You’ve probably heard by now about the change that Facebook made to its Terms-of-Service (”TOS”) policy last week regarding the company’s “perpetual use” of a user’s information even after the user terminates his/her Facebook account.  It prompted an outcry, with many users threatening to quit the service.  Facebook has now done a complete about-face and announced, for the time being at least, that the old TOS was going to be reinstituted while the company resolves “the issues that people have raised.”

The change focused upon the license provision of the TOS.  Facebook deleted a sentence from its old policy that the company could not claim any rights to a user’s content once that person’s account was closed.  Instead, the company replaced it with other language giving it the right to store and retain copies of a user’s content indefinitely.  It must have been a slow news day, because this really shouldn’t have created the firestorm that it did.

First, at no time did Facebook exercise any actual ownership claims over its users’ content.  It never did.  Copyright remained with the user, where it’s always been.  So people need to relax.  Some of the articles and blog postings that I’ve seen are trying to read much more into this change then there really is (or was). 

Also, even under its broad license provision—which is hardly unusual—people need to be a bit more realistic about their own content.  Facebook simply has no interest in using the picture of you and your German Shepherd playing together on the lawn or in the song you strummed on your guitar one night for your friends.  To put it bluntly:  Get over yourself.

In many ways, this is a tempest in a teapot.  However, when you’re the biggest social networking site at the moment and are growing by about 4 to 5 million users per week, even small changes to a TOS can take on a life of their own.  Mark Zuckerberg, Facebook’s CEO, characterized the reason for the change this way:

One of the questions about our new terms of use is whether Facebook can use this information forever. When a person shares something like a message with a friend, two copies of that information are created—one in the person’s sent messages box and the other in their friend’s inbox. Even if the person deactivates their account, their friend still has a copy of that message. We think this is the right way for Facebook to work, and it is consistent with how other services like email work. One of the reasons we updated our terms was to make this more clear.

In reality, we wouldn’t share your information in a way you wouldn’t want. The trust you place in us as a safe place to share information is the most important part of what makes Facebook work. Our goal is to build great products and to communicate clearly to help people share more information in this trusted environment.

Facebook’s position is not unreasonable.  While users are perhaps rightly concerned that this seemingly small TOS change could have a far greater impact then intended, let’s not go too crazy with anti-Facebook sentiment just yet.  I’m all for privacy and protecting people’s personal information—it’s a continuing theme throughout this blog.  It’s an important issue and people should be concerned.

But does anyone seriously think that if Facebook did something stupid—such as taking an expired user’s picture or other content and using it in an advertisement—the backlash against it wouldn’t be swift and severe?  While the company would be able to point to its TOS claiming that it had the right to do what it did, it would still become a public relations fiasco, with prominent bloggers leading the “I told you so” charge and the refrain, “just because you have the right to do something doesn’t mean you should.”  Facebook obviously understands that.

While the company has achieved critical mass and its 175 million users gives Facebook considerable muscle at the moment, internet users are a fickle bunch.  The next social networking site is only an e-mail address and password away.  And if that site were to offer comparable or better services and a more user-friendly TOS that gives its users more control over their content, word would spread as only word can on the internet.  Every internet business is acutely aware that its next competitor may be a garage or college dorm room away.  So Facebook will be cautious in what it does, as its reversion back to the old TOS demonstrates.

Zuckerberg also correctly notes that these issues are “difficult terrain to navigate and we’re going to make some missteps.”  As a technology lawyer, I can attest that they are indeed difficult issues to address and require a great deal of thought.  So while this may have been a bit of a misstep from a public relations perspective, it’s also a “sensible” one given some of the concerns that the company has.  While Facebook is going to slow the TOS amendment process down somewhat, it will still move forward.  It will be evolutionary, not revolutionary. 

As an attorney who both drafts and litigates TOS policies, there are some practical lessons to be learned here.  At the very outset of a website’s inception, I often—but not always—tell my clients to go for the broadest possible content license from its users when the TOS is first posted, unless there are reasons against it (which there sometimes are depending upon the type of entity that is collecting the content and the type of content being collected).  Better to have it and not need it, than to need it and not have it.

