W. Bruce Lunsford contribution to create Academy for Law, Business + Technology

With apologies for posting a press release as a blog post, the news that W. Bruce Lunsford has pledged $1 million to Chase under the direction of the Law + Informatics Institute for the creation of the the W. Bruce Lunsford Academy for Law, Business + Technology is exciting enough for us to share our news.

HIGHLAND HEIGHTS, Ky. (May 15, 2013) — The Northern Kentucky University Chase College of Law has received a $1 million gift from W. Bruce Lunsford to establish and support the W. Bruce Lunsford Academy for Law, Business + Technology.

Lunsford, a 1974 graduate of Chase College of Law, is chairman and CEO of Lunsford Capital, LLC, a private investment company headquartered in Louisville, Ky.

The W. Bruce Lunsford Academy for Law, Business + Technology will be an honors immersion program operated by the NKU Chase Law + Informatics Institute. The focus of the program will be to develop “renaissance lawyers” for the Information Age. The Lunsford Academy will provide students with the technological, financial and professional skill sets essential to the modern practice of law.  Through the program’s technology-driven, skills-based curriculum, students will acquire the fundamental skills that will make them more productive for their clients, more attractive to employers and better prepared to practice law upon graduation.

For those interested in learning more about the details of the program, the most comprehensive vision is provided in my forthcoming article from Connecticut Law Review. An working draft of the paper may be found here: Jon M.Garon, Legal Education in Disruption: The Headwinds and Tailwinds of Technology, (Conn. L. Rev. forthcoming) at SSRN: http://ssrn.com/abstract=2040560.

In addition to taking the program’s required and elective law and informatics courses, Chase students participating in the Lunsford Academy will have the opportunity to participate in technology-focused semester-in-practice placements and study abroad programs; they will also be able to seek joint degrees.

Chase College of Law partners with the NKU College of Informatics to offer a Juris Doctor/Master of Business Informatics and Juris Doctor/Master of Health Informatics and with the NKU Haile/US Bank College of Business to offer a Juris Doctor/Master of Business Administration.

Professor Jon Garon, director of the Law + Informatics Institute, said the development of the Lunsford Academy is the next step in the evolution of legal education. “In addition to a solid foundation in legal doctrine, theory and practice, law students need business education, information technology and intellectual property knowledge, and law practice management experience,” he said. “These skills will enable students to compete in today’s highly networked, efficient and global business community. The generous donation by Bruce Lunsford enables Chase to meet this challenge and redefine the scope of legal education.”

In recognition of Lunsford’s gift, the academy will be named the W. Bruce Lunsford Academy for Law, Business + Technology, upon approval by the NKU Board of Regents.

“We are extremely honored and pleased that Bruce has made this significant investment in our Law + Informatics Institute,” said Dennis R. Honabach, dean of the College of Law. “The Lunsford Academy will provide our law students with invaluable opportunities to become uniquely prepared for the modern practice of law.”

One year later – DRM-free ebooks hugely positive for Tor

New York Times technology columnist David Pogue discussed the decision last year by Tor Books UK and US to drop copy protection. It just released a statement regarding the effect of the DRM-free ebooks after one year.

His column deftly discusses the tension between consumers who want the inconvenience of encryption eliminated and concerns that DRM targets lawful consumers far more than those acquiring illegally distributed copies. Although he does not address the plethora of DRM-free versions on bit torrent sites, he notes that the changes to DRM for commercial products might affect the rate of piracy, but not the existence of piracy.

The Tor announcement highlighted a few other features of their strategy. First, the strategy was about their authors and the goals of the authors to engage more effectively with their readers. Secondly, as a science fiction imprint, their readership is among the most capable of getting DRM-free copies, so the publisher needs to make the consumer happy more than it needs to protect itself from the consumer. And finally, the decision to eliminate DRM does not mean that the works are not for-profit, on-sale copies. This statement captures many of Tor’s concerns:

We had discussions with our authors before we made the move and we considered very carefully the two key concerns for any publisher when stripping out the DRM from ebooks: copyright protection and territoriality of sales. Protecting our author’s intellectual copyright will always be of a key concern to us and we have very stringent anti-piracy controls in place. But DRM-protected titles are still subject to piracy, and we believe a great majority of readers are just as against piracy as publishers are, understanding that piracy impacts on an author’s ability to earn an income from their creative work. As it is, we’ve seen no discernible increase in piracy on any of our titles, despite them being DRM-free for nearly a year.

Pogue suggests but does not state outright that DRM is an ineffective strategy for reducing piracy. But he is very explicit that the point of an anti-piracy policy is to increase sales and revenue. DRM-free does not mean without cost. iTunes sells its music even though it dropped DRM. He also points out that his own books have had fared similarly in the market.

If book consumers thought that everyone in the household could easily read the same book (in the manner that a family can share a physical book), it might be more willing to spend money to own the ebook. For works that have no physical cost, the increase in unauthorized copies is not the right metric. The right question is whether more customers will purchase the work. If more copies are sold, the work is more successful, even if more copies are also pirated.

