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December 28 2010

16:40

Top 3 New Media Legal Battles of 2010

This year's been a big one. Spain won the World Cup. Lindsay Lohan went to jail. Don Draper married his secretary. And, of course, the federal courts waded into some of the thorniest legal issues affecting new media.

Three cases stand out from the rest of 2010's docket. Each one shook up the law in a significant way. Below are summaries of the major developments, condensed in the spirit of CliffsNotes, with some commentary about the implications for people and organizations using new media.

Viacom v. YouTube

In June, a federal district court judge ruled on Viacom Int'l Inc. v. YouTube, Inc., a case testing the limits of the Digital Millenium Copyright Act. The ruling came after three years of pre-trial litigation. Viacom claimed that thousands of its copyrighted works had been uploaded to YouTube (e.g., clips of "The Daily Show with Jon Stewart"), in violation of the DMCA, which governs online copyright infringement.

At the heart of the case was the DMCA's safe-harbor provision. It allows service providers in certain circumstances to host user-generated content without assuming copyright liability for that content. The key element is a notice-and-takedown scheme that immunizes the provider if it "responds expeditiously" when notified of specific infringements. That notification can come in two forms.

First, the provider could have actual knowledge of an infringement. This occurs when a valid takedown request has been received. Second, the provider could be "aware of facts or circumstances from which infringing activity is apparent." This operates like a red flag, and the idea is that the provider can't claim the safe harbor if it ignored one.

Viacom argued essentially that YouTube ignored a red flag, because it was well known in general that there was a great deal of "infringing activity" on the site. The judge, however, didn't agree. He sided with YouTube and held that the "facts and circumstances" raising the red flag must be "specific and identifiable infringements of particular items." In other words, it was not enough for YouTube to be aware in general that there was "infringing activity" on the site.

Although some have questioned the importance of the decision, it does spell out just how aggressively YouTube and others must police their user-generated content. Among other things, the decision affirms that the burden of identifying and documenting infringing content is on the copyright holder, rather than the service provider, and it makes clear that if the provider is aware only in general that there is infringing activity on the site, then the safe harbor still will be available.

Earlier this month, Viacom appealed [PDF] the case to the U.S. Court of Appeals for the Second Circuit, bringing in Theodore Olson, a former U.S. Solicitor General, to handle the oral argument. This is a sign that Viacom is very serious about winning. YouTube has not yet filed its reply brief.

Barclays v. Theflyonthewall.com

barclays_logo.gifThis case required a federal district court judge to apply the "hot news" misappropriation doctrine, first recognized in 1918, to a news aggregation website. Barclays and two other financial firms produced regular research reports, to be distributed to clients for a fee, about stocks. They often released them before the New York Stock Exchange (NYSE) opened for the day, and although the firms took precautions to ensure the reports went only to paying clients, some did leak out.

Enter Theflyonthewall.com (Fly), an online subscription news service that picked up and published those reports on its own news feed, updated continuously every day between 5 a.m. and 7 p.m. It featured an average of 600 headlines per day, some of them about the research reports.

In 2006, Barclays and two other firms got fed up and filed suit against Fly, claiming that their reports were "hot news" and that the redistribution of them constituted misappropriation, a violation of New York state law. Misappropriation is a fancy way of saying that an organization used your property impermissibly for its own benefit. This is where the old collides with the new.

The "hot news" doctrine, as noted above, was developed in 1918, in the Supreme Court case International News Service v. Associated Press. INS and the AP were competing news services during World War I that transmitted articles by wire to member newspapers. Speed and accuracy got them their daily bread. For various reasons, INS began collecting AP stories that ran on the East Coast and rewriting them for INS subscribers on the West Coast. Finding that the AP had a "quasi-property right" in the news content it gathered, the Supreme Court held that INS's conduct constituted misappropriation. INS was, the Court said, "endeavoring to reap what it had not sewn."

The policy justification anchoring that decision was the same one running through the Barclays decision: The content producer invested substantial time, labor and money in its publication process, and those investments should be protected; because if they're not, the producer loses the economic incentive to continue producing, depriving the public of a valuable benefit.

