The University of Chicago Law School Faculty Blog

Google on Offense, Google on Defense

Google and Microsoft are all over the news yesterday and today (I get confused: does the news happen on the day it happens or on the next day when my paper newspaper shows up on my stoop?). Three quick stories.

1. Google announced that it is going into the operating system business. In May, 1995, Bill Gates wrote his famous Internet Tidal Wave Memo. What scared Gates?: “One scary possibility being discussed by Internet fans is whether they should get together and create something far less expensive than a PC which is powerful enough for Web browsing.” Of course, now this is about more than just surfing the Internet; it is about moving the functionality of the desktop and more into the browser.

2. David Pogue likes Bing, Microsoft’s new search engine. I go each day for the pretty picture—even Baltimore looks good on Bing—but Pogue likes it as a search engine.

3. Google is getting bounced around over how transparent it is over its efforts in targeted advertising. Google apparently has been giving a presentation in Washington on its approach to what it calls “interest-based advertising.” The presentation is labeled Google Confidential, even though it consists mainly of screen shots from Google websites. Google has rethought that approach and has now released the presentation generally. I guess information really does want to be free.

My most recent draft article, Online Advertising, Identity and Privacy (abstract here and you can download from there) addresses exactly these issues. It is very much a work in progress, so if you have comments, please email them to me.

The Mediated Book

Amazon announced today a bigger and better Kindle (but still black & white). I am giving my new draft “The Mediated Book” tomorrow at a symposium at George Mason on Online Markets v. Traditional Markets. The paper addresses the new book mediation—devices like the Kindle and services like Google Book Search. You can download the paper here; the abstract is below the fold.

Antitrust Updates: Google Book Search; Section 2 Symposium; The Mediated Book

Three quick items of interest:

1. The judge extended the deadlines in the Google Book Search settlement by roughly four months yesterday. That means that the new opt-out deadline is September 4, 2009 and the Fairness Hearing is scheduled for October 7, 2009. Also yesterday, there are a number of reports (NYT) that the Antitrust Division at DOJ is now taking a serious look at the settlement. This is hardly surprising, since the most obvious parallels to the settlement are ASCAP and BMI and we have engaged in nearly 70 years of antitrust “regulation” of them. You can read my paper on the antitrust issues in GBS here (and I have a short version this week on the Washington Legal Foundation’s website). Fred von Lohmann at the Electronic Frontier Foundation has a nice update post on GBS. (And if you want more on ASCAP and BMI, you might try this.) Google itself explains the benefits of the deal today on its Public Policy Blog.

2. The folks at Truth on the Market are planning an online symposium starting on May 4^th on Section 2 of the Sherman Act and the DOJ’s recent report on Section 2.

3. Finally, I will be attending a symposium next week at George Mason on Online Markets v. Traditional Markets. I will be discussing “The Mediated Book.”

Audio: Randy Picker Discusses DRM

On the current edition of the Intellectual Property Colloquium podcast, hosted by UCLA (and former Chicago) professor Doug Lichtman, Paul H. and Theo Leffmann Professor of Commercial Law Randy Picker discusses digital rights management with Princeton's Ed Felten. According to Ben Sheffner's Copyrights & Campaigns blog,

Lichtman's interview with Picker focuses on a topic that gets much less attention than it deserves: how DRM enables pro-consumer business models. The discussion of how the Microsoft Xbox gaming console's business model -- artificially low console subsidized by Microsoft-only games -- is particularly interesting. And Picker takes the public's dislike of DRM head-on: "They hate it, but that doesn't mean anything." Picker explains that much of the "hatred" comes from looking only at the downsides of DRM, but ignoring the benefits: fostering business models that would be either more expensive or nonexistent if not for DRM.

You can listen to or download the podcast here.

The Google Book Search Settlement: A New Orphan-Works Monopoly?

I have posted on SSRN a preliminary paper on the Google Book Search settlement. That is very much a live legal issue, so I cut the draft short somewhat to get it into circulation at a point that it might be relevant (take that Harry Edwards!). There is much more that could be done on antitrust doctrine and probably some profitable comparisons to other questions of mandatory access (I get at some of these in my slides for the talk at the Columbia conference on the settlement).

In any event, the paper is here. The abstract is below the fold.

The End of Bailouts

Not in real life—those will be with us for some time unfortunately—but the end of the seminar. I think that we all learned a great deal. Yesterday, we heard five more student presentations: Madoff; Continental Illinois; Sweden; Ratings Agencies; and Consumer Mortgage Issues. Very much worth downloading and reviewing.