Pogue makes another strong point that the ease of the transaction directly impacts sales. “Friction also matters. That’s why Apple and Amazon have had such success with the single click-to-buy button. To avoid piracy, it’s not enough to offer people a good product at a fair price. You also have to make buying as effortless as possible.” High transaction costs are reasonable only for expensive, infrequent purchases. Weight is a normal force on friction; only weighty purchases should have high friction.

Finally, Pogue addresses the pricing of ebooks. Frankly, he is more generous to the publishers than I would be on this issue by acknowledging the costs associated with “author advance, editing, indexing, design, promotion, and so on” but like the music industry, the investments are declining. The public is likely to value the fair price point of an ebook as a percentage of its physical counterpart. If the physical copy has a secondary market in the used bookstore, then the loss of resale also needs to be factored in for the consumer. Otherwise the consumer is only paying for the convenience of instant access, and if the instant access is undermined by cludgy DRM, there is no value to be had.

Tor heard this from its constituents:

But the most heartening reaction for us was from the readers and authors who were thrilled that we’d listened and actually done something about a key issue that was so close to their hearts. They almost broke Twitter and facebook with their enthusiastic responses. Gary Gibson, author of The Thousand Emperors tweeted: “Best news I’ve heard all day.” Jay Kristoff, author of Stormdancer, called it “a visionary and dramatic step . . . a victory for consumers, and a red-letter day in the history of publishing.”

Tor never says it has become more profitable, but the company does relish the role it is taking in leading the publishing industry towards a more consumer-friendly business model.

The move has been a hugely positive one for us, it’s helped establish Tor and Tor UK as an imprint that listens to its readers and authors when they approach us with a mutual concern—and for that we’ve gained an amazing amount of support and loyalty from the community. And a year on we’re still pleased that we took this step with the imprint and continue to publish all of Tor UK’s titles DRM-free.

So the lesson from Tor is simple – for low-cost impulse purchases DRM doesn’t add value. High quality, fairly priced, and easy to access works will continue to attract a growing market. These are the points of emphasis and differentiation for the marketplace. DRM may be a legal solution, but it is not a sound business strategy.

Cyber Defense Strategies and Responsibilities for Industry Call for Papers Now Open

The Northern Kentucky Law Review and Salmon P. Chase College of Law seek submissions for the third annual Law + Informatics Symposium on February 27-28, 2014.

2014 Law + Informatics Symposium on

Cyber Defense Strategies and Responsibilities for Industry

 The focus of the conference is to provide an interdisciplinary review of issues involving business and industry responses to cyber threats from foreign governments, terrorists, and corporate espionage. The symposium will emphasize the role of the NIST Cybersecurity Framework and industries providing critical infrastructure.

The symposium is an opportunity for academics, practitioners, consultants, and students to exchange ideas and explore emerging issues cybersecurity and informatics law as it applies to corporate strategies and the obligations of business leaders. Interdisciplinary presentations are encouraged. Authors and presenters are invited to submit proposals on topics relating to the theme, such as the following:

Cyber Warfare

  • Rules of Engagement
  • Offensive and defensive approaches
  • Responses to state actors
  • Engagement of non-state actors
  • Distinguishing corporate espionage from national defense
  • Proportionality and critical infrastructure
  • Cyber diplomacy
  • Cold War footing and concerns of human rights implications

Front Lines for Industry

  • Role of regulators such as FERC
  • Legacy systems and modern threats
  • NIST guidelines
  • NIST Cybersecurity Framework
  • Engaging Dept. of Homeland Security
  • Implications on various industries (electric power,  telecommunications and transportation systems, chemical facilities)
  • Health and safety issues
Global Perspectives

  • Concepts of cyber engagement in Europe
  • Perception of Internet and social media as threat to national soverignty
  • Rules of engagement outside U.S. and NATO
  • Implications for privacy and human rights
  • Stuxnet, Duqu, Gauss, Mahdi, Flame, Wiper, and Shamoon
  • Cyber engagement in lieu of kinetic attacks or as a component of kinetic engagement

 

Corporate Governance

  • Confidentiality and disclosure obligations
  • Responsibilities of the board of directors
  • Staffing, structures and responses
  • Data protection & obligations regarding data breaches
  • Corporate duty to stop phishing and other attacks for non-critical industries
  • Investment and threat assessment
  • Litigation and third party liability

 

Other Issues

  • Executive orders and legislative process
  • Lawyer responsibility in the face of potential threats
  • Practical implications of government notices
  • Perspective on the true nature of the threat

Submissions & Important Dates: 

  • Please submit materials to Nkylrsymposium@nku.edu
  • Submission Deadline for Abstracts: September 1, 2013
  • Submission Deadline for First Draft of Manuscripts: January 1, 2014
  • Submission Deadline for Completed Articles: February 1, 2014
  • Symposium Date: February 27-28, 2014

Law Review Published Article:  The Northern Kentucky Law Review will review, edit and publish papers from the symposium in the 2014 spring symposium issue.  Papers are invited from scholars and practitioners across all disciplines related to the program. Please submit a title and abstract (of 500-100 words) or draft paper for works in progress. Abstracts or drafts should be submitted by September 1, 2013. Submissions may be accepted on a rolling basis after that time until all speaking positions are filled.

