Archives For DMCA

Welcome to the TOTM Symposium on FTC UMC Rulemaking

Gus Hurwitz —  25 April 2022

[This post is the first in our FTC UMC Rulemaking symposium. You can find other posts at the symposium page here. Truth on the Market also invites academics, practitioners, and other antitrust/regulation commentators to send us 1500-4000 word responses for potential inclusion in the symposium.]

There is widespread interest in the potential tools that the Biden administration’s Federal Trade Commission (FTC) may use to address a range of competition-related and competition-adjacent concerns. A focal point for this interest is the potential that the FTC may use its broad authority to regulate unfair methods of competition (UMC) under Section 5 of the FTC Act to make rules that address a wide range of conduct. This “potential” is expected to become a “likelihood” with confirmation of Alvaro Bedoya, a third Democratic commissioner, expected to occur any day.

This post marks the start of a Truth on the Market symposium that brings together academics, practitioners, and other commentators to discuss issues relating to potential UMC-related rulemaking. Contributions to this symposium will cover a range of topics, including:

  • Constitutional and administrative-law limits on UMC rulemaking: does such rulemaking potentially present “major question” or delegation issues, or other issues under the Administrative Procedure Act (APA)? If so, what is the scope of permissible rulemaking?
  • Substantive issues in UMC rulemaking: costs and benefits to be considered in developing rules, prudential concerns, and similar concerns.
  • Using UMC to address competition-adjacent issues: consideration of how or whether the FTC can use its UMC authority to address firm conduct that is governed by other statutory or regulatory regimes. For instance, firms using copyright law and the Digital Millennium Copyright Act (DMCA) to limit competitors’ ability to alter or repair products, or labor or entry issues that might be governed by licensure or similar laws.

Timing and Structure of the Symposium

Starting tomorrow, one or two contributions to this symposium will be posted each morning. During the first two weeks of the symposium, we will generally try to group posts on similar topics together. When multiple contributions are posted on the same day, they will generally be implicitly or explicitly in dialogue with each other. The first week’s contributions will generally focus on constitutional and administrative law issues relating to UMC rulemaking, while the second week’s contributions will focus on more specific substantive topics. 

Readers are encouraged to engage with these posts through comments. In addition, academics, practitioners, and other antitrust and regulatory commentators are invited to submit additional contributions for inclusion in this symposium. Such contributions may include responses to posts published by others or newly developed ideas. Interested authors should submit pieces for consideration to Gus Hurwitz and Keith Fierro Benson.

This symposium will run through at least Friday, May 6. We do not, however, anticipate, ending or closing it at that time. To the contrary, it is very likely that topics relating to FTC UMC rulemaking will continue to be timely and of interest to our community—we anticipate keeping the symposium running for the foreseeable future, and welcome submissions on an ongoing basis. Readers interested in these topics are encouraged to check in regularly for new posts, including by following the symposium page, the FTC UMC Rulemaking tag, or by subscribing to Truth on the Market for notifications of new posts.

In Administrative Law, Antitrust & Competition, Copyright, Federal Trade Commission, FTC UMC Rulemaking, Regulation, Section 5, Symposia, Truth on the Market , , , , , ,
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Righting Incentives to Combat Online Piracy

Neil Fried and Kristian Stout —  9 December 2020

More than two decades after Congress sought to strike a balance between the interests of creators and service providers with the Digital Millennium Copyright Act (DMCA), it is clear that Section 512 of the Copyright Act has failed to create the right incentives to curb online copyright infringement. Indeed, as a May report from the U.S. Copyright Office concluded, the “original intended balance has been tilted askew.”

As laid out in the DMCA, Section 512’s goal was to “preserve strong incentives for service providers and copyright owners to cooperate to detect and deal with copyright infringements” while simultaneously providing “greater certainty to service providers concerning their legal exposure for infringements.” While the law has certainly accomplished the latter, it has been at the expense of the former.

The good news is that Congress has taken notice. Sens. Thom Tillis (R-N.C.) and Chris Coons (D-Del.)—the chair and ranking member, respectively, of the Senate Judiciary Subcommittee on Intellectual Property—have held a series of hearings on potential reforms to the Copyright Act, with another scheduled for Dec. 15. Tillis also recently solicited feedback to guide a discussion draft of reform legislation he intends to make public shortly after the hearing. (Our answers to Tillis’ questionnaire can be found here.) 

