Category Archives: Trademarks

Google v. Everyone

I had a long interview this morning with the Christian Science Monitor .  Like many of the interviews I’ve had this year, the subject was Google.    At the increasingly congested intersection of technology and the law, Google seems to be involved in most of the accidents.

Just to name a few of the more recent pileups, consider the Google books deal, net neutrality and the National Broadband Plan, Viacom’s lawsuit against YouTube for copyright infringement, Google’s very public battle with the nation of China, today’s ruling from the European Court of Justice regarding trademarks, adwords, and counterfeit goods, the convictions of Google executives in Italy over a user-posted video, and the reaction of privacy advocates to the less-than-immaculate conception of Buzz.

In some ways, it should come as no surprise to Google’s legal counsel that the company is involved in increasingly serious matters of regulation and litigation.  After all, Google’s corporate goal is the collection, analysis, and distribution of as much of the world’s information as possible, or, as the company puts it,” to organize the world’s information and make it universally accessible and useful.”  That’s a goal it has been wildly successful at in its brief history, whether you measure success by use (91 million searches a day) or market capitalization ($174 billion).

As the world’s economy moves from one based on physical goods to one driven by information flow, the mismatch between industrial law and information behavior has become acute, and Google finds itself a frequent proxy in the conflicts.

As I argue in “The Laws of Disruption”, the unusual economic properties of information make it a poor fit for a body of law that’s based on industrial-era assumptions about physical property.  That’s not to say there couldn’t be an effective law of information, only that the law of physical property isn’t it.  Particularly not when industrial law assumes that the subject of any conflict or effort to control (the res as they say in legal lingo) is visible, tangible, and unlikely to cross too many local, state, or national borders—and certainly not every border at the same time, all the time.

To see the mismatch in action, consider two of Google’s on-going conflicts, both in the news this week:  Google v. China and Google v. Viacom.

Google v. China

In 2006, Google made a Faustian bargain with the Chinese government.  In exchange for permission to operate inside the country, Google agreed to substantially self-censor search results for topics (politics, pornography, religion) that the Chinese government considered dangerous.  The company had strong financial motivations for gaining a foothold in the astronomically-fast expanding Chinese Internet market, of course, but also had a genuine belief that giving Chinese users access to the vast majority of its indexed information had the potential to encourage fewer restrictions over time.

Apparently the result was the opposite, with the government tightening, rather than loosening the reins.  Google’s discomfort was compounded by the revelation in January that widespread hacking and phishing scams had penetrated the Gmail accounts of several Chinese dissidents, leading the company to announce it would soon end its censorship of Chinese searches.  (It also added encryption technology to Gmail and, it is widely believed, began working closely with the National Security Agency to help identify the sources of the attacks.)  Though Google has not claimed the attacks were the work of the Chinese government or entities under its control, the connection was hard to miss.  Google is hacked, Google decides to end cooperation with the government.

This week, the company made good on its promise by closing its search site in China and rerouting searches from there to its site in Hong Kong.  As a result of the long occupation of Hong Kong by western governments, which ended in 1997 when the U.K.’s “lease” expired, Hong Kong maintains special legal status within China.  Searches originating in Hong Kong are not censored, and Hong Kong appears to be largely outside China’s “great firewall” which blocks undesirable information including YouTube and Twitter.

For residents of the mainland, however, the move is a non-event.  China quickly applied the filters that Google had applied on behalf of the government for searches originating inside the country.  So Google searches in China are still censored—only now Google isn’t doing the censoring.  The damage to the company’s relationship with the Chinese government, meanwhile, has been severe, as has collateral damage to the relationship between China and the U.S. government.  The story is by no means over.

Google v. Viacom

Also in the last week, a number of key documents were released by the court that is hearing Viacom’s long-running copyright infringement case against Google’s YouTube.  The case, which began around the same time that Google made its deal with China, seeks $1 billion in damages from copyright violations against Viacom content perpetrated by YouTube users, who posted everything from short clips to music videos to entire programs, including “South Park” and “The Daily Show.”

Under U.S. law, Internet service providers are not liable for copyright infringement perpetrated by their users, provided the service provider is not aware of the infringement and that they respond “expeditiously” to takedown requests sent to them by the copyright holder.   (See Section 512 of the Digital Millennium Copyright Act,  http://www.copyright.gov/legislation/dmca.pdf)  Viacom claims YouTube is not entitled to immunity in that it had actual knowledge of the infringing activities of its users.

