Archive for March 2012

The Facebook Password Privacy Act – Is It Legal?

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On Wednesday, the House of Representatives voted down an amendment to FCC legislation that would prohibit employers from asking or demanding that potential employees disclose their Facebook usernames and passwords as part of the interview screening process. This practice, which received widespread media attention after a recent Associated Press article in the Boston Globe, has reportedly been used by public service oriented employers such as municipalities, law enforcement offices, and 911 call centers, but also by other commercial employers, including Sears.

Discussion of this practice has provoked widespread outrage and heated policy debates; this is indicative of the larger and mainly uncharted issue of privacy on social media in our technological age. What kind of privacy can a Facebook user really expect? Theoretically, information that users post on social media sites – inside jokes to friends, embarrassing pictures, social commentary, political rants – could be out there forever. Even if a user deletes a previous post or an image, it does not necessarily disappear. The post could be copied, saved, and re-posted elsewhere, where it can be taken out of context or altered. A user quickly loses any certainty of control over this information. Should the dramatic on-line rant of an impulsive 15 year old be associated with him or her indefinitely? Should it affect his or her future job prospects?

Critics, and outraged Facebook users (often one in the same), have likened the move to an interviewer requesting the interviewee’s house keys. Furthermore, by logging onto an interviewee’s Facebook account, a potential employer gains access to the personal information of not only the interviewee, but also all of the interviewee’s Facebook friends, many of whom have likely set their privacy settings to limit who can access their information. These peoples’ privacy would now be in jeopardy, and they would have no way of determining who exactly has been browsing through their pictures, status updates, and private information.

It’s clear that the practice of employers asking prospective employers for their social media passwords is a controversial one, but the key question remains: is it legal? The ACLU has complained of the practice, and several senators have reportedly banded together to request that the Justice Department and the Equal Employment Opportunity Commission begin investigating the legality of the act. The senators specifically asked, according to the New York Times, about the legality of the practice in light of the Stored Communications Act and the Computer Fraud and Abuse Act.

Facebook has issued a strong-worded, proactive response. In its response (Full text of the post). Facebook reminded users that it is actually “a violation of Facebook’s Statement of Rights and Responsibilities to share or solicit a Facebook password.” It also addressed an additional potential legal issue: employment law and, in particular, employment discrimination issues. As Facebook put it,

it also may cause problems for the employers that they are not anticipating.  For example, if an employer sees on Facebook that someone is a member of a protected group (e.g. over a certain age, etc.) that employer may open themselves up to claims of discrimination if they don’t hire that person.

Employment discrimination statutes such as the Age Discrimination in Employment Act, the Americans with Disabilities Act and Title VII of the Civil Rights Act, prohibit an employer from making employment decisions based on factors like age, race, gender, and physical condition – all things which, most likely, would be readily revealed by even a quick perusal of a potential employee’s Facebook page.

Finally, in the case of government or public employers, another possible legal issue involves the 14th amendment due process liberty interests of potential employees. Presumptively, these individuals have a fundamental right to privacy, particularly that which involves their personal lives and not their job performance. Government employers, of course, will argue that the information on a person’s Facebook page is relevant to that person’s character, lifestyle or integrity, which presumably will affect their job performance, and thus is both relevant and important.

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March 29th, 2012 at 10:32 pm

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Sony’s $8M Settlement and the Future of Digital Royalties

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Wrapping up six years of heated litigation, Sony offered an $8 million settlement this week in a class action lawsuit led by The Allman Brothers and Cheap Trick, accusing Sony of underpaying the bands’ digital record royalties.  Originally filed back in 2006, this class action forged the way for numerous artists to sue their labels for counting digital downloads as “sales” rather than “licenses.”  Last year, Eminem’s producers won a similar suit against Universal.  See F.B.T. Productions, LLC v. Aftermath Records, 621 F.3d 958 (9th Cir. 2010).  At the crux of such disputes lies the discrepancy between sale and license royalty rates: royalties for phonorecord sales typically fall between 8 and 20 percent, whereas a 50 percent royalty rate remains the industry standard for licenses.