The problem

Back in 1998, there were reasons for lawmakers to believe Section 512 would help Internet users, copyright holders and online service providers (OSPs) alike. Holding OSPs culpable for any misuse of copyrighted material in the vast amount of user-generated content they carry would create unreasonable litigation risk and hinder development of online distribution services. That would be bad for Internet users, for copyright holders who benefit from the lawful dissemination of their content and for the OSPs themselves. In that sense, providing OSPs limited liability protection for collaborating to curb piracy was seen as a way to create a healthier online ecosystem to everyone’s advantage.

But as Section 512 has been applied by the courts, OSPs need do little more than respond to takedown notices from copyright holders. At that point, the copyrighted content has already been unlawfully disseminated and damage has already been done. Moreover, in the interim, service providers can continue to monetize the infringing content through ad placement or other mechanisms. In essence, Section 512 has in practice given OSPs an economic incentive to do as little as possible to prevent infringement for as long as possible so that they can avoid costs and continue to generate revenue. That is antithetical to the copyright system, which is supposed to give copyright holders the ability to determine how their content is disseminated and to negotiate compensation.

Such concerns are compounded by the fact that a single unauthorized version of a copyrighted work on one Internet site may quickly be replicated into hundreds of versions at hundreds of sites across the globe. Copyright holders must scour the entire Internet for unauthorized versions of their content in a constant state of notice-sending, only to have the content continue to pop up. That is a costly and time-consuming burden for any copyright holder. The burden is even greater for independent creators who do not have their own content-protection departments. The hours and days they lose policing the Internet for their copyrighted material is time they could be spending on their craft.

Potential solutions

Proper safe harbors should encourage OSPs to help prevent copyrighted content from being improperly disseminated. Ideally, such rules could also encourage OSPs to license content. That would enable them and their users to benefit from the content without litigation risk, but while respecting copyright holders’ rights. One of the benefits of intermediaries is that they can more efficiently negotiate such agreements with copyright holders than the copyright holders could with each of the service providers’ many users.

But the near-complete absence of intermediary liability means OSPs have little incentive to curb piracy or license content. As a condition of receiving safe harbor protection, OSPs should be required to take reasonable steps: 1) to prevent infringement and 2) to stop, upon notice, infringement that has already occurred. Such steps would include:

  • Authentication of Identities. Ensuring online service providers know their users’ true identities would discourage those users from engaging in piracy, while also making it harder for users to simply change account names once caught. It would also help copyright holders to seek redress, including in cases where all they want is to ask users to cease unintentional infringement. Identities could generally remain confidential, disclosed to third parties only when needed to resolve a case of infringement.
  • Education Measures. Unintentional infringement might be avoided if OSPs briefly explained to users the principles of copyright and fair use and asked whether they were transmitting content that contained someone else’s copyrighted work. Such explanations and inquiries should be provided at the point a user seeks to disseminate content. Links could be included pointing to more detailed information on the Copyright Office’s site.
  • Revisions to the Knowledge Standard. According to the text of Section 512, to be protected by the safe harbors, OSPs must not have either “actual knowledge” of infringement or be “aware of facts or circumstances from which infringing activity is apparent.” This awareness of facts or circumstances is often referred to as “red flag” knowledge. But courts have all but read this standard out of the statute. The statute should be revised to make clear that OSPs are required to act when infringement is apparent, even if they have not been alerted to a specific instance of infringement by a copyright holder.
  • Preservation of Rights Management Information. Digital works often have embedded data indicating who the copyright holders are and how the content may be used. OSPs should be held culpable if they negligently, recklessly or knowingly remove that data. Copyright holders should not be required, as is the case today, to demonstrate that the online service provider acted with an intent to facilitate infringement. The lack of accurate rights-management information makes it harder for copyright holders to enforce their rights, as well as for individuals willing to license content to determine who to approach to do so. OSPs should thus have an obligation to ensure that rights-management information included by a copyright holder remains intact, especially since OSPs often monetize that content through advertising or other means.
  • Filtering and Staydown: Allowing all copyright holders to provide “fingerprints” of their content would enable OSPs to prevent copyrighted content from being unlawfully uploaded or otherwise disseminated. It could also help ensure that any copyrighted content that slips through and is subsequently taken down manages to stay down. Preventing unauthorized dissemination through filtering could also reduce the number of takedown notices copyright holders would need to send and OSPs would need to process—saving everyone time, hassle and money. Filtering technologies, such as Google’s Content ID, already exist, although Google does not make it available to all copyright holders. The EU has recently adopted filtering requirements. A U.S. filtering requirement would help to foster a market for the creation of additional filtering solutions.
  • Adoption of Standard Technical Measures. Section 512(i) requires OSPs to accommodate standard technical measures for preventing piracy that have been developed through a voluntary, consensus process. The immunity from liability that the safe harbors provide, however, reduces OSPs’ incentive to collaborate to develop standard technical measures. The Copyright Office should be authorized to certify certain solutions as standard technical measures, and even to commission the creation of additional ones. This would help foster a market for such measures.
  • Improving the Takedown Process. The statute allows copyright holders to provide representative lists in their notices for takedown, rather than require them to itemize every URL for takedown. Yet OSPs often impose technicalities before they will act on a representative list. The Copyright Office should be authorized to create model forms deemed to provide adequate notice, as well as to specify what kind of information is both necessary and sufficient to require takedown.
  • Effective Repeat Infringer Policies. The statute already requires OSPs to have policies to terminate service to repeat infringers, and to reasonably implement those policies. Courts have historically interpreted those requirements rather laxly. The Copyright Office should be authorized to create a model repeat-infringer policy deemed to comply with the requirement.