Bailing Out the Bailouts

The economy continues to struggle and we are doing do-overs on the first wave of bailouts. In the bankruptcy world, we talk about Chapter 22s and Chapter 33s—firms that have been in Chapter 11 bankruptcy two and three times. Unfortunately, as the case of AIG seems to suggest, we need a similar nomenclature for bailouts (AIG 3.0no?).

If a seminar can be simultaneously lively and depressing, we have hit that mark in the bailouts seminar this quarter (David Weisbach may have done so also in his climate change seminar). The class bailouts blog is full of interesting posts. Last week, student presentations started and we heard about AIG; LTCM; Japan; Iceland; and municipal financial distress. If you are interested in getting a better handle on any of those situations, download the slides and go to some of the materials that the students have put together at the blog.

Fairey v. Associated Press: Yes He Can

The lawsuit filed yesterday by Shepard Fairey against the Associated Press raises some basic questions about what copyright does and doesn’t do. Today’s New York Times describes the background  and displays the two critical images. The first is a photograph snapped by Mannie Garcia for the Associated Press (there seems to be dispute over the copyright to the photograph between Garcia and the AP, but that isn’t my issue today). The second is a now iconic poster created by Fairey based upon the Garcia photograph.

The lawsuit suggests that Fairey used the Garcia photograph as a “visual reference” in creating two Obama posters. I am not quite sure what that means. I take that to mean that Fairey looked at the Garcia photograph while he created the Obama posters. An alternative use of the Garcia photograph would be something more akin to a remix or a mash up, where the transformations resulting in the new work are directly made on the original work.

I think that there are good reasons to treat those two cases differently. In snapping Obama’s picture, Garcia did not obtain a right over other images portraying Obama’s original look, pose and posture. Another photographer taking exactly the same picture at exactly the same time would have full rights as to the image she took, and Garcia could not somehow block the second photographer merely because he had simultaneously taken the same picture.

Government’s Promise: Taking Away Property?

On this day of new opportunities, it seems almost churlish to point out how large the gaps are sometimes between political viewpoints. The lead editorial in the New York Times today is, appropriately enough, on government’s promise. The Times focuses on a possible amendment to the bankruptcy code to allow mortgage modifications on primary residences in Chapter 13. With house prices dropping, many mortgages are underwater. Chapter 13 currently precludes the reduction of those mortgages to now-current market prices. The Times favors an amendment that would allow just that. As the Times puts it: “The bankruptcy amendment cannot stop all foreclosures. But it is the starting point. And it would be a prime example of government doing for individuals what they cannot do for themselves—opening a courthouse door that is closed to them by law.”

Now reframe this from a different political perspective. What individuals lack is the right to take property from others. Individuals facing foreclosure lack the ability to grab shares of New York Times stock from the Sulzbergers so that they can sell those shares to pay off their debts. Government indeed makes it impossible for individuals to do that on their own.

I am not sure whether I think mortgage stripdown should be generally permitted on a going forward basis for new mortgages. I have never thought through the question fully. But it is important to recognize the important difference between a going-forward regime and one that applies to pre-existing mortgages. Of course all the bite is in the latter—and indeed versions of the mortgage stripdown bill would apply only to past mortgages.

But the central question is whether the rights of the mortgage holder are sufficiently property like that they are entitled to constitutional protection from after-the-fact taking, just like presumably the stock held by the Sulzbergers in the New York Times. I don’t know that I know the answer to that question either, but in 1982, the Supreme Court regarded it as sufficiently difficult that it avoided it in U.S. v. Security Industrial Bank, 459 U.S. 70 (1982) (“no bankruptcy law shall be construed to eliminate property rights which existed before the law was enacted in the absence of an explicit command from Congress”).

What I think I can say with greater confidence is that it is hard to give much credence to a view of government’s promise that operates off of such an incomplete understanding of what property rights are and when they are contested.

Bailouts

I am doing a seminar on bailouts this quarter with Professors Baird and Henderson. The syllabus is evolving but is here if you are interested. I put together some introductory material on the 1930s for class last week; the newspaper headlines from the time of Roosevelt’s first inauguration are really quite striking. The powerpoint slides also include links to many of the statutes enacted during Roosevelt’s first 100 days, plus key bailout statutes such as both versions of the Frazier-Lemke Act.

And for those interested in reading more blogging, students will be blogging about the readings each week. Posts will go up Monday and Wednesday of each week. Today’s posts on the 1979 bailout of Chrysler are available here.