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Universal, Pay Those EFFing Lawyers
Section 512(f) of the DMCA says pretty clearly that anyone who "knowingly materially misrepresents under this section... that material or activity is infringing... shall be liable for any damages, including costs and attorneys' fees", which would seem to apply here; the EFF argues that Universal should have reasonably known that the video obviously constituted fair use. In a Law.com article about the case, attorney Kelly Klaus, representing Universal, countered that "Congress also said that there was another remedy, which is the counter-notice procedure, which is what happened here." But this seems to miss the point -- the DMCA says that the remedies are the counter-notice procedure and an award for attorney's fees. (Klaus's firm did not respond to requests for comment for this article.) Anyway, as EFF staff attorney Corynne McSherry points out, if there were no possible award for attorney's fees against copyright holders who make false accusations, then there would be no disincentive for copyright holders not to file frivolous accusations in the first place.
I'm an EFF member and support their request for attorney's fees, but let's play devil's advocate. Suppose you were an indie musician who sold your songs online, and you found a number of YouTube videos that used your song without permission, so you sent a long list of DMCA takedown notices to YouTube. Included in that list was one video that used only a brief portion of your song, short enough to count as fair use. Is $400,000 a fair punishment for accidentally including one video in your list that wasn't a bona fide copyright infringement?
On the other hand, if the EFF doesn't get their attorneys fees, then they have to eat the cost of the work they did, and that doesn't seem fair either.
The problem is that once you have a $400,000 bill on the table, someone has to pay it, which punishes one or both parties usually vastly out of proportion to any wrongdoing. ($400,000 is almost half of what Reebok had to pay when one of their lead-tainted bracelets killed a child.) Huge attorney's fees awards also limit access to the court system for plaintiffs who might have a reasonable case, but can't afford the risk of having to pay attorney's fees if they lose, and for defendants who might also have a reasonable case, but are under pressure to settle quickly to avoid the risk of a huge attorney's fees award against them.
This suggests an economics / game theory problem: Could you come up with a system that takes into account the incentives of parties on both sides, and that prevents huge legal bills from being generated?
Now, any argument about the legal system usually raises two kinds of objections. The first is that the existing system "works". Well, in many ways it does, but everybody also knows that wealthy corporations and individuals enjoy a huge advantage in the court system, even though courts are supposed to treat all parties equally. So at least in that respect it doesn't "work" the way it's supposed to. The second objection is that it's too hard to change the rules and traditions that are built into legal proceedings, so it's better just to work within the system. True, but that's not the question I'm asking. I'm posing it as a logical brainteaser: If you had carte blance to modify the way that legal disputes were held, could you do it in a way that respects the rights and interests of all parties and still minimizes the legal fees incurred? (Whether I'm right or wrong, my goal is to make this argument more interesting to mathematicians and game theorists, than to lawyers; otherwise, I've failed.)
From a game-theoretic point of view, you might argue that large attorney's fees serve a useful purpose by discouraging frivolous lawsuits. The problem is that the fees don't just discourage frivolous lawsuits but also non-frivolous lawsuits where there's a reasonable chance of losing. On the other hand, a person who is already broke would have little disincentive to file a frivolous lawsuit, since the worst that can happen is that they'd get hit with a huge award for attorney's fees and have to declare bankruptcy, which they might consider worth the risk for a small shot at a million-dollar payout. So assume that attorney's fees are not themselves the best way to deter frivolous lawsuits, and that avoiding large fees in general is still a desirable thing. How do you design rules to achieve that?
I think you could save a lot of money by enforcing a rule that a lawyer is not allowed to seek attorney's fees from the other side for arguing any points that the other side offered to concede anyway. So the incentive would be that if party A's lawyer concedes some point of fact or point of law, and party B ultimately wins the case and an award for attorney's fees, then party B is not allowed to seek attorney's fees for arguing the point conceded by party A's lawyer.
In all of my legal cases where the other side was represented by a lawyer who was getting paid by their client up front, it was clear from reading the other side's briefs (and my own lawyers agreed with me) that opposing counsel had spent a lot of time spinning their wheels and arguing obvious or irrelevant points before getting to the crux of the dispute. If their client wants to pay them for that busy-work, that's between them and their client, but if they had won the case and an award for attorney's fees, I would have objected that they shouldn't be allowed to charge us for time they spent arguing points that we would have given to them anyway. The hypothetical savings from implementing and enforcing this rule, are not trivial.
