What has Sonny Wrought?

How did you celebrate Public Domain Day, January 1st? I celebrated in suitable fashion, among 90,000 celebrants in red and white. Of course, in the United States, not much has entered into the public domain for the last 14 years or so, since the Sonny Bono Copyright Term Extension Act went into force, extending individual copyrights by 20 years, and works for hire by 25 years.

The balance in copyright between producers and consumers has been warped in favor of producers for a long time. Copyright protection is designed to encourage the production of new material — not reward the makers of old material. As Justice Steven Breyer stated in his dissent in Golan v. Holder:

“In order ‘[t]o promote the Progress of Science’ (by which term the Founders meant ‘learning’ or ‘knowledge’), the Constitution’s Copyright Clause grants Congress the power to “secur[e] for limited Times to Authors . . . the exclusive Right to their . . . Writings.’ Art. I, §8, cl. 8. This ‘exclusive Right’ allows its holder to charge a fee to those who wish to use a copyrighted work, and the ability to charge that fee encourages the production of new material.”

However, when copyright terms go from 14 years (the original term in 1790), to 28 years (1831), to life of the author plus 50 years (the original provision in the 1976 Copyright Act) to life of the author plus 70 years now, what new incentive to an author is there? Will studios make any more movies because copyrights on works-for-hire are now 95 years, instead of 70? I just don’t see someone saying that they’ll make this work if the copyright lasts until 2108, but not if it lasts only until 2083. In the meantime, many works are left ignored, because it costs too much to re-release them.

In 1974, Frank Capra’s classic It’s a Wonderful Life went into the public domain, after languishing on various studios’ back shelves for more than two decades. When I first saw it in 1981 on film, there was still some cost involved in preparing and shipping the film. Now, however, there are no costs to copying — it is available on YouTube, and millions of people can enjoy Jimmy Stewart saving Clarence (and the town of Bedford Falls), and discovering Zu-zu’s petals. By attempting to grab every last penny of worth in a work in an era in which the cost of good-quality copying approaches zero, producers’ over-reliance on copyright may cause the entire copyright regime to fail.

The Economist has another good examination of copyright law, which examines the sorry state of the public domain. No one wants to discourage artists and authors from creating new works, but it is in no one’s interest to have

Photo credit: By Peter Denton [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

Both employers and employees need to review their wage statements for the new year, because California has amended Labor Code 226 to identify nine types of information that has to be on each wage statement:

(1) gross wages earned,
(2) total hours worked by the employee, except for any employee whose compensation is solely based on a salary and who is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission,
(3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis,
(4) all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item,
(5) net wages earned,
(6) the inclusive dates of the period for which the employee is paid,
(7) the name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number,
(8) the name and address of the legal entity that is the employer and, if the employer is a farm labor contractor, as defined in subdivision (b) of Section 1682, the name and address of the legal entity that secured the services of the employer, and
(9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee.

The most common mistake seems to be not including the name of the legal entity: “Bob’s Hardware” is not the name of the legal entity, if that is merely the tradename, and the business is actually “Robert Smith Hardware, Inc.”

I forgot to fix the wage statement

There is a real price to pay if the wage statements are incorrect: the greater of actual damages or $50 for the initial pay period, per employee, and $100 per employee for each later pay period, up to a total of $4000 per employee. The Legislature has put some real bite into this, because lawyers who sue on behalf of the employees are entitled to an award of costs and reasonable attorneys’ fees – which could be $300-$500 per hour. These attorneys are always very thorough, and bill lots of hours.

Every employer should review the wage statement being issued to employees this month, to make sure it complies with current law. The payroll provider should be aware of these changes but if not, changes need to be made quickly.

Online content providers – including websites and apps – need to add something to their 2013 To-Do list.

It covers you, too

Beginning July 1st, the Federal Trade Commission’s new rules under the Child Online Privacy Protection Act (“COPPA”) will apply covering more online services. While the new rules have been criticized as “a mess,” they still apply. Most business-related online providers have assumed that COPPA and its related rules have not covered them, because they do not direct activities at children. However, if your stationery store has Barbie Notepads or fuzzy gnome erasers, their online presence could bring them under the COPPA requirements, such as having parental consent and disclosure requirements.

Here is a quick summary of the new changes:

• More Online Providers. Probably the most important change is that more online providers are covered. Rather than just the child-focused websites, all online providers (which includes apps) that have even a small amount of content directed at children are subject to the COPPA rules.
• Third Parties Covered, Too. If your website or app relies on advertising from third parties who might be able to collect information about children, those third parties are covered as well.
• Personal Information is EVERYTHING. Personal information about a child is more than their name, address, email address, or birthdate – it is anything about them. Thus, anything that can be used to discover something about the child has to be protected: screen or user names, geolocation info, browser and flash cookies, device identifiers, internet messaging IDs, javascript “tags” – basically, anything, other than those used for the internal operations of the provider.

