IP, BTE and funding startups

In running the @KeckGrad business plan competition this week, I was struck by how different our students’ life science startups were from the retail or IT startups that are common at other colleges. In most cases, our students needed $5 to $50 million in outside funding to jump through regulatory hoops and generate initial revenues.

It seems like this also reflects a fundamental difference in IP strategy — how a successful startup discourages entry or imitation, and how that ties back both to their funding needs and their IP strategies.

The retail startups have a brand, and locations, and perhaps a little bit of internal process trade secrets. Seed funding is available, but (shy of an IPO or acquisition) any subsequent growth tends to be organic and self-funded. Whether restaurants or clothing, these sorts of startups take years to build up, and the margins are generally thin.

The IT companies rely on copyright and trade secrets to protect their implementations, and hope to build network effects or switching costs to discourage entry. A hot property attracts plenty of money, because the scale is small and (if successful) the TTM and thus the payback time is quick. Still, a well-funded, well-run competitor could catch them. Many startups hope that the differentiator is the vision and positioning: for example, MySpace had years to respond to Facebook, but somehow never did.

Then there’s the life science companies: they need spend (and thus raise) huge amounts before ether generate revenues and — given mandatory regulatory disclosures — give rivals plenty of time to see what they are doing. The only way this works is if you have a patent, that gives investors an ironclad assurance of exclusivity for some period of time.

I'm not exactly sure what the model is for cleantech — but maybe there isn’t one. Certainly renewable energy — such as solar or biofuels — the hope is to leverage economies of scale to attain cost advantages in producing commodity energy. Given the hope of scale as a BTE (or BTI), many companies bulked up quickly, leaving a lot of dead companies strewn along the way. China’s Suntech was once world’s largest solar company — the first to sell 2 gigawatts of solar panels in one year — but is now shrinking and bankrupt.

If we look at older, mature industries, scale is never enough. Scale has reduced (but not eliminated) competition in electronics, steel and autos, but has done nothing to provide barriers to imitation to protect HP, US Steel or GM from subsequent entrants. If anything, the race for scale has led to overcapacity and thus price wars — in steel, DRAM, LCD panels, solar panels.

Intractable online IP policy controversies

Hat tip: Matt Asay (@mjasay)

Like anyone who follows the tech industry, I’ve been seeing apocalyptic stories, emails and seminar announcements about how SOPA (the Stop Online Piracy Act) will destroy the Internet, Internet companies and technological innovation as we know it.

With my new job, I haven’t been paying as much attention as I’d like to, but from what I’ve read, it’s another law in the general direction of the (much loathed) Clinton-era Digital Millennium Copyright Act. Certainly the motivation and opposition sound nearly identical to DMCA.

What also sounds similar is the oddfellow coalition: I mean, how often do Republicans try to make Hollywood studio execs richer? And how often do Democrats have to choose between the supporting the entertainers (and entertainment execs) who help them raise millions against the grass roots consumers and the EFF/civil liberties types?

I spent a fair amount of time studying DMCA. After briefly working as a consultant to one of the earliest Internet music streaming sites (Live365), I wrote two teaching cases about the challenges facing the entertainment industry in the Napster generation, and the trade-offs of Federal imposition of terms for content producer-consumer negotiations (particularly the Online Royalty Tribunal).

My favorite part of that era was when I asked my MBA students to do a five forces analysis of the record industry ca. 1995, when there were 6 major labels instead of the soon-to-be 3. After walking through the buyer power, supplier power, substitutes, rivals and entry barriers, I led them to the inescapable conclusion: this is as close to a cartel as you’re ever going to see. (Hint to students: professors love examples of industries with very high or very low forces.)

There are no white hats here. The DMCA was a sledgehammer to kill a mosquito, but that didn’t make the mosquito any less deadly. My sense is the SOPA is roughly the same.

So I was thrilled to read a blog entry (tweeted by Matt Asay) by John Lilly:

What’s bothering me about the SOPA “discussion”

There are 3 things that have really been bothering me about how the SOPA/PIPA discussion has been going so far.