Discovery in the case has revealed some warm if not smoking guns—guns that the parties resisted being made public.  (See the New York Times Miguel Helft’s as-always excellent coverage, and also coverage in the Wall Street Journal.)  Viacom claims it has found a number of internal YouTube emails that make clear the company knew of widespread copyright infringement by its users, though Google characterizes those messages as having been taken out of context.

Perhaps more interesting has been the embarrassing revelation that many (though still a minority) of the Viacom clips, from MTV and Comedy Central programming for example, were posted by Viacom itself.  Indeed, these noninfringing posts were often put on YouTube under the guise of being posted by non-affiliated users in the hopes of giving the clips more credibility!

These “fake grassroots” accounts, as Viacom marketing executives referred to them, made use of as many as 18 outside marketing agencies.  Most embarrassing is that Viacom’s own legal team has now admitted that hundreds of the YouTube postings it initially claimed in its list of infringing posts were actually authorized posting by Viacom or its affiliates, disguised to look like unauthorized postings.

(Since 2007, Google has somewhat quieted the concerns of copyright holders over YouTube by introducing filtering technologies that let copyright holders supply reference files that can be digitally compared to weed out infringing copies.  This is an example, for better and for worse, of what Larry Lessig has in mind when he talks of implementing legal rules through software “code.”  Better because it avoids some litigation, worse because the code may be overprotective—filtering out uses that might in fact be legal under “fair use.”)

Google v. Everyone

What do the two examples have in common?  Both highlight the difficulty of judging the use of information with traditional legal tools of property and borders.

In the first example, China considers some forms of information to be dangerous.  To some extent, in fact, all governments restrict the flow of information in the name of national security, consumer safety, or other government aims.  China (along with Burma and Iran) are at one end of the control spectrum, while the U.S. and Europe are at the other end.

Google believes, as do many information economists, that more information is always better than less, even when some of it is of poor quality, outright wrong or which espouses dangerous viewpoints.  Google’s view was perhaps best put by Oliver Wendell Holmes, Jr. in his 1919 dissent in Abrams v. United States, 250 U.S. 616 (1919):

[T]he ultimate good desired is better reached by free trade in ideas…[T]he best test of truth is the power of the thought to get itself accepted in the competition of the market, and that truth is the only ground upon which their wishes safely can be carried out. That at any rate is the theory of our Constitution.

But even legal systems that believe in the “the marketplace of ideas” as the preferred forum for determining information value can’t resist the temptation sometimes to put their finger on the scales.  Congress and some states have tried and failed repeatedly to censor “indecent” content on the Internet (fortunately, the First Amendment puts a stop to it, but, as John Perry Barlow says, in cyberspace the First Amendment is a local ordinance).  Just this week, Australia came under fire for proposals to beef up the requirements it places on Internet service providers to censor material deemed harmful to children.  The Google convictions in Italy last month suggest that not even Europe is fully prepared to let the marketplace of ideas operate without the worst kind of ex post facto oversight.

Likewise in the Viacom litigation, it’s clear regardless of the final determination of legal arguments that some information uses that are illegal are nonetheless valuable to those whose interests are supposedly being protected by the law.  Viacom can make all the noise it wants to about “pirates” “stealing” their “intellectual property,” as if this were the 1800’s and the Barbary Coast.  .  Those who posted copyrighted material to YouTube were not doing it with the intent of harming Viacom—their intent was just the opposite.  What’s really going on is that users—fans!—who value their programming were using YouTube to share and spread their enthusiasm with others.

Yet intent plays no part in copyright infringement.  The law assumes that, as with physical property, any use that is not authorized by the “owner” of the information is with few exceptions likely to be financial detrimental.  That is certainly what Viacom claims in the litigation.   But the company’s own behavior tells a different story.  Why else would they post their own material, and pretend to be regular users?  Put another way, why is information posted by an anonymous fan more valuable to Viacom than information posted by the company itself?  What is it about an unsanctioned sharing that communicates valuable information to the recipient?

By posting the clips, YouTube users added their own implicit and explicit endorsement to the content.  The fact that Viacom marketing executives pretended to be fans themselves demonstrates the principle that the more information is used, the more valuable it can become.  That’s not always the case, of course, but here the sharing clearly adds value—in fact, it adds new information to the content (the endorsement) that benefits Viacom.