As the Amended Class Action Complaint alleges, Sony’s failure to properly account to Plaintiffs for recording royalties of their recordings sold by “Music Download Providers” and “Ringtone Providers” through digital distribution has resulted in a gross underpayment of royalties to Plaintiffs.  See Allman v. Sony BMG Music Entm’t, No. 06-CV-3252 (GBD), 2008 WL 2307598 (S.D.N.Y. July 10, 2006).  By treating digital downloads like traditional record sales, Sony has successfully triggered a lower-paying royalty deal for its artists.  The Complaint charts out the differences between the two royalty options, highlighting that of the 99 cents charged to the consumer by Apple for each download through iTunes, Plaintiffs receive approximately 4.25 cents.  Similarly, from each $1 to $1.50 that Sony receives for a ringtone, Plaintiffs receive only 8.3 cents.  Plaintiffs argue that these numbers stand in stark contrast to the revenue Plaintiffs would receive if Sony licensed its sound recordings to Music Download Providers, since the artists’ Recording Agreement requires Sony to pay its artists 50% of all net licensing receipts received, when such sound recordings have been licensed to third parties.

However, in a brief and pointed opinion, the district court judge determined based on the contractual language that there is “no basis from which it can reasonably be inferred that payment pursuant to the master recording lease provision is applicable.”  Allman v. Sony BMG Music Entm’t, 06-CV-3252 (GBD), 2008 WL 2477465, at *1 (S.D.N.Y. June 18, 2008).  Since the master recording lease provision (which would entitle Plaintiffs to 50% of net receipts as a royalty) necessarily required proof that the master recordings were in fact leased to the Music Download Providers – proof not provided by Plaintiffs – that provision did not apply.  Instead, the district court held that the royalty provisions applicable to “Sales of Phonograph Records” reigned supreme, which included master recordings sold by Defendant or its licensees through normal retail channels, such as iTunes.  Since the parties stipulated that digital music files fell within the contractual definition of “phonograph records,” the iTunes downloads constituted sales of the digital sound recordings rather than licenses and thus justified the lower artist royalty rate.

Now, almost four years later, the Settlement directs that $7.65 million (less attorneys’ fees) will go to class members who sold at least 28,500 downloads on iTunes, while the remaining $300,000 will be paid to class members equally, per capita, with sales fewer than 28,500 total downloads.

Despite being premised primarily on contractual interpretation, Allman nonetheless raises timely, compelling questions pertaining to the disconnect between emerging digital technologies and frequently outdated contracts.  For example, one background explanation for the prevailing lower royalty rate in Allman may be that the lead Plaintiffs’ record contracts came into existence before the advent of digital music sales online, and did not adequately predict or account for future methods of artist payments.  In any case, the district court’s opinion makes clear that “the emergence of a new era of digital sound recordings does not afford plaintiffs the right, under the guise of contract interpretation, to rewrite the terms of the contracts in order to secure a more favorable, or what they consider to be more equitable, royalty formula.”  See Allman, 2008 WL 2477465, at *2.  Depending on the exact wording of other artist contracts, then, we can expect to see an increase in this type of litigation.

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March 22nd, 2012 at 1:33 pm

Biotechnology, Bioterrorism & the First Amendment

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Last year, two teams of researchers funded by the National Institutes of Health (NIH) succeeded in genetically modifying the H5N1 avian flu virus.  The modified virus is capable of respiratory transmission between ferrets, suggesting that it would also be transmittable between humans and potentially capable of causing a “pandemic of disastrous proportions” with mortality rates exceeding 50%.

The central controversy arose around attempts to prevent publication of the research findings, which some considered a “blueprint for bioterrorism.  The U.S. National Science Advisory Board for Biosecurity (NSABB) met to discuss the issue and adopt a solution that would both protect national security and be consistent with scientific freedom and the First Amendment.  While the NSABB recommended redacting details from the paper, the international community came to a different conclusion.  At a meeting convened at the World Health Organization in Geneva, international experts felt that the papers should be published in full.

