Category: Blog

Grandma’s going to jail for digital trespassing?
By Ryan Long

Grandma’s going to jail for digital trespassing?

“No digital trespassing! Violators will be sued. Survivors will be sued again!” Ever seen that sign? Not likely. That’s because, technically, there is no law against digital trespassing per se. This occurs when your grandma’s new universal remote control climbs over, figuratively speaking, the encryption security fence on copyrighted content, such as the software to her old garage opener, so as to enable communication between the new control and old garage door opener. And yet some copyright owners want to hold your grandma civilly or even criminally liable under federal law for such trespassing. Allowing them to bust grandma would be an unwise expansion of their copyright monopoly.

Say you buy your grandma a garage door opener made by Acme Inc. The garage door opener comes with a control. Now, granny has a lot of controls, and she is too old to futz around with a control for her television, one for her radio, and one for her garage. Given you love your grandma and want to make her happy, you buy her Bling Inc.’s universal remote control. Bling’s one size fits all control circumvents the encryption technology fence on Acme’s garage door opener. In so doing, Bling’s remote is now able to gain access to Acme’s copyrighted software, thereby enabling interoperability. Otherwise, they wouldn’t be able to communicate because Bling’s remote would be speaking kilometers per hour to the miles per hour garage door opener without a translation protocol.

Does Acme have a claim for digital trespass against Bling or your grandmother? In the view of some copyright holders, the answer is yes. That’s because, in their view, Bling’s universal remote control has enabled your grandma to violate the anti-circumvention provisions of what is called the Digital Millennium Copyright Act (“DMCA”). This is so even if neither Bling nor your grandma infringe, or otherwise induce infringement of, Acme’s copyright in the source code by copying, reproducing, or otherwise publishing it. Under this view, there is a per se — automatic — violation of the DMCA whenever Bling or your grandma trespass, regardless of the circumstances.

But in the view of federal courts, there is no per se rule against digital trespassing under the DMCA. Bling’s universal remote control allows for what is called interoperability between grandma’s different devices, which is an efficiency that Congress didn’t want to do away with when passing the DMCA. In fact, the DMCA explicitly states as much in Section 1201(f)(1), in case you want to bore yourself by looking it up. What is more, courts have dismissed claims brought under the DMCA where the plaintiff is only able to allege or prove digital trespass, no corresponding copyright infringement or conscious inducement of the same.

Then why do companies like Acme file lawsuits seeking redress for digital trespassing? There are various reasons. One is security. Closed software universes, like Apple’s, protect better against viruses that can more easily attack porous systems that are liberal in their approaches to interoperability. This is one of the reasons why Apple’s computers are hacked less often than personal computers. The second is the fear that digital trespassers will pirate copyrighted content. The third is lost revenues. Conversion technology which allows newer kilometers per hour devices to communicate with older miles per hour ones via a translation protocol cost companies money. Rather than forcing granny to buy a new television in order for her to gain access to content protected by new encryption technology, conversion technology enables her old television to communicate with the new encrypted content. In the process, new technology sales suffer.

In the end, your 92 year old grandma isn’t going to jail! One reason is that her and her friends pack heat with silencers. The other is that the DMCA didn’t expand the scope of a copyright holder’s monopoly, and it expressly says that. However, it may take some more court decisions to make that clear to aggressive copyright holders who seek to pursue granny for digital trespass merely because she uses conversion technology to watch Netflix’s “Just Call Saul” on an old outdated screen. Otherwise, grandma’s crew might just shoot them all.

Google is moving to Moscow!
By Ryan Long

Google is moving to Moscow!

Google is moving to Moscow! Not really. But Mr. Sergey Brin, the founder of Google, was born in Moscow. How does Russia ensure that Sergey 2.0 will stay in Moscow – and not flee to Mountain View? You should care. Russia’s economy is over leveraged in the energy market. When oil prices drop, the Kremlin will be all the more desperate to do unwise deals for arms, among other things, to fill its coffers at the risk of longer term Russian — and American — stability. To keep Sergey 2.0, the Kremlin should take the following steps.

