referred to yesterday by Rene Kita noted the tension between the collaborative nature of creation and the Romantic notion of authorship in connection with the Blues: “[Y]ou may ‘create’ a new instance of The Blues by shuffling the notes and words around by a set amount. Shuffle too little and you’re in trouble with the law. Shuffle too much and the purists start screaming rape.”

My former colleague Olufunmilayo B. Arewa makes the point in much greater depth in “Seeing but not Hearing Music: How Copyright Got and Didn’t Get the Blues,” a working paper she recently presented at the recent Conference on the 100th Anniversary of the 1909 Copyright Act. Arewa focuses on Robert Johnson, the musician who remained largely obscure until decades after his death he became known as the greatest and quintessential Blues musician. In Arewa’s view, Johnson is an archetypical example of the way the Romantic view of authorship promotes individual genius over cultural context:

Commentators have so elevated Johnson by using classic language associated with Romantic author discourse that emphasizes the unique genius of Johnson’s compositions. Romantic author discourse has generally played an important role in defining who constitutes an “author” for copyright purposes in part by emphasizing the unique and genius-likecontributions of individual creators. Romantic author assumptions are a primary mechanism by which borrowing and collaboration in creation are minimized or even denied. This vision of authorship has significantimplications for the application of copyright to blues music. The collaborative nature of blues musical composition does not lend itself very well to Romantic author characterizations. In blues practice, the combination of individual performers crafting material from a collaborative tradition is a difficult one from the perspective of current assumptions about creation in copyright. Later romanticization of his musical creations aside, Robert Johnson falls firmly within a blues tradition characterized at least in part by repetition and reuse of existing music and lyrics as a core aesthetic. [Charles Ford, "Robert Johnson's Rhythms", 17 Popular Music 71, 88 n. 57 note 57, at 88 (noting that Johnson borrowed and pasted-in materials much like his predecessors and shaped his pieces into unique and autonomous forms)].The divergence between Robert Johnson’s actual musical practice and later characterizations of both the nature and musical practices underlying his “musical genius” is thus significant. (footnotes omitted)

Why, then, did Robert Johnson, who in Arewa’s view was likely of a piece with an entire genre to African American audiences in the 1920s and 1930s, become known as a genius among musicians comparable to the way Shakespeare is viewed among writers? Because a bunch of white British musicians in the 1960s listened to his recordings and heard something they genuinely had never heard before. In other words, as Arewa explains, perceiving originality in the Romantic sense is more a matter of being ignorant of sources and influences than it is of genuinely discovering independent genius:

Conceptions of Robert Johnson’s work highlight the context dependent nature of notions of originality. Originality is yet another characteristic of copyrightability that is not always easy to delineate in actual contexts of creation. However, what might seem original to those in one context may not seem as original in other contexts. Consequently, within the context of African American audiences of the 1920s and 1930s, Johnson’s work probably did not seem startlingly original in the way that it did to British and other musicians and audiences listening to Johnson’s music, often in relative isolation, in the 1950s and 1960s. This later audience was largely removed from the original context of other music that was prevalent at the time Johnson produced his music or able to listen to a limited and likely biased sample of such music. For early African American blues listeners, what seemed original and
interesting was very different that what seemed interesting and original to the largely white blues fans that were the major force behind the blues revival in the 1950s and 1960s. For the latter, romantic conceptions about the blues were closely tied to notions of authenticity that are often unsuited to musical creation in living musical traditions. As a result, what is perceived as original may depend in significant part on the contexts within which listeners hear music. (footnotes omitted)

Don’t believe it? Here’s a song by Charlie Patton (1891-1934) and one by Robert Johnson:

Does online writing produce better writers? IMHO, it can, but hasn’t yet to any great degree.

In the Chronicle of Higher Education, Josh Keller asks: does the explosion of online writing via social networking sites mean that we’re developing a better generation of writers?

The long and the short of it is that no one knows. Students are writing a lot more, and to audiences about whom they care. On the other hand, Facebook, Twitter, and blogs do not exactly seem to promote the kind of disciplined analysis that most good writing constitutes:

Some scholars say that this new writing is more engaged and more connected to an audience, and that colleges should encourage students to bring lessons from that writing into the classroom. Others argue that tweets and blog posts enforce bad writing habits and have little relevance to the kind of sustained, focused argument that academic work demands.

The debate seems to boil down to whether more writing produces better writing. One researcher states, “People write more now than ever. In order to interact on the Web, you have to write.” But writing, on the one hand, for Facebook and, on the other,  to produce an analytic essay or a legal brief, is writing for entirely different purposes. Sometimes I wonder if the differences are like driving to a Friday night party and driving in the Indy 500 — skill at one does not necessarily translate into skill in the other. As one writing professor quoted in the Chronicle of Higher Education article points out,

[H]e spends more of his time correcting, not integrating, the writing habits that students pick up outside of class. The students in his English courses often turn in papers that are “stylistically impoverished,” and the Internet is partly to blame, he says. Writing for one’s peers online, he says, encourages the kind of quick, unfocused thought that results in a scarcity of coherent sentences and a limited vocabulary.

My own views on the effects of online writing on professional writing are mixed — it hasn’t been the benefit idealists hope for, but it’s an outstanding tool that, properly used, could be a tremendous benefit to producing a new generation of excellent writers.