So how does game theory predict that the two sides would behave under this rule? Suppose MegaCorp is suing or being sued by IndieActivist. MegaCorp's first priority is to win, and if possible to hit IndieActivist with a huge award for attorney's fees to discourage other would-be IndieActivists. MegaCorp doesn't want to lose, but if they do lose, they don't much care about the attorney's fees award they would have to pay to IndieActivist's lawyers. In this scenario, they would be expected to concede very little, disputing trivial points in order to drag out the case as long as possible, hoping that IndieActivist's lawyers would run out of time or money and pressure their client to settle. In other words, MegaCorp would behave about the same as they would under the existing rules.
For IndieActivist, on the other hand, their first priority is to win, but they also care very much about not having to pay a staggering award for attorney's fees if they lose. So they would be expected to concede any points of fact or law, even if favorable to MegaCorp, if those points are so obvious that they don't think the judge would be likely to rule in their favor on those questions anyway. This way, even if IndieActivist loses and has to pay attorney's fees to MegaCorp, those fees would be limited to the time spent arguing the actual point of disagreement that formed the crux of the lawsuit.
Suppose, for example, that Universal had actually sued Lenz for violating Prince's copyright by using a 30-second excerpt of his song in her video. Lenz or her lawyers could have filed a brief conceding all the obvious points that they would expect Universal's lawyers to make: Prince was the holder of the copyright, the copyright had been filed with the Copyright Office, Lenz never sought permission for using the recording, etc. Very quickly, the whole case could be distilled down to: "Show this video to the judge and let them decide if it qualifies as 'fair use'." Any effort spent arguing any points beside that, is wasteful. And if the legal system encourages lawyers to rack up billable hours arguing other points, then the system is wasteful. Concede the obvious, and everybody's costs are kept under control.
This only partially addresses the problem of large attorney's fees, because it still leaves the fees that are generated in the process of arguing points that the other side wouldn't concede. Solving this problem is much harder, because while you can simply eliminate the work that's spent on arguing points that the other side would give to you anyway, you can't eliminate the work spent on points that are genuinely in dispute, you can only try to make that work shorter and cheaper. I've argued for my own fairly complicated remedy in a separate article, but my main point was that legal costs aren't driven up so much by the complexity of the law as by the ambiguity in it. The Windows programming interface, after all, is also very complex, but if you can write a clear description of what you want a simple program to do, you can often get a programmer to write the program for you for dirt cheap. In arguing a legal case, on the other hand, the number of possible outcomes grows exponentially with each point of ambiguity in the law where there's no way to predict how the judge will interpret a particular rule.
But still, even if you can't reduce the ambiguity in how a legal question will be interpreted, you can avoid a lot of unnecessary attorney's fees by distilling the case just down to that particular question. Is it fair use to use a 30-second clip of Prince's song in a video of a dancing toddler? Let the judge decide. But if that's the one and only point that both sides can't agree on, then neither side should be able to bill for time spent arguing about anything else.
Perhaps someone mathematically or logically inclined can come up with a better algorithm for avoiding the billing hours generated by arguing the obvious. I'm not entirely happy with my own solution, because it still allows MegaCorp to concede absolutely nothing, and to try and bleed IndieActivist dry by forcing them to argue even the most trivial points. IndieActivist's lawyer could be reimbursed for that time if they win and get an award for attorney's fees, but they might run out of money or patience before then. To counter this tactic, you could allow either side to seek penalties for Frivolously Arguing The Super-Obvious. If IndieActivist's lawyer wants MegaCorp to concede an obvious point and MegaCorp won't do it, IndieActivist could seek a FATSO penalty, and the judge could decide whether to award them that penalty if the point is really and truly obvious, without deciding on the merits of the case as a whole. The penalty doesn't have to be large enough to hurt MegaCorp, it just has to be large enough to compensate IndieActivist's lawyer for their time, so that MegaCorp can't run them into the ground by forcing them to argue every point unnecessarily. However, economic game theorists might think of some unintended consequence of the FATSO rule. Could MegaCorp flood IndieActivist's lawyer with a gigantic list of requested concessions, so that if IndieActivist's lawyer screws up and forgets to concede one of the points that the judge turns out to consider "obvious", MegaCorp could hammer them with a FATSO award too? It's hard to anticipate all the ways that either party might abuse a new rule of the game.
Meanwhile, under the existing system, while it may be unfair to Universal in some cosmic sense that they have to pay out $400,000 for sending one mistaken DMCA takedown notice, it would be more unfair to force the EFF to eat those costs, and in any case the DMCA does clearly allow for an award of attorney's fees. But it would be better for everyone in the long run -- especially for the EFF and the kind of relatively powerless clients that they usually represent -- if there were more ways to keep legal costs from spiraling out of control in the first place.
