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Universal, Pay Those EFFing Lawyers 335

Posted by CmdrTaco
from the they-can-afford-it dept.
Slashdot frequent contributor Bennett Haselton writes "The EFF is seeking over $400,000 in attorney's fees from Universal Music Group after Universal sent a DMCA takedown notice to YouTube, demanding the removal of a video posted by user Stephanie Lenz. Lenz had posted a video of her toddler dancing to a 30-second clip of the Prince song "Let's Go Crazy"; after Universal sent the takedown notice, the EFF sent YouTube a counter-notice on behalf of Lenz arguing that the video was fair use, and YouTube restored it. Now the EFF is asking the judge to award them attorney's fees for their work." Use your magical clicking device below to read many more words.

Section 512(f) of the DMCA says pretty clearly that anyone who "knowingly materially misrepresents under this section... that material or activity is infringing... shall be liable for any damages, including costs and attorneys' fees", which would seem to apply here; the EFF argues that Universal should have reasonably known that the video obviously constituted fair use. In a Law.com article about the case, attorney Kelly Klaus, representing Universal, countered that "Congress also said that there was another remedy, which is the counter-notice procedure, which is what happened here." But this seems to miss the point -- the DMCA says that the remedies are the counter-notice procedure and an award for attorney's fees. (Klaus's firm did not respond to requests for comment for this article.) Anyway, as EFF staff attorney Corynne McSherry points out, if there were no possible award for attorney's fees against copyright holders who make false accusations, then there would be no disincentive for copyright holders not to file frivolous accusations in the first place.

I'm an EFF member and support their request for attorney's fees, but let's play devil's advocate. Suppose you were an indie musician who sold your songs online, and you found a number of YouTube videos that used your song without permission, so you sent a long list of DMCA takedown notices to YouTube. Included in that list was one video that used only a brief portion of your song, short enough to count as fair use. Is $400,000 a fair punishment for accidentally including one video in your list that wasn't a bona fide copyright infringement?

On the other hand, if the EFF doesn't get their attorneys fees, then they have to eat the cost of the work they did, and that doesn't seem fair either.

The problem is that once you have a $400,000 bill on the table, someone has to pay it, which punishes one or both parties usually vastly out of proportion to any wrongdoing. ($400,000 is almost half of what Reebok had to pay when one of their lead-tainted bracelets killed a child.) Huge attorney's fees awards also limit access to the court system for plaintiffs who might have a reasonable case, but can't afford the risk of having to pay attorney's fees if they lose, and for defendants who might also have a reasonable case, but are under pressure to settle quickly to avoid the risk of a huge attorney's fees award against them.

This suggests an economics / game theory problem: Could you come up with a system that takes into account the incentives of parties on both sides, and that prevents huge legal bills from being generated?

Now, any argument about the legal system usually raises two kinds of objections. The first is that the existing system "works". Well, in many ways it does, but everybody also knows that wealthy corporations and individuals enjoy a huge advantage in the court system, even though courts are supposed to treat all parties equally. So at least in that respect it doesn't "work" the way it's supposed to. The second objection is that it's too hard to change the rules and traditions that are built into legal proceedings, so it's better just to work within the system. True, but that's not the question I'm asking. I'm posing it as a logical brainteaser: If you had carte blance to modify the way that legal disputes were held, could you do it in a way that respects the rights and interests of all parties and still minimizes the legal fees incurred? (Whether I'm right or wrong, my goal is to make this argument more interesting to mathematicians and game theorists, than to lawyers; otherwise, I've failed.)

From a game-theoretic point of view, you might argue that large attorney's fees serve a useful purpose by discouraging frivolous lawsuits. The problem is that the fees don't just discourage frivolous lawsuits but also non-frivolous lawsuits where there's a reasonable chance of losing. On the other hand, a person who is already broke would have little disincentive to file a frivolous lawsuit, since the worst that can happen is that they'd get hit with a huge award for attorney's fees and have to declare bankruptcy, which they might consider worth the risk for a small shot at a million-dollar payout. So assume that attorney's fees are not themselves the best way to deter frivolous lawsuits, and that avoiding large fees in general is still a desirable thing. How do you design rules to achieve that?