1. Encourage entrepreneurial risk taking

Who likes failing? Nobody does. But failing is a necessary part of being an entrepreneur in the tech space, and can be like compost for future successes. Numerous players, including Steve Jobs, failed miserably before they succeeded. He started Apple, was kicked out, started NeXT, that failed horribly, and created America’s largest capitalized company. There is a lesson to be learned from success stories like Apple for the Kremlin, whose oil and natural gas sales accounted for almost 70% of exports in 2013.

By failing to diversity its economic portfolio into the technology sector, Russia’s economy remains overly beholden to the volatile energy market. When oil prices drop, as they have recently, the Russian ruble suffers. This also makes the Russian economy subservient to good short term but bad long-term deals. To make Russia more economically robust in the long term, which ensures that America has a stable trading partner (Ford currently has a factory in Saint Petersburg), Kremlin policy makers should encourage more entrepreneurial risk taking among its inventive youth. This will make it more likely that a Russian version of Google will arise, employing numerous Russians and giving the country an alternative revenue source alternative to energy. This means going backwards and dismantling some of the centralized state control apparatus — whether under the Czar or under the Bolsheviks — that dominates Russia’s history.

Going backwards isn’t always bad. As any tech entrepreneur will tell you, including Mr. Jobs if he were alive, oftentimes you need to go backwards before you can leap forward. That’s why those who risk more get more. But most cultures – including Russian – look upon failing as being weak. While I am a California boy hailing from the City of Angels (Los Angeles), I have been living in New York City for twelve years now. And I can tell you first hand that the mentality here is less failure forgiving than in my Los Angeles birthplace, where, according to artists like Moby, there is “freedom to fail.” This explains why most of the top 50 venture backed companies in 2011 were located in California.

Like Californians, Russians are inventive, too. That’s why they were first to the moon, are the top rated chess players in the world, and are number 14 on Bloomberg’s list of most innovative countries in the world. But, as MIT points out, there is a difference between inventing and innovating. It’s one thing to invent something, like new ways of training for hockey, as recounted in Red Army, a documentary about the Soviet Union’s invincible Red Army hockey team. It’s another to take that invention and make it an innovation by packaging and marketing as a product that will disrupt the market. Part of the reason why there isn’t more innovation – as opposed to just invention – in Russia is the fear of commercial failure, as I have seen with Russian clients.

To temper this fear, Kremlin policy makers should encourage schools to teach Russian children about the benefits of trial and error so that they know that the risky path less taken isn’t necessarily the wrong one.

Otherwise, the world wouldn’t have Apple, Microsoft, or Google.

2. Create tech incubators

Some say “isolation is required” for creativity to flourish, as the famed Russian physicist Isaac Asimov says in his essay On Creativity. Others say that creativity is collaborative, as recounted in The Innovators by Walter Isaacson in telling about the starting of companies like Texas Instruments by a team of mavericks. Like with most things, the truth lies somewhere between these two poles.

Even Mr. Asimov says that cross-fertilization of ideas happens best when creative types are able to collaborate in an environment that encourages “ease, relaxation, and a general sense of permissiveness.” That’s because “the world in general disapproves of creativity, and to be creative in public is particularly bad. Even to speculate in public is rather worrisome. The individuals must, therefore, have the feeling that the others won’t object.” This means Russia needs to develop incubators and co-working spaces where collaborative creativity can thrive.

The benefits of such collaborative creativity can be seen throughout the United States. It can be seen in California or even New York skate parks, where kids make up new moves on their own, but try them in front of others to receive applause, pointers, or thumbs down. It can also be seen in tech incubators and co-working spaces located in both states – and in places like Cambridge, Massachusetts – where start-up companies work on their own inventions, but then can have practice pitch sessions in preparation for venture capital showdowns with other start-ups.