On the domestic plane, preventing publication of scientific research raises issues of free speech and the First Amendment.  The Supreme Court has consistently read the First Amendment broadly, as evidenced by the landmark Pentagon Papers case.  In New York Times v. United States, the government sought to prevent the New York Times from publishing a top secret study on the U.S.’s policy in Vietnam.  This marked the first time that the federal government sued the press to prevent it from disclosing information for reasons of national security. The Supreme Court recognized that there was a “heavy presumption against” restraints on the press, and found that the government did not meet this burden.

Even in instances – as with the H5N1 research – where the U.S. government has funded research, this does not give it the power to censor publication.  In Board of Trustees of Leland Stanford Jr. University v. Sullivan, the Court ruled that federally funded scientific research should not be subject to prior restraint.  That is, the government may choose whether or not to fund research, but if it chooses to fund a certain study, it may not restrain the dissemination of findings from that research without a compelling state interest.

Although First Amendment jurisprudence is strong, freedom of speech does not extend to every situation.  The Court ruled in Chaplinisky v. New Hampshire that certain utterances may be of such low value “that any benefit that may be derived from them is clearly outweighed by the social interest in order and morality.”  Since New York Times v. United States, courts have found themselves judging cases in which it is necessary to balance the value of free speech against other interests, such as security.  In 1979, the Court in United States v. Progressive, Inc. recognized that “First Amendment rights are not absolute,” and enjoined the press from publishing an article with technical details on constructing a hydrogen bomb.  The Court ruled that the threat to national security met the standard established in New York Times v. United States.

In the case of the H5N1 research, a redacted publication may survive a First Amendment challenge under the reasoning of the court in Progressive.  In both instances, free speech must be balanced against the potential threat to life and security.  The government could evoke the war on terror to argue that heightened restraints on speech are necessary when it comes to issues of biosecurity during wartime.

Another possible solution to the H5N1 controversy is for Congress to legislate in this domain.  One of the Supreme Court’s main reservations in New York Times v. United States was that the judges did not want to legislate from the bench; they saw this as an issue of separation of powers.  In recent years, Congress has considered expanding legislation to protect national security over freedom of the press.  After the upheaval caused by Wikileaks, the Securing Human Intelligence and Enforcing Lawful Dissemination (SHIELD) Act was introduced in Congress.  This proposed legislation would amend the Espionage Act, providing greater protection for classified government information.

Unfortunately, as the H5N1 controversy has shown, problems relating to security and free speech do not end with domestic law.  The two researchers who led the H5N1 study were from universities in the U.S. and the Netherlands, and the international community and the World Health Organization have already become heavily involved.  Even if redacting the articles would survive a First Amendment challenge in the U.S., these efforts would be fruitless if other countries chose to publish the data in science journals abroad.  With increasing international collaboration in scientific research and greater security risks posed by research findings, it may soon become necessary to create a set of international standards for biosecurity.

One major problem with international standards to suppress speech in the interests of security is determining who decides when these standards have been met.  In the case of the H5N1 research, would the U.S. and the Netherlands be the sole decision makers?  This seems certain to displease other nations who have an interest in the sensitive information or in voicing their opinions.  On the other hand, if all nations had a say in weighing the benefits of publication against security interests, then the risk of sensitive information getting out could grow even greater.

Threats to biosecurity like the H5N1 research will continue to present themselves in the years to come, and political leaders should seek to address these issues both domestically and internationally.  While First Amendment jurisprudence may pose an obstacle to preventing the dissemination of dangerous information, a coordinated effort on the international level is also necessary.  With clear standards for undertaking research and withholding sensitive findings from the press, threats to biosecurity may be contained without prejudice to scientific freedom.