In addition to creating baseline requirements such as the ones listed above, the Copyright Act should be revised to provide additional tools to resolve disputes. Creating a small claims process, as provided in the CASE Act, could alleviate the burdens of litigation for smaller copyright holders, smaller OSPs and individual users. Also, courts ordinarily have authority to issue no-fault injunctions to third parties when doing so is necessary to effectuate their rulings. In the copyright context, even when U.S. courts have ruled that websites have willfully engaged in infringement, ceasing the infringement can be difficult, especially when the parties and their facilities are located outside the United States. Courts should be clearly authorized to issue no-fault injunctions requiring OSPs to block access to sites that the courts have ruled are willfully engaged in mass infringement. Such orders are already available to courts in many other countries and have not, as some hyperbolically predict, “broken the Internet.”

Revising the Copyright Act as described above would encourage OSPs both to prevent the initial infringement and to more effectively curtail continued infringement that has slipped through. OSPs could decline to implement these content-protection requirements, but they would lose the safe harbors and be subject to the ordinary standards of copyright liability. OSPs also might more widely choose to license copyrighted works that are likely to appear on their platforms. That would benefit copyright holders and Internet consumers alike. The providers themselves might even find it leads to increased use of their service—as well as increased profits.

In Copyright, European Union, Federal Trade Commission, Google, Intellectual Property, International, Platforms, Section 5, Truth on the Market , , , , ,
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Trade Agreements and Restatements as End Runs Around the Rule of Law

Kristian Stout —  15 February 2018

The Internet is a modern miracle: from providing all varieties of entertainment, to facilitating life-saving technologies, to keeping us connected with distant loved ones, the scope of the Internet’s contribution to our daily lives is hard to overstate. Moving forward there is undoubtedly much more that we can and will do with the Internet, and part of that innovation will, naturally, require a reconsideration of existing laws and how new Internet-enabled modalities fit into them.

But when undertaking such a reconsideration, the goal should not be simply to promote Internet-enabled goods above all else; rather, it should be to examine the law’s effect on the promotion of new technology within the context of other, competing social goods. In short, there are always trade-offs entailed in changing the legal order. As such, efforts to reform, clarify, or otherwise change the law that affects Internet platforms must be balanced against other desirable social goods, not automatically prioritized above them.

Unfortunately — and frequently with the best of intentions — efforts to promote one good thing (for instance, more online services) inadequately take account of the balance of the larger legal realities at stake. And one of the most important legal realities that is too often readily thrown aside in the rush to protect the Internet is that policy be established through public, (relatively) democratically accountable channels.

Trade deals and domestic policy

Recently a letter was sent by a coalition of civil society groups and law professors asking the NAFTA delegation to incorporate U.S.-style intermediary liability immunity into the trade deal. Such a request is notable for its timing in light of the ongoing policy struggles over SESTA —a bill currently working its way through Congress that seeks to curb human trafficking through online platforms — and the risk that domestic platform companies face of losing (at least in part) the immunity provided by Section 230 of the Communications Decency Act. But this NAFTA push is not merely about a tradeoff between less trafficking and more online services, but between promoting policies in a way that protects the rule of law and doing so in a way that undermines the rule of law.