By mixing the collaborative and individualistic aspects of creativity, these innovators are able to get better feed back on their minimum viable products — a sample of the larger product to test — in preparation for either venture capital pitches or launching into the marketplace. This type of feedback is impossible in pure isolation. It would be like me testing out one of my new novels on a maple tree in Maine. The tree makes for an obedient audience, but I don’t want that when trying out new work. I want the good, bad, and ugly comments – stomach punches! – so that I can perfect my work for the real world.

The same type of culture can be encouraged in Russia by funding incubators or shared work spaces where entrepreneurs can find the environment they need to prosper.

3. Keep public hands off private intellectual property

Some products are produced and developed with government – taxpayer — money, and others with private money. To the extent I am developing a product using public money, then it is to be expected that the government – taxpayers – will own the the fruits of my labor. In that case, public copying isn’t theft. If, however, I receive private money for my development project, then the government should have less of a stake in the pot of intellectual property gold at the end of my entrepreneurial rainbow. In such a case, public copying is theft.

This risk reward relationship is one of the main drivers of innovation. Of course, some creators will make things regardless of the economic benefit. But these folks are usually hobbyists, not professionals. Those who seek to take a new product to market with their own — or borrowed private — money will expect to receive the financial spoils, and to have the state enforce their intellectual property rights, whether they be copyright, patent, or trademark. To the extent that the Kremlin is able to take away this pot of gold at the end of the rainbow from law-abiding citizens — not tax cheats — as a form of redistribution or retribution for challenging centralized power, then Russians like Mr. Brin will continue to flee to the West. This will further leverage the Russian economy into energy, and make job creating private tech innovation a pipe dream.

However, if the Kremlin makes the next Sergey Brin firmly confident that the gold at the end of his tech rainbow will not be seized, or otherwise taxed at 99%, then tech innovation will boom in Russia.

4. Ensure legal stability

Finally, there needs to be regulatory stability in Russia. This means that before I launch a new tech gadget product, the law might be settled concerning the patentability of a piece of hardware I developed, or copyrightability of source code. However, if the government is able to be lobbied by a larger competitor so that the law can swiftly change via regulatory diktat, smaller tech entreprenerus can no longer rely on the law being principled, which is what many smaller entrepreneurs in the U.S. feel about the legal system. Further regulatory uncertainty is created — which isn’t not good.

Such uncertainty is one of the biggest obstacles to creating and fostering an environment that encourages innovation. Sudden regulatory changes create a new factor that may go wrong after launching a product, or in the process of research and development. These types of regulatory changes also add another barrier to entry. In the United States, it makes it more costly for products to be developed by cash strapped start-ups without having expensive regulatory lobbying might in Washington D.C. so as to protect against well-connected competitors. This explains why so many companies from Silicon Valley now have lobbyists in the Capitol, whereas they didn’t before. The Kremlin can learn from Washington D.C. what to do — and not do — to enhance tech innovation in Russia.

Don’t be surprised to see a Silicon Moscow in the coming years. This will be beneficial to Americans since it will make it less likely that the Kremlin will do short term desperate arms deals that will be injurious to longer term Russian — and world wide — security and stability. It will also give American companies another fertile market in which to do business. And yet to get to this tech motherland, Russia will need to create the right type of environment. If it does, watch out for Sergey Brin 2.0 in Moscow.

The good, bad, and ugly of binary thinking
By Ryan Long

The good, bad, and ugly of binary thinking

Sometimes the best choice when you come to a fork in the road is to retreat, or even merge the two forks by taking one then going off road to the other! And yet binary thinking will force us to choose between the right or left fork, even if both forks suck standing alone. Only by understanding the perils of binary thinking can you protect against its destabilizing bipolar effects in conflict resolution.