Whether that added value is outweighed by lost revenue to Viacom from users who, having seen the content on YouTube, didn’t watch it (or the commercials that fund it) on an authorized channel ought to be a key consideration in the court’s determination, but in fact it has almost no place in the law of copyright.  Yet Viacom obviously saw that value itself, or it wouldn’t have posted its own clips pretending to be fans of the programming.

Productive v. Destructive Use

Both these cases highlight why traditional property ideas don’t fit well with information uses.  What would work better?  I present what I think is a more useful framework in the book, a view that is so far absent from the law of information.  That framework would analyze information uses not under archaic laws of property but would rather weigh the use as being “productive” or “destructive” or both and determine if, on the whole, the net social value created by the use is positive.  If so, it should not be treated as illegal, regardless of the law.

What do I mean?  Since information can be used simultaneously by everyone and, after use, is still intact if not enhanced by the use, it’s really unhelpful to think about information being “stolen” or, in the censorship context, of being “dangerous.”   Rather, the law should evaluate whether a use adds more value to information than it takes away.  Information use that adds value (reviewing a movie) is productive and should be legal.  A use that only takes value away (for example, identity theft and other forms of Internet fraud) is destructive and should be illegal.  Uses that do both (copyright infringement in the service of promoting the underlying content) should be allowed if the net effect is positive.

Under the productive/destructive model, Google’s actions in entering and now exiting from China make more sense as both policy and business decisions.  Censoring information is destructive in that it gives users the appearance of complete access where in fact the access has been limited.  That harm should be weighed against the benefit of providing information that otherwise wouldn’t have been available at all to Chinese users.

That the government became more rather than less concerned about Google over time might imply that Google had gotten the balance right—that is, that the Chinese government was increasingly aware that even what it originally thought of as benign information could have the kind of transformative effects it wanted to avoid.

Is China wrong to censor “dangerous” information?  Economically, the answer is yes.  There is a strong correlation between countries who are on the “freer” end of the censorship spectrum and those that have gained most financially from the spread of information technology.  The more information there is, the more value gets added by its use, value that is allocated (roughly, sometimes poorly) among those who added the value.

Likewise, the posting of Viacom clips on YouTube should weigh the productive value of information sharing (promotion and endorsement) against the destructive aspects–lost revenue of paid viewers on an authorized channel supported by cable fees, advertising sponsorship, and purchased copies in whatever media.

Under that kind of analysis, it might turn out that Viacom lost little and gained a great deal from the unpaid services of its fans, and that in fact any true accounting would have credited the fans for $1 billion in generated value rather than the other way around.  Or maybe it was a wash.  But just to consider the lost revenue, particularly using the crazy method of modern copyright law (each viewed clip is considered as a lost sale), is certain to misjudge the true extent of the harm, if any.

A lingering problem in both these examples is the difficulty of determining both the quality and quantity of the productive and destructive uses of the information in question.   How much harm did Google censoring cause?  How much value did YouTube users generate?

We don’t know, not because the answers aren’t knowable but because the tools for making such determinations are so far very primitive.  Traditional rules of accounting follow the industrial assumptions of physical property—that is, if I have it then you don’t, and once I’ve used it, it’s gone or at least greatly depleted—that information doesn’t follow.   It makes little or no allowance for the fact that information use can be non-diminishing, or even productive.

So how would we measure the harm to Chinese Internet users from the censored information, or the value of the information they could get before Google left town?  How would we measure the value of “viral” marketing of Viacom programming posted by real (as opposed to “fake grassroots”) fans?  How would we measure the actual losses Viacom suffered—not the statutory damages they claim under copyright law, which are surely far too generous?

Well, one problem at a time.  First let’s change the rhetoric about information use, positive and negative, from the language of property to a language that’s better-suited to a global, network economy.  If we do, the metrics will invent themselves.

Note to eBay: A Chink in the Amazon Armor?

I don’t usually blog “personal” stories, but this one is irresistible.  It raises disturbing questions at the border of digital and physical life, and legal problems of trademark and the emerging issues of cloud computing and data liability.

EBay, as everyone knows, has been struggling to improve its customer experience in the light of disappointing results in the last few years. One problem in particular that the company has worked hard to address is the problem of sellers who either misrepresent their items or otherwise underperform in the transaction, tarnishing the image of eBay in the process.