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March 21st, 2012 at 1:40 pm

Bollywood & Hollywood: Opportunity for Collaboration through Reform of Policies Governing Copyright and Plagiarism

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The Bollywood film industry has been using ideas from foreign films since its inception. This “borrowing” has ranged from melodies for background scores to entire plot summaries and even translated dialogues. However, with the advent of technology and the increasing popularity of Bollywood cinema in the United States, we are beginning to see American film producers “borrowing” Bollywood film elements as well. Prominent examples are the use of the Bollywood song “Chamma Chamma” from the Hindi movie China Gate as a dance number in Moulin Rouge; the use of the Bollywood song “Chaiyya Chaiyya” as the title song for the Hollywood movie Inside Man; and the Black Eyed Peas sampling of songs from both Don and Apradh on the track “Don’t Phunk with my Heart”.

The media exchange between both nations is increasing as Bollywood actors and directors are entering the Hollywood industry while Hollywood filmmakers and production companies are trying to break into the Bollywood media market. As the cross-border media sharing intensifies, the need for answers regarding legal implications for both nations increases. While both countries have copyright statutes and are signatories to numerous treaties regarding intellectual property rights there is a lack of enforcement of these provisions in the Indian courts.

There is a great need for international collaboration between the United States and Indian governments to work towards a solution to this legal issue. As evidenced by the Indian High Court’s ruling against Will Smith’s production company’s suit against the Bollywood producers who re-made Hitch without permission, the two governments have vastly different approaches to intellectual property rights enforcement. Without some way for Hollywood and Bollywood film producers to compromise and reach a mutual understanding regarding sampling each other’s productions, the creativity that could be fostered by increased communication is hindered. Furthermore, without some sort of reprimand for producers who abuse their “sampling” privileges and effectively steal whole works of others, relations between these two film industry giants will be frayed.

For further reading on this topic, check out this, this, & this.


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March 20th, 2012 at 2:54 pm

Hashtags Represent the Future of the Linkable Web

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When Dick Costolo succeeded Evan Williams as the CEO of Twitter, the social network blogged about the occasion with a post entitled “#newtwitterceo”. This is an example of a new kind of link—the hashtag—and its popularity is growing rapidly. The #-symbol (a.k.a. “number sign” or “pound”) introduces the form, which precedes a term or phrase, often without punctuation or capitalization. A search for #newtwitterceo only returns results with that specific tag, far more relevant than a search for “new Twitter CEO”. Twitter encourages using hashtags in this way. They represent a new form of link for the social Web, pointing not to a specific website, but often to a larger topic or thread. Some writers have been quick to specify the hashtag’s dos and don’ts, or to discourage its use. Others have recognized its potential to attract a larger audience. New websites have been founded with the sole premise of pointing users to the best hashtags.

In 2007, Chris Messina suggested the pound symbol be used for organizing groups via Twitter, and ever since hashtags have allowed tweets to show up more easily in search results. The form underwent mission creep, and now serves many functions, the most prominent being adding additional context to a tweet. It can reveal the speaker’s tone. It’s almost like an aside, a whisper from the tweeter to the reader. For example, Mitt Romney tweeted: “Only in @BarackObama’s world is it an “economic positive” that Americans are giving up hope and leaving the workforce #clueless”. With only 140 characters to make a statement, the added context can be particularly valuable.

The hashtag has leaked from Twitter into the wider Web. Twitter has officially supported hashtags since 2009, and other websites have begun to do the same. Regardless of official support, hashtags are common on popular social networks today, including Facebook, which has led to some confusion about what exactly they mean. This has, in turn, created a niche for new services which explain the meaning behind the tags. Much like URLs, they can serve as guideposts for navigating the vast soup of content generated every day by the millions of users worldwide.

The usefulness and applicability of hashtags have brought the form beyond the Web and into popular culture. Hashtags have appeared in advertising (including the Super Bowl), Comedy Central’s Roast of Donald Trump, and as a recurring gag on Late Night with Jimmy Fallon. They can also guide professionals (e.g., lawyers) networking and researching online. Hashtags seem to fill the niche left by AOL keywords of yore. They provide an easy-to-remember shortcut—a way of connecting us through the web without unwieldy URLs. However, they are also user-generated and are capable of expressing and connecting the ideas of many. As Internet communication becomes more complex and more personal, the popularity of hashtags is likely to increase. Going forward, an understanding of hashtags will be important for up-and-coming professionals on the social Web.