This suggests an economics / game theory problem: Could you come up with a system that takes into account the incentives of parties on both sides, and that prevents huge legal bills from being generated?
Not with copyright and fair use. Fair use is deliberately ambiguous. This is the reason why huge legal bills can be generated over it. Because it is ill defined. No amount of logical, sane Markov modeled state diagrams could convince some people that they are now entering a state of expected loss on a case.
Allow me to present what will undoubtedly be a very unpopular viewpoint here.
"Let's Go Crazy" is a 279 second track off of Purple Rain. Most Copyright lawyers consider 'safe harbor' for fair use to be one tenth of a song or, if longer than five minutes, thirty seconds (even Wikipedia implements this). In a very pedantic analysis, had she used 27.9 seconds of the song instead of the quoted 30 then there would be no grounds for take down, let alone a court case.
Now lets say you have a huge catalog of songs you'd like to defend. You're a big mega corporation so what you do is you hire developers to analyze songs for fingerprints and -- funny how pedantic algorithms get to be -- submit anything over the 'safe harbor' limit to Control Gate C (that being the legal arm which churns out thousands of take down notices).
I'd like to see Universal burned by their mechanization of this process but there's your unpopular defense of having to take this to court based entirely around popular 'safe harbor' limits and deliberate ambiguity of the law. And I guess this could be seen as Universal having to try to draw the real line with precedence for court case established 'safe harbor.' Universal could fear popular 'safe harbor' limits expanding if they don't fight these things.
"knowingly materially misrepresents under this section..."
The question is -- given the above -- were they really?
My work here is dung.
$400,000 for writing a letter? I like the EFF and I sort of agree that it's not fair they have to eat the costs of defending a fraudulent claim. But it was their choice to send the notice chiseled on a solid gold tablet.
that don't see deep cultural penetration of their products as an unqualified good. They could take a cue from Microsoft and learn that even piracy brings value by making your product be what's on people's minds in a desirable way. Yes, Microsoft may lose business, but they maintain marketshare. Likewise, a label whose songs are remixed in fan videos or used as background music in a YouTube video is keeping its product out there at no cost to itself, which at least keeps it in the minds of more music buyers.
Run this by me again.
EFF's lawyers charged $400,000 for checking to confirm that the video was covered under fair use then writing one letter to that effect? That's not legal advice, that's extortion.
I presume they're trying to make a point to the extortionate claims that Universal et all charge. Good on them. Hopefully Universal don't pay it and end up in breach of these terms.
What a long rant.
The short of it is: Universal is one of those companies that appears to have absolutely no trouble asking for similar figures when it is them who filed the suit. And I'm talking both damages and attorney fees. Quid pro quo. You ruin people upload 240 seconds of your song, then be ready to be ruined yourself when you falsely accuse people over 30 seconds of it.
You can't have it both ways. Either these are the crown jewels and everything about them is so precious that your ridiculous fees and damages are alright, or this is mass-produced cheap crap with a net worth around a couple cents. Which one is it?
Assorted stuff I do sometimes: Lemuria.org
Why should the punishment for depriving a person of their right to fair use be any less severe than violating a copyright?
Time is what keeps everything from happening all at once.
Run this by me again.
EFF's lawyers charged $400,000 for checking to confirm that the video was covered under fair use then writing one letter to that effect? That's not legal advice, that's extortion.
More precisely it's counter-extortion. I agree $400,000 is excessive... I hope they win $10,000 or whatever the minimum is to make it profitable for the EFF to defend the common person. Most people would just fold and take down a fair-use clip rather than risk bankruptcy so the EFF is necessary.
Remember - these are punitive damages intended to discourage further fraudulent DMCA claims. You know, like the punitive damages of $x,xxx per song that the RIAA collects on a regular basis.
Well, if a song is worth $180,000, then I can see how the letter is worth $400,000.
I'd like to point out that sneaking TFA into TFS cheating. Damn you.
...then 1 attorney taking 2 or 3 hours of time to review the facts, compose the letter, and handle internal billing paperwork is surely worth $400,000. What goes around comes around. When grandma gets penalized millions of dollars for having her grandson download 20 songs over bit torrent, surely lawyer fees must be worth much more.
Authority questions you. Return the favor.
"Suppose you were an indie musician who sold your songs online..."