Presentations (without publication) based on Abstracts:  For speakers interested in presenting without submitting a publishable article, please submit an abstract of the proposed presentation. Abstracts should be submitted by September 1, 2013. Submissions may be accepted on a rolling basis after that time until all speaking positions are filled.

Publication of Corporate Handbook on Cyber Defense: The Law + Informatics Institute may edit and publish a handbook for corporate counsel related to the topics addressed at the symposium. Scholars and practitioners interested in authoring book chapters are invited to submit their interest by September 1, 2013 which may be in addition to (or as an adaptation of) a submitted abstract for The Northern Kentucky Law Review. Submissions may be accepted on a rolling basis after that time until all chapter topics are filled.

About the Law and Informatics Institute:  The Law + Informatics Institute at Chase College of Law provides a critical interdisciplinary approach to the study, research, scholarship, and practical application of informatics, focusing on the regulation and utilization of information – including its creation, acquisition, aggregation, security, manipulation and exploitation – in the fields of intellectual property law, privacy law, evidence (regulating government and the police), business law, and international law.

Through courses, symposia, publications and workshops, the Law + Informatics Institute encourages thoughtful public discourse on the regulation and use of information systems, business innovation, and the development of best business practices regarding the exploitation and effectiveness of the information and data systems in business, health care, media, and entertainment, and the public sector.

For More Information Please Contact:

  • Professor Jon M. Garon, symposium faculty sponsor and book editor: garonj1@nku.edu or 859.572.5815
  • Lindsey Jaeger, executive director: JaegerL1@nku.edu or 859.572.7853
  • Aaren Meehan, symposium editor, meehana2@mymail.nku.edu or 859-912-1551

Beyond Google’s Looking Glass – The Internet of Things is Already Here

Seal of the United States Federal Trade Commis...

(photo: Wikipedia)

Perhaps triggered by the New York Times coverage of Google Glass, The FTC announced both a call for submissions and a workshop related to the Internet of Things and its implications on privacy, fair trade practice, and security implications for both data and people. The FTC announcement highlights both the benefits and risks of device connectivity.

Connected devices can communicate with consumers, transmit data back to companies, and compile data for third parties such as researchers, healthcare providers, or even other consumers, who can measure how their product usage compares with that of their neighbors.  The devices can provide important benefits to consumers:  they can handle tasks on a consumer’s behalf, improve efficiency, and enable consumers to control elements of their home or work environment from a distance. At the same time, the data collection and sharing that smart devices and greater connectivity enable, pose privacy and security risks.

The issue is not new. The ITU released a 2005 study discussing the implications of the Internet of Things. The ITU described a near, technological future in which “industrial products and everyday objects will take on smart characteristics and capabilities. … Such developments will turn the merely static objects of today into newly dynamic things, embedding intelligence in our environment, and stimulating the creation of innovative products and entirely new services.”

I have previously described some of these concerns in an article, Mortgaging the Meme.[1]

In each of these situations, an automated and consumer-defined relationship will replace the pre-existing activities. In many situations, this will create efficiency and convenience for the consumer, but it will also reduce the opportunities for human interaction and subtly rewrite the engagement between customer and company. Those that understand this change will adjust their technologies to improve the service and increase the customer‘s reliance on its systems. Companies that do not understand how this engagement will occur, risk alienating customers and losing markets quickly.

Beyond consumer interactions, other uses may arise. Ethical and privacy concerns regarding misuse tend to focus on government, business and organized crime. These include unwarranted surveillance, profiling, behavioral advertising and target pricing campaigns. As a result, as companies increasingly rely on these tools, they also bear a responsibility to do so in a socially positive manner that increases the public‘s estimation of the company.

Timing for the FTC submissions and workshop are overdue. Reading the New York Times quote regarding app developers, there is a sense that unlike the technology giants such as Microsoft and Google, the developers are thinking more about the technology’s potential than its potential impact. One such example from the Times: “‘You don’t carry your laptop in the bathroom, but with Glass, you’re wearing it,’ said Chad Sahlhoff, a freelance software developer in San Francisco. ‘That’s a funny issue we haven’t dealt with as software developers.’”

Many fields will benefit from increased device connectivity. Just a few:

  • Public transportation systems designed around real-time usage and traffic patterns.
  • Prescription monitoring to help patients take the right medications at the correct time.
  • Fresher, healthier produce.
  • Protection of pets and children.
  • Social connectivity, with photo-tagging and group-meeting moving into the real world.
  • Interactive games played on a real-world landscape.

There are also law enforcement uses that must be carefully considered. After the Boston Marathon attack, for example, calls for public surveillance will undoubtedly increase, including calls for adding seismic devices and real-time echo-location. Gunshots, explosions, and even loud arguments could become self-reporting.

Common household products sometimes become deadly in large quantities. RFID technology could be used to monitor quantity concentration of potentially lethal materials and provide that data to the authorities.

