Whither Potential Market?

Info/Law has a nice post on fair use factor number 4 - the effect on the potential market or value of the work - and highlights some problems with the law as it stands (madness and confusion). The questions needing answering is "what markets is the fourth fair use factor concerned with?" because there are 3 different approaches that courts have taken in the last couple months alone.

Mo Money Mo Problems

Be Grateful Fair Use Ain't Dead

The sailor gave at least a try
the soldier being much too wise
strategy was his strength
and not disaster

The sailor coming out again
the lady fairly lept at him
that's how it stands today
you decide if he was wise

The storyteller makes no choice
soon you will not hear his voice
his job is to shed light
and not to master

~ Grateful Dead, Terrapin Station

Lawrence Lessig brings to attention a great pro-fair use decision in Graham v Dorling Kindersley Limited. There is a great condensed outline of the case available at ©opyBites if you don’t care to read the whole opinion (and an even shorter summary is at Ars if you’re that way). The opinion is significant because of the line it draws to reign in the scope of the "potential market" prong of the fair use analysis. Obviously, fair use is a troublesome issue because it is so fact specific and decided on a case-by-case basis, but I would say that this decision gives fair use a little bit more bite.

The case revolved around a Grateful Dead coffee table book published by Dorling Kindersley Limited (DK). The book contained several images of concert posters to which The Bill Graham Archive (BKA) owns the copyright. DK had tried to license the images, but talks broke down and it published the book with without securing a license to the images. BKA sued and the Second Circuit later affirmed that DK’s use of the posters was a “fair use.”

Most importantly, the court found that the use of the posters was transformative, thus creating a “transformative market,” such that DK’s unauthorized use of the posters did not affect BKA’s primary market for the sale of poster images.

The Second Circuit found DK’s use of the images to be transformative “both when accompanied by referencing commentary and when standing alone.” The images were displayed as part of a timeline with little or no commentary attached. The court said that the posters’ original purpose was both for promoting the band and for their artistic expression and that including the images in a biographical work is “transformatively different from the original expressive purpose.” Under fair use, biographical works hold a special place because they require the inclusion of original source material (and are considered scholarly works which are an explicit exception to copyright under 17 USC 107). BKA had argued that merely using the images as part of a timeline, without more, was not transformative enough. The court rejected this claim, holding that the images serve as “historical artifacts graphically representing the fact of significant Grateful Dead concert events” that “fulfills the transformative purpose of enhancing the biographical information” in the book. Snap.

After finding a transformative use, the court found that DK’s unauthorized use of the images did not usurp BKA’s ability to develop a derivative market. This is slightly astounding because copyright owners want to claim the right to license their works for use in new markets. This is one of the main contentions behind the Authors’ Guild suit against Google: that Google should pay a licensing fee to the publishers to use their books in Book Search because licensing books to be searched online is a “potential market,” the fees from which publishers are entitled to.

The Second Circuit had this to say on the point:

[W]ere a court automatically to conclude in every case that potential licensing revenues were impermissibly impaired simply because the secondary user did not pay a fee for the right to engage in the use, the fourth fair use factor would always favor the copyright holder.

The opinion continues to state that:

[When the use of] images is transformatively different from their original expressive purpose… a copyright owner cannot prevent others from entering fair use markets merely by developing or licensing a market for [transformative uses] of its own creative work.

And:

Since DK’s use of BGA’s images falls within a transformative market, BGA does not suffer market harm due to the loss of license fees.

That’s a pretty big deal. The court is saying that once you show a transformative use (and all that that entails) the potential market prong won’t count against you unless the new use serves the consumer as a substitute or supersedes the original work. This presumably isn’t a problem if the work really is transformative, but rather than having rights in every derivative market, copyright owners can claim a right to licensing fees only in traditional, reasonable, or likely to be developed markets. Markets based on fair use seem to be beyond the scope of “potential markets.”