Not all the changes are negatives for the online providers. The FTC has tried to streamline the online notices required to parents, although it remains to be seen whether this will be sufficient. Online providers, at least for now, will not be required to explain how children’s data is protected.
Strict Liability. An online provider is strictly liable for any breach of COPPA’s provisions. This includes, beginning in July, those who are working on behalf of the provider, but not controlled by the provider. While the online industry largely opposed this extension, privacy groups won the battle. The takeaway for smaller online providers is to make sure – very sure – that the organization that is monetizing your content through advertisements or the like is following the new COPPA provisions.

We never regulated websites back in the 70's. (c) 2008, photo courtesy of Matt Becker, Weatherman90 at en.wikipedia, Wikipedia Commons

The FTC has provided a lengthy 167-page analysis of its reasoning for the new rules. If you are an online provider, you need to review these new rules to see how they apply to you and your technology. Bay Oak Law will be here to assist, if necessary.

Walking on red-hot irons? Easy. Try a 3-day depo.

It is easy to feel smug when we look back on our ancestors 1000 years ago. They had donkeys — we have 400 horsepower, 4 wheel drive vehicles. They had the Black Death — we have vaccines for all types of illness, even cancer. For a justice system, they had trial by ordeal — we have civil court depositions. Well, some things never change.

Actually, one thing has. In September, California’s Governor Jerry Brown signed Assembly Bill 1875, which generally limits civil depositions to just seven hours of testimony.

The federal courts have been following a seven hour rule for several years now. Federal Rule of Civil Procedure 30(d)(1) limits depositions to “1 day of 7 hours.” If someone tries to impede, delay, or frustrate a deposition, that person can be sanctioned.

New California Civil Procedure Code section 2025.290 provides:

(a) Except as provided in subdivision (b), or by any court order, including a case management order, a deposition examination of the witness by all counsel, other than the witness’ counsel of record, shall be limited to seven hours of total testimony. The court shall allow additional time, beyond any limits imposed by this section, if needed to fairly examine the deponent or if the deponent, another person, or any other circumstance impedes or delays the examination.

(b) This section shall not apply under any of the following circumstances:

(1) If the parties have stipulated that this section will not apply to a specific deposition or to the entire proceeding.

(2) To any deposition of a witness designated as an expert pursuant to Sections 2034.210 to 2034.310, inclusive.

(3) To any case designated as complex by the court pursuant to Rule 3.400 of the California Rules of Court, unless a licensed physician attests in a declaration served on the parties that the deponent suffers from an illness or condition that raises substantial medical doubt of survival of the deponent beyond six months, in which case the deposition examination of the witness by all counsel, other than the witness’ counsel of record, shall be limited to two days of no more than seven hours of total testimony each day, or 14 hours of total testimony.

(4) To any case brought by an employee or applicant for employment against an employer for acts or omissions arising out of or relating to the employment relationship.

(5) To any deposition of a person who is designated as the most qualified person to be deposed under Section 2025.230.

(6) To any party who appeared in the action after the deposition has concluded, in which case the new party may notice another deposition subject to the requirements of this section.

(c) It is the intent of the Legislature that any exclusions made by this section shall not be construed to create any presumption or any substantive change to existing law relating to the appropriate time limit for depositions falling within the exclusion. Nothing in this section shall be construed to affect the existing right of any party to move for a protective order or the court’s discretion to make any order that justice requires to limit a deposition in order to protect any party, deponent, or other natural person or organization from unwarranted annoyance, embarrassment, oppression, undue burden, or expense.

Your phone rings, and it is your friend from the PTA: your name is listed in the local paper for having skipped jury duty last month. Your friend informs you that you may be subject to jail time and/or a fine. You were called for jury duty awhile ago, but you checked the website, and you didn’t have to go in — but when was that? Last year? The year before? Your friend sounds worried, but tells you that there is a number to call, and you get the number. Now your fingers are shaking a little bit as you dial.
Your fingers start shaking a little more as you listen to the recorded message tell you the bad news that you may face a thirty day jail term and a $500 fine — but then you hear that this is all just a joke, but you can use the number to mess around with the head of one of your friends. What the —?

No joke. Photo courtesy of Photos-public-domain.com

This is really happening in Pennsylvania, as the Administrator for the Courts, Zygmont Pines (yes, that is his real name) is warning about the hoax. The only question is how soon it will spread to the jokers here in California. As much of a drag that jury duty is, it is vitally necessary for our justice system. If one of your friends tries to play this one on you, just tell him its really not funny.