The judge, accordingly, ruled for Barclays. She issued an injunction requiring Fly to delay its publication of stories about the research reports. Notably, the delay was just long enough to allow Barclays and the other firms to monetize the reports by distributing them to clients before they appeared on any news aggregation site.

Fly quickly countered that decision, however, by asking a federal appeals court to stay the injunction, i.e., to relieve Fly of its obligation to comply with it. The court granted the stay and agreed to expedite its full review of the appeal, which is pending as of this writing.

Comcast v. FCC

Last but not least comes the determination in April by a federal appeals court that the FCC has limited power to regulate the Internet. Comcast Corp. v. FCC [PDF] arose because of complaints in 2008 that Comcast, a service provider, was interfering with its customers' use of peer-to-peer networking applications.

mediashift_legal small.jpg

In response to those complaints, the FCC issued an order concluding that it had jurisdiction over the matter and that Comcast's method of bandwidth management "contravene[d] ... federal policy." Comcast complied with the order, but later asked the appeals court to review it, objecting on three grounds. The court began and ended its inquiry by finding that the FCC failed to establish jurisdiction.

For its part, the FCC conceded to the court that it did not have express authority to regulate network management practices, but argued that it had ancillary authority under the Communications Act of 1934 [PDF]. It empowered the FCC to "perform any and all acts, make such rules and regulations, and issue such orders ... as may be necessary in the execution of its functions."

The court didn't buy the argument and said the FCC, relying heavily on policy statements and unhelpful statutory provisions, failed to prove that its Comcast order was "reasonably ancillary to the ... effective performance of its statutorily mandated responsibilities."

The decision prompted many commentators to wonder about its implications for Net neutrality, the idea that all online content and applications should be treated equally by service providers. David Post in April summed up the thinking over at the Volokh Conspiracy: "So what does this portend for Net neutrality rules? Can the Commission proceed with its rulemaking efforts ... or does it need some additional statutory authorization from Congress before it can do so?"

Since then, the FCC has been trying to answer those questions. It promulgated last Tuesday a set of rules that functionally creates two classes of Internet access, one for fixed-line providers and one for wireless providers. The rules are tied to the FCC's Section 706 authority, which directs the commission to "encourage on a reasonable and timely basis the deployment of advanced telecommunications services to all Americans," purportedly including broadband services. This means the FCC would have to show that the Net neutrality rules are ancillary to 706's mandate, a difficult task because the FCC itself concluded in the 1990s that that section is not an independent grant of authority.

Despite all the uncertainty, two things are certain: The rules will be challenged in the courts, and they will be challenged by Republicans in Congress.

The Year Ahead

Next year promises to bring big developments in the law affecting new media. A federal appeals court will decide both the Viacom and Barclays appeals, and the Net neutrality rules surely will be challenged. WikiLeaks will continue to dominate the news and very likely will head to court to test the uneasy balance between free speech and national security. And at the Supreme Court, the justices will hand down Schwarzenegger v. Entertainment Merchants Association, which addresses whether the First Amendment permits any limits on offensive content in violent videogames sold to minors.

Jonathan Peters is a lawyer and the Frank Martin Fellow at the Missouri School of Journalism, where he's working on his Ph.D. and specializing in the First Amendment. An award-winning freelancer, he has written on legal issues for a variety of newspapers and magazines. He can be reached at jonathan.w.peters@gmail.com.

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October 19 2010

16:00

Can we make journalism a tax-exempt purpose? Expanding the meaning of nonprofit journalism

[Nikki Usher has been looking into the options for news organizations under current nonprofit laws. With coauthor Michelle D. Layser, she’ll have a paper on the subject appearing in an upcoming number of the Utah Law Review. Here at the Lab, Nikki will be exploring their findings in a series of posts detailing the alternative models newspapers might consider. —Josh]

Around the country, nonprofit journalism outlets are proliferating in both citizen journalism forms and more professional renditions, like ProPublica and MinnPost. But is there room within the legal code to make journalism itself a tax-exempt purpose, rather than making them shoehorn into being an “educational” institution or some other approved category for nonprofits? The answer is maybe — and the possibilities would leave new room for journalism to actually legally define itself as a field that constitutes both legacy media and more non-traditional forms of journalism.