The consumer use, public use, and law enforcement use must be thoughtfully reviewed to balance the benefits of the technology with the intrusions into privacy and the legacy of retrievable information that such technology creates.

FTC staff will accept submissions through June 1, 2013, electronically through iot@ftc.gov or in written form. The workshop will be held on November 21st. These are the questions posed by the FTC thus far:

  • What are the significant developments in services and products that make use of this connectivity (including prevalence and predictions)?
  • What are the various technologies that enable this connectivity (e.g., RFID, barcodes, wired and wireless connections)?
  • What types of companies make up the smart ecosystem?
  • What are the current and future uses of smart technology?
  • How can consumers benefit from the technology?
  • What are the unique privacy and security concerns associated with smart technology and its data?  For example, how can companies implement security patching for smart devices?  What steps can be taken to prevent smart devices from becoming targets of or vectors for malware or adware?
  • How should privacy risks be weighed against potential societal benefits, such as the ability to generate better data to improve healthcare decision making or to promote energy efficiency?
  • Can and should de-identified data from smart devices be used for these purposes, and if so, under what circumstances?

While the FTC has asked some good questions, they are only the beginning. Please submit your thoughts and join the FTC conversation.


[1] Jon M. Garon, Mortgaging the Meme: Financing and Managing Disruptive Innovation, 10 NW. J. TECH. & INTELL. PROP. 441 (2012).

Supreme Court to answer whether human genes are patentable

The Supreme Court recently granted certiorari to the highly contentious patent case focusing on the patentability of human genes. The case, Ass’n for Molecular Pathology v. Myriad Genetics, Inc., combines challenges regarding a patent originally developed at the University of Utah. The Supreme Court unanimously disallowed a patent for evaluating a patient’s response to a drug in March 2012 in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1794 (2012). The Supreme Court has asked the Federal Circuit to review Myriad in light of Prometheus, but the Federal Circuit re-affirmed its decision upholding the patentability of the genes in dispute.

In 2009, WIPO Magazine provided this very helpful explanation of the patents under review:

BRCA-1 and BRCA-2 are two genes linked to susceptibility for breast and ovarian cancer (hence their acronyms). The risk of falling ill increases if these genes show certain mutations. Identifying the mutations is therefore important for diagnosis and for monitoring higher-risk women. Myriad Genetics Inc., in collaboration with the University of Utah, were the first to sequence the BRCA-1 gene, and applied for patent protection in 1994. Together with the University of Utah Research Foundation and the United States of America, Myriad holds U.S. patents 5747282 and 5710001 on the isolated DNA coding for a BRCA-1 polypeptide and on a screening method. In 1997, together with the Centre de Recherche du Chul in Canada and the Cancer Institute of Japan, they received patent protection on an isolated DNA sequence, asserting rights over a number of mutations in the gene (U.S. Patent 5693473). Further patent applications were filed on the second gene, BRCA-2, in the U.S. and in other countries (US Patents 5837492 and 6033857).

The Supreme Court accepted certiorari on one question: Are human genes patentable?

In framing the question, the Petitioners seeking to overturn the Federal Circuit decision introduced the issue as follows:

Many patients seek genetic testing to see if they have mutations in their genes that are associated with a significantly increased risk of breast or ovarian cancer. Respondent Myriad Genetics obtained patents on two human genes that correlate to this risk, known as BRCA1 and BRCA2. These patents claim every naturally-occurring version of those genes, including mutations, on the theory that Myriad invented something patent eligible simply by removing (“isolating”) the genes from the body. Petitioners are primarily medical professionals who regularly use routine, conventional genetic testing methods to examine genes, but are prohibited from examining the human genes that Myriad claims to own.

The medical professionals pressing the case have been supported by public advocacy organizations. Among them, the ACLU has been a leader among the parties fighting the validity of the BRCA gene patents. Petitioners argue that human genes cannot be eligible for patentability because genes are ‘products of nature’ and therefore can’t be patented.” This question represents a traditional patent challenge to any gene which is merely isolated, when the patent provides no use for that isolation.

At the same time, however, many of the objections to the patent have been triggered by public frustration at the cost and restrictions on testing labs. To the extent that women are seeking to identify these markers, the Federal Circuit concluded that there is a therapeutic value in the information, which can be used for preventive surgery.

At the trial court level, the ACLU also made a First Amendment claim on the basis that genetic patents prevent research and discussion of the patented subject matter. This claim has not received support in any of the lengthy judicial proceedings.

The Supreme Court petition does not necessarily invite a discussion of the appropriateness of a patent’s role in limiting treatment resources and it is highly unlikely to delve into any First Amendment discussion. But the question whether the isolation of a human gene represents a legitimate invention rather than the identification of a product of nature will have significant implications for the pharmaceutical and bio-tech industries.

The ACLU reports that the PTO “has granted thousands of patents on human genes – in fact, about 20 percent of our genes are patented.” The Supreme Court could set significant limits on patent eligibility for human genomes or it could invite Congress to set those limits.