This way, users know at the very outset (or at least are given the opportunity to know) what licensed rights the company has in their content.  Based upon all of the TOSs that I’ve drafted through the years, I’ve found that in many instances it’s only after a site catches-on and becomes popular that people start to pay really close attention to how they’re content is being used.  And the site may never catch-on so it may never become an issue.  Also, as a general matter, few users read a TOS when it’s first posted anyway.  And since so many sites use them, there tends to be ”TOS fatigue.”  They don’t exactly make for a stimulating read no matter how plainly they’re written.

It’s only later when a company announces its inevitable changes to the TOS that users then pore over the language—which is what happened to Facebook.  If after the site has been up-and-running, a company wants to restrict what it does with a user’s information, i.e., disseminate or use it less broadly than originally intended, few users would raise an eyebrow.  After all, people don’t often complain that a company isn’t using their personal information broadly enough.  How would users even know?  If the TOS is drafted properly, the company would have the right to use as little information as it wants anyway.  It’s the broader uses that get a company into trouble. 

While I realize that this is much easier said than done and that a company may not really know what it needs when it first starts doing business (Facebook, after all, started out as a site while Zuckerberg was at Harvard), I prefer to err on the side of caution and ask for broad user license rights that a company may never need, as opposed to too few rights and then run the very real risk of alienating users if the company needs to ask them for more.  At that point, everyone is paying attention.  But it depends on many factors and can be a bit of a “balancing test.”  So if you’re in the process now of putting together your site, develop the TOS carefully and think it through.

Perhaps that’s the plus side from the Facebook story.  People are indeed paying attention to these issues more and more.  So companies do need to be careful.  All it takes is one blog post and . . . .

When I heard the Author’s Guild claim that Amazon’s new Kindle 2 text-to-speech feature violated an author’s copyright, all I could first think of was . . . good grief.  And being a lawyer with a good stable of Yiddish terms, the phrases “oy vey” and “meshugenah” came to mind also.  This nifty feature allows the Kindle to read the e-book’s text to the user in a computer-generated voice.  But Paul Aiken, the Guild’s Executive Director, stated very matter-of-factly:  “They don’t have the right to read a book out loud.”  

There’s something inherently silly about this statement which makes me want to unequivocally proclaim: “That’s ridiculous!”  After all, when you buy a book, you certainly have a right to read it out loud, whether to yourself, your children, your colleagues, or to the friends in your book club.  This is a “fair use.”  Is it really that different if a machine does it for you—at least in this limited instance?

You probably already know that you don’t have the right under copyright law to publicly perform a literary work.  You can’t, for example, hold a public gathering open to all and begin reading salient portions of a book out loud for all to hear solely for the purpose of disseminating it (and for no other reason).  This would almost certainly constitute infringement.  And you also couldn’t record yourself reading the book out loud to your children or friends and then sell or give away the recording.  That would be infringement also.

Aiken, however, isn’t raising the public performance or the recording issues (at least not directly).  Rather, he’s claiming that the Kindle’s speech feature creates a “derivative work.”  This seems like a bit of a stretch, but not a wholly unreasonable one.  As I’ve said before, intellectual property law is a highly nuanced area of practice, and many courts don’t see eye-to-eye on these issues.  Easy answers are usually elusive, even though common sense may compel a rush to judgment.  Let’s take a look at the issue.  Under the Copyright Act, a derivative work is defined as:

A work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a “derivative work”.

17 U.S.C. § 101 (emphasis added).  At first blush, it doesn’t seem to me that a device which reads a book’s text out loud to a person who lawfully possesses the copy would meet the “original work of authorship” test. 

For example, it makes sense why translating a book from one language to another is a derivative work.  It takes a certain degree of deliberate judgment and choice on behalf of those translating a book for a different audience to convey what the author is trying to express.  This would meet the minimum level of creativity needed for originality.  But that’s not the case here with the Kindle.  (For the moment, I’ll sidestep the more difficult question of whether automatic translation software creates a derivative work.  If the Kindle was translating the book AND then reading it aloud, it would present a more complicated issue.)

But the originality question here is a deceptively simple one, and some of the analyses I’ve read so far—in their somewhat understandable quest to show that common sense should dictate that the law respond with a resounding, “NO” in this instance—overlook subtle distinctions which need to be analyzed carefully.