First, the good. Binary logic is what makes many computer software programs run. The logic of going between “0” and “1” on streams of code is what gives direction to hardware. Not only that, but compact discs use the same logical geography to play music. Plus, in some cases, as Professor Steven Pinker points out in How the Mind Works or Malcolm Gladwell in Blink, binary logic helps us decide, often in split seconds, between: fight or flight in a dark alley, taking one fork in the ski slope or another, one moral decision as opposed to another in our relationships.

Second, the bad and ugly. The same logic that helps us make split second decisions in dark alleys also causes disaster in conflict resolution. In most but not all legal disputes I have handled, binary thinking keeps each side stuck in their black and white view of the law and facts, like the gun men pictured above. In most cases, both sides are right, and wrong, in different respects. (In others, there is a right, and a wrong, but that is quite rare.) As pointed out by Mr. John Kenneth Galbraith about the Myth of Consumer Sovereignty in The Affluent Society, rational decision making often gets irrational because consumers make decisions based on their perceived necessary choices — not their actual available choices.

The same goes with decision making in conflict resolution. Take negotiations between Democrats and Republicans. Labeling an idea “Republican” or “Democrat” can change an otherwise great idea in a split second into a horrible idea, depending on the listener’s prejudice. This is so even though each party may claim to have the same stated goal, such as less American unemployment. Rather than considering the idea with an open mind, the political listener shoves the idea into one pigeonhole or the other, even when the idea doesn’t fit into either hole, and then smashes it. Alternatively, the listener blasts the idea because it doesn’t fit into either hole. In so doing, yesterday’s distrust taints the new today. Thus, the circle of distrust is continued, as recounted in Politics of Distrust, which shows that, as of 2012, only 22% of Americans trust government.

While binary thinking can help us survive, it can, at other times, be deadly. Such thinking blinds us to innovative solutions available outside the binary system we desperately cling to. By considering these solutions, the two forks in the road can merge more often towards common goals.

Here come the robot lawyers! Is that a good thing?
By Ryan Long

Here come the robot lawyers! Is that a good thing?

What do you call 5,000,001 lawyers at the bottom of the ocean? A good start! Hah! While there may be some truth to the joke given the unprofessional behavior of many lawyers, the question is whether we want robot replacing human lawyers as decision makers for global reaching legal — and policy — decisions. I think not.

Robot lawyers aren’t pure fantasy. As reported in Who Will Own the Robots, an article in MIT Technology Review, Narrative Science is a Chicago based company which is “able to take data — say, the box score of a baseball game or a company’s annual report — and not only summarize the content but extract a ‘narrative’ from it.” Imagine that Google — or Microsoft! — creates an app called “Robot Lawyer.” You download the app, choose your accent (Chinese, Russian, or, um, So Cal surfer), input your facts, and then ask your legal questions. The input-output algorithm of the Robot Lawyer system resembles the means-end reasoning of the human mind.

But does it? Have you ever seen War Games? If you haven’t seen it, in the movie, the Department of Defense (“DOD”) replaces human with computer fingers on the nuclear bomb buttons. With everything governed by that intelligence, the chances of error decrease, right?

Wrong. In the movie, Matthew Broderick unintentionally — and easily — hacks — surprising, eh? — the government’s server. He ends up playing a virtual game of thermonuclear war with Joshua, the war game computer that the DOD created to play war games without actually conducting nuclear war. When Broderick intentionally launches a virtual nuclear attack from U.S.S.R. on the U.S. through Joshua, the DOD generals without computer knowledge think it is a real nuclear attack.

Why? Because those generals were living in their virtual tech cave — a system closed off from objective reality — and were tempted to trust that system rather than wait for reports from humans in the field to see if bombs were actually dropping. (Not only that, but the generals didn’t understand the workings of Joshua. Only Joshua’s father, and Broderick did, which is why these outsiders saved the world from catastrophe.)

No matter how rational lawyers make the legal system appear, it is not. External political factors can change the outcomes of cases which, without these unpredictable intervening influences, can be more susceptible to prediction by simple law applied to facts reasoning. In this respect, law practice is more akin to a humanistic art form merged with soft science than a pure mathematical system. While artificial intelligence can supplement the art of human decision making, it cannot replace it.