Congress has already taken some action. As reflected in the PTO Manual of Examining Procedure, the recent amendments to the Patent Act limit the scope of human patentability somewhat:

The Leahy-Smith America Invents Act (AIA), Public Law 112-29, sec. 33(a), 125 Stat. 284, states:

Notwithstanding any other provision of law, no patent may issue on a claim directed to or encompassing a human organism.

The legislative history of the AIA includes the following statement, which sheds light on the meaning of this provision:

[T]he U.S. Patent Office has already issued patents on genes, stems cells, animals with human genes, and a host of non-biologic products used by humans, but it has not issued patents on claims directed to human organisms, including human embryos and fetuses. My amendment would not affect the former, but would simply affirm the latter.[1]

The legislative history both suggests that Congress was aware of the scope of patent eligibility and expressed a desire to draw a line regarding the expansion of patent eligibility rather than to restrict that eligibility. If the Supreme Courts accepts this view, then the case will be focused squarely on the transformation of the gene from something found in nature to an invention made by the inventor.

As the Supreme Court explained, “[t]he laws of nature, physical phenomena, and abstract ideas have been held not patentable. Thus, a new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter.” So perhaps the simpler question could have been whether an isolated gene is closer to a newly discovered species than a newly created species. But the Supreme Court accepted the question regarding patentability of Human genes not isolated genes. So the seminal decision of Diamond v. Chakrabarty, 447 U.S. 303 (1980) which set out the current test may soon receive a new judicial gloss.

At a time when the scope of intellectual property protection is facing great political pressure, the Supreme Court action to revisit this question could have profound effects – even beyond patents to the role and scope of intellectual property more generally.


[1] 157 Cong. Rec. E1177-04 (testimony of Representative Dave Weldon previously presented in connection with the Consolidated Appropriations Act, 2004, Pub. L. No. 108-199, ‘ 634, 118 Stat. 3, 101, and later resubmitted with regard to the AIA; see 149 Cong. Rec. E2417-01). Thus, section 33(a) of the AIA codifies existing Office policy that human organisms are not patent-eligible subject matter. [Text in original MPEP Section.]

Orphan Works Notice of Inquiry ends Jan. 4th, setting the stage for a new era of publishing industry debate on fair use

As 2012 begins to wind down, it is time to turn to the transformation taking place in the publishing sector. 2012 may be marked as the end of the printed book – not because physical publishing has ended but because the ingredients for its demise are now all at hand. Of course, it will continue indefinitely just as vinyl records continue to have a place in the music economy, just not a significant place.

I have previously discussed the broad sweep of changes affecting publishing. SeeForetelling the Future of the Book Business.” Among the issues affecting the future of publishing are the legacy impacts on previously published works. These issues include a range of topics:

  • The meaning of contractual terms for “in print” publications, when a book can be made available digitally or on demand;
  • Derivative rights clauses and media clauses when the parties contemplated only categories such as hard cover, paperback, and trade paperback without regard to digital, audiobook or other repurposing;
  • Non-publishing uses by publishers or other rights holders to scan books in cases where the publisher does not have digital reproduction rights; and
  • The ability of libraries or other owners of particular copies to authorize the digitization of copies when the rights holder cannot be identified – the “orphan works” problem.

The Copyright Office is beginning to grapple with some of these issues, and the concern that is focused most squarely on legal rather than contractual concerns is that of orphan works.

In October 2011, the Copyright Office published “Legal Issues in Mass Digitization: A Preliminary Analysis and Discussion Document.” The report is framed by the question raised in the Google Books class action litigation which is now in its seventh year:

The question of who should be entrusted with guardianship over orphan books, under what terms, and with what safeguards are matters more appropriately decided by Congress than through an agreement among private, self-interested parties. Indeed, the Supreme Court has held that “it is generally for Congress, not the courts, to decide how best to pursue the Copyright Clause’s objectives.” [And the Supreme Court has] noted that it was Congress’s responsibility to adapt the copyright laws in response to changes in technology.[1]

While the report does not focus exclusively on orphan works, it has led the Copyright Office to begin an “initial notice of inquiry.” The request for comments seeks comments on “what has changed in the legal and business environments during the past few years that might be relevant to a resolution of the [orphan works] problem and what additional legislative, regulatory, or voluntary solutions deserve deliberation at this time.”

Comments are due by January 4, 2013 and may be submitted online.

In the notice of inquiry, the Copyright Office framed the discussion with this comment:

The Office has long shared the concern with many in the copyright community that the uncertainty surrounding the ownership status of orphan works does not serve the objectives of the copyright system. For good faith users, orphan works are a frustration, a liability risk, and a major cause of gridlock in the digital marketplace. The issue is not contained to the United States. Indeed, in recent months, the European Commission has adopted measures that would begin to resolve the issue in certain contexts and a number of foreign governments are reviewing or proposing solutions. The Copyright Office seeks comments regarding the current state of play for orphan works.