There are of course legal consequences to some of these problems as well. EBay has been the subject of numerous lawsuits in the U.S. and abroad from trademark holders claiming that eBay sellers are offering knock-off or forged goods as branded merchandise, or selling items outside the often-strict terms under which authorized merchants may sell branded goods. (For example, selling outside assigned geographic territory, or selling below the authorized price or terms.)

I’ve written extensively about the eBay litigation, including lawsuits brought by Tiffany in the U.S. and the Louis Vuitton brands in France. The question in these cases comes down to a definition of what eBay actually “is”—a department store responsible for the merchandise sold on its premises (liable) or a community bulletin board offered as a convenience to connect buyers and sellers of a variety of unrelated products and services (not liable).

EBay is neither of these things—it is an example of a new kind of virtual marketplace enabled by digital technology. But the law here, as elsewhere, has not kept up with the changing realities of digital life, leaving judges to struggle with analogies that just don’t fit. EBay has scored strong victories in the U.S., and significant losses abroad. Whatever the results in these cases, the legal reasoning is always hopeless and the opinions useless as precedent. The law evolves slowly.

(In a new twist, just the other week eBay was ordered to pay over $300,000 by a French court in another dispute with Louis Vuitton. This one involved eBay’s practice of purchasing advertising keywords that were common misspellings of LVMH marks that directed searches to eBay. EBay is appealing.)

Amazon’s third-party Marketplace, which has eaten into eBay’s market significantly over the years, has largely avoided these public legal skirmishes. Brand holders and their distributors may prefer to sell through Amazon than eBay, giving an incentive not to litigate when problems do arise. Amazon also manages a much smaller and generally more professional group of third party merchants than does eBay and, it appears, exercises more vigorous policing over the items that appear under the Amazon banner but which in fact are sold and distributed by third parties.

Well, maybe not. Recently I purchased a replacement camera battery from an Amazon third party merchant. (You can find the listing here, though I strongly suspect it will be changed or disabled very shortly for reasons that will become clear in a moment.)

Dissatisfied with after-market batteries I have purchased in the past, I decided this time to buy an actual Minolta battery for my Minolta camera. The listing I purchased from described the item as a “Konica Minolta DiMAGE X Replacement Battery,” and even had a link immediately below to “Other products by Konica-Minolta” (sic), which went to a page of authorized, branded goods from the electronics giant. Overall, the listing gives several indications that suggest an actual, new Minolta battery is being offered.

I received the battery today, only to find that what I received was an OEM battery of completely unknown quality and a completely different brand. (I haven’t bothered to test it out yet—but in any case, my problem with OEM batteries is that they often stop holding a charge after a month or two of use.) The purchase price was small, and the unrefundable shipping and handling represented about a third of the cost. Still, I wrote to the merchant to request a return authorization.

The merchant called immediately with an unusual story to tell. He claimed that his original listing was entirely accurate, and that the title listed his house brand name (“Wasabi”) and not Konica Minolta. But, he advised, Amazon allows other merchants who sell “the same item” to include themselves as a seller of the item and to make modifications to the page.  Another seller, he claimed, changed the listing to misrepresent the item.

Even if another seller makes changes that are inaccurate or, in this case, obviously fraudulent and infringing of strong trademarks, the seller complained to me that there is nothing the original seller can do. He claims that when he has previously advised Amazon of similar changes, Amazon often failed to correct the listings and informed him there was nothing he could do about it—that later changes take priority.

There is indeed a second seller listed as offering this item, though the merchant I purchased from is still the default seller on the page and, in fact, the second seller offers “the same item” at a higher price. (It’s unclear what the second seller actually sells–a Konica Minolta battery or a different after-market compatible battery. Amazon has several other pages offering several other after-market batteries.) There were no reviews of the item until I wrote one today noting the misrepresentation.

The merchant indicated that he hadn’t noticed this particular error (he sells a great deal of after-market items) but that when he received my complaint he immediately requested Amazon correct the page. Amazon, he said, rejected the changes. (As of the end of the day, the original page is still intact.) He offered to—and later did—fully refund my purchase including the shipping and handling, and told me to keep the item anyway. I told him I would contact Amazon, which he encouraged me to do, and asked me to call him back if they didn’t confirm everything he had told me.