That’s why I’d prefer a creative, principled, and savvy Atticus Finch from To Kill of Mockingbird as my lawyer over his Robot Lawyer counterpart any day.

The big bad wolf to the . . . rescue?
By Ryan Long

The big bad wolf to the . . . rescue?

If you work in technology, the big bad fair use wolf can be your best friend. Read below to find out why.

A few days ago, the U.S. Supreme court denied Google’s appeal from a decision by the United States Court of Appeals for the Federal Circuit which found that source code — written instructions that run computer software — can be protected by copyright law. In so doing, the nation’s highest court left in tact a ruling by the Federal Circuit which found Google could have infringed the copyright to Oracle’s software programming platform.

To the extent Oracle’s code is original and non-functional, then it should find protection against wolves inside a nice cozy copyright house during the cold winter. That’s because this type of source code is akin to the original combinations of words that authors use as inputs into their own hardware — books, screenplays, or plays. Because these words are original expressions of perhaps unoriginal ideas, they are copyrightable subject matter. No less should be true about original non-functional source code.

Nonetheless, the copyright house isn’t impervious to the elements outside. If you copy the idea behind a copyrighted work, then you have no liability because ideas aren’t protected by copyright law — but functional ideas can be potentially patented. That’s why, when copyrighted expression is so inextricably linked with a functional idea, many federal courts will deny copyright protection to the expression, especially in the case of functional source code. Small tweaks in code inspired by not all that original — but original enough for copyright protection — source code can keep you away from the infringement line. In such a crowded market, there are only so many ways to express a functional idea, which is why courts are remiss about extending the scope of copyright protection for any one particular expression. To do otherwise would hurt innovation. No less is true in other expressive endeavors. The scope of copyright protecting less original works — such as a “me too” drip style painting inspired by the works of Jackson Pollock — is smaller than that for pioneering ones — such as an architectural design that blends, for the first time, Frank Lloyd Wright with Frank Gehry.

Even if Oracle’s source code can jump the foregoing copyright hurdles, the story doesn’t end there.The lower court has yet to decide whether Google has a fair use defense. In the end, if Oracle’s source code is original enough for copyright but not so original so as to read that protection broadly, then Google’s fair use big bad wolf will likely huff, puff, and blow over Oracle’s copyright lawsuit to the ground.

Devil’s in the details? Good news!
By Ryan Long

Devil’s in the details? Good news!

The Devil is in the details. Good news! This means picking a trade name for your new business venture will involve a great deal of planning and detail oriented thinking about your launch plan, and the market you serve. This will only serve you in good stead down the line.

Take, for example, a company called “Designbook.” According to a recent article, Established Firms Fight Startups on Names, they are a fledging upstart who is seeking entry into the now crowded social networking market. In attempt to gain a nationwide monopoly on their name, Designbook filed an application to register it’s name with the federal government’s Patent and Trademark office.

Guess who opposed the application? Facebook. According to the networking giant, Designbook’s use of “book” in it’s name is confusingly similar to the “book” used in “Facebook.” Of course, if Designbook was a pen manufacturer, Facebook’s claim wouldn’t likely have merit.

However, as applied to the social networking market, “book” has gained a worldwide reputation as being associated with “Facebook.” So the mammoth’s argument about confusingly similar use has merit — in this instance. Imagine if the market became saturated with “Desginbook,” “Loobook,” “Cokebook,” “Gangabook,” “Pornbook,” and so on? Such uses give the impression that the companies are affiliated with Facebook (as in the case of “Designbook” or “Lookbook”). Otherwise, the tradenames dilute the “Facebook” name (as in the case of “Cokebook,” “Gangabook,” and “Pornbook.”). Unlike confusion, dilution doesn’t require that folks think one brand is affiliated with the other, but merely that that the new brand — i.e. “Cokebook” — makes the famous brand — “Facebook” — less unique.