I think you could save a lot of money by enforcing a rule that a lawyer is not allowed to seek attorney's fees from the other side for arguing any points that the other side offered to concede anyway. So the incentive would be that if party A's lawyer concedes some point of fact or point of law, and party B ultimately wins the case and an award for attorney's fees, then party B is not allowed to seek attorney's fees for arguing the point conceded by party A's lawyer.

In all of my legal cases where the other side was represented by a lawyer who was getting paid by their client up front, it was clear from reading the other side's briefs (and my own lawyers agreed with me) that opposing counsel had spent a lot of time spinning their wheels and arguing obvious or irrelevant points before getting to the crux of the dispute. If their client wants to pay them for that busy-work, that's between them and their client, but if they had won the case and an award for attorney's fees, I would have objected that they shouldn't be allowed to charge us for time they spent arguing points that we would have given to them anyway. The hypothetical savings from implementing and enforcing this rule, are not trivial.

So how does game theory predict that the two sides would behave under this rule? Suppose MegaCorp is suing or being sued by IndieActivist. MegaCorp's first priority is to win, and if possible to hit IndieActivist with a huge award for attorney's fees to discourage other would-be IndieActivists. MegaCorp doesn't want to lose, but if they do lose, they don't much care about the attorney's fees award they would have to pay to IndieActivist's lawyers. In this scenario, they would be expected to concede very little, disputing trivial points in order to drag out the case as long as possible, hoping that IndieActivist's lawyers would run out of time or money and pressure their client to settle. In other words, MegaCorp would behave about the same as they would under the existing rules.

For IndieActivist, on the other hand, their first priority is to win, but they also care very much about not having to pay a staggering award for attorney's fees if they lose. So they would be expected to concede any points of fact or law, even if favorable to MegaCorp, if those points are so obvious that they don't think the judge would be likely to rule in their favor on those questions anyway. This way, even if IndieActivist loses and has to pay attorney's fees to MegaCorp, those fees would be limited to the time spent arguing the actual point of disagreement that formed the crux of the lawsuit.

Suppose, for example, that Universal had actually sued Lenz for violating Prince's copyright by using a 30-second excerpt of his song in her video. Lenz or her lawyers could have filed a brief conceding all the obvious points that they would expect Universal's lawyers to make: Prince was the holder of the copyright, the copyright had been filed with the Copyright Office, Lenz never sought permission for using the recording, etc. Very quickly, the whole case could be distilled down to: "Show this video to the judge and let them decide if it qualifies as 'fair use'." Any effort spent arguing any points beside that, is wasteful. And if the legal system encourages lawyers to rack up billable hours arguing other points, then the system is wasteful. Concede the obvious, and everybody's costs are kept under control.

This only partially addresses the problem of large attorney's fees, because it still leaves the fees that are generated in the process of arguing points that the other side wouldn't concede. Solving this problem is much harder, because while you can simply eliminate the work that's spent on arguing points that the other side would give to you anyway, you can't eliminate the work spent on points that are genuinely in dispute, you can only try to make that work shorter and cheaper. I've argued for my own fairly complicated remedy in a separate article, but my main point was that legal costs aren't driven up so much by the complexity of the law as by the ambiguity in it. The Windows programming interface, after all, is also very complex, but if you can write a clear description of what you want a simple program to do, you can often get a programmer to write the program for you for dirt cheap. In arguing a legal case, on the other hand, the number of possible outcomes grows exponentially with each point of ambiguity in the law where there's no way to predict how the judge will interpret a particular rule.

But still, even if you can't reduce the ambiguity in how a legal question will be interpreted, you can avoid a lot of unnecessary attorney's fees by distilling the case just down to that particular question. Is it fair use to use a 30-second clip of Prince's song in a video of a dancing toddler? Let the judge decide. But if that's the one and only point that both sides can't agree on, then neither side should be able to bill for time spent arguing about anything else.