1. it’s not a discussion at all — it’s people calling each other names.
2. it’s highly likely to have a result that is unhelpful at best, and insanely destructive at worst
3. we’re building a completely worthless/bad roadmap for how to deal with technology policy going forward, and it’s going to get worse

Let me be very clear: SOPA is a terrible law that should not be enacted under any circumstances. It’s broken technically and misguided from a policy point of view. It not only won’t accomplish what advocates want it to accomplish, but it also will create backbreaking burdens and barriers to entry for some of our most promising technology companies and cultural movements of the coming decade.

But also: content creators & owners have a legitimate beef with how their content can be appropriated and distributed so easily by rogue actors.

I don’t share John’s interpretation of the law. Part of this is because I’ve not read the law, nor heard more than a smidgen of the articles regarding it. But part of it is also because entertainment companies are getting killer, the other side (consumers, Silicon Valley, cyberlibertarians) are at best indifferent to their situation and it’s only with the threat of bad legislation will they make even the most modest concessions.

John was particularly funny as he caricatured the name-calling on both sides:

[Here] I use the term “conversation” here very loosely, since it has characteristics more like a bunch of schoolyard name calling. The conversation that’s happening is going more like this:

- content: “you people are stealing our stuff. you’re thieves”

- techies: “we’re not stealing it. we’re just building great apps for users.”

- content: “you’re ignoring the problem and helping the thieves. you’re effectively pirates, so we’re going to shut everyone down.”

- techies: “you’re acting like jackbooted fascists, embracing censorship and your’e going to end everything that’s good about culture today.”

- content: “we’re trying to protect our content — you guys are pretending like there’s no problem, then getting rich off platforms that pillage our content.”

- techies: “you don’t understand how the Internet works — how do you even live life in the 21st century? dinosaurs.”

So that’s awesome. Then you throw Congress into the mix and hilarity ensues. Because if you’re looking for folks who really do not act like they want to understand the Internet, Capitol Hill is a pretty good place to start.

John advises that “we need to be thinking about copyright law — in an age where copies are the natural order of things, as opposed to previously, when it was harder to make copies.“

What I find particularly depressing here is that fixing entertainment copyright law is trivial compared to fixing patent law. Here we have a pretty simple mix of stakeholders: content producers, content consumers, interested bystanders and pirates.

When you’re trying to fix patent law, you a particularly rich mix of people in an industry. For example, for the patent term on a therapeutic compound you’d have big pharma, startup biotech, insurance companies, the Feds (Medicare/Medicaid/VA), consumes, and senior citizen lobbies. But when the same patent system also impacts IT — with components, systems, software, open source, patent trolls — and dozens of other industries, then the prospect of finding a patent reform compromise that a majority will endorse becomes virtually impossible.

What's up with that?

There’s an American Express and Microsoft pitchman who apparently used to have a comedy show that, he bragged, was a “show about nothing.” Somehow he managed to create 9 seasons of DVDs out of nothing and a decade later is still milking that celebrity for $85 million/year.

I never watched the show, except occasional snippets in reruns or when trapped on an airplane. However, I recall that one of the favorite phrases of the protagonist (I’ll call him “Jer”) was “what’s up with that?” Apparently that made it into our shared cultural understanding, even if not to the same degree as “yada yada.” More on Jer in a minute.

I’m guessing that some readers have heard that another celebrity (The Gloved One) died earlier this month and had a blowout funeral. Probably fewer people recall that in 1985 he paid $47.5 million to buy the copyrights to all the Beatles songs, which is either the sort of one-of-a-kind collectible only rich people an afford or a high-profile way to convert cash into an income stream. (Evidence of the latter is that one estimate says the investment is now worth billions.) John Lennon doesn’t care anymore, but apparently Paul McCartney still performs these songs now and again.