That being said, assume “Pornbook” launched a website, not in the social networking realm, but as a new humorous online publication by evolutionary biologists like E.O. Wilson for the study of sexual practices among Rhesus monkeys, in addition to other non-human mammals, throughout history. In that case, Facebook would be hard pressed to bring a claim. “Book” is a generic word. Facebook doesn’t own it. So the question becomes, how do you, as a new venture backed company, pick a good name to enter into an otherwise crowded market?

Be original. While “Designbook” describes, in some ways, what the company does, the trade name “Nike” does not. If you didn’t know that “Nike” referred to the shoe company, you’d otherwise think it may apply to a Greek God for victory — it does. All this means is that a company like “Designbook” needs to pick a more original — “fanciful” — name that doesn’t describe, in anyway, what they do. They then can make a splash in the market — like Nike did after Mr. Jordan helped revamp the brand. (Remember those Spike Lee/Michael Jordan commercials?) In the end, an original name can actually help “Designbook” gain more market share instead of merely being a “me too” Facebook.

Only by respecting the Devil and his details will you arrive at a sustainable, attention grabbing, name.

Is your design inspired or stolen?
By Ryan Long

Is your design inspired or stolen?

Are you a crook? Jonathan Adler may consider you one when you use an edited, transformed, and artistically styled sample of his pillow design to create a custom-made wallpaper design for a client. But would he be right? These days, it is getting harder to tell, but there are still guidelines that can help you navigate the sometimes murky waters separating inspiration from infringement.

To make a custom-made wallpaper design for a client, assume you copy Mr. Adler’s black vine design that was inspired by an ancient Japanese kimono vine design, and that there are many types of this vine design in the pillow market. You then transform the vines by making them look shabby and worn out, use pink instead of black, and infuse the pink with the copies of the American flag. Imagine, then, that you combine the transformed Adler design with 9/10 other types of content from elsewhere, including a starry sky design pattern from Ralph Lauren Home to make your wallpaper.

Does your wallpaper infringe Mr. Adler’s copyright in the kimono vine inspired pillow design? Does it matter if you made up your own vine design that differed from Mr. Adler’s design, but which used his, among others, as inspiration?

The answer to these two questions depends on a number of factors. For the first question, given that you clearly copied Mr. Adler’s design, the question is whether the “fair use” defense would apply, part of which asks whether you sufficiently “transformed” Mr. Adler’s design to make it different enough from the original. The closer you get to a complete metamorphosis of Mr. Adler’s design – think the caterpillar becoming a butterfly – the safer you are. That’s because if your work and Mr. Adler’s are that different then people won’t think that Mr. Adler designed your pillow.

For the second question, you may not even need to get to the fair use defense. That only comes into play when you have actually copied another person’s expression. Because you merely used Mr. Adler’s expression of the Japanese vine design, among others in the marketplace, as inspiration to create your work, and your work differs from Mr. Adler’s, then there would in all likelihood be no infringement. That’s because copyright doesn’t protect the idea of the Japanese vine design, only Mr. Adler’s particular expression of it. Given that his expression isn’t original in the marketplace, it will most likely receive less protection than something truly off the wall – and original.

In the end, a completely original design is the best policy. That being said, designs are rarely completely original. The more your design exactly resembles another person’s work, the closer you are getting to the infringement line.

Michael Jordan was an MVP, but would he like the lean start up’s MVP?
By Ryan Long

Michael Jordan was an MVP, but would he like the lean start up’s MVP?

Michael Jordan. Ever heard of him? The winner of the Most Valuable Player five times, Mr. Jordan was one of my heroes growing up. While I am sure he loved winning the MVP all of these years, would he have liked the minimum viable product (“MVP”) of the lean start up methodology? What on earth is that anyway?