As litigation continues in the publishing industry, consolidation of the major publishing houses and retailers transform the business landscape, and digital access reshapes consumer behavior, the orphan works issue will increasingly take a back seat to the economic restructuring of the industry. Nonetheless, the manner in which the Copyright Office, and ultimately Congress, deals with the issue will serve as a harbinger for legislative tolerance of the transforming publishing industry. As such, it is a bell-weather for things to come and an important platform to participate in the policies of publishing fair use.

I expect that on the heels of this debate will come the debate about fair use in the academic publishing environment. The scope of fair use for orphan works may also influence this developing public policy debate on the breadth of access to free or low cost teaching materials and the industry’s need to maintain revenue to develop new works.

The best way to shape both these discussions is to participate. The deadline is January 4th.


[1] Authors Guild v. Google Inc., 770 F. Supp. 2d 666, 677 (S.D.N.Y. 2011) (the “Google Books” case) (quoting Eldred v. Ashcroft, 537 U.S. 186, 212 (2003) and Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 429 (1984) (citations omitted)); see also Am. Soc’y of Media Photographers, Inc. v. Google Inc., Civil No. 10-2977 (S.D.N.Y.) (companion suit filed by a consortium of visual artists for infringement of visual works in books).

Foretelling the Future of the Book Business; Turow says leverage comes at too high a cost for the literary market

A student of the publishing industry would be amazed at the transformation which has taken place in the last decade. According to the Association of American Publishers, “[t]he eBook phenomenon continued in 2011 with eBooks ranking, for the first time, as the year’s #1 individual format for Adult Fiction.”

This transformation comes at a time when the battle over tablet readers has suddenly heated up. Apple’s lead in tablet computing has slipped to a paltry 50.4% – still the global majority, but a 15% decline in the last quarter. Which of course is before the new Microsoft marketing push for its competing Windows 8 products. Using Google’s Android OS, Samsung has taken away the majority of that market share away from Apple.

An increase in book reader form factors to include Apple, Microsoft, Google powered Samsung (and maybe Sony) does not suggest a fragmented market. (Both Amazon and Barnes & Noble are pushing branded tablets as well.) Instead it suggests that the dominant computer companies are rolling from video games and music distribution into consumption of the publishing industry.

Perhaps this is why antitrust actions continue. The Department of Justice plans to press its case against Apple and publishers MacMillan and Penguin over restraint of trade in the pricing of ebooks on the iTunes platform. Former publishing defendants Hachette Bok Group, HarperCollins Publishers and Simon & Schuster have settled identical charges.

Notably absent from the list of defendants was Random House. Instead of arranging pricing structures with its competitors through a standardized iTunes license, Random House instead elected to grow more powerful by acquiring Penguin. As the New York Times describes the merger, it “narrows the business to a handful of big publishers, and could set off a long-expected round of consolidation as the industry adapts to the digital marketplace.”

The merger combines two European publishing giants – Bertelsmann’s Random House and Pearson’s Penguin, reducing the “big six” by at least one. It may trigger even more. Again from the New York Times:

[T]he major publishers have been expected to join together, getting smaller in number and bigger in size. The other four houses among the so-called Big Six are also owned by larger media conglomerates: HarperCollins, which is part of News Corporation; Macmillan, owned by Georg von Holtzbrinck of Germany; Hachette, whose parent company is Lagardère of France; and Simon & Schuster, a division of CBS. They could all now face increased pressure to consolidate in response to a combined Penguin Random House.

In the blog from Authors Guild (of which I am a member), Scott Turow had this to say:

“Survival of the largest appears to be the message here,” said Scott Turow, Authors Guild president. “Penguin Random House, our first mega-publisher, would have additional negotiating leverage with the bookselling giants, but that leverage would come at a high cost for the literary market and therefore for readers. There are already far too few publishers willing to invest in nonfiction authors, who may require years to research and write histories, biographies, and other works, and in novelists, who may need the help of a substantial publisher to effectively market their books to readers.”

Still, the lesson may be that big wins. The Google Book scanning project has been in litigation for seven years with apathy and partial settlements derailing most of the importance of the litigation. In October 2012, the publishers capitulated and settled. The arrangement involved the Association of American Publishers, along with McGraw-Hill Companies, Pearson Education, Penguin, John Wiley & Sons and Simon & Schuster. The Authors Guild continues to fight, though the relevance of the litigation seems to be waning. The actual use of the digitized books has become more constrained and falls into fair use activities like text searches and archival backups. As a result, the Authors Guild was handed a stunningly lopsided defeat in its action against the HathiTrust, the partnership between Google and the university libraries that allowed digitization of their collections.

These concerns are a far cry from the monopoly concerns leveled at national book retailers a decade ago. In 2011 Borders Books was the latest mega-book retailer to disappear in bankruptcy. (Waldenbooks was a subsidiary disappeared as well.) Crown Books, once the third largest retailer, collapsed a decade earlier. This leaves only Barnes & Noble and Books-A-Million as bookstore retail chains, though Walmart, Costco, and Target sell mass retail. Online Amazon, Barnes & Noble, and Books-A-Million dominate sales.