To be awarded damages you have to *know* you were filing a false claim. And at this point the difference between a self-represented indie musician (who accidentally flagged a single fair-use video in a long list of infringing ones) and a team of lawyers specializing in copyright law (who flag every video using any part of "their" songs, with no apparent effort to identify fair use) becomes important. One can argue that they missed some nuance of "fair use". The other really can't. Especially when they do it over and over again with no apparent effort reduce the number of falsely flagged videos.
The point of asking for penalties in this case is not to set a precedent of penalizing every mistakenly sent DMCA claim, it's to change the attitude of "we'll take down every possibly infringing video and let people who think they have fair use file counter-notices" into "hey, lets only file DMCA complaints against videos that are actually infringing."
Does a line appended to your comment give your post meaning in and of itself, or only in relation to those without?
Hey, the RIAA claims that they need to deter downloaders by imposing excessive fees; this is just more of the same, but in the other direction. The EFF's demand for that much money is a deterrent to people who think that it is OK to abuse the legal system and issue unfair takedown notices. Hopefully, this will have the effect of shocking the government into action and reducing the damages in copyright cases (once they start targeting individuals, the damages should be much, much smaller), but I have a feeling that this sort of activity will continue for many more years.
Palm trees and 8
Well, to make it fair, the punative damages should be assessed based on the annual income of the defendant. Punative damages are the punishment for wasting everyone's time. If it was the little guy wasting Sony's time, they would then feel the same level of sting as if Sony was wasting the little guy's time.
They do this with speeding tickets in Switzerland--the fine is assessed as a percentage of annual income.
Cool! Amazing Toys.
Actually, I think this is very much related to the RIAA's over-blown claims.
I think they've filed this request with the intention of Universal protesting it, calling the fees outrageous, and doing all of the research for the EFF on why fees that large are wrong in order to get them stopped.
Then the EFF can take that case work, and apply it in the next RIAA trial they're involved in, since in the US, a lot of law is built on precedent, and that would make a very useful precedent indeed.
How long have the editors waited to use the phrase "EFFing lawyers"? All their lives, I'd guess.
Grats.
Welcome to the Panopticon. Used to be a prison, now it's your home.
I hate the fact that money buys justice. I propose that neither side can spend more than the other without loaning the other the difference, and loser pays. If I sue MegaCrp for a legit complaint and they bring in ten lawyers to my one, that is hardly justice. They must offer to loan me what it takes to hire a full team. If I decline the offer, they are limited to one lawyer, just like me. If I take their offer and win, they don't get their money back, and they owe me for the one lawyer I paid for. If I lose, I owe them the fees for 19 lawyers. If they think I am not able to repay their loan and/or their own costs, they should not offer the loan and should restrict themselves to equal costs, or even less -- hire a cheap lawyer and make me loan them the difference, and if I can't afford that, I have to reduce my lawyering costs to match.
Same thing applies if they sue me.
Obviously you have to have some leeway; you can't demand matching down to the penny. You also have to have some auditing to eliminate padding and lies. But cases where MegaCorp brings in a full fancy team against a single lawyer is blatantly wrong.
I especially like the idea that it encourages keeping expenses small. The more you spend, the more you have to loan, and the more the other side spends. You can't simply swamp the other side with expensive investigations.
You have to combine with with loser pays or it is pointless.
Infuriate left and right
I agree.
If a person who makes under $30000/year is fined almost two million, that is roughly 6600% of ones income that already has president as 'fair'.
So if Universal is making a 2 billion per year profit, that would be about $132 trillion in fees.
Seems fair to me.
The EFF actually made a claim for attorney's fees earlier in the case, and the claim was denied. The court found that a violation of 512(f) requires either actual knowledge that the material is not infringing or that the fair use be self-evident. Lenz v. Universal Music Corp., Copy. L. Rep. (CCH) P29,540, 8 (N.D. Cal. 2008). The court then found that the plaintiff had neither alleged facts from which actual knowledge could be inferred nor facts showing that the fair use was self-evident. Id. at 9. The plaintiff was given leave to amend the claim to correct these issues, which she did.
The amended version of the complaint alleged that Universal acted in bad faith and deliberate ignorance of fair use. Lenz v. Universal Music Corp., 572 F. Supp. 2d 1150, 1156 (N.D. Cal. 2008). It further alleges that Universal is acting solely to satisfy Prince's personal agenda. Id. Those allegations were held sufficient to deny a motion to dismiss the claim. Id at 1157. The court ruled that copyright holders must undertake a good faith consideration of fair use but they are not required to make a full investigation. Id at 1155-56. The court noted that cases of bad faith are likely to be rare. Id at 1155.
