Paul Wallbank – Brilliant Communications

Tag: copyright

You hold us harmless
Social media site Pinterest was recently caught in one of the ongoing quandaries of social media – the ownership of content.

The subject is tricky; social media sites rely on a vibrant community of users posting news and interesting things for their online friends.

Unfortunately many of things social media users post are someone else’s property, so almost every service has a boilerplate legal indemnity term like Pinterest’s.

You agree to defend, indemnify, and hold Cold Brew Labs, its officers, directors, employees and agents, harmless from and against any claims, liabilities, damages, losses, and expenses, including, without limitation, reasonable legal and accounting fees, arising out of or in any way connected with (i) your access to or use of the Site, Application, Services or Site Content, (ii) your Member Content, or (iii) your violation of these Terms.

Facebook have similar terms (clause 15.1) as do LinkedIn (clause 2.E) and Tumblr (clause 15). Interestingly, Google’s master terms of service only holds businesses liable for the company’s legal costs, not individuals.

Boilerplate terms like these are necessary to provide at least an illusion of legal protections for investors – those venture capital investors, greater fool buyers or punters jumping into the latest hot technology stock offering need a fig leaf that covers the real risk of being sued for copyright infringement by one of their users.

The risk in these terms shouldn’t be understated; by agreeing to them a user assumes the liability of any costs the service incurs from the user’s posts. Those costs don’t have to be a successful lawsuit against the service, it could be something as minor as responding to a lawyer’s nastygram or DMCA takedown notice.

Of course, none of the major social media platforms have any intention of using these indemnity terms; they know that the first time they go after a user all trust in the service will evaporate and their business collapse.

Somewhere among the thousands of social media services though there is going to be one that will pull this stunt. Strapped for cash and slapped with an outrageous claim for copyright damages, the company’s board will settle then send out their own demands to the users responsible.

Those “responsible” users – probably white, middle class folk sitting in somewhere in the US Midwest, South East England or North Island of New Zealand – will be baffled by the legal demand that requires them to file a defense somewhere obscure in California or Texas and will go to their lawyer friends.

When the lawyers tell them what it means their next step will be to their local news outlet.

The moment the story of a middle class person facing losing all their assets hits the wires is the moment the entire social media business model starts to wobble.

In many ways what the social media sites are trying to do is offset risk.

Risk though is like toothpaste. Squeeze the tube in one place and the pressure moves elsewhere.

By laying off a real risk by using legal terms the social media sites create new, even bigger risks elsewhere in their business.

The dumb thing is these terms really don’t protect the services anyway – it’s unlikely the typical social media user will have anything like the assets to cover the costs of a major copyright action by a rich, determined plaintiff.

It’s going to be interesting to see how many services still have these indemnity clauses in 12 months.

For the industry’s sake, the big players will need to have ditched these terms before that first dumb attempt to claim damages from users hits the wires.

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March 25, 2012
When tails wag dogs
A recent Business Insider examination of how patent “aggregator” Intellectual Ventures works is a good example of one of the problems in modern business – essential ancillary processes have overtaken doing business itself.

Intellectual property rights are an important part of doing business, however what should be an adjunct to doing business has consumed many enterprises.

As the Business Insider article point out, Intellectual Ventures has become some sort of modern day privateer, extracting loot from hapless companies that cross its path.

This problem with intellectual property is part of a larger problem with lawyers, where they have been given too important a role in business.

In any civilised society lawyers are essential and carry out an important role but in western society over the last fifty the scope of the legal system has expanded so dramatically that now the legal tail wags the business dog.

Today company directors, business owners and entrepreneurs live under the shadow of breaching some obscure law that they had no inkling existed. Of course, the lawyers can help with this.

A similar thing has happened in the financial world, accountants have also moved from being an essential adjunct of business into being at the centre of most enterprises.

Much of this explosion in lawyering and accounting has been due to the increased role of government in our lives; each time a new law or regulation is enacted it makes it harder for the average person, or business owner, to understand the system.

A cynic can argue this is by design but most government actions are intended to address some injustice or flaw in society. The problem is there are always unintended consequences.

One can also argue that the increased growth in business overheads like lawyers, accountants and patent attorneys is because of fat, prosperous business conditions.

So maybe what western business has seen in the last fifty years has been because of a favorable market place; politicians have introduced a morass of often contradictory financial and legal rules because they know business, and society, can afford it.

Now times have changed and both business and society can’t afford unnecessary overheads it will be interesting to see exactly how our laws and regulations evolve to respond.

Maybe they won’t and we’ll see a black economy develop where whole groups of society ignore the rules, dispense with lawyers and accountants and hope for the best. This would not be good.

Possibly we’ll see legislatures and courts winding back and reigning in some of the more silly and egregious excesses as they recognise society can’t carry the burden and remain productive.

Whatever happens we can be sure the lawyers, accountants and people like Intellectual Ventures will fight hard against any change that reduces their status and income.

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March 5, 2012
Paying the piper – the cost of the internet’s walled gardens
With the web increasingly dominated by four major, and many minor, fiefdoms the cost of being part of those groups is gradually becoming clear.

As part of Facebook filings in advance of their public float they published the key agreements with their developer partners including that with games provider Zygna, technology journalist Tom Foremski has a disturbing look at Facebook’s conditions that illustrate the costs and risks.

In terms of the costs, Tom identifies Clause 2.1 of Facebook’s “Statement of Rights and Responsibilities” – shown as Annex 1 in the Developers as probably the biggest price for all content creators;

… you grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook (“IP License”). This IP License ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it.

So by sharing something on Facebook, you grant Facebook the right to do what they like with what you’ve created. That’s something worth thinking about.

For anybody trying to make a living off Facebook, it’s important to consider they also retain the right to throw you off the service at any time. From clause 4.10 of the Statement Of Rights Annex;

If you select a username for your account we reserve the right to remove or reclaim it if we believe appropriate (such as when a trademark owner complains about a username that does not closely relate to a user’s actual name).

So get into a trademark dispute with a big corporation – and often their lawyers cast a very wide net on potential similar spellings – and your account is shut down.

There’s also the specifics of the Zynga agreement that should concern anyone investing in the games company. Right at the beginning of the agreement we see this clause;

The parties further acknowledge that Zynga is making a significant commitment to the Facebook Platform (i.e., using Facebook as the exclusive Social Platform on the Zynga Properties and granting FB certain title exclusivities to Zynga games on the Facebook Platform). In exchange for such commitment, [*] the parties have committed to set certain growth targets for monthly unique users of Covered Zynga Games.

So Zynga is closely tied into the fortunes of Facebook, we knew that on a business level but now we know just how deep and binding the agreements are.

We should be clear, all the major social media and online services have similar clauses on intellectual property and copyright infringements; there’s no shortage of businesses who’ve been caught out by eBay or Paypal and plenty of people found their Google accounts shut down by their obsession with real names.

For all businesses the message is clear – be careful before committing totally to one online platform or another. Should you end up in a dispute, or find you’ve backed the wrong service, it may be a very costly process to get your company off that platform.

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February 11, 2012