Michael Kwun of the Electronic Frontier Foundation takes the position that there’s no way a derivative work could be created due to the originality requirement.  While he may ultimately be correct in the result, his analysis fails to take into account several factors.  For example, he confidently cites the case of Lewis Galoob Toys, Inc. v. Nintendo of America, Inc., 964 F.2d 965 (9th Cir. 1992), for the proposition that a derivative work “must incorporate a protected work in some concrete or permanent ‘form,’” which he argues that the Kindle’s audio feature fails to do as no recording is ever made. 

While the Galoob court stated this, it also noted that, “[a] derivative work must be fixed to be protected under the act . . . but not to infringe.” (emphasis in original).  Thus, in order for it to be copyrightable, the derivative work has to be fixed, but if it infringes it doesn’t have to be—yet it must be in some “concrete or permanent form.”

If this distinction seems fleeting to you, you’re not alone.  Kwun fails to note that other courts have disagreed with the 9th Circuit’s approach.  For instance, in Lee v. Deck the Walls, Inc., 925 F. Supp. 576 (N.D. Ill. 1996), an Illinois district court expressly rejected this rationale:

Respectfully, the Ninth Circuit’s determination of a dual definition (1) “risks that courts will naively apply this broad definition to find activities infringing that are more properly viewed as altogether beyond the scope of copyright,” . . . and (2) ignores the definition of a “derivative work” found in § 101, in which Congress specifically included an originality requirement.

In affirming the Lee court’s holding, the 7th Circuit (in Lee v. A.R.T. Co., 125 F.3d 580 (7th Cir. 1997)) also found the 9th Circuit’s approach to be lacking: 

If Lee (and the ninth circuit) are right about what counts as a derivative work, then the United States has established through the back door an extraordinarily broad version of authors’ moral rights, under which artists may block any modification of their works of which they disapprove.

Moreover, the 9th Circuit seems to have significantly loosened the originality requirement for derivative works in Mirage Editions, Inc. v. Albuquerque A.R.T. Co., 856 F.2d 1341 (9th Cir. 1988).  There the court found that a company which purchased legitimate copies of the plaintiff’s artwork and glued them onto ceramic tiles, which it then resold, was creating illegal derivative works.  This case has also been met with significant criticism by courts and commentators due to the lack of creativity and originality that such activities by the defendant actually entailed.

Other courts have also declined to follow the 9th Circuit’s approach.  In Precious Moments, Inc. v. La Infantil, Inc., 971 F. Supp. 66 (D.P.R. 1997), the district court noted:

Reading Galoob in conjunction with Mirage, however, it appears that the Ninth Circuit also relaxes the originality requirement when considering whether a work is a derivative work for purposes of infringement. Even if Galoob was correct with regard to fixation, Mirage reads the originality requirement out of the definition of “derivative work.”

Thus, while Kwun may have ultimately arrived at the correct result, 9th Circuit precedent doesn’t firmly support his position. 

Indeed, if the Precious Moments court is correct, originality isn’t even a requirement when creating a derivative work and  “open[s] the door for the most trivial of modifications to generate an infringing derivative work.”  Consequently, notwithstanding Kwun’s belief that the 9th Circuit’s standard immunizes Amazon from liability, the Kindle 2’s text-to-speech feature could potentially be “trivial” enough to be deemed an infringing derivative work under another formulation of the 9th Circuit’s approach.  As discussed below, the 2nd Circuit (where suit would most likely be brought) appears to have expressly rejected this rationale.

Moreover, there are also some practical considerations that Kwun fails to take into account.  As noted above, standards of originality vary from circuit to circuit, and Kwun makes the implicit and unsubstantiated assumption that if the Guild were to sue Amazon, it would sue in Washington state, where the 9th Circuit’s test would be applied.  This is unlikely.  As a litigator, I often wrestle with forum and venue issues and their importance shouldn’t be underestimated—it can make all the difference in the world.

While Amazon is located in Seattle, the Author’s Guild is located in New York, which is the 2nd Circuit’s jurisdiction.  The 2nd Circuit would apply its own test and isn’t bound by anything that the 9th Circuit does.  (And even though the 9th Circuit handles many intellectual property cases due to Silicon Valley and Hollywood, it’s still the most reversed circuit by the Supreme Court—about 86% in 2007—and its rationale would likely be met with considerable skepticism in New York.)  So if the Guild were to sue, it would almost certainly bring suit in a jurisidiction favorable to itself, and that’s not the 9th Circuit.