What’s odd is apparently is that Jackson didn’t really buy all rights — because Congress retroactively created a loophole. For anyone interested in IP law, I recommend the posting by Hollywood blogger Chris Arledge. One excerpt:

People not familiar with copyright law might be surprised to hear that McCartney-one-half of music’s most-successful songwriting duo-must pay royalties to perform his own hit songs. The fact certainly seemed to grate on McCartney, who frequently made mention of it in interviews. But even more surprising, at least to those not acquainted with the intricacies of copyright law, is that Sir Paul will one day be able to re-acquire the rights to his music without even having to pay to buy them back.

This is true because of the Copyright Act’s reversion provisions, which allow the original author of a copyrighted work to reclaim the work many years after assigning it away. It is this same right to reclaim lost copyrights that will soon make millionaires of the heirs of Joe Shuster and Jerry Siegel, Superman’s creators, when they conclude their pending lawsuit against Warner Brothers.

(For younger blog readers, Superman is a fictional character who co-starred with Jer in those American Express ads.)

Intellectual property law exists for two reasons: to create incentives for creators, and (like all legal rights) provide a stable institutional framework for creators and users, buyers and sellers, competitors and complementors. Some of the trade-offs make sense: long IP term=more incentives, short IP term=more derivative works. If you want one outcome, then you put your thumb on that side of the scale.

However, indeterminacy of term makes for an uncertain property right. One example is the 1998 Mickey Mouse Copryight Extension Act — there is no economic rationale for lengthening the term ex post facto since it provides no incentive for something that was long since created. Meanwhile, the indeterminate term of sale provided by copyright reversion means that the buyer of the property right doesn’t know what it is buying, leaving the actual rights granted subject to the whims of the seller (or perhaps the courts).

When I mentioned this article to a legal blogger, her observation was that “Termination rights are an aspect of copyright law many people find strange.” I guess “strange” is the polite way a law school professor says “makes no sense whatsoever.”

I prefer to quote Jer the stand-up pitchman: “What’s up with that?”

Disruptive change is unpredictable

Deven Desai (a law professor in San Diego) has posted a provocative article over on the Madisonian blog about the inherent policy tradeoffs of using copyright to protect IP-based business models.

His specific topic is the Digital Millennium Copyright Act (DMCA), a Clinton-era sop to Hollywood that (in one element) banned circumventing copy protection. The act has been controversial for (among other reasons) upsetting the prior status quo about “fair use” that was established in the Betamax case.

One response to DMCA was DeCSS, a successful software library by European hackers to circumvent DVD copy protection. The library became a cause célebrè of civil libertarians among academia and elsewhere.

Prof. Desai makes general points about whether or not DMCA is a good idea, and the tendency of IP holders to overstate their case for protection of their existing business models. However, in describing the dilemma of making an IP policy before a new technology comes along, the money quote sounds more like an economist than a lawyer:

One does not know what technology will or won’t be disruptive. Furthermore, because we don’t know we should allow for more open systems to see what happens. Nonetheless, at least with DVDs we may find that certain technologies will not be pursued without the law agreeing to protect an existing business model.

I first subscribed to Madisonian because of my friend Mike Madison, but I continue to read it because it has a low volume of high quality analysis of copyright and other IP issues that impact technology businesses.

The Mouse who once set IP policy

Belated birthday wishes to Mickey Mouse. Eighty years ago Tuesday, he made his professional debut in Steamboat Willie, the first Disney cartoon, the first cartoon with sound, and the beginning of the Disney empire.

Daniel Finkelstein of the London Times describes the back story of that first cartoon and also defends Uncle Walt against his posthumous critics. He recommends the 2007 biography of Disney by Neal Gabler (now in paperback) which brings together a largely unknown facts about Uncle Walt and his empire.

My interest is Mickey’s role in setting the term of US copyright law. A decade ago, the copyright on Steamboat Willie was about to expire, so Disney Co. lobbied its friends in DC to extend all copyrights by 20 years. The ex post facto extension of copyright term makes no economic sense whatsoever, but (despite the heroic efforts of Larry Lessig) it was upheld by a 7-2 SCOTUS ruling. Hence the disparaging term “Mickey Mouse Copyright Law” or “Mickey Mouse Copyright Extension Act.”