One question is how far can we run with this reasoning? This case deals with a printed book. Can it be extended it cover online works? Basically, DK’s use of the images in a printed book only takes away from BKA’s potential licensing market insofar as DK hasn’t paid any license fee. But what if DK’s book was available freely online? Then it could be argued that DK’s actions have caused more harm to BKA’s potential licensing market by making the images available to be easily copied (assuming they have not been published previously online). At that point, the transformative use of creating a biographical work morphs into something akin to distribution, or so it appears: you could always go photocopy DK’s printed book and get the image. It's unclear what a court would do then, but so long as DK’s use is ok, then what happens after that I don’t think should count against it.

No matter the extent that this decision applies to online works, notice that the discussion has shifted in favor of fair use. The argument has turned from focusing on the potential market to focusing on the transformative use of the material. Before, a really transformative use could be labeled unfair essentially because it deprived the copyright owner of revenue. Such would weigh against the new use in two prongs: character of use and potential market, and would tough to outweigh. Now, the transformative nature of the use is key, stressing the context of the use over the fact that someone else owns copyright to the material.

Overall, hooray for the Second Circuit and hooray for the Honorable Jane Restani who wrote the opinion.

Quote of the Month

"The Internet is a highway of stolen goods and child pornography that goes into the bedroom of every kid in this country."

~ an unnamed lobbyist for the Canadian Recording Industry Associations (Canadian version of the RIAA), arguing for restrictive DRM legislation modeled on the WIPO treaty.


This quote comes from an op-ed piece by Charles Angus, a Canadian MP and musician, describing Big Content's efforts to protect its outdated business model. Angus argues against legislatures acting as a rubber stamp for passing draconian laws drawn up by corporate lobbyists by recalling early efforts to by RCA to cripple FM radio.

Gmail Loophole Closed

A loophole in Gmail has apparently allowed users to strip emailed PDF files of their DRM, but Google has fixed the bug after Adobe called to complain.

According to bloggers who had tested several documents, while Gmail didn't always handle page layout and images with perfect fidelity on DRM-enabled documents, it did allow users to print and copy content the authors had not wished to be duplicated.

Google's solution appears to be that the "View as HTML" option will be disabled when a PDF document with DRM is received through Gmail, as well as changes to the coding behind "View as HTML" itself.

The quick work by Google should ensure no one sniffs up a DMCA claim for assisting in the removal of DRM, but I'm curious as to how much of this was merely an oversight on Google's part.

Scan This Book!

NYT goes big with an overview of Google Book Search, giving the issue a pretty thorough treatment while coming down in Google's favor (article written by Wired's Kevin Kelly, so the bias seems obvious).

After fawning over awesomeness of the project (better than the library of Alexandria) and the technological marvel of the effort (bigger than landing on the moon), the discussion turns to how the Internet effects the way we read. Trolling the web for news and opinion is already infinitely better with the ability to deep link and tag, just imagine the same with books! But no one doubts the benefit of Book Search: the problem is how to make it work under the law.

So how do we characterize Google's "moral imperative to scan" against the interests of publishers? The description of the battle between Google and publishers is neatly summarized:

The argument about sharing revenue is not about the three or four million books that publishers care about and keep in print, because Google is sharing revenues for those books with publishers. (Google says publishers receive the "majority share" of the income from the small ads placed on partner-program pages.) The argument is about the 75 percent of books that have been abandoned by publishers as uneconomical. One curious fact, of course, is that publishers only care about these orphans now because Google has shifted the economic equation; because of Book Search, these dark books may now have some sparks in them, and the publishers don't want this potential revenue stream to slip away from them. They are now busy digging deep into their records to see what part of the darkness they can declare as their own.