In fact, in Durham Indus., Inc. v. Tomy Corp., 630 F.2d 905 (2d Cir. 1980), the 2nd Circuit appears to have rejected the 9th Circuit’s questionable dual approach to derivative works:

First, to support a copyright the original aspects of a derivative work must be more than trivial. Second, the scope of protection afforded a derivative work must reflect the degree to which it relies on preexisting material and must not in any way affect the scope of any copyright protection in that preexisting material.

Thus—assuming that the court doesn’t distinguish between copyrightability and infringement (and the Lee court cites to the 2nd Circuit in this regard)—in order for the Kindle’s speech feature to be deemed non-infringing under the 2nd Circuit’s test, Amazon would have to show that: (1) the speech feature is “trivial,” even if it constitutes original expression; or (2) there is no “scope of protection” for the text-to-speech feature because even though it relies upon the author’s preexisting expression in order to generate its audio, no recording is ever made (as discussed shortly) and it therefore doesn’t affect any exclusive rights in the preexisting material.  (As the test is conjunctive, Amazon only has to show that it fails to meet one of the elements to succeed in its defense.)

It is this last point upon which the Guild appears to be focusing.  It seems concerned that this feature could somehow impact audio book sales and therefore affect an author’s ability to commercially exploit the audio aspects of the work.  Several commentators, however, have correctly noted that it’s unlikely an unfeeling, monotone computer-generated voice could ever replace an audiobook read by a live person.  I’ll take a book read by James Earl Jones any day over one read by the HAL 9000.

Another commentator, Nilay Patel, states that what the Guild is essentially arguing in a roundabout way is that while Amazon has the right to sell you the electronic version of the book, it can’t sell you a recording of the book, which the speech feature emulates.  He notes that the claim isn’t as “ridiculous as it seems.”

While Patel states that the Kindle’s “text-to-speech feature blurs the line between books and recordings,” sound recordings under the Copyright Act are defined as  “works that result from the fixation of a series of musical, spoken, or other sounds . . . .”  17 U.S.C. § 101 (emphasis added).  Fixation is absent here.  As Kwun correctly notes, the Kindle 2’s sounds are not fixed but “immediately trail away into the ether.”  So under the statute, it’s not technically a sound recording.  But that doesn’t make it a “ridiculous” claim either.

Finally, as mentioned earlier,  “fair use” would be a major—and likely successful—defense if the Guild ever sued Amazon.  Amazon would almost certainly cite the ubiquitous “substantial non-infringing use” rule from Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984).  It’s practically a staple defense in every technology lawyer’s arsenal these days.  And it may prove to be a persuasive one.  

Surely the legion of customers who may want to listen to a computer-generated voice in the privacy of their own homes should be allowed to do so, shouldn’t they?  The technology does appear to have substantial non-infringing uses along the same lines as video recorders and “time-shifting” of programs did in the Sony case.  Instead of reading to themselves, consumers are simply “voice-shifting,” i.e., letting the Kindle read to them. 

Ultimately, the Guild’s position seems like a weak claim, but not one devoid of merit.  It could have some teeth if presented in the proper context, but the Guild would have an uphill battle.  As a litigator, I enjoy a good lawsuit (yes, there are such things!) when there are interesting and significant issues at stake. 

Alas, however, Amazon doesn’t seem to think so.  At least not at the moment.  The company announced that while it was convinced the audio feature was legal and didn’t violate copyright law, it would give authors and publishers the right to determine, on a book-by-book basis, whether the audio feature would be enabled.  According to one report, Amazon may have retreated from its position due to the contracts that publishers (particularly large publishers) had with their authors over e-book rights.

Sigh.  It would have been an interesting and possibly ground-breaking case in copyright law.  And a good fight besides.  But I’m sure that the next one is right around the corner.  Hey, a lawyer can dream, can’t he? 