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March 20th, 2012 at 2:53 pm

Dueling Cybersecurity Propositions in the Senate

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It’s no secret that cybersecurity is a big issue today, especially with certain private networks containing the personal information of millions of Americans being at a very high risk of attack. Never fear, though, because the U.S. Senate is on the case. Last month, a group of mostly Democrat Senators introduced the Cybersecurity Act of 2012. In response, seven GOP Senators, led by Senator McCain, introduced the Strengthening and Enhancing Cybersecurity by Using Research, Education, Information, and Technology (SECURE IT) Act this past week. Clearly the first bill wins in the name category, unless you happen to be a fan of the trend of giving bills complex names just for their cutesy acronyms. The real question is, which bill is better for increasing cybersecurity without imposing too much on the organizations running these private networks?1

The Cybersecurity Act would create a new regulatory scheme under the Department of Homeland Security that requires certain critical infrastructure networks to work with regulators to develop and abide by extra security measures. The regulations would apply to any network “whose disruption from a cyber attack would cause mass death, evacuation, or major damage to the economy, national security, or daily life.” Since its drafters were opposed to the increased government intervention of this measure, the SECURE IT Act instead promotes more sharing of information about threats between the government and private network owners and increases to criminal penalties for certain cybercrimes.

Trade groups seem to prefer the SECURE IT Act, since it doesn’t create more regulations for them to follow. That was predictably the biggest criticism of the Cybersecurity Act. The owners of these networks already have incentives to keep them up and secure, and increasing information sharing regarding threats is absolutely necessary. It also places more emphasis on punishing the people doing the hacking in the first place, but the huge problem with cybersecurity on the punishment is how difficult it is to catch the perpetrators in the first place. The penalty could be life in prison, but it’s worthless if you don’t have a person to try.

There is also some benefit to requiring certain networks to meet extra requirements. The networks running our financial system, fire departments, police departments, utilities, and even certain retailers are high risk, but as the Cybersecurity Act implies, they are essential to daily life. Too big to fail, if you will. Allowing the government to ensure their security can be seen as part of national defense.

The answer may be to incentivize information sharing, with the threat of increased regulation if critical infrastructure networks have substandard security as tested by an accepted industry standard. This sort of compromise may be what eventually passes, if anything can get past the gridlock gripping Washington this election year. We’ll have to wait and see.

1) I assume here that we do want to avoid extreme impositions on the private networks, whether because giving the government that control gives us the heebie-jeebies or because we’re worried they will just take the networks down.

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March 19th, 2012 at 11:49 am

Limitations on the Seventh Circuit’s Reasoning in Flores-Lopez

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In an opinion by Judge Posner, the Seventh Circuit held on Wednesday in United States v. Flores-Lopez that police may conduct a warrantless search of a cellular phone to determine the device’s phone number when the device is found with or on an arrested suspect. Analogizing mobile phones to diaries, address books, and other receptacles of personal objects or information, the court held that where previous case law held certain types of warrantless searches to be lawful, the equivalent search and extraction of information from a cellular phone was also lawful.

Accepting this analogy at face value, however, ignores the reality that cellular phones are quite unlike diaries, address books or other containers of objects or information. First, a cellular phone acts like many, many types of traditional receptacles of information in one—a substantial proportion of phones now are message inboxes, email inboxes, contact lists, photo galleries, and much more. The sheer quantity of information carried in one place sets cellular phones apart from such non-electronic personal items. Second, a cellular phone, unlike its address book or diary counterparts, is almost always with its owner, exposing its data to greater access by law enforcement in the event of arrest and seizure of the device. And finally, it is difficult for a user to control what personal information is stored electronically on a cellular phone, especially because such devices generate and store much of their information automatically. Indeed, the piece of information at issue in Florez-Lopez was a cellular phone’s own number—a piece of data that is automatically programmed into the device and cannot be removed by a user.