The second complaint against Google is more complex. Google argues that it is nearly impossible to track down copyright holders of orphan works, and so, it says, it must scan those books first and only afterward honor any legitimate requests to remove the scan. In this way, Google follows the protocol of the Internet. Google scans all Web pages; if it's on the Web, it's scanned. Web pages, by default, are born copyrighted. Google, therefore, regularly copies billions of copyrighted pages into its index for the public to search. But if you don't want Google to search your Web site, you can stick some code on your home page with a no-searching sign, and Google and every other search engine will stay out. A Web master thus can opt out of search. (Few do.) Google applies the same principle of opting-out to Book Search. It is up to you as an author to notify Google if you don't want the company to scan or search your copyrighted material. This might be a reasonable approach for Google to demand from an author or publisher if Google were the only search company around. But search technology is becoming a commodity, and if it turns out there is any money in it, it is not impossible to imagine a hundred mavericks scanning out-of-print books. Should you as a creator be obliged to find and notify each and every geek who scanned your work, if for some reason you did not want it indexed? What if you miss one?

Stepping back from book search, we can see that the dispute over scanning books is only only battlefront in the war between pre- and post-internet business models:

A new regime of digital technology has now disrupted all business models based on mass-produced copies, including individual livelihoods of artists. The contours of the electronic economy are still emerging, but while they do, the wealth derived from the old business model is being spent to try to protect that old model, through legislation and enforcement. Laws based on the mass-produced copy artifact are being taken to the extreme, while desperate measures to outlaw new technologies in the marketplace "for our protection" are introduced in misguided righteousness. (This is to be expected. The fact is, entire industries and the fortunes of those working in them are threatened with demise. Newspapers and magazines, Hollywood, record labels, broadcasters and many hard-working and wonderful creative people in those fields have to change the model of how they earn money. Not all will make it.)

Definitely read the article for yourself. I'm always happy to see articles like this hit the NYT (and any other msm) because it means the issue is reaching a broader audience. Today's debates over the Internet and intellectual property will have a much more profound effect on the future than, say, debates over immigration, yet you wouldn't think so based on what gets covered in the news.

Copyright in Digital Scans

Likelihood of Confusion posts on the status of copyright in scans of public domain works. Spoiler alert... there is no such right.

Cases of note:
FEIST PUBLICATIONS, INC. v. RURAL TELEPHONE SERVICE CO., 499 U.S. 340 (1991)
BRIDGEMAN ART LIBRARY, LTD. v. COREL CORP., 36 F. Supp. 2d 191 (S.D.N.Y. 1999)

And read Project Guttenberg on why there is no "sweat of the brow copyright."

Of course you can always argue that a scan is a derivative work and hope a court agrees, but that argument is pretty much a losing battle. So too bad for all the hard work that goes into scanning something. I just don't think that's what Locke had in mind anyway.

Microsoft Writing Checks it Can't Cash?

Ars on Microsoft's plans to take on Google in search:

Even though it may be starting from behind the frontrunners, Microsoft isn't entering the battle unarmed. The company's sheer clout in the areas of both file formats and OS gives it an advantage that Google is unlikely to match without resorting to open standards—more popular with users, but much less so with content creators.

If this is an accurate description it sets up Microsoft to cater to the man while Google entices the support of regular Joe-user. Assuming that Microsoft is successful in, as Steve Ballmer puts it, "evolving Microsoft from a software company into the world's largest, most attractive provider of online media through MSN, Windows Live and adCenter," the result will be two-fold. First, making Microsoft "the most attractive provider of online media" necessarily includes locking down content with DRM and those interested in creating themselves and tired of passively consuming content will look elsewhere. Second, since people generally despise Microsoft, lawsuits that now target Google might find themselves causing more Ballmer tantrums.

Paying for TV

The NYT's article on who's paying for tv offered an interesting glimpse at how technology is transforming the way tv programs are funded through advertising and what advertisers are doing to strike back. Something about the article didn't sit right with me though, and I just figured it out.