Indeed, the NAFTA effort appears to be aimed at least as much at sidestepping the ongoing congressional fight over platform regulation as it is aimed at exporting U.S. law to our trading partners. Thus, according to EFF, for example, “[NAFTA renegotiation] comes at a time when Section 230 stands under threat in the United States, currently from the SESTA and FOSTA proposals… baking Section 230 into NAFTA may be the best opportunity we have to protect it domestically.”

It may well be that incorporating Section 230 into NAFTA is the “best opportunity” to protect the law as it currently stands from efforts to reform it to address conflicting priorities. But that doesn’t mean it’s a good idea. In fact, whatever one thinks of the merits of SESTA, it is not obviously a good idea to use a trade agreement as a vehicle to override domestic reforms to Section 230 that Congress might implement. Trade agreements can override domestic law, but that is not the reason we engage in trade negotiations.

In fact, other parts of NAFTA remain controversial precisely for their ability to undermine domestic legal norms, in this case in favor of guaranteeing the expectations of foreign investors. EFF itself is deeply skeptical of this “investor-state” dispute process (“ISDS”), noting that “[t]he latest provisions would enable multinational corporations to undermine public interest rules.” The irony here is that ISDS provides a mechanism for overriding domestic policy that is a close analogy for what EFF advocates for in the Section 230/SESTA context.

ISDS allows foreign investors to sue NAFTA signatories in a tribunal when domestic laws of that signatory have harmed investment expectations. The end result is that the signatory could be responsible for paying large sums to litigants, which in turn would serve as a deterrent for the signatory to continue to administer its laws in a similar fashion.

Stated differently, NAFTA currently contains a mechanism that favors one party (foreign investors) in a way that prevents signatory nations from enacting and enforcing laws approved of by democratically elected representatives. EFF and others disapprove of this.

Yet, at the same time, EFF also promotes the idea that NAFTA should contain a provision that favors one party (Internet platforms) in a way that would prevent signatory nations from enacting and enforcing laws like SESTA that (might be) approved of by democratically elected representatives.

A more principled stance would be skeptical of the domestic law override in both contexts.

Restating Copyright or creating copyright policy?

Take another example: Some have suggested that the American Law Institute (“ALI”) is being used to subvert Congressional will. Since 2013, ALI has taken upon itself the project to “restate” the law of copyright. ALI is well known and respected for its common law restatements, but it may be that something more than mere restatement is going on here. As the NY Bar Association recently observed:

The Restatement as currently drafted appears inconsistent with the ALI’s long-standing goal of promoting clarity in the law: indeed, rather than simply clarifying or restating that law, the draft offers commentary and interpretations beyond the current state of the law that appear intended to shape current and future copyright policy.  

It is certainly odd that ALI (or any other group) would seek to restate a body of law that is already stated in the form of an overarching federal statute. The point of a restatement is to gather together the decisions of disparate common law courts interpreting different laws and precedent in order to synthesize a single, coherent framework approximating an overall consensus. If done correctly, a restatement of a federal statute would, theoretically, end up with the exact statute itself along with some commentary about how judicial decisions have filled in the blanks differently — a state of affairs that already exists with the copious academic literature commenting on federal copyright law.

But it seems that merely restating judicial interpretations was not the only objective behind the copyright restatement effort. In a letter to ALI, one of the scholars responsible for the restatement project noted that:

While congressional efforts to improve the Copyright Act… may be a welcome and beneficial development, it will almost certainly be a long and contentious process… Register Pallante… [has] not[ed] generally that “Congress has moved slowly in the copyright space.”

Reform of copyright law, in other words, and not merely restatement of it, was an important impetus for the project. As an attorney for the Copyright Office observed, “[a]lthough presented as a “Restatement” of copyright law, the project would appear to be more accurately characterized as a rewriting of the law.” But “rewriting” is a job for the legislature. And even if Congress moves slowly, or the process is frustrating, the democratic processes that produce the law should still be respected.

Pyrrhic Policy Victories

Attempts to change copyright or entrench liability immunity through any means possible are rational actions at an individual level, but writ large they may undermine the legal fabric of our system and should be resisted.

It’s no surprise why some may be frustrated and concerned about intermediary liability and copyright issues: On the margin, it’s definitely harder to operate an Internet platform if it faces sweeping liability for the actions of third parties (whether for human trafficking or infringing copyrights). Maybe copyright law needs to be reformed and perhaps intermediary liability must be maintained exactly as it is (or expanded). But the right way to arrive at these policy outcomes is not through backdoors — and it is not to begin with the assertion that such outcomes are required.