Perhaps someone mathematically or logically inclined can come up with a better algorithm for avoiding the billing hours generated by arguing the obvious. I'm not entirely happy with my own solution, because it still allows MegaCorp to concede absolutely nothing, and to try and bleed IndieActivist dry by forcing them to argue even the most trivial points. IndieActivist's lawyer could be reimbursed for that time if they win and get an award for attorney's fees, but they might run out of money or patience before then. To counter this tactic, you could allow either side to seek penalties for Frivolously Arguing The Super-Obvious. If IndieActivist's lawyer wants MegaCorp to concede an obvious point and MegaCorp won't do it, IndieActivist could seek a FATSO penalty, and the judge could decide whether to award them that penalty if the point is really and truly obvious, without deciding on the merits of the case as a whole. The penalty doesn't have to be large enough to hurt MegaCorp, it just has to be large enough to compensate IndieActivist's lawyer for their time, so that MegaCorp can't run them into the ground by forcing them to argue every point unnecessarily. However, economic game theorists might think of some unintended consequence of the FATSO rule. Could MegaCorp flood IndieActivist's lawyer with a gigantic list of requested concessions, so that if IndieActivist's lawyer screws up and forgets to concede one of the points that the judge turns out to consider "obvious", MegaCorp could hammer them with a FATSO award too? It's hard to anticipate all the ways that either party might abuse a new rule of the game.

Meanwhile, under the existing system, while it may be unfair to Universal in some cosmic sense that they have to pay out $400,000 for sending one mistaken DMCA takedown notice, it would be more unfair to force the EFF to eat those costs, and in any case the DMCA does clearly allow for an award of attorney's fees. But it would be better for everyone in the long run -- especially for the EFF and the kind of relatively powerless clients that they usually represent -- if there were more ways to keep legal costs from spiraling out of control in the first place.

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Universal, Pay Those EFFing Lawyers

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  • by nomadic (141991) <nomadicworldNO@SPAMgmail.com> on Monday January 25, 2010 @12:37PM (#30891800) Homepage
    The problem with attorneys' fees is not unlike the problem in the medical profession. They usually get paid per hour. This gives them incentives to drag cases out and not do their best work up front. After all, if you end the case fast, you don't get much money.

    As a lawyer I can tell you I hate billable hours with the heat of a thousand suns. Most lawyers do. The problem with a flat fee is one mistake and you could end up doing hundreds of hours of work for a very low amount of money.
  • by Toonol (1057698) on Monday January 25, 2010 @12:50PM (#30892018)
    "Let's Go Crazy" is a 279 second track off of Purple Rain. Most Copyright lawyers consider 'safe harbor' for fair use to be one tenth of a song or, if longer than five minutes, thirty seconds (even Wikipedia implements this). In a very pedantic analysis, had she used 27.9 seconds of the song instead of the quoted 30 then there would be no grounds for take down, let alone a court case.

    There's no basis in law for those figures. The law is deliberately constructed to NOT have those sorts of arbitrary limits. It's a mistake to be pedantic over a rule-of-thumb estimate that has no legal weight. There are cases where a full song would be fair use, there are cases where a fifteen-second clip would be infringement.
  • by nomadic (141991) <nomadicworldNO@SPAMgmail.com> on Monday January 25, 2010 @12:53PM (#30892062) Homepage
    So while the cost of writing a letter is insignificant, the cost of being an attorney, running a firm, and generally being available to take up this sort of case is likely not so trivial. We could compare similar firms' rates, but stating that 'attorneys charge a lot' is sort of a non-starter.

    As an attorney I can assure you there is no legitimate scenario where the EFF honestly had to expend $400,000 worth of work to write a letter. Maybe, MAYBE, $2,000 if you throw in a few hours of research, which the EFF shouldn't have to do considering this is what they specialize in. A top-of-the-line civil litigator bills maybe $600 an hour, and as much as we like the EFF people they are not top-of-the-line civil litigators.
  • by dissy (172727) on Monday January 25, 2010 @01:40PM (#30892848)

    I agree.

    If a person who makes under $30000/year is fined almost two million, that is roughly 6600% of ones income that already has president as 'fair'.

    So if Universal is making a 2 billion per year profit, that would be about $132 trillion in fees.

    Seems fair to me.

  • by DeadPixels (1391907) on Monday January 25, 2010 @01:43PM (#30892896)
    As far as I know, you're correct in that those figures aren't specified by law. The really sad part here is that if the video had been 2.1 seconds shorter, she would have been well within the widely-accepted standard for fair use - perhaps she's still legally in the right, but it would have been a whole lot easier to argue if she could use the 30-second/10% guideline to support herself.