The copyright trolls had a bad day at the beginning of September, as Judge Phyllis Hamilton of the Northern District of California found that wireless router owners do not have a duty to secure Internet connections from outsiders.
The issue in AF Holdings v. Doe (Hatfield), US Dist Court, ND Cal. C12-2049 (PJH)  is negligence. Can the owner of an Internet connection (like a wireless router, for example) be negligent in preventing third parties from using the connection to access and copy copyrighted content?
For there to be negligence, there first may be a duty. Automobile drivers, for example, have duties both to their passengers and third parties that they might encounter, not to injure them in any way. Employers have duties to their employees not to use machinery in a dangerous manner. However, Judge Hamilton ruled that there is no duty of the owner of an Internet connection to the owner of copyrighted content:  ”AF Holdings has not articulated any basis for imposing on Hatfield a legal duty to prevent the infringement of AF Holdings’ copyrighted works, and the court is aware of none.”
Judge Hamilton put a further stake in the heart of AF Holdings’ argument by finding that federal law regarding copyright and the Communications Decency Act supersede, or preempt, state and local law, meaning that local laws regarding negligence have no effect in terms of negligence for maintaining an internet connection.
Judge Hamilton’s ruling does not mean that wireless router owners are now free to take off password protection from their wireless routers. Acting recklessly, knowing that somebody will use the router to download prohibited content, legally acts as a “knowingly” allowing someone to use your internet connection illegally, and that can be considered contributory copyright infringement. Moreover, allowing lots of people to use your connection will inevitably slow down the access that you paid for. Lastly, if someone is committing a crime using your wireless connection, you could have SWAT teams invading your home, and even Martha Stewart can tell you that that’s NOT a good thing.

If you had any doubts, the New Scientist has published a report that says that most torrent downloaders have their internet protocol (“IP”) addresses logged within three hours of the download.

The article wonders whether the information will be reliable enough to be admitted in a court of law, but another legitimate question is whether there are many who can afford to fight the evidentiary battles. The owners of copyrighted content are very good at targeting the price points where it is cheaper to settle than to fight.
BitTorrent is seen as a godsend to many illegal downloaders, but it should be seen for what it is: a trap. To participate in a “swarm,” you have to give up your IP address, so that the other members of the swarm can copy from and to you. If you don’t want to leave your home address with the owners of the content, then do not use BitTorrent. The End. Finis. Owari.

As the son of a stockbroker, I grew up listening to talk about large, well-established businesses. IBM. Gerber. Proctor & Gamble. All successful companies, in industries that will last a long time. But all, in their way, static. IBM’s headcount of American employees has been falling for years. Most Fortune 500 companies in America that are not in the financial world or in computing are losing jobs, not gaining them. When national unemployment is over 8%, the US needs to focus on the companies that add employees. Those are small businesses.

That is why I was interested in an article about small businesses in The Daily Beast about the real job creators. Small businesses are providing most of the new jobs in the US, but too many of them are left to fend for themselves, as the larger, more connected companies demand and receive far more face time from policymakers.

Small businesses need to organize around their common interests: they need to preserve and improve their flexibility. They need to know that they can hire someone without risking their business. Most small business owners want their employees protected from dangerous situations — and want their competitors subject to the same common sense rules, so that the more ruthless can’t leverage that ruthlessness to the detriment of the compassionate. They want their employees to have decent healthcare — but can’t afford to pay an increasingly large percentage of their revenue for it. Few employers want to be health insurance experts — which they become, involuntarily, when the burden of the decision on health insurance rests on them. The need capital and credit, but they are hard to find.

Small businesses have lots of challenges, from efficiencies of scale to being noticed in the marketplace. When employment rests on their shoulders, though, it behooves policymakers to make the small business environment a pleasant one.

California’s Art Resale Royalty Act has been declared unconstitutional  by now former Central District of California Judge Jacqueline Nguyen. Judge Nguyen issued her ruling on May 12, two days before she received her commission to become a judge on the Ninth Circuit Court of Appeals. She found the Resale Royalty Act to be unconstitutional because it violates the Commerce Clause of the United States Constitution.

Dancer, by Keiko Nelson, www.keikonelson.com

The decision will no doubt be appealed to the Ninth Circuit, where Judge Nguyen will not be able to participate.

News Flash: cellular providers here in the US are going to work together to inhibit cell phone theft, by shutting down access to the cell phone system for a phone reported stolen. We’d be more impressed with the progress if it hadn’t been done in Australia nearly a decade ago. It may not stop thieves wanting a new paperweight or data on the phone (like contacts, texts, files, or other things), but it will end the resale value, and thus the incentive to steal them.