William Patry points out (here) that the article confuses the copyright argument, unconsciously assisting the effort to have copyright deal with noncopyright issues:

To be clear, then about Sony: the fourth factor analysis of harm to the market for the copyrighted work was a bunch of hoo-ha in that case. The fourth factor concerns ways in which copying of the work itself damages similar or otherwise relevant markets for the particular type of copying done by defendant. The fourth factor most certainly does not concern harm to advertisers, nor does it reach reduced advertising revenues because viewers are not copying or not viewing a third party's works, i.e., the advertisments. Sony, properly understood, did not deal with copying of the works in question at all. Whatever else one thinks about how to deal with the issue of advertising, we should not distort basic principles of fair use, when the real issues lie outside of copyright altogether.

Indeed, the heart of the decision in Sony v. Universal is the following snippet:

The staple article of commerce doctrine must strike a balance between a copyright holder‘s legitimate demand for effective -- not merely symbolic -- protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce. Accordingly, the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses.

The question is thus whether the Betamax is capable of commercially significant noninfringing uses. In order to resolve that question, we need not explore all the different potential uses of the machine and determine whether or not they would constitute infringement... For one potential use of the Betamax plainly satisfies this standard, however it is understood: private, noncommercial time-shifting in the home. It does so both (A) because respondents have no right to prevent other copyright holders from authorizing it for their programs, and (B) because the District Court’s factual findings reveal that even the unauthorized home time-shifting of respondents‘ programs is legitimate fair use.

Though fair use was discussed at some length in the case, any one of the four factors to be considered is not dispositive alone. Rather, the court must strike a balance between the four primary factors and any other it deems imporant in any given case. If a court were to rehear Sony today, even with the data available about DVR as the NYT's article suggests, it should not make much of a difference. Though some of the claims rejected in Sony as unfounded would no longer be so, the general question of significant non-infringing would be the same. The focus would still be on the work being copied and whether they are being exploited in a new market.

I cannot say whether this is more of a problem for advertisers or content creators, but nevertheless, it's fun watching the two groups jockey to preserve their current business models.

Superrman

And now for something completely different, from the Onion:

NEWARK—Executives at DCC Comics have announced the debut of comic-book character Superrman, whose invulnerability to copyediting protects him from nefarious outside forces and intellectual-property lawsuits. "Thrill to the exploits of Superrman, the only child of a doomed plant! Gasp in awe at his Superr-Strength, X-Roy Vision, and his ability to leap mall buildings in a single bounce!" read a press release issued by DCC. "Superrman's only weakness? His vulnerability to Cryptonight… and his star-crossed love for sassy, sexy, trouble-prone reporter Louis Lane!" The editors of Superrman say the comic book will be released alongside those of other popular DCC characters such as Wander Woman, the Flush, and Batdan.

The Great Google Colbert Coup

Have been busy with exams, so excuse the lapse since my last posting, but thought this was a gem. It seems that Google has lucked out because of its position and its desire to play by the rules regarding copyright, but the dispute between C-Span, Google, and YouTube highlight a problem that can only get worse when it comes to privatizing content of public concern.

Stephen Colbert of The Colbert Report gave a great (though that itself has created controversy of its own) performance at the White House Correspondents Dinner last Saturday. By Sunday the bit, including monologue and skit with Stephen and Helen Thomas, was available online via YouTube. However, C-Span contacted YouTube on Wednesday and asked it to remove the Colbert videos because their display of them violated C-Span's copyright. After exercising its copyright powers against YouTube, C-Span signed an exclusive agreement with Google to post the video online. A DVD of the entire dinner is also available at the C-Span store for $24.95 (originally priced at $45!). I had noticed something was up after I emailed the YouTube link to several people and was told that whatever I had linked to was taken down for copyright reasons, but it wasn't until this NYT article today did the details become clear (there's also a lot of good coverage from BoingBoing).

Generally, the entity that first broadcasts something has copyright rights to the broadcast and has some control over its display elsewhere. Thus C-Span technically has the right to control rebroadcasts of the correspondents dinner.

C-Span, it should be noted, is a non-profit cable channel that was created by cable companies as a public service to provide news coverage of government. From its site:

C-SPAN is a private, nonprofit organization. It does not, and never has, received any government funding. C-SPAN video is not in the public domain. (emphasis not mine)

This is not to say that C-Span owns what happens in the US government, but it owns its broadcast of those events. It seems a little bit unclear what happens when the C-Span broadcast is the only one available; in that event it looks like de facto ownership.