Amazon denied everything he told me. Specifically, the customer service representative told me that he would file a complaint against the merchant but that, “I can tell you that what he told you is completely inaccurate.” (I don’t think the call was being recorded—in any case, I wasn’t notified if it was.)

Worse, when I asked them to get the merchant on the call, the customer service representative agreed but told me that “for legal purposes” he would not be able to confirm or deny anything he had previously said to me once the merchant got on the call. (That strikes me as the kind of “urban myth” legal advice that has no actual value but which gets passed along all the time.) True to his promise, the Amazon CSR listened politely as the merchant repeated his explanation of a serious breakdown in Amazon’s process, told in the presence of a customer, and neither confirmed nor denied it, much to the merchant’s frustration.

After the call, the merchant emailed me the following quotation from, he says, the Seller Support page’s “Detail Page Control” process:

In most categories, multiple sellers sell the same product through a single detail page. This provides an organized, uniform product presence in our catalog and increases the convenience of comparison shopping for potential buyers.

The information displayed on an Amazon single detail page, called “reconciled” data, is drawn from multiple seller contributions. When a seller contributes product information to an existing item in our catalog, a decision is made about whether or not to display any changes to the product details on the single detail page. This decision is processed automatically according to business logic known as “Detail Page Control.” Detail Page Control determines which of the available product descriptions, features, titles, and additional details are displayed on the single detail page.

The selection is made based on which contributing seller has greater Detail Page Control as determined by our automated system. This could be Amazon or any seller offering the item. Detail Page Control rankings are not modified manually, but are regularly reviewed and updated automatically by our system. Some factors that affect Detail Page Control are a seller’s sales volume, refund rate, buyer feedback, and A-to-z Guarantee claims.

I can’t say if this is actually what the Amazon page says (it is behind a firewall for sellers) or what, in addition, the page says regarding fraudulent information and information that constitutes potential trademark infringement or other actionable unfair trade practices. Nor is it clear what controls exist over merchants claiming to sell “the same product” but who in fact sell something different. Nor can I say why, when asked directly by the merchant on the call to assure the customer (me) that the merchant was accurately describing Amazon’s process, the CSR refused to “confirm or deny anything.”

The description of the system, if accurate, suggests a significant level of control exercised by Amazon over the accuracy and quality of the content of its listings. It goes beyond what I understand to be the level of control exercised by eBay.

Could this prove definitive in trademark disputes brought by companies such as, oh I don’t know, Konica Minolta? Perhaps so. Could it serve as evidence eBay could use to make the case that it is “less” of a storefront than Amazon in eBay’s own litigation? Well, I’d certainly offer it were I representing eBay. (I do not represent eBay. Or Amazon. Or Konica Minolta. Or the merchant in this case.)

The merchant, understandably upset if he is telling the truth, wrote that he owns a small business that provides for his wife and son and is greatly distressed that I have had a bad experience with him for which he cannot get Amazon to take the blame. Though I am a long-time and very satisfied Amazon customer, I have had enough bad experiences with their third party Amazon marketplace resellers to suspect he is telling the truth here.

That is, it seems plausible to me that another seller sabotaged his listing and that Amazon’s processes aren’t good enough to correct that behavior on a timely basis. A few well-placed lawsuits by brand holders ought to take care of the problem, if in fact there is a problem. But even an honest merchant is a small cog in a big machine, with little recourse except perhaps to move his business to another marketplace. (But then he would have to learn another perhaps imperfect system and would lose all the reputation value of his nearly 4,000 customer reviews.)

One disturbing detail, however. After the calls I went back and looked at the sales receipt that accompanied the battery, which was shipped by the merchant and not Amazon. The receipt, printed under the merchant’s letterhead, includes an SKU that I assume to be the merchant’s and not Amazon’s. In any case, the item description repeats the description on the Amazon page, that is, it describes the item as a Konica Minolta battery and not the merchant’s house branded OEM.

I asked the merchant by way of follow-up to explain his Sales Receipt. He writes, “We use the title of the product (as listed on Amazon) on our printed sales receipt. If the product title changes on Amazon, so too will the description as it appears on our sales receipt.”

I suspect what he means is that either he uses Amazon’s systems or that his system pulls its data on-demand from Amazon. If so, here’s another interesting legal problem raised by the move to cloud computing. Who’s responsible when bad data generates actionable misrepresentations?