Did I mention that there was no economic justification for this? (Yes, I know that Stan Liebowitz would beg to differ). People who created something 70 years ago (or even are dead) get no incentive for innovation or creativity for such an ex post facto change in terms. Instead, it is just another exhibit in the core Libertarian argument that a government that has the power to hand out favors to the well-connected is a government of men, not laws — or a government that can be bought.

However, today I find myself encouraged. I think this is the last copyright extension we’ll ever have: the law will be permanently set at 90 years rather than 70 (or 50) years, but it won’t be extended indefinitely. Someday Fitzgerald and Faulkner and Winnie the Pooh will be in the public domain.

Why? In 1998, the biggest threat to Steamboat Willie was unauthorized DVDs: think of all the DVDs of It’s a Wonderful Life, whose copyright was allowed to lapse.

Today, it’s the Internet. And, as any fool knows, this is a battle that won’t be won by copyright or copyright enforcement, but by clever business models that can compete with free.

Steamboat Willie is already being given away free by GooTube. Disney either doesn’t know or doesn’t care — or it realizes that pulling this copy will only have it replaced by another somewhere else.

So Eric Eldred may not live to see it, but someday works will again start falling into the public domain, and (hopefully) we’ll never see this mistake repeated again.

Stiffling interoperability and competition

Mike Madison has an interesting post on the lawsuit between the proprietary software package EndNote and the open source rival Zotero, from George Madison U, funded by the Mellon Foundation. Zotero is a Netscape plugin for organizing academic papers that I found less useful than a commercial alternative.

In its lawsuit, the owners of EndNote (Thomson Scientific, now Thomson Reuters) argues that its contract prohibits reverse engineering. Thus, it contends, Zotero’s developers violated contract law by using reverse engineering to figure out how to get interoperability with EndNote.

The lawsuit seems prompted by a recent Zotero feature that enabled importing EndNote libraries journal styles and thus eliminating reducing the lock-in Thomson thought it owned. Since EndNote compatibility is mainly for one-time imports, it seems like Zotero could easily strip this functionality and have it distributed as a plug-in by an open source coalition located in .ru or some other scofflaw domain).

I’m no lawyer and haven’t kept up with the law, so I largely have to defer to Prof. Madison’s analysis of the case. Madison notes that under federal law, reverse engineering for compatibility is probably legal fair use, and thus Thomson filed in state court.

My first exposure to reverse engineering started in practice. Like many other software engineers making Apple-compatible software, I did a fair amount of reverse engineering of Apple’s code for just this purpose. Apple knew it was going on (or at least the tech support people did) but never sued anyone except the folks who tried to make unlicensed clone computers.

I also immersed myself in reverse engineering law for a night school term paper in an Asian studies class I took with Chalmers Johnson. This led in 1995 to my first published journal paper (and second† academic paper) about a Japanese policy controversy over how copyright law handled reverse engineering of software for compatibility. At the time, Sun (and some Japanese firms) wanted to reverse engineer IBM systems to provide interoperability and the IBM people wanted to discourage such reverse engineering. The identical issues played out with Linux and Microsoft in more recent years.

As I found in 1995, two major US appeals verdicts in 1992 — Sega v Accolade and Atari v. Nintendo — set a precedent under US law for allowing reverse engineering. After the 1992 precedents, two other important articles were published on reverse engineering and interoperability: one by Julie Cohen in the California Law Journal and another by (my recent friend) Charles McManis in the High Technology Law Journal.

Then as now, I think the precedent and the policy outcomes were reasonable, since copyright law provides production only for the expression of an idea, and not against revealing trade secrets (which are compromised by public distribution, even of the object code). The cost of reverse engineering and re-implementation usually provides adequate value and protection for the author’s original expression, while adding allowing it to be used for compatibility enables competition.