But it seems difficult to reconcile C-Span's non-profit public interest mission with enforcing copyright law in a way that limits access to material of public interest. C-Span's budget should, in theory, be supported by the cable stations that founded it; its business model need not rely on monetizing intellectual property. If C-Span thinks it's in its best interests to charge $25 for a DVD of Stephen Colbert's bit, is it safe to assume then that C-Span is being underfunded by those that created it? Otherwise, such a move would be out of step with its mission. Of course, C-Span's original content would be copyrighted, but I'm focusing here on C-Span's broadcasting of public events.

The law as written gives C-Span the power to act as it is here, but that doesn't preclude us from asking whether or not such is fair. C-Span is the only network that thinks it a good idea (ie. has invested in the idea) to provide non-stop coverage of the US government. In this instance it appears C-Span has gotten lucky, having broadcast a funny bit from a popular tv personality, out of no real work of its own. C-Span doesn't decide the speakers at the correspondents dinner, nor does it do anything else. It merely shows up with the cameras and broadcasts the event on a channel buried deep in the bowels of my cable guide. Sure, allowing C-Span to monetize the unforeseen popularity of a particular broadcast is an "incentive" for C-Span to go about and continue broadcasting these kinds of things, but isn't its incentive to serve the public interest?

I tried calling C-Span, but couldn't get through to anyone who wanted to talk, so I called Comedy Central and talked to someone with the Colbert Report. My thoughts were confirmed in that C-Span is not giving Colbert nor Comedy Central a cut of its DVD profits, and the Colbert Report had to ask for permission to rebroadcast the Helen Thomas bit, even though Colbert produced the piece and it was intended to be shown to the crowd in the room and not particularly to the whole world (thus meaning that C-Span would be granted rights over it because it broadcast the video first).

So let's assume that the kind of economic decision that leads C-Span to flex its copyright muscles is not a problem and we support it. But then we see that C-Span has entered into an exclusive deal with Google to display this video. Also, Google must provide the whole video (a whopping 1 hr and 35 minutes long) rather than just the Colbert bit (barely topping 24 min). From a first amendment standpoint, if I were Colbert, I would be upset. Criticism of the government occupies a sacred place in first amendment jurisprudence and Colbert's brutal satire certainly falls in that lofty echelon of highly protected speech. Because C-Span can decide only Google can show the video, and that it must show the video according to C-Span's rules, what was originally an economic decision based on monetizing content becomes a free speech issue where Colbert's speech is censored by C-Span by how it enforces its copyright. It doesn't matter that the original motivation for this censorship was political, the fact that it results in a form of censorship should be enough cause for concern.

In a way, this whole C-Span affair parallels the recent flap over the Smithsonian exclusive deal with Showtime over the use of its archives for documentary purposes. That deal has generated lots of controversy because the museum is publicly funded and has signed a deal that essentially privatizes the entire collection. The comments to this post on Patry's blog provide a good discussion.

The larger point is not that C-Span or the Smithsonian are necessarily wrong because they are merely following the law and reacting to the incentives that copyright law provides. The larger point is that copyright law as is provides these kinds of motivations - what I would call the wrong kind - in the first place. Holders of copyright have little to no motivation to act in the public interest and often enough there is no market force that encourages that kind of behavior either. When copyright law no longer secures the interest of the public benefit then entities entrusted with protecting the public interest in education (Smithsonian) and free debate (C-Span) cannot be trusted to remain true to their missions, as we can see.

Google, for its part, has been rewarded by C-Span for following the rules that favor entities like C-Span. Though YouTube tried to score a similar deal with C-Span, it was denied, presumably because it didn't seek permission first. In a way, while Google acted appropriately under the law, it can still be accused of not acting appropriately at all because its unwavering compliance in order to draw traffic to its site sets a precedent for such cases in the future.