Talk about a slow news day.  A recent article in USA Today discusses the so-called “fine print” in ISP contracts and then concludes that it doesn’t really matter anyway.  This non-story highlights the fact that ISP contracts, which their company lawyers draft, give ISPs rights to read their subscribers’ e-mail, block their subscribers from accessing certain websites, and can terminate their subscribers for overusage of their networks.  The horror.  Imagine that?  A business that protects itself.  The shareholders will be outraged.

As an attorney who drafts these contracts, this article is much ado about nothing.  Yes, ISPs put all sorts of language into these agreements to make sure that their services are not abused by users.  But simply because an ISP has the right to read a user’s e-mail or block a user from accessing certain sites doesn’t mean that it will actually do so.  The article makes it sound inevitable.

An ISP, like every other business in America, is keenly aware of the public relations disaster that would result if it was disclosed that they routinely read their users’ e-mails, blocked access to websites, or simply terminated their users accounts due to overusage, without good cause.  They would quickly and perhaps permanently lose users as the media and blogosphere savaged them.  And as they know all too well, everything in cyberspace lives on indefinitely. 

But think of the public relations disaster that would result if it was disclosed that an ISP was aware or suspected that a user was engaging in wide scale spamming, copyright infringement, or the downloading of child pornography.  Or that certain users were hogging bandwidth to the point that other subscribers’ service was affected, while the ISP took a laissez-faire attitude?  It’s not exactly a model of corporate responsibility in these post-Sarbanes Oxley times.  The blogosphere would again be buzzing, albeit for different reasons.  You’re damned if you do, and damned if you don’t.

Furthermore, some of these clauses are economic necessities.  The RIAA has begun targeting ISPs whose users engage in massive and sustained downloading of copyrighted music through their networks.  If an ISP suspects that a user is downloading copyrighted material and does nothing, it can be held liable for contributory copyright infringement in certain instances.  But by terminating the offending user’s account, it may insulate itself from liability.  The “fine print” of the contract allows an ISP to do so.

Is an ISP contract really that different from signing a lease with a landlord?  A landlord has the right to access your apartment with or without notice and can potentially invade your privacy.  A landlord puts certain restrictions as to how its property can be used and how many people can live in it.  And a landlord can evict you under the right circumstances.  While internet access is certainly important nowadays, so is having a place to live.  Yet many tenants have rules not unlike what their ISPs impose, but don’t assume that their landlords will exercise them indiscriminately.

So the contractual provisions such as those described in the article are not necessarily a bad thing.  It all depends upon the circumstances.  If an ISP does include a provision that a court finds to be unfair or onerous, it can be struck from the contract (to say nothing of the scrutiny the ISP would get from that state’s attorney general).  So it’s not as if an ISP can do anything it wants.  While it may sound like this is a case of “ISPs gone wild,” the simple fact is that—for the moment at least—this was an article in search of a story.  But when an ISP does overreach or overreact, I’m sure we’ll hear about it somehow.

     Although it should hardly be considered to be news anymore, an appellate court in New York has ruled that a series of e-mails constituted “signed writings” within the meaning on New York’s Statute of Frauds.  Consequently, they could be used to modify an employment agreement which provided that all modifications had to be signed by the parties.

     The court found that when each party typed his name at the end of his respective e-mail prior to sending it, this signified each party’s “intent to authenticate” the e-mail’s contents.  Thus, the e-mails fell within the scope of the modification provision of the employment agreement, and the contract was deemed to have been modified in accordance with the e-mail’s contents.

      There’s nothing remarkable about this ruling.  It relates back to the standard caveat nowadays that parties need to be careful about what they put in their e-mails, as they can obviously impact legal rights.  In this instance, if the parties didn’t want the e-mails to be considered writings, they should have had an express provision in the employment agreement which excluded e-mails from modifying the contract.  

     In fact, provisions such as these are becoming increasingly common as more and more people communicate via e-mail.  It depends, however, upon the client.  I have several technology clients who prefer e-mails and pdfs to actual paper when communicating with just about everyone, including their customers, prospects, employees, contractors, and attorneys.  While this may be easier and more efficient, it’s also easy—given the daily deluge of e-mails—to delete or overlook them (especially if they get caught in spam filters).  Thus, for those of you who prefer to communciate this way, just be aware of the potential ramifications.