With significantly greater amounts of information stored in one place, greater access to that storehouse of information, and less control over what information is generated and stored, cellular phones are quite different from traditional diaries and address books. For this reason it is a mistake to say that an invasion of privacy with cellular phones is permissible simply because an equivalent invasion would be permissible under existing law. The Seventh Circuit’s attempt to preserve existing law could very well backfire: the same rule applied to different circumstances is, in fact, different law.

Law enforcement therefore needs a principled way to limit the applications of the analogy between mobile phones and other receptacles of information. In subsequent cases, courts will need to give law enforcement such guidance to avoid violations of the Fourth Amendment’s principles through the imperfect application of old law to new circumstances.

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March 18th, 2012 at 9:03 pm

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DOJ Threatens to Sue Apple, Publishers for Violating Federal Antitrust Laws

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How much did you pay for your most recent e-book purchase? According to the Justice Department, you may have paid too much. News outlets have recently reported that the Justice Department has threatened to sue Apple and prominent book publishers such as Simon & Schuster, Hachette Book Group, Penguin Group, Macmillan, and HarperCollins Publishers for violating federal antitrust laws by price-fixing the cost of their e-books.

The Justice Department’s allegations are based on events occurring in 2010, when the Justice Department alleges that Apple and the above-named publishers engaged in price-fixing to force Amazon to increase the cost of its e-books. At the time, Amazon was selling many of its e-books for just $9.99.

Reportedly, Amazon and Apple have also developed a practice of offering publishers “most favored nation” clauses. These clauses prohibit publishers from offering their e-books at a cheaper price to other e-book competitors. According to CNN, the agreements “aren’t straight out illegal under antitrust laws – but they’re also not always legal.” According to the Wall Street Journal, the Justice Department has recently looked more closely at these clauses because of their potential to limit market competition illegally.

Publishers have argued that their actions have had the positive effect of making the e-book market more competitive. They argue that their actions prevented Amazon from dominating the e-book industry.

Apple, the publishers, and the Justice Department are reportedly in settlement negotiations to resolve the matter.

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March 15th, 2012 at 5:26 pm

Will Jeremy Lin’s Success On The Basketball Court Lead To Troubles In Another Court?

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Jeremy Lin’s battles have been well documented.  He led his high school to a state title his senior year, and yet he received no athletic scholarship offers out of high school.  After going undrafted from Harvard, Lin bounced around a few NBA teams before finding himself a spot in the starting lineup of the ailing Knicks.  And from there, a sensation was born, the birth of “Linsanity”!

Jeremy Lin’s recent successes on the basketball court may ultimately lead him into a battle in another court.  On February 13, 2012, Lin filed a trademark application for the term “Linsanity” with the U.S. Patent and Trademark Office.  The problem is that Lin’s filing came six days after Yenchin Chang, a 35-year-old California resident with no ties to Lin,  became the first to apply for a “Linsanity” trademark.  Chang said that he filed his application because, like many others, he “wanted to be part of the excitement.”  A second filing was also made on February 9 by Andrew Slayton, who coached at Lin’s high school.  Both applications for “Linsanity” have proceeded  quickly through the trademark examination process, as the Trademark Office’s database shows that both applications have already been assigned to an examining attorney.

The fight for the “Linsanity” trademark is fierce, as many attempt to jump on the bandwagon to capitalize on Lin’s remarkable story.  In fact, Lin’s emergence has translated into huge sales thus far.  ESPN is reporting that Lin’s No. 17 Jersey has been the number one selling jersey since February 4th, according to the NBA.  In addition, Yahoo! Sports recently announced that Jeremy Lin is the world’s fastest-growing athlete brand worth approximately $14 million.  So far, only Slayton’s application  is based on use of the “Linsanity” trademark in commerce, as Mr. Slayton, who owns the domain names and, has already begun selling Lin merchandise.  The remaining applications, including both Chang’s and Lin’s, are only based on a bona fide intent-to-use the mark in commerce.