The MVP theory says that before you put your head down for months, or even years, developing a fancy business plan with the likes of Harvard, Chicago, or Stanford MBAs, you should first test the idea via an MVP. Say you are seeking to develop a social networking platform that will require retention of a large data base of names, and that the software you are creating will require much effort — and funding — to create. Before you create the whole network, you may want to make a sample that is big enough to get feedback from the marketplace as to functionalities that will be well received, and others that will not, before you create the whole.

When he entered the NBA, Mr. Jordan was criticized and cajoled for having larger shorts than anybody else in the NBA, and for also sticking his tongue out when he played. If he abided by the MVP method, would he have continued? Or what about Steve Jobs, when he sought to make your personal computers pretty, instead of the regular drab look that IBM was creating at the time? Would he have continued on his path if, after being ousted by the board of Apple for spending too much on hardware design, he sought approval from the market via an MVP?

Probably not. As I covered along with Silicon Valley Software Group in our first panel discussion, entitled Choosing the Right Technologies for Your Next Product, at San Francisco’s General Assembly on April 2, the MVP was created in reaction to the “build it and they will come” ideology. Einstein said “religion without science is blind” and so, too, building hardware or even software without any idea of what the market will or will not like is like flying in the dark with no radar.

But the reason why we call certain people innovators is that, in some ways, they can see in the dark. They are ahead of the market, close enough to get its energy, but not so close so as to be eaten up by it. The shortcoming of the MVP is that, if you are really looking to make a big bang, the positive relationship between risk and reward says that, in the end, you need to be aware of where the market is, but also have faith in your vision of where the market is going to be.

Now, most NBA players wear the larger shorts that Jordan sported when he first came into the league, and Apple is the largest company, in terms of capitalization, of the United States. MVP has its place in terms of spending scarce venture capital funds in an efficient way, but too much worshipping at its feet will make us all followers and diminish innovation.

An Axl Rose sample used in a mash up often doesn’t sound as sweet.
By Ryan Long

An Axl Rose sample used in a mash up often doesn’t sound as sweet.

The bright lines of the real property based view of copyright are being blurred by technology. In 1991, Mr. Biz Markee was found liable for infringing Mr. Gilbert O’Sullivan’s copyright in his song, Alone Again (Naturally), when Mr. Markee used an unauthorized sample in his rap song entitled Alone Again. Had Mr. Markee used Mr. O’Sullivan’s song in a mash up, the result may have been different.

A mash up is a digitally created song that splices in elements of other songs, sometimes in very small increments — not in quarks, but in milliseconds — to create what some would argue are original pieces. Think of a mash up as a fusion dish that blends elements of Chinese, southern soul food, Italian, and Mexican cuisine into one dish. The question arises whether the unauthorized use of other people’s songs in a mash up is an infringement or a fair use of their copyrighted works?

The question isn’t an academic one. According to Turning Profit from Music Mashups, New York based tech company Dubset Media, Inc., collects royalties from mash up artists who use other copyrighted songs in their works. The company’s technology, known as “MixScan,” tracks uses of copyrighted songs down to the second on mash ups. It then distributes royalties to labels depending on the extent of use.

These royalty streams come in different forms and can be lucrative, Turning Profit saying that such mini sampling can generate an additional $1.2 billion a year in revenues. That’s because there is a copyright in the musical composition underlying the song, and in the recording of the song. In Mr. O’Sullivan’s case, he would own the copyright to the composition of Alone Again (Naturally), which includes the musical notes and lyrics to the song, in addition to his recording of the song in the studio, known as the “master.” Mr. O’Sullivan collects royalties from those who wish to publicly perform or re-record his composition, and from others who wish to use the recording of the song in their music or in a film. Mr. Markee avoided paying these royalties to Mr. O’Sullivan by using the uncleared sample in the rap song Alone Again.