On the one hand, I have encountered again and again in the past couple of years student efforts at professional writing that are so stylistically inappropriate as to make me cringe. I recently read, for example, an analysis of the jury system that read entirely like a People Magazine article, full of superficial quips and an endless series of references to examples obvious to everyone – the principal point of reference was the O.J. Simpson trial (which, incidentally, I consider an example of atrocious lawyering on the part of the prosecutors, not a failure of the jury system).

On the other hand, the internet is here, and we better get used to it, even if we are training lawyers or political analysts. Students write  a lot on social networking sites. As the article points out, “Students in [one] study ‘almost always’ had more enthusiasm for the writing they were doing outside of class than for their academic work . . . .” Moreover, online writing is “self-directed,” is “often used to connect with peers” and usually is aimed at a “broader audience” than is professional writing. One of the most interesting points to me as a legal writer is that online writing is “also often associated with accomplishing an immediate, concrete goal, such as organizing a group of people or accomplishing a political end . . . .”

These are all characteristics that quite plainly can be used to produce better professional writers even if they have not yet been used effectively to this end. I have struggled to exploit student enthusiasm for online writing. Two years ago, I created a class wiki directed at creating a brief writing check list. I did not consider the effort terribly successful. One year ago, however, I created (as the Chronicle of Higher Education noticed) a class blog to explore issues regarding copyright and fair use in connection with a legal brief the students were assigned to write. While the blog became almost entirely the product of my own work rather than that of my students, it was a huge success in producing better work product. The students were engaged in and argued about the blog, and that engagement and passion produced work that was far more thoughtful and disciplined than anything I could have imagined without the blog.

So does Web 2.0 produce better writers? If you think it does so merely because it makes people write more, no. But it is a tool that, properly employed, sure can help.

Listening (not) to Pandora in Amsterdam

Dear Pandora Visitor,

We are deeply, deeply sorry to say that due to licensing constraints, we can no longer allow access to Pandora for listeners located outside of the U.S. We will continue to work diligently to realize the vision of a truly global Pandora, but for the time being we are required to restrict its use. We are very sad to have to do this, but there is no other alternative.

We believe that you are in Netherlands (your IP address appears to be 213.46.155.181). If you believe we have made a mistake, we apologize and ask that you please contact us at pandora-support@pandora.com

If you are a paid subscriber, please contact us at pandora-support@pandora.com and we will issue a pro-rated refund to the credit card you used to sign up. If you have been using Pandora, we will keep a record of your existing stations and bookmarked artists and songs, so that when we are able to launch in your country, they will be waiting for you.

We will be notifying listeners as licensing agreements are established in individual countries. If you would like to be notified by email when Pandora is available in your country, please enter your email address below. The pace of global licensing is hard to predict, but we have the ultimate goal of being able to offer our service everywhere.

We share your disappointment and greatly appreciate your understanding.

What real biking culture looks like.

As I wrote yesterday, the fact bicycling is the best and most popular way for Amsterdamers to get around their own city is one of the greatest pleasures I take in living here, even for the brief times I’ve been able to each of the last 3 years. It shouldn’t be surprising, therefore, that Amsterdam is leading the world in pursuing green urban planning. But for green Americans, the reality may not be exactly what they would conceive. Not only, as I wrote yesterday, do you ride a cheap, single-speed, fat tired, rusty and old bike and buy and use locks heavier than your backpack and more expensive than the bike itself, but you don’t wear a helmet, you carry people — often in the plural, and often of very tender ages — on whatever protrusion they fit on. And they, of course, don’t wear helmets either. You ride at any hour of the day or night, and you don’t hesitate to speak on your cell phone while you’re riding.

It’s the honest truth from one who is here. And if you don’t believe me, you can check out “82 pictures of bicycles taken during 73 minutes on 9/12/06 in Amsterdam, Netherlands.”

Bicycling is, by the way, the most energy efficient means of transportation, more efficient even than walking.

The Greening of Amsterdam

One of the joys of living in Amsterdam is the opportunity to bike everywhere and at any time. The city is built for and entirely operates around the predominance of bicycles as a means of transportation. It’s not U.S. bicycling, with expensive bikes and helmets. You ride one-speed junker bikes that no one wants to steal, but the city is small and flat, so you don’t care much.  But Amsterdam wants only to become greener and more energy efficient:

The City of Amsterdam has selected Accenture to help implement its ‘Amsterdam Smart City’ program and create the European Union’s first ‘intelligent city.’ The purpose of the Amsterdam Smart City program is to take a comprehensive and coordinated approach to developing and implementing sustainable and economically viable projects that help the city reduce its carbon footprint and meet the European Union’s 2020 emissions and energy reduction targets.

And Amsterdam, apparently, is on the cutting edge of energy efficiency in urban planning. According to Business Week, “unlike cities that could take decades to upgrade their infrastructure, Amsterdam aims to complete its first-round investments by 2012. That makes it one of the first and most ambitious adopters of the smart city concept, attracting attention from policymakers worldwide hoping to glean lessons from the green experiment.” Just last week, on Utrechtsraat, a major shopping avenue in the center of the Dutch capital not far from where I am living, electric trucks have begun to pick up the trash, and the electronic displays on the local bus and tram stops are powered by small solar panels. “Elsewhere, 500 households will pilot an energy-saving system from IBM and Cisco aimed at cutting electricity costs. An additional 728 homes will have access to financing from Dutch banks ING and to buy everything from energy-saving light bulbs to ultra-efficient roof insulation.”