    Generally, I would say that this still falls under fair use, because she isn't attempting to profit from the song in any way. It's a clip of a baby dancing for thirty seconds; have we really gotten so crazy that we're breaking out the lawyers and gearing up for lawsuits over thirty seconds of a dancing baby?
  • by Grond (15515) on Monday January 25, 2010 @01:57PM (#30893060) Homepage

    The EFF actually made a claim for attorney's fees earlier in the case, and the claim was denied. The court found that a violation of 512(f) requires either actual knowledge that the material is not infringing or that the fair use be self-evident. Lenz v. Universal Music Corp., Copy. L. Rep. (CCH) P29,540, 8 (N.D. Cal. 2008). The court then found that the plaintiff had neither alleged facts from which actual knowledge could be inferred nor facts showing that the fair use was self-evident. Id. at 9. The plaintiff was given leave to amend the claim to correct these issues, which she did.

    The amended version of the complaint alleged that Universal acted in bad faith and deliberate ignorance of fair use. Lenz v. Universal Music Corp., 572 F. Supp. 2d 1150, 1156 (N.D. Cal. 2008). It further alleges that Universal is acting solely to satisfy Prince's personal agenda. Id. Those allegations were held sufficient to deny a motion to dismiss the claim. Id at 1157. The court ruled that copyright holders must undertake a good faith consideration of fair use but they are not required to make a full investigation. Id at 1155-56. The court noted that cases of bad faith are likely to be rare. Id at 1155.

    So the outcome here hinges on whether Universal considered fair use and decided in good faith that it did not apply. Normally it would be difficult to prove that Universal ignored fair use as a possible defense or considered it only in bad faith (e.g., had its lawyers tell it what it wanted to hear). The evidence would normally be protected by the attorney-client privilege or the attorney work-product privilege. In this case, however, the EFF won significant parts of a motion to discover such evidence. Lenz v. Universal Music Corp., 2009 U.S. Dist. LEXIS 105180 (N.D. Cal. 2009). Unfortunately, I can't find a link to the EFF's argument for this motion, so it's hard to say how strong their case actually is (e.g., whether they uncovered a smoking gun memo).

    As for Mr. Haselton's extensive discussion of the best way to apportion the cost of litigation between parties I will say this: It is remarkable only for its complete lack of citation to or recognition of the numerous legal and economic studies that have been made of the subject over the past couple of centuries. It is the law and economics version of the phenomenon described in this XKCD comic [xkcd.com] and its accompanying alt-text.

  • by nabsltd (1313397) on Monday January 25, 2010 @02:08PM (#30893212)

    Most Copyright lawyers consider 'safe harbor' for fair use to be one tenth of a song or, if longer than five minutes, thirty seconds (even Wikipedia [wikipedia.org] implements this).

    I'm not sure what "most copyright lawyers" believe, but I do know that there has never been any codified limit on the portion of an audiovisual work that makes "fair use" an unassailable defense.

    The bogus 30-second limit has been used countless times in references that know nothing about copyright law, similar to the way that 10 or 25 words or "one sentence" or any other essentially random number is used as the layman's criterion for fair use when quoting text.

    The four pillars that make up fair use are:

    • the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes
    • the nature of the copyrighted work
    • the amount and substantiality of the portion used in relation to the copyrighted work as a whole
    • the effect of the use upon the potential market for or value of the copyrighted work

    In a particular case, if the other three far outweigh the "amount and substantiality", then it's still fair use, even if you are using the entire original work.

  • by dr_dank (472072) on Monday January 25, 2010 @02:21PM (#30893390) Homepage Journal

    If I am the CEO of a mega corporation, then I know the value of good will to generate goodwill and I will put some kind of human at Control Gate C who will put a stopper on the mindless sharks in my legal department who would sully my business' positive reputation by suing dancing toddlers.

    That's exactly the reason why these suits are usually filed by the RIAA. The RIAA takes the heat for playing bad cop and the underlying content producer gets to keep their name away from the lawsuit.

  • by Hatta (162192) on Monday January 25, 2010 @04:51PM (#30895526) Journal

    Prince is a total dick, and hired investigators [cnet.com] for the sole purpose of sending DMCA notices to people he felt were infringing his copyright.

A CONS is an object which cares. -- Bernie Greenberg.

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