However, had Mr. Markee used Mr. O’Sullivan’s song in a mash up, the resulting decision finding infringement wouldn’t have been so easy. Mr. Markee would likely have had a colorable fair use defense if he: physically transformed the sample (changing the frequency, tone, bass) so that it became physically unrecognizable in the final product, sampled only a small part, and if the resulting rap song either had no effect on the market for Mr. O’Sullivan’s work, or exposed it further.

Courts are more prone to find fair use — and no infringement — when there is either physical transformation of the copyrighted work in a new work, or application to a new purpose. Patrick Cariou, a photographer, lost his copyright infringement lawsuit against appropriation artist Richard Prince because he had physically modified the photographer’s photos of Rastafarians — in one case, putting a gas mask and guitar in the Rastafarian’s hands. In the recent Google books case, Google was found to have fairly used authors’ copyrighted indexes to their books by making them searchable via Google books. This is so even though there was no physical transformation of the copyrighted work, but, rather, only application to a new purpose.

Before the recent technology boom, copyright infringement was viewed with a real property monocle — one toe over the line constitutes a trespass. But technology is making that toe harder to see and the resulting line between properties less clear. A rose by any other name may smell as sweet, but an Axl Rose sample in a mash up doesn’t smell as sweet.

The emperor still has no clothes!
By Ryan Long

The emperor still has no clothes!

Recently, a jury found Mr. Ross Ulbricht guilty of running the black market website Silk Road. Many observers claim that the government’s theory expanded liability for third parties like Mr. Ulbricht online. As I mention in a recent GizMoto interview, the government’s theory of liability wasn’t new, but “whether the government obtained the evidence that they wish to use to prove this narrative . . . in a lawful way consistent with the Fourth Amendment” is still up for debate.

On Silk Road, you could buy everything from cyanide, to marijuana, to, yes, some say hit men! The site was dubbed the Amazon of the black market. While diary entries from Mr. Ulbricht showed that he initially intended to launch the site so that he could sell mushrooms, the factual issue in the trial was whether he was the infamous Dread Pirate Roberts who continued to captain the site after it got up and running — and after Mr. Ulbricht supposedly bailed out.

Some have claimed that the government’s theory of liability “would expand legal liability for commerce in contraband online,” and that the outcome of the trial shows that “anonymity is dead.” Under this view, it is a slippery slope to hold Mr. Ulbricht liable for the conduct of people on Silk Road. That means all folks running websites have to be nannies who oversee all that is done on the site or risk criminal prosecution.

Maybe so. The Silk Road verdict makes it tougher to be a libertarian provider of a virtual platform where people can freely — and anonymously — transact. The freewheeling atmosphere on Silk Road was facilitated via the use of Bitcoin as the medium of payment. Some in the financial industry have sought similar anonymity with their “dark pool” methods of trading, where “the trading volume created by institutional orders . . . are unavailable to the public.” Dark pools, too, have come under legal scrutiny.

Contributory liability under copyright makes a third party — here Mr. Ulbricht — liable for infringements that occur under their control that they are aware of, or should be aware of. There is no intentional ostrich defense — “I chose not see or hear criminality!” — to such liability, nor is there such a defense to aiding and abetting violations of federal law. If Mr. Ulbricht was, in fact, Dread Pirate Roberts, then he intentionally facilitated the illegal transactions. In this respect, the case did not “expand legal liability for commerce in contraband online,” and so the emperor still has no clothes, contrary to what others say.

However, Silk Road did suggest new methods of potential government overreaching in the digital age. According to some pundits, the F.B.I. was mysteriously able to uncover the Silk Road servers supposedly via a software flaw on a site’s login page that, in turn, revealed an IP address. Supposedly, the IP address led the feds to an Iceland location where the server for Silk Road was located. Whether this cookie crumb trail created by the feds violated the Fourth Amendment is an issue that will likely be raised on appeal.

Regardless of the outcome of that appeal, Silk Road illustrates the tension between being able to conduct business in private online without the government unlawfully snooping, and society’s interest in regulating virtual transactions that have negative externalities — nasty effects — on all but the transacting parties.