Congress and the courts can be frustrating vehicles through which to enact public policy, but they have the virtue of being relatively open to public deliberation, and of having procedural constraints that can circumscribe excesses and idiosyncratic follies. We might get bad policy from Congress. We might get bad cases from the courts. But the theory of our system is that, on net, having a frustratingly long, circumscribed, and public process will tend to weed out most of the bad ideas and impulses that would otherwise result from unconstrained decision making, even if well-intentioned.

We should meet efforts like these to end-run Congress and the courts with significant skepticism. Short term policy “victories” are likely not worth the long-run consequences. These are important, complicated issues. If we surreptitiously adopt idiosyncratic solutions to them, we risk undermining the rule of law itself.

In Copyright, Intellectual Property, Platforms, Truth on the Market , , , , , ,
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The Internet Association’s vision for the future looks a lot like the past

Neil Turkewitz —  23 November 2016

Last week, the Internet Association (“IA”) — a trade group representing some of America’s most dynamic and fastest growing tech companies, including the likes of Google, Facebook, Amazon, and eBay — presented the incoming Trump Administration with a ten page policy paper entitled “Policy Roadmap for New Administration, Congress.”

The document’s content is not surprising, given its source: It is, in essence, a summary of the trade association’s members’ preferred policy positions, none of which is new or newly relevant. Which is fine, in principle; lobbying on behalf of members is what trade associations do — although we should be somewhat skeptical of a policy document that purports to represent the broader social welfare while it advocates for members’ preferred policies.

Indeed, despite being labeled a “roadmap,” the paper is backward-looking in certain key respects — a fact that leads to some strange syntax: “[the document is a] roadmap of key policy areas that have allowed the internet to grow, thrive, and ensure its continued success and ability to create jobs throughout our economy” (emphasis added). Since when is a “roadmap” needed to identify past policies? Indeed, as Bloomberg News reporter, Joshua Brustein, wrote:

The document released Monday is notable in that the same list of priorities could have been sent to a President-elect Hillary Clinton, or written two years ago.

As a wishlist of industry preferences, this would also be fine, in principle. But as an ostensibly forward-looking document, aimed at guiding policy transition, the IA paper is disappointingly un-self-aware. Rather than delineating an agenda aimed at improving policies to promote productivity, economic development and social cohesion throughout the economy, the document is overly focused on preserving certain regulations adopted at the dawn of the Internet age (when the internet was capitalized). Even more disappointing given the IA member companies’ central role in our contemporary lives, the document evinces no consideration of how Internet platforms themselves should strive to balance rights and responsibilities in new ways that promote meaningful internet freedom.

In short, the IA’s Roadmap constitutes a policy framework dutifully constructed to enable its members to maintain the status quo. While that might also serve to further some broader social aims, it’s difficult to see in the approach anything other than a defense of what got us here — not where we go from here.

To take one important example, the document reiterates the IA’s longstanding advocacy for the preservation of the online-intermediary safe harbors of the 20 year-old Digital Millennium Copyright Act (“DMCA”) — which were adopted during the era of dial-up, and before any of the principal members of the Internet Association even existed. At the same time, however, it proposes to reform one piece of legislation — the Electronic Communications Privacy Act (“ECPA”) — precisely because, at 30 years old, it has long since become hopelessly out of date. But surely if outdatedness is a justification for asserting the inappropriateness of existing privacy/surveillance legislation — as seems proper, given the massive technological and social changes surrounding privacy — the same concern should apply to copyright legislation with equal force, given the arguably even-more-substantial upheavals in the economic and social role of creative content in society today.

Of course there “is more certainty in reselling the past, than inventing the future,” but a truly valuable roadmap for the future from some of the most powerful and visionary companies in America should begin to tackle some of the most complicated and nuanced questions facing our country. It would be nice to see a Roadmap premised upon a well-articulated theory of accountability across all of the Internet ecosystem in ways that protect property, integrity, choice and other essential aspects of modern civil society.

Each of IA’s companies was principally founded on a vision of improving some aspect of the human condition; in many respects they have succeeded. But as society changes, even past successes may later become inconsistent with evolving social mores and economic conditions, necessitating thoughtful introspection and, often, policy revision. The IA can do better than pick and choose from among existing policies based on unilateral advantage and a convenient repudiation of responsibility.

In Amazon, Copyright, Facebook, Google, Intellectual Property, Platforms, Regulation, Regulatory Reform , , , , , , , , ,
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