So while I have not inspected the Thomson lawsuit, I am hoping that their competitor (who happens to be a university developing open source) wins the case on its merits. No software rents are perpetual: software gets commoditized over time, and if you can’t deal with it, you’re in the wrong business.

† The first was designing a programming language, predating by nearly a decade my decision to become an academic.

Updated 3:30pm: Oops. As anonymous Bruce points out, the lawsuit is about importing the EndNote styles, which are a set of templates defining the reference format of a wide range of publications. (I have never used EndNote, so I didn’t understand the distinction.) Since this is not conversion of user content but of EndNote’s content, it seems to me that the Zotero is in a much more precarious legal position.

Copyright common sense

Regular readers know that I’m generally pro-IP and pro-IP business models. Properly structured, intellectual property rights reward innovation and creativity, giving us more and better.

However, I’m cheering a victory tonight against the overstretch of the “copyright cartel” (as their opponents demonize them). The case involves a YouTube video and a lawsuit filed by Universal Music against YouTube here.

Here’s tonight’s SF Chronicle update of the AP story:

(08-20) 19:58 PDT San Jose -- In a victory for small-time music copiers over the entertainment industry, a federal judge ruled today that copyright-holders can't order one of their songs removed from the Web without first checking to see if the excerpt was so small and innocuous that it was legal.

The ruling by U.S. District Judge Jeremy Fogel of San Jose was the first in the nation to require the owner of the rights to a creative work to consider whether an on-line copy was a "fair use" - a small or insignificant replication that couldn't have affected the market for the original - before ordering the Web host to take it down.

A 1998 federal law authorized copyright-holders to issue takedown orders whenever they see an unauthorized version of their work on the Internet, without having to sue and prove a case of infringement. Some advocates of Internet users' rights - including the Electronic Frontier Foundation, which represented the individual user in this case - contend the procedure has been abused.

The principle of fair use is that society benefits by allowing certain exceptions to an absolute copyright control, allowing both small amounts (such as my story quote above) and for specific purposes (such as for commentary, research or scholarship). Playing 15 seconds of a song in a documentary about the music scene is different than putting an MP3 file on Gnutella.

The law is also quite clear that “fair use” has limits. In the case of Gerry Ford’s memoirs, The Nation published only 300 words from an illicit copy of the book, but it was enough to kill a deal the publisher had to serialize a larger excerpt in Time. The Supreme Court ruled that even this brief excerpt violated fair use because of the impact on the publisher’s business.

Thus, today’s ruling is no guarantee of victory for the defendant, a mom who used 29 seconds of a Prince song in a YouTube video of her toddler. That is as it should be — whether some use is “fair use” is a question of fact to be decided at a trial.

But it means that the DMCA has to conform to the same principles of copyright as any other copyright law. Perhaps the record industry will now be a little more judicious (and reasonable) in challenging use of its work. Given Hollywood’s difficulty in dealing with the Brave New World, somehow I doubt it.

The best things in life are free?

Apache has for a long time had a claim that is rare (if not unique) in the software world: the best software, that is most popular, and is cheapest (i.e. free).

This form of open source is collaborative innovation, or what Eric von Hippel would call “user innovation.” But what about people who need to make money off of their IP?

There are a few good examples of valuable books available free online:

• von Hippel’s 2005 book Democratizing Innovation
• The best book on open source licenses, Larry Rosen’s Open Source Licensing
• A better-than-most book on the business of open source, Producing Open Source Software (recommended by a client)

We don’t have page proofs online, but the book I helped edit Open Innovation: Researching a New Paradigm is also available free online. Compared to the $100 hardback, the double-spaced proofs are a hassle, but at $40 for the paperback (as with Rosen’s book) the paper copy may be more useful.

So while you can’t say the best things in life are free, there are a few good things in life that are.

What's with "taxing" music downloads, eh?

Just back from my visit to Calgary for a conference.