By the way, here's my favorite part from the video (full transcript):

But, listen, let's review the rules. Here's how it works: the president makes decisions. He's the Decider. The press secretary announces those decisions, and you people of the press type those decisions down. Make, announce, type. Just put 'em through a spell check and go home. Get to know your family again. Make love to your wife. Write that novel you got kicking around in your head. You know, the one about the intrepid Washington reporter with the courage to stand up to the administration. You know - fiction!

Because really, what incentive do these people have to answer your questions, after all? I mean, nothing satisfies you. Everybody asks for personnel changes. So the White House has personnel changes. Then you write, "Oh, they're just rearranging the deck chairs on the Titanic." First of all, that is a terrible metaphor. This administration is not sinking. This administration is soaring. If anything, they are rearranging the deck chairs on the Hindenburg!

Ironically, the first part of the quote seems an apt description of what copyright owners want these days. Content companies decide what will make money - thus what people should watch. Some intermediary is implemented to deliver that content as is. It is our job to consume and that's all. The extra effort to do anything else is effort misspent. Rather than exercise our creativity, rather than enforce our "fair use" rights, people should just consume what is given and then go and spend time with their families.

Debunking the Million Dollar Typo

WaPo ran an article yesterday on typosquatting implying that Google is improperly profiting from running ads on parked domains. The article leads with:

Google Inc., which runs the largest ad network on the Internet, is making millions of dollars a year by filling otherwise unused Web sites with ads. In many instances, these ad-filled pages appear when users mistype an Internet address, such as "BistBuy.com."

This new form of advertising is turning into a booming business that some say is cluttering the Internet and could be violating trademark rules. It also has sparked a speculative frenzy of investment in domain names, pushing the value of some beyond the $1 million mark.

First off, what WaPo characterizes as a "new form of advertising" isn't all that new. ZDNet reported in-depth on the problem way back in 2000, saying even then the issue wasn't new. Even better, WaPo itself sued a typosquatter who claimed the domain washingtonpos.com back in 2001. Quality control missed this one, which is too bad since the article exudes an alarmist tone and tries to label Google as a nogoodnik for its complicity in this sort of business.

Google, along with its popular AdSense program for websites, also runs AdSense for domains, which provides ads to domain name registrars and large domain name holders, but Google's policy is to not allow web addresses that infringe upon trademarks to use their ad service. What happens is that Google will remove participating parked sites from its AdSense for domains program if a trademark owner complains of a site with a confusingly similar URL. Google defends its policy of leaving it up to URL owners to take the initiative and contact them, rather than investigating these things itself, because close misspellings don't necessarily equate to trademark infringement:

"Unless it is confusing to somebody, trademark law doesn't apply," said Rose Hagan, Google's chief trademark lawyer.

To say that it is Google's job to vet every site on the Internet to determine whether it's confusing people (a) is absurd because of the vagueries of trademark law, (b) would require Google to make a legal determination about every URL, which would negate the benefit of having an algorithm do all the work thus requiring an army of workers to scour the net, and (c) is not required by trademark law.

This is not to say that complaints of typosquatting aren't serious, because they can be, but even WaPo is unsure of the real trouble (which we don't learn until paragraph 10):

Opinion is split on whether these type of ad pages are good or bad. Some say they are nothing more than junk pages that frustrate people. But others, including those who speculate on potential traffic of a specific domain name, argue that the pages are helping people find information related to what they're looking for.

If anything, it is more a problem of who is liable under the law. Or to put it another way: can I sue the Daddy Warbucks that is Google?

I still remember when Whitehouse.com was a porn site whose traffic rivaled that of Whitehouse.gov, but the advertising money angle of this story made me curious. Using the WaPo example of earthlink.com misspellings, I tried the two mentioned in the story: dearthlink.com and rearthlink.com. Both come up page unavailable (Google is capable of flexing its muscles and acting fast to avoid bad publicity and legal troubles I suppose), but warthlink.com (W instead of E is a common typo) comes up showing a parked page running ads by a Google-run service called Oingo (as in Oingo-Boingo I wonder?). Click on any of those ads or type a query in the search bar and Google gets a taste from your slip of the finger.