By adding journalism into Section 501(c) — as a tax-exempt category exempt under nonprofit law, we could protect all nonprofit organizations organized and operated to advance journalism from federal taxes. Senator Ben Cardin’s bill to establish nonprofit newspapers was dead on arrival in the Senate and House. With the struggling Baltimore Sun in mind, his goal was to make newspapers 501(c)3s and have them operate under the section’s clause of “educational” institutions.

But why limit journalism to just the category of “educational” institutions? To be clear, the 501c(3) statute from the IRS code reads:

Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition…or for the prevention of cruelty to animals or children.

The clause that bothers so many journalists is this one:

…no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation…and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.

This would mean that journalists would not be able to endorse political candidates — although there is considerable debate in the legal community about whether the effect of the Supreme Court’s decision in Citizens United might provide more room for nonprofit newsrooms to endorse.

So why include journalism as a separate clause under the nonprofit 501(c)3 category? First, it establishes a special place for journalism within our tax code. It doesn’t limit journalism to traditional newspapers, and it establishes journalism apart from just being about educational purposes. Not all of what journalism purports to do is strictly educational. What about the non-serious news, or sports columns, or comics and crosswords — or even the comments sections, opinion blogs, and social media efforts of newsrooms. These activities might be stretching the term of educational.

But if we gave journalism a special place we would be protecting all journalism in its myriad forms organized as nonprofits from federal taxes. Though many newspapers aren’t paying a lot of taxes these days because they are losing so much money, nonprofit status could help. Consider the implications for profitable news enterprises — for CNN, or dare say we Fox. These organizations could become nonprofits and take advantage of federal tax breaks to reinvest in journalism. Idealistic, but it could happen. Okay — maybe not.

Further, we would also be making it easier for journalists who are not big media to avoid federal taxes. The lives of small startups and innovative forms of journalism organizations would be free from going through any kind of onerous process of proving themselves as tax-exempt through other categories. This might provide a further boost to experimentation with new forms of journalism.

The tax code could also be amended to start fresh — to make journalism its own specific form of tax-exempt nonprofit: in this case 501(c)29. This would start the idea of a journalism nonprofit fresh, free from the restrictions of past 501(c)3 rulings about endorsements, awaiting new IRS rulings and case law.

However, the rules currently governing foundations mean that a 501(c)29 that endorses candidates would be unable to receive foundation money. An exception could, technically, be carved out of these foundation rules, but that would be pretty messy and likely rejected politically. So this doesn’t get us out of the endorsement problem that so frustrates journalists.

So what are the problems? Like anything with the IRS, we’d be giving the IRS the power to define what counts as journalism. That’s a pretty scary thought, particularly in a time of evolving journalism forms. But it might be better than the alternative: continuing to force journalism into a pre-existing model of an “educational” category that may not be right to accompany the myriad forms of journalism.

Bringing journalism into the tax code would require journalists to do something they aren’t good at: lobbying for their own position. But that, of course, strikes at the heart of our changing profession. But forcing ourselves to have the discipline to define what journalism is and might be is one way to protect journalism for the future.

Photo by Jacob Kearns used under a Creative Commons license. For the record, this post represents only Nikki Usher’s views, not those of her coauthor.

September 28 2010

14:00

September 27 2010

10:07

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10:31

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14:54
11:37

September 17 2010

12:48

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10:13

September 15 2010

12:15

September 09 2010

09:07

September 07 2010

16:17

#iq2privacy: Privacy, the press, and Max Mosley560/470

Journalism.co.uk will be at tonight’s ‘Sex, bugs and videotape’ debate organised by Intelligence Squared. Given this week’s renewed focus on phone hacking at the News of the World and debates on the privacy of footballers and public interest, tonight’s proceedings are pretty timely.

Proposing the motion that the private lives of public figures deserve more protection from the press will be Rachel Atkins, a partner at Schillings law firm; and Max Mosley, no stranger to the News of the World and secret videotaping himself.

Speaking against the motion are Tom Bower, journalist and author of books on Robert Maxwell and Richard Desmond; and Ken MacDonald QC, defence lawyer and former director of public prosecutions.

You can follow tweets from the event with the hashtag #iq2privacy or in the liveblog below:

Sex, bugs and videotape – privacy and the media debateSimilar Posts:



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