In a decision Thursday that made headlines here in Canada but was largely ignored elsewhere in North America, a government body decided to retroactively impose a mandatory 3.1% royalty on legal music downloads to compensate songwriters and composers.

Among the very limited news coverage south of the 49th parallel, Slashdot proclaimed "Canada May Tax Legal Music Downloads," based on a secondhand report in Electronista (called "Canada to tax legal digital music downloads"). Any money collected under the coercive power of the state is a form of taxation. On the other hand, the money is not being paid to the government, but to SOCAN (Canada's answer to ASCAP).

In the only decent story on the subject, the Global and Mail notes that the new 3.1% royalty adds onto the 7.9% fee being made to music publishers. On a 99¢ (CDN) download, the label gets 60¢, these royalties run 11¢, the bandwidth is about 1¢ and the credit card companies (for small transactions) get 10-20¢. While the iTunes Store has set a 99¢/song ceiling on prices, one executive predicted these royalties could push pricing past one loonie (CDN 1.00). Canada also has a tax (or mandatory royalty) on blank CDs and music players to collect royalties for artists.

In some ways, that's double jeopardy because [if it's at all like the US] the songwriters were already getting compensated by the record labels out of that 60¢; however, I suspect (as on the US) the royalties were based on a physical good rather than an information good. When I did my “digital music" case 5 years ago, I estimated that 28% of the wholesale price of a CD was for manufacturing and distribution, which record labels used as an excuse to limit songwriter royalties. With digital downloads, everything but the royalties is gross profit: if the download volumes ever match physical ones (they won't), record company profits should be higher than they are today.

Despite this potential inequity, I think it's a bad idea to set royalty rates via government fiat. Exhibit A is the March 2007 decision by the equivalent US panel to increase record label payments by Internet radio stations (beyond those of other countries) to more than 100% of revenues. Over the centuries, the only accurate way of setting prices has been through negotiations between with multiple competing buyers and sellers. Whether or not the artists were getting a fair price beforehand, the actions of the US Copyright Royalty Board and now the Copyright Board of Canada have only reinforced that point.

Using fair use to attack fair use

On Friday, Lucasfilm released clips from its Star Wars movies on Eyespot, a San Diego company that both hosts a website and produces editing software. As I noted in my SD Telecom blog, Eyespot’s cooperation with licensed content is in stark contrast to the GooTube business model.

On his Madison.net blog, Mike Madison added a copyright law wrinkle I hadn’t considered:

Of course, once Lucasfilm blesses the remixing, a couple of things happen. One, the resulting remixes aren’t necessarily examples of “fair use”; so long as the mixers follow Lucasfilm guidelines, their mixes are authorized. Two, Star Wars remixes that don’t rely on the authorized clips begin to look a bit less like fair use than they might otherwise; here again, there is a copyright owner that is authorizing parodies. Under a typical four-factor analysis of fair use, avoiding an authorized “market for parodies” appears to cut against the user.

That’s a really clever angle — don’t know if it took a lawyer to come up with, or only a lawyer to spot it.

The fair use law makes quite clear that anything that diminishes the value of the original looks less like fair use. Since Lucasfilm/Eyespot eventually plan preroll ads to support their website, parodies that bypass the site will be undercutting Lucasfilm’s business, and thus less likely to be considered “fair use.”

Some are whining that Lucas is tightly controlling the clips with possible censorship (e.g. against Princess Leia as a porn star). But if Lucas didn’t exert some control, then it would lose the ability to go after others who diminished the value of the franchise.

As for complaints that Lucas isn’t sharing advertising proceeds for user-generate content, where is this true? Geocities? Yahoo Groups? Blogger? YouTube? Hotmail? I think everyone knows that “free” on the web means “I don’t pay but others sell ads.”

Technorati Tags: business models, copyright, fair use, Web 2.0, YouTube

Good meddling and bad meddling

Apple hoped that by providing downloads without DRM it would solve its problems with EU regulators over its FairPlay DRM system. This remains to be seen. Meanwhile, it has other problems.