WaPo quotes Ron Jackson, publisher of DNJournal.com, an online publication that covers the industry, saying that the typosquatting business is good:

"It's like a 24-hour money-printing machine."

Of course it may not be fair that someone who owns thousands of misspelled variations of earthlink.com can make tons of money, but again, the question comes down to whose responsibility is it to deal with the problem. Is it Google, or any other ad server, that should be on the lookout for typosquatters? Or, in this case, should earthlink be the one trolling the Internet for trademark infringers?

Practically speaking, Google has taken the wisest position and the one more in line with the mandates of trademark law. First, a little bit about the law.

Trademark only exists to protect consumers from confusion in the marketplace and, generally speaking, if it doesn't confuse anyone it's not trademark infringement. There are two kinds of confusion at issue in trademark: initial confusion and post-initial confusion. Initial confusion was at issue in Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999) where the court held that it was infringement if another's mark was used in a way that drew traffic to one's own site, despite the fact that once people got there they realized they were not at the site they intended to reach (the case dealt with misleading metatags). The court analogized with Blockbuster putting up a highway sign that said "West Coast Video, Exit 7" when West Coast Video was really at Exit 8 and Blockbuster was at Exit 7. The thinking is that people can figure this out easily enough, but are too lazy to get back on the highway and instead they will just rent at Blockbuster instead of going to West Coast Video as they originally intended. Following this reasoning, it's possible a court could apply Brookfield to typosquatting to say that warthlink.com is capitalizing on earthlink.com's mark.

Post-initial confusion comes into play once a user gets to warthlink.com. Upon arriving at a similarly named site, the nature of that site may lead the consumer to be confused as to who is running the place. If warthlink.com offered Internet service, with links to earthlink.com and other service providers, if it used earthlink's logo, or if it engaged in enough similarly activity as that happening on earthlink.com, then the consumer would be confused at a point after which initial confusion sets in (hence the name). There would definitely be no post-interest confusion when a person visited Whitehouse.com back in the day if they were trying to find out the time of the White House Easter Egg Hunt on Whitehouse.gov. Similarly, there should be little confusion when a person arrives at warthlink.com because it looks like a typical parked site. I would think everyone could recognize one of those, but since 97% of people have trouble spotting spyware, I could see how reasonable (?) minds could differ. Take this test to see if you're in the 97%.

Trademark has a policing element where the owner of a mark must combat infringing uses to preserve the power of their mark. Policing means that the owner of a mark has to prevent others from trading on the good will of the mark through lawsuits under the trademark law or by complaining to ICANN under the Uniform Domain Name Dispute Resolution Policy (UDRP). The danger is that once the public no longer associates a mark with a particular good or service, the mark is considered "abandoned" and anyone can make use of it. This is what happened to Xerox and Kleenex. I used to think it could happen to Google, but I think its foray into areas other than search will ensure that Google is perceived as a unique company and not a generic term for search. Does this happen with typosquatting? Will someone think that warthlink.com is somehow related to earthlink.com and thus confuse them to the point that earthlink.com becomes almost indistinguishable from warthlink.com in the mind of a web surfer? This is highly unlikely, especially when talking about initial confusion. If there is post-initial confusion, however, then the owner of a mark should seriously consider policing the use of that mark to be safe. In this case, earthlink.com may lose traffic, and thus revenue, from the existence of warthlink.com and its extended family, but that doesn't necessarily harm the mark itself. Though it may be an extreme example, it does highlight a weakness in a potential claim.