It has never been easier for an author to publish materials for the world to see or even to place works into national distribution. The only thing the new publishing order lacks is infrastructure to support nurturing talent and carefully editing works. Larger publishers rely more on backlists and less on new authors. Fewer editors spend less time on more manuscripts. Research and factual works are mined by researchers using word searches and shoddy research that diminishes the need to acquire actual copies of those works.

Arbitrary legal barriers to the transformation are irrelevant or even counter-productive. Antitrust suits will simply change who will dominate the new, concentrated landscape. Nonetheless, it is important to note the passing of an era even if nothing can be done save mourn its passing.

So, in keeping with the season, sing along – with feeling:

Five major publishers, four ebook sources, three mass market chains, two national bookstores … and just Amazon for all our online needs!

Copyright Anti-circumvention provisions published; jailbreaking for phones okay but not tablets; access to DVDs for comment and criticism in education and documentary filmmaking increase

In 1998 Congress updated the copyright law with the Digital Millennium Copyright Act with hopes that it provided a forward-looking approach to the rapidly changing technologies affecting movies, music, television, publishing, the artists and all manner of creative endeavors. Among its two key provisions are the Section 512 take-down provisions[1] and the Section 1201 anti-circumvention provisions.

Section 1201(a)(1)(A) makes it a crime (and a tort) to “circumvent a technological measure that effectively controls access to a work protected” by copyright. Put another way, if a work protected by copyright is accessed through a digital lock, such as encryption or a digital authentication handshake, then the steps to get around that process violate sec. 1201. The law has some specific exemptions built in for library research, law enforcement, reverse engineering, and encryption research. But these exemptions are highly limited. As a result, Congress also called upon the Librarian of Congress, in consultation with the Register of Copyright to provide a review every three years to publish a list of additional exemptions.

The fifth such list has just been published: Section 1201 Rulemaking: Fifth Triennial Proceeding to Determine Exemptions to the Prohibition on Circumvention. A copy of the final rule is here.

To be successful, an applicant seeking an exemption had to establish by a preponderance of evidence on a factual record that  “(1) uses affected by the prohibition on circumvention are or are likely to be noninfringing; and (2) as a result of a technological measure controlling access to a copyrighted work, the prohibition is causing, or in the next three years is likely to cause, a substantial adverse impact on those uses.”

In most cases, the exemptions are modification of the petitioner’s actual request. Here is a summary of approved exemptions:

  1. Literary works distributed electronically – assistive technologies: Literary works, distributed electronically, that are protected by technological measures which either prevent the enabling of read-aloud functionality or interfere with screen readers or other applications or assistive technologies for the blind or persons with a disability under 17 U.S.C. 121.
  2. Wireless telephone handsets – software interoperability: Jailbreaking of smartphones – but not tablets – to allow for apps from outside the provider app store.
  3. Wireless telephone handsets – interoperability with alternative networks: phone unlocking to allow a handset to be redeployed on another phone network.
  4. Motion picture excerpts – commentary, criticism, and educational uses: circumventing the DVD Content Scrambling System for the traditional fair use purposes of comment and criticism where “where circumvention is undertaken solely in order to make use of short portions of the motion pictures for the purpose of criticism or comment in the following instances: (i) in noncommercial videos; (ii) in documentary films; (iii) in nonfiction multimedia ebooks offering film analysis; and (iv) for educational purposes in film studies or other courses requiring close analysis of film and media excerpts, by college and university faculty, college and university students, and kindergarten through twelfth grade educators.” The exemption for motion picture capture makes fairly clear that screen capture is not a circumvention prohibited by the statute. The Register also supported the exemption because “[d]espite the commercial aspect of uses by documentary filmmakers and multimedia ebook authors, … when a short excerpt of a motion picture is used for purposes of criticism and comment, even in a commercial context, it may well be a productive use that serves the essential function of fair use as a free speech safeguard.”
  5. Motion pictures and other audiovisual works – captioning and descriptive audio: permits the circumvention of motion pictures and other audiovisual works contained on DVDs or delivered through online services to facilitate research and development of players capable of rendering captions and descriptive audio for persons who are blind, visually impaired, deaf, or hard of hearing.

In addition to this list, the report specifically identified a number of categories of works that did not earn an exemption.

Works in the public domain

Of greatest note is the ongoing refusal to provide an exemption to circumvent a digital protection measure to obtain a work in the public domain. The Register correctly notes that it is not a violation of section 1201 to circumvent a technological protection measure unless there is a copyright work being sought. Therefore no exemption is required.

This is more than parsing language. To create an exemption would suggest an expansion of section 1201 that is unwarranted. As a result, the report that the exemption is not needed provides ample protection to the public.

Space-shifting for DVDs

The other significant rejection was the space-shifting of DVD content to devices without DVD players such as iPads and other tablets. The U.S. has been behind Europe in providing that non-physical versions of movies are generally offered in streaming mode rather than download format. The ability to acquire a second format of the same content is also generally sold at a premium price. An exemption to section 1201 would have put significant pressure on the motion picture industry regarding this transition. It is likely that this will become of greater economic and legal importance by the next rule-making.