Today the European Commission announced that its competition authorities were investigating the iTunes store over pricing. The well-written AP version makes it clear, however that the issue is less the price that Apple charges in different stores (mainly Euro vs. non-Euro, i.e. UK), and more that it won’t let customers buy music from countries other than their country of residence. Such intra-European price shopping was supposed to be one of the benefits when the Euro currency was introduced in 2002.

The root of the problem is that the record companies grant rights on a country-by-country basis. Is this Apple’s fault? Of course not, it existed decades before the first iPod. Is it the record company’s fault? Not necessarily — the record companies may have their distribution rights (whether for the composition or the performance) on a country-by-country basis.

Normally I’d say that government fishing expeditions are a great example of government subtracting value and attempting to micromanage the economy. This could be true here, too. However, it may also be that by getting all the agreements out in the open, everyone — politicians, bureaucrats, the industry, consumers — can see what the impediment here is to a pan-European licensing system. One possibility is differences still exist in contractual (or copyright) law between member states. Another could be that those differences disappeared in the last few years, but the country-by-country music industry practices have not been updated to reflect that change.

In the long run, this is probably a good thing for consumers and Apple. It might even be a good thing for the record industry — by providing the sort of efficiencies that are necessary for globalization — even it has to get dragged kicking and screaming into the 21st century.

Technorati Tags: antitrust, Apple, music industry, copyright

Content that actually belongs on YouTube

While the 1998 DMCA was intended to limit the threat of Napster, there have been ongoing complaints about its excesses.

One of the major areas of controversy was the (likely intentional) effect of DMCA of swinging back the pendulum against established consumer “fair use” rights. The case law (and policy tradeoffs) around fair use are complex, but two important examples of fair use exceptions are for public policy debates and for scholarship.

The potential of the DMCA to restrict established fair use rights has been highlighted by law school instructor Wendy Seltzer, who deliberately baited the NFL to prove a point. Seltzer used to work for the EFF — a group promoting absolutist cyberlibertarian positions that ignore other equally important public policy goals — but is now affiliated with Harvard’s Berkman Center, which combines advocacy with serious scholarship.

To make her point, Seltzer posted to YouTube a video clip of the now-familiar NFL disclaimer:

This telecast is copyrighted by the NFL for the private use of our audience. Any other use of this telecast or of any pictures, descriptions, or accounts of the game without the NFL's consent, is prohibited.

The NFL demanded that the clip be deleted, which it was; Seltzer sent a Safe Harbor counter-notification provided by the DMCA, and the clip came back up. That should have been the end of it, Seltzer says:

when I sent my counter-notification to the first NFL notice, on February 14, YouTube forwarded it on to the NFL per the DMCA's specification. Since my counter-notification included a description of the clip, "an educational excerpt featuring the NFL's overreaching copyright warning aired during the Super Bowl," it put the NFL on clear notice of my fair use claim.

Instead of seeking a court determination (which Seltzer contends is necessary), the NFL just asked (and succceed) in getting YouTube to pull it again. Seltzer recounts the saga in her blog, as do the AOL sports blog and the WSJ legal blog.

The publicity stunt spotlights that online copyright issues are not just big corporations disseminating commercially valuable content for free. If nothing else, this is helping to bring the policy debate to call attention to the impact on consumer interests.

There are limits to such interests. Many of the 22-year-olds in my classes think they have an unlimited right to download free music forever — not because the law allows it, but because everyone gets away with it so it has become an entitlement (like downloading term papers from the Internet). The opposite extreme is the RIAA suing grandmothers or even the dead.

Right now any business model is at risk if it involves professionally-generated content, either directly or indirectly. As Walt Mossberg observed, legal clarity is sorely needed here for consumers, but this is also something sorely needed by business. The purpose of business regulation is to set rules for fair competition, and right now no one knows what the rules will turn out to be when they are interpreted in a court of law. A lot of litigators are going to get rich off of these ambiguities, an obvious waste of economic resources.

Technorati Tags: Google, DMCA, copyright, YouTube