Intellectual property law is never that easy and in the case of typosquatting the law is complicated by the Anticybersquatting Consumer Protection Act (ACPA) passed in 1999, which basically makes typosquatting illegal. The 3rd Circuit held in Shields v. Zuccarini, 254 F.3d 476 (3d Cir. 2001) that typosquatting violated the ACPA and thus constituted trademark infringement. Mr. John Zuccarini really is a spunky fellow who has had his share of lawsuits over typosquatting, taking a leading role in shaping this area of the law. One key part to the ACPA is that it requires the "bad intent" to profit from a domain name and coming to that determination involves a nine (9!) part test that looks at the person's intent, acts, and purpose in registering, using, and trafficking in a domain name. However, if the purpose of trademark is to reduce customer confusion, it is then easy to tell how the ACPA changes the way we think of trademark rights and how to enforce them.

To throw some more kindling on the fire, the House of Representatives is working on a new trademark bill called "The Trademark Dillution Revision Act" that may or may not erase free speech exceptions to trademark dilution claims. Though different from confusion, stronger dilution laws that favor mark owners would give them more tools to combat potential infringement, just as the ACPA gives mark owners more tools to fight confusion.

So is Google aiding, or at least complicit in trademark infringement by doing business with typosquatters? Who knows. As I've tried to show, it's never all that clear whether a given URL could be considered an infringement and the analysis is all about the context of each particular URL. There are no rules for how many letters need be changed or how similar a URL need be to trigger infringement. Darthlink.com, based on another common typo, could be a trademark infringer, but what about an enterprising Star Wars fan using it as a rally point for his Star Wars Galaxies MMORP guild members. Or perhaps you're familiar with my personal favorite fallwell.com. It's a clever little parody of falwell.com, so clever in fact that the Reverend brought the boy to court and lost. In Lamparello v. Falwell, the court held that the use of fallwell.com did not create confusion as to source or initial confusion, and was thus not a violation of trademark. Read about it here and here. Based on these two examples alone it is doubtful that an algorithm would be able to distinguish those URLs that do in fact infringe from those that don't. Google's seemingly untenable position is to be either extra aggressive in removing potentially infringing URLs from its services and be sued when they are wrong, or to let trademark holders ask them to remove infringing sites and be sued for doing business with such sites.

Now, whether Google engages in shady behavior by working with the multitude of parked sites is also a difficult question. Those who manage these sites will find a way to monetize their assets and if it's not through Google it will be through another source. I imagine, however, that if earthlink.com owned all the typo variations of its URL and Google helped it monetize them no one would have a problem.

One point about the revenue that Google gets from these parked sites is how it floats the AdSense dollars generated from a given site. For those unfamiliar with AdSense, Google doesn't cut checks to participants on a regular basis; it cuts checks only when the AdSense hits $100. There's a great post on this from Nicholas Carr at RoughType describing how Google floats all this money until an AdSense account hits $100, pocketing all the interest. This could be a week, it could be years, but when you think of all the parked pages running Google ads on top of active sites in AdSense, the scheme makes up a major chunk of Google's earnings. Carr provides an enlightened description of an AdSense participant:

He struggles on, earning a penny here and a penny there, waiting month after month for the $100 mark to arrive. He becomes another Google sharecropper, one of the thousands working the rocky soil of the AdSense plantation. And all the while Google gets to hold onto the poor sap's meager earnings, using them for its own purposes. In many cases, I'm sure, the less-than-$100 balances never get collected, and Google gets to pocket them for good.

To be fair, if someone wants to make a stink about how Google makes money this makes for a much better attack and it doesn't rely on erroneous claims about trademark law.

This issue of typosquatting seems to be catching on as the WSJ follows up with a typosquatting article of its own today. In the end, Google's approach is a carefully planned one since it is under no legal obligation to police typosquatters and its hands off approach doesn't create situations where it is removing legitimate sites. Were Google too aggressive in this regard it could run into even worse publicity for abridging free speech rights by removing non-infringing URLs from AdSense. Everyone has their own understanding of evil when they decry Google's motto of "Don't Be Evil," but being smart and erring on the side of empowering the small guy instead of catering to the wishes of Best Buy doesn't strike me as being evil at all.