So the outcome here hinges on whether Universal considered fair use and decided in good faith that it did not apply. Normally it would be difficult to prove that Universal ignored fair use as a possible defense or considered it only in bad faith (e.g., had its lawyers tell it what it wanted to hear). The evidence would normally be protected by the attorney-client privilege or the attorney work-product privilege. In this case, however, the EFF won significant parts of a motion to discover such evidence. Lenz v. Universal Music Corp., 2009 U.S. Dist. LEXIS 105180 (N.D. Cal. 2009). Unfortunately, I can't find a link to the EFF's argument for this motion, so it's hard to say how strong their case actually is (e.g., whether they uncovered a smoking gun memo).
As for Mr. Haselton's extensive discussion of the best way to apportion the cost of litigation between parties I will say this: It is remarkable only for its complete lack of citation to or recognition of the numerous legal and economic studies that have been made of the subject over the past couple of centuries. It is the law and economics version of the phenomenon described in this XKCD comic and its accompanying alt-text.
In France, the government sets a rate it thinks it is reasonable medical professionals to charge. For instance a GP should cost x and a heart surgeon should cost y. Now you are allowed to see any medical professional you wish, and they are allowed to charge what-ever rate they like. However, the government will only reimburse you at the reasonable rate. Let us say, for example, you need a liver operation. You can choose a surgeon that charges the standard rate and have free health service. Or you may be well off and choose a famous surgeon that charges twice the normal rate, but in the knowledge you will only have half of it reimbursed. The rate the medical profession charges reflect the market, most charging around standard rate as the majority of people want free health care but a smaller percentage charging more for the wealthier as they "want the best".
This will fit in well with the attorney fee reimbursement model. The State decides that a copyright attorney is worth $x/hour. The EFF chooses attorneys that charge the standard rate. If they win then justice was done at no cost to themselves. If they lose, then their additional losses are limited to roughly what they had spent themselves. MegaCorp may decide money isn't an issue and wants to hire the best to make an example out of the EFF. If they lose, they reimburse all of the EFF attorney fees. If they win, they get back what they would have spend if they had used average lawyers. The difference they knew they knew in advance they were going to have to write off. The attorneys submit to the court their timesheets for reinbursement. A cursory glance by the judge will easily spot if there is any exaggerated excesses.
It won't solve the problem of dragging out a court case, but at least you know upon losing there will be a reasonable cap on the winner's attorney fees. IndyMedia's attorney also knows he can continue at standard rate in the knowledge we will get a summary judgement for payment without trying to haggle to get all of his fees paid at the end.
Phillip.
Property for sale in Nice, France
Lawyers are supposed to not inflate their bills, no matter who is paying.
It's illegal to double-bill, falsify bills, and such. However, to craft a "sure-fire" letter, could cost that, especially with the stakes at hand. I would assume that when they saw it, they decided to make this a test case. So they didn't craft the letter to the letter of the law - "Nuh uh. Signed, Lawyers" (which is about all that's needed for a counter-letter). Instead, they created a letter that probably said the same thing, but with cites, precedents, and arguments that indicated that not only was if Fair Use, but so obvious that they should have known and never filed their takedown.
I assume that their takedown system is such where any detected use of their works, no matter what for, generates a letter. The EFF thinks this illegal. They worked hard in drafting and defending a letter to this point (when "nuh uh" was all they needed). It's more like front-loading the case. They made sure the number was high enough that they would make a case of it. Send them a letter and a bill for $150, and there's a good chance it would be paid to shut them up and prevent precedent. But a bill for $400k to your "enemy" is something they'd fight over. And the EFF wanted to make sure that battle happened and that they were ready for it. So that was both the cause of and reason for the bill being $400k.
I don't think it's inflated at all, in the sense of they probably did spend the time to generate that bill. But I'd argue that if it was to obvious as to be illegal, then the letter should have been $150. And if it was that complicated, then the bill should be $400k, but that they wouldn't be on the hook for that because it wasn't so obvious. The fact that $400k was spent on a single letter would indicate some manner of complication.
Learn to love Alaska
Just wanted to mention, as a matter of routine, the Big Four behind RIAA: Warner Bros, EMI, Sony, Universal, or "WESU" for short.
I'm trying to give WESU a bit more mindshare so they can't hide behind the mask of the RIAA. Ok, back to your regular programming.
404555974007725459910684486621289147856453481154 in hex is "You sank my Battleship?"
[GPG key in journal]