Lin’s predicament is reminiscent of the rush to trademark catchphrases coined by Charlie Sheen last year, including by Sheen himself.  The law firm of Mintz Levin recently did a comparison of Lin’s situation with that of Sheen’s from last year.  The firm noted that when faced with trademark applications from Sheen and others for phrases such as “WINNING”, the Trademark Office refused registration based on Section 2(a) of the Lanham Act.  Under Section 2(a), registration of a mark may be barred if the mark is the same as, or a close approximation of, the name or identity of another person (that is not the applicant) and points uniquely and unmistakably to that person.  In Sheen’s case, the Trademark Office refused registration on the grounds that the applied-for mark “consists or includes matter which may falsely suggest a connection with the actor Charlie Sheen.”  In Lin’s case, Mintz Levin noted that given Lin’s recent explosion, his fame is such that consumers may presume that Chang’s and Slayton’s “Linsanity”  mark and associated goods are connected with Lin.  Similarly, the Trademark Office may refuse registration under Section 2(c), which is a bar to registration of a designation that identifies a particular living individual absent written consent.  Section 1052(c) of Article 15 the U.S. Code, which protects individuals’ privacy and publicity rights, also specifically prohibits the registration of a trademark that “[c]onsists of or comprises a name, portrait, or signature identifying a particular living individual except by his written consent.”  Given the fact that Lin is unlikely to provide the required consent, the pending applications may ultimately be doomed.

Checking on the  status of Sheen’s trademark applications,  more than half of them have subsequently been abandoned.  As for Lin’s case, it remains to be seen whether trademark applications for “Linsanity” will suffer the same fate, or whether the “Linsanity” phenomenon truly has staying power.  What is clear, for the reasons articulated above, is that Lin appears well positioned to protect his trademark rights.

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March 12th, 2012 at 1:13 pm

What Will Pay For Information Next?

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As Ezra Klein wrote earlier this year at Bloomberg, someone has always footed the bill for information distribution. For a century and a half, newspapers and print sources were the primary sources people read in order to access information. Initially newspapers were bankrolled by political parties, but this gradually shifted to a model whose revenues were built on advertising. There were very few ways to ensure advertisements ended up in front of valuable consumers, and newspapers were able to sell the attention of their readers to advertisers eager to guarantee such an audience.

As the Internet has grown to dominate information distribution, advertising has continued to subsidize the distribution of information. From simple AdWords placements based on search terms to complex tracking schemes which build profiles of web users, advertising allows the information distributors to maintain the illusion that everything on the Internet can be free.

But as digital marketing and metrics allow for increasingly precise measures of advertising effectiveness, companies are increasingly only willing to pay for ads which directly lead to sales. Similarly, merchandisers want to be able to target their internal advertising, via circulars or product placement, in ways which maximize sales. The recent New York Times piece on how Target manages to do this, How Companies Learn Your Secrets, was, for many, an introduction to the sheer amount of data these companies and advertisers have amassed from our online and purchase histories.

Newspaper advertisements were a necessary inconvenience, if they were an inconvenience at all. Sure, you didn’t need to know how Macy’s was branding their sales promotion every week of the year, but sometimes it was nice to know when those jeans were on sale. And advertisers then could barely know anything about you, most likely your name and address, if that. Search-based advertisements, while initially confusing, were easily accepted. I’m openly looking for a Mont Blanc pen, so Mont Blanc retailers are looking for me. Targeted advertising based on a pool of data amassed by the same advertisers is another beast unto itself. People don’t like to be followed, especially online where many maintain the illusion that everything they do is anonymous.

In what must be entirely coincidental timing, Google recently announced it would incorporate a ‘Do-Not-Follow’ function into its browser one week later. But if Google and other information accumulaters can’t track your online life, the value of advertising falls. And if the value of advertising falls, who will pay for the distribution of information? Surely there are entities that would love to pick and choose what we see, just as political parties did when they controlled the newspapers in the mid-19th century. Is this an invitation for internet service providers who would gladly sell preferential access to certain websites for greater profit? Could it be an unexpected blow to those who fight for net neutrality? Will time tell, but only if someone pays it?

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March 12th, 2012 at 12:47 pm

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