Jailbreaking Limited to Phones – No Tablets, Video-Game Consoles or Computers

The report also rejected the desire to permit video game console interoperability. Much like the rejection of tablet jailbreaking, the report refused to exempt console jailbreaking so that lawful third-party games could be used on a particular platform. In both instances, the Register rejected the evidentiary record on the matter. There is likely little evidence to be developed because the practice may be quite common and the benefits of enforcement are too limited.

The report similarly rejected a desired exemption for jailbreaking computers to allow installation of unauthorized operating systems. This appears to fail for the reasons stated in the other jailbreaking proposals. In contrast to the smartphone app stores, the Register takes the position that the other categories of interoperability limitation have not developed sufficient economic concerns to merit an exemption.

Taken together, the rule-making continues to reflect a very conservative, incremental approach to the development of new technology and the appropriateness of anti-circumvention self-help. The Register has made great strides regarding fair use in the educational and documentary filmmaking environments but was probably overly conservative on iPads and tablet computers.

Conclusion

As a whole, the report is thoughtful and predictable. The process restarts with each triennial review.

In each rulemaking proceeding, the Register and Librarian review the proposed classes de novo. The fact that a class previously has been designated creates no presumption that redesignation is appropriate. While in some cases earlier legal analysis by the Register may be relevant to analyzing a proposed exemption, the proponent of a class must still make a persuasive factual showing with respect to the three-year period currently under consideration. When a class has been previously designated, however, evidence relating to the costs, benefits, and marketplace effects ensuing from the earlier designation may be relevant in assessing whether a similar class should be designated for the subsequent period.

As the Register describes the process, it becomes clear how important the evidentiary record and the economic significance of the particular issue must be. Unless Congress has itself shown a preference for a class of users, such as persons with disabilities, the exemptions are limited to very large classes of users.

Of course, if you did not get what you wanted, start preparing your petition for rule-making VI – coming in just two years.


[1] Known as the DMCA Takedown Provisions, section 512 provide ISPs immunity from copyright liability if the ISP provides an effective method of accepting copyright infringement notice allegations and responds to those notices in a timely manner. Though highly criticized by some organizations, these provisions do not have a triennial review process.

Join over 300 professionals before space runs out at NKU Security Symposium

 The NKU Security Symposium with the inclusion of the legal track takes place this Friday. It will be a great opportunity to cross-train with security and privacy professionals, programmers, IT specialists and legal specialists. The legal track announcement is below:

2012 NKU Security Symposium

Friday, Oct. 12, 2012
NKU METS Center in Erlanger, KY

Register Now!

The 2012 Security Symposium, for the 6th year in a row, will bring together security professionals for a multi-track conference focused on the various aspects of security in information technology today. The symposium will focus on IT security challenges, best practices, and professional discussions, and will include a legal track focusing on the intersection of law and security. The symposium is presented by the Center for Applied Informatics, NKU Chase Law & Informatics Institute and CincyIP. Four hours of Kentucky, Ohio and Indiana CLE credits are anticipated.  This conference is free, but space is limited. Register now!

The Security Symposium is organized into five tracks:

  • Information Security Governance
    This informational track focuses on the understanding and implementation of management policy, procedures, IT audits, continuity planning, and security awareness and training.
  • Software Security
    This track incorporates knowledge about how identity theft is being fought and information
    integrity is being secured by industry ingenuity.
  • Mobile & Computer Forensics
    Learn the latest methods and tools to process and understand digital evidence.
  • Current Topics in Security
    Explore security topics focused around cloud computing, virtualization, mobile, and much more.
  • Legal Issues in Privacy and Security
    This year marks the first year with an additional legal track, enabling the legal professionals to engage with security professionals and those involved with implementation of software security.


Legal Track Presenters:

•  Prof. Jon M. Garon, director of the NKU Chase Law + Informatics Institute
•  Prof. Jack Harrison, NKU Chase College of Law
•  Craig Hoffman, Esq., partner of Baker Hostetler
•  Curtis Scribner, an attorney in the Global Privacy and Digital Legal group at Procter & Gamble
Agenda

7:30 - 8:00 AM:  Breakfast

8:15 – 8:30 AM:  Welcome Address

8:30 – 9:30 AM:  General Session I

9:30 – 9:40 AM:  Break

9:40 – 10:40 AM:  LEGAL TRACK: Curtis Scribner on “Issues in Data Privacy”

10:40 – 11:10 AM:   Refreshments and Networking

11:10 – 12:10 PM:  LEGAL TRACK: Prof. Jon M. Garon on “Navigating Through the Cloud – 
                            Legal and Regulatory Management for Software as a Service”

12:10 – 12:45 PM:  Lunch

12:45 – 1:45 PM:  General Session II

1:45 – 2:00 PM:  Break

2:00 – 3:00 PM:  LEGAL TRACK: Craig Hoffman, Esq. on “The Legal Implications of Data Breach”

3:00 – 3:30 PM:  Refreshments and Networking

3:30 – 4:30 PM:  LEGAL TRACK: Prof. Jack Harrison on “E-Discovery – 
                         Legal Issues, Strategies, and Management”

4:30 – 5:30 PM:  Reception

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