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Beatles in the Ether or Streaming

By now many may know that The Beatles catalog (or most of it) is available for streaming on the major services. I happen to love The Beatles and easily recommend Cirque du Soleil’s Love in Las Vegas. But the streaming option presents some questions to which I have not seen answers. First, did the services offer anything extra or special to get the rights (I can’t recall the state of streaming license law as far as flat rate or baseline rate to stream if the rights are granted)? Second, will the rights holders (I can’t recall where those have ended up) track the money from streaming versus selling the tracks and albums? If they do what will they find? Work on P2P music sharing and its effect on music and a study on the effect of free options for film may shed light on the future for Beatles revenues. The film study offered:

Together our results suggest that creative artists can use product differentiation and market segmentation strategies to compete with freely available copies of their content. Specifically, the post-broadcast increase in DVD sales suggests that giving away content in one channel can stimulate sales in a paid channel if the free content is sufficiently differentiated from its paid counterpart. Likewise, our finding that the presence of pirated content does not cannibalize sales for the movies in our sample suggests that if free and paid products appeal to separate customer segments, the presence of free products need not harm paid sales.

If music works in a way similar to film, The Beatles rights holders may expand their pie, not reduce it.

Either way I am happy to enjoy the streaming options while they last.

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AALS diversion – Jackson Pollock

The annual AALS meeting is in New York in 2016. A few folks have asked whether I will be there. I am not able to attend, but in the spirit of it’s good to get out and see more than the law (or take a friend and go for a good long chat about legal scholarship), I see that that MOMA is pulling out its Jackson Pollock collection. The write up in the New Yorker is short and captures his evolution and why you should go.

Pollock was always Pollock, though he was long in agonizing doubt, notably about his ability to draw. Dripping brought a rush of relief, as he found a steadying and dispassionate, heaven-sent collaborator: gravity. Drawing in the air above the canvas freed him from, among other things, himself. “Number 31” is the feat of a fantastic talent no longer striving for expression but set to work and monitored. He watched what it did. We join him in watching. Pollock redefined painting to make it accept the gifts that he had been desperate to give. Any time is the right one to be reminded of that.

Sorry to miss AALS and the exhibit, but there will be other chances to enjoy both.

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A Christmas Movie that Led to a Financial Reg (Sort of)

Trading Places is a Christmas movie in that it is set during the holidays and I suppose making hundreds of millions (or probably billions in today’s dollars) is a 1980s Christmas wish as compared to other Christmas wish movies. It is a heart-warming story of a young Eddie Murphy and Dan Akroyd taking on the entrenched elite by, oh well, by insider trading. The ending and the glory of frozen concentrated orange juice live on. First the full explanation of how the two manage to out maneuver the Dukes is a little tricky. But after the thirtieth anniversary a two years ago, a few places explain it nicely. NPR’s coverage is succinct. Business Insider is good and has better pictures. But the best is from Don’t Worry I am an Economist which has a step-by-step on short selling, and then applies it to the movie including explaining how the pricing worked (142 is in fact A $1.42 and 29 is $0.29 per pound but the contracts are for thousands of pounds thus “Trading begins at 102 cents per pound (at 15,000 pounds of F.C.O.J. per contract – size of a typical contract – the value of a single contract is $15,300).”.). So he shows that

How much have they made? Let’s see. In the movie Winthorpe says they’ve moved around 20,000 contracts. Assuming they’ve sold short at a constant pace from 142 down to 102, and that later they’ve bought them back while the price was falling from 46 down to 29, let’s say that the average sell price was around 122 cents per pound, where the average buy-back price was 37.5 cents per pound. The spread is therefore 122 – 37.5 = 84.5 cents per pound profit. Per single contract this is 15,000 pounds * 84.5 cents per pound = $12,675 per contract. Multiply this by roughly 20,000 contracts and their total profit was: $253,500,000.

Oh and here is the law and regulation part: The movie was explicitly invoked as the Eddie Murphy rule when the government finally made insider trading on the commodities market illegal. Per the WSJ when the rule passed CFTC Chief Gary Gensler explained:

We have recommended banning using misappropriated government information to trade in the commodity markets. In the movie “Trading Places,” starring Eddie Murphy, the Duke brothers intended to profit from trades in frozen concentrated orange juice futures contracts using an illicitly obtained and not yet public Department of Agriculture orange crop report. Characters played by Eddie Murphy and Dan Aykroyd intercept the misappropriated report and trade on it to profit and ruin the Duke brothers. In real life, using such misappropriated government information actually is not illegal under our statute. To protect our markets, we have recommended what we call the “Eddie Murphy” rule to ban insider trading using nonpublic information misappropriated from a government source.

Law and lit and reg I guess. Anyway Merry Christmas and in the words of Nenge Mboko “Merry New Year.”

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Cyberpunk Because You Forgot to Get Someone a Gift

OK Cyberpunk can be great for a range of reasons, but I saw this repost from i09 on The Essential Cyberpunk reading list and thought, “A great list with some books I have not read. Wait! It’s a list for folks who need to send a just in time Christmas gift (assuming they are available as eBooks, which I know some are). I easily recommend Neuromancer, Snow Crash, and Mirrorshades. I look forward to reading the rest (Accelerando did not work for me but I may try it again). Plus this genre really does a great job of positing worlds and issues that are pressing the tech-law space right now, so that is another reason to jump in.

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More Science Cheer – Microscopes for Everyone!

The New Yorker has a nice piece about Manu Prakash and his work on the Foldscope, a portable, paper-based microscope that costs about one dollar. As the author pointed out the whole thing can be put into “a nine-by-twelve-inch envelope.” Here are the details:

The paper is printed with botanical illustrations and perforated with several shapes, which can be punched out and, with a series of origami-style folds, woven together into a single unit. The end result is about the size of a bookmark. The lens—a speck of plastic, situated in the center—provides a hundred and forty times magnification. The kit includes a second lens, of higher magnification, and a set of stick-on magnets, which can be used to attach the Foldscope to a smartphone, allowing for easy recording of a sample with the phone’s camera. I put my kit together in fifteen minutes, and when I popped the lens into place it was with the satisfaction of spreading the wings of a paper crane.

The Foldscope performs most of the functions of a high-school lab microscope, but its parts cost less than a dollar.

So what? So Prakash and his colleagues are trying to deploy the device around the world to increase the way people gather and share data to understand the world. Folks use the device but also can go to “Foldscope Explore, a Web site where recipients of the kits can share photos, videos, and commentary. A plant pathologist in Rwanda uses the Foldscope to study fungi afflicting banana crops. Maasai children in Tanzania examine bovine dung for parasites. An entomologist in the Peruvian Amazon has happened upon an unidentified species of mite. One man catalogues pollen; another tracks his dog’s menstrual cycle.”

These seemingly far ranging interests thus connect to what Brett Frischmann, Mike Madison, and Kathy Strandburg have been studying: a knowledge commons. Just within Prakash’s interest in “biomimicry—understanding how and why certain organisms work so well, and using that knowledge to build new tools,” the project increases the ability to know about “Plants, insects, tiny bugs under the sink, bacteria,” that do amazing things. New species can be identified, and so the project creates thousands of eyes not only for Prakash’s work but others in the field.

As I read the article and the details of low-cost tech being used around the world for a variety of problems that locals identified, I thought of the way FabLabs and the work of Neil Gershenfeld have approached and supported the maker-movement. And as I went on, I found out that Prakash did his work with Gershenfeld’s Center for Bits and Atoms at MIT. Can you say school of thought?

Prakash’s group is looking for ways to aid in early detection of disease and water contamination using low-cost technology. At the same time, the world may be re-experiencing the wonder of the first tools that pushed our ability to understand the world. As the article described, Prakash and Jim Cybulski, (then Prakash’s student, now chief collaborator on the project) were in Nigeria studying malaria. They met with young students, caught a mosquito “that was feeding on one of the children and mounted it on a paper slide, which they inserted into the Foldscope.” The student looked at the slide and

“For the first time, he realized this was his blood, and this little proboscis is how it feeds on his blood,” Prakash said. “To make that connection—that literally this is where disease passes on, with this blood, his blood—was an absolutely astounding moment.” The exercise had its intended effect. The boy said, “I really should sleep under a bed net.”

Scale and change the world technology can be small, simple, and accessible. Folks who press the practical and tee up the skills and tools to learn and dream of bigger things are part of an ongoing season of giving that I dig. Happy holidays to all.

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Holiday Cheer – Creations for Good

A sister notices that her sister’s monitor for her blood sugar level has a weak alarm and does not work well to wake someone up at night, when the alert is critical. Sister decides maybe she can do something, and she does. Who is this mystery girl? Our own Danielle Citron shared with me (and let me share more) that her daughter, JJ, has been designing a new monitor to help diabetics (which her sister has).

JJ applied to a program to help high schoolers with STEM projects and was paired with folks at Northrup Grumman where she spent a day a month developing her idea. Along the way, JJ had to figure out what alarm noise worked best to wake someone up, program a code to link the monitor and bracelet devices, and then wired them. As her school reports

This year, Citron will continue to test and refine the design, creating the bracelet with the help of a 3D printer. When she’s finished, the bracelet will change color to let the user know immediately if their blood sugar is getting too high or too low. The detailed information from the monitor will also be linked to a smartphone app.

3D printing! Color coding! And JJ seems poised to go into computer science.

Although I am friends with Dani and have met JJ, the real point for me is that a teenager saw a problem and felt she had the room to try and fix it. Then she worked on it. Her success is lovely, but the fact of the chance is downright excellent and puts me in a great holiday mood. Of course, with Danielle as her mom, JJ may have to look forward to law professors wondering about patents, privacy, and data ownership, but those are what a good friend of mine once called “high quality problems.” Well done, JJ.

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Authentic Brands

What is authentic? The question seems to pop up in many areas. If a company or corporation claims authenticity, I am sure several folks I know would have a reflexive reaction that such a claim is absurd. Nonetheless, the Economist notes that “Authenticity” is being peddled as a cure for drooping brands. One part of the article notes that despite the ongoing difficulties in valuing brands, “when brands are sold as part of corporate takeovers, what price do investors put on them? They found that these prices, as a percentage of deals’ total value, have dropped since 2003. So, at least for those firms being taken over, the strength of their brands is becoming a smaller share of their overall worth.” That is interesting insofar as it suggests that 1) Brand value (and goodwill in that sense) can be measured and 2) That is has gone down.

What is driving the change? A key thing I have tried to show is that the issue of information or search costs is not as high as it used to be and that change brings into question many aspects of trademark law and policy. The Economist seems to agree and puts it this way

It is not hard to see why the old marketing magic is fading, in an age in which people can instantly learn truths (and indeed untruths) about the things they are contemplating buying. Online reviews and friends’ comments on social media help consumers see a product’s underlying merits and demerits, not the image that its makers are trying to build around it. The ease of accessing information makes consumers more likely to abandon their habitual brands because they have heard about something new, or learned that retailers’ own-label products are much the same, except cheaper. Depending on your perspective, people are either increasingly fickle or ever more impermeable to marketing bullshit. For brands that lack any truly distinguishing features, that is bad news.

Better information and new sources of it change the legal and brand landscape. Plus an old problem–trying to sell essentially the same goods–has returned. As Spencer Waller and I noted, “From the end of the nineteenth century to the middle of the twentieth century to today, companies have had to find ways to compete over selling essentially the same goods and manage excess production capacity.” So it is not surprising that the sectors most hit by the change The Economist discusses are consumer goods and imported goods that no longer offer difference from other, lower-cost options of the same or close to same quality.

So can a corporation be authentic? If a corporation is slinging its authenticity with Keebler Elves and Santa Claus in Coke Red, that is a harder sell. Those plays will be claiming authenticity based on cultural history and maybe a done deal in that sense (as Spencer and I discussed, the history of firms using events and education to build a sense of community and identity is old). But insofar as craft brewing, locally-made goods, and customized offerings are claiming authenticity, those may fit the authenticity claim; as long as that claim is that the item is not from a firm of a certain size or somehow to be distrusted because of size, for Scalia was correct in Citizens United that many firms of many sizes can be corporations. Assuming small and personal is a sort of authenticity, where I am not sure The Economist is correct is its example of Apple. The newspaper offers

for those firms that get the product right and have a genuine story to tell, the rewards can still be huge. The textbook example of this is Apple, whose devices’ superior design and ease of use make it a powerful brand in a commoditised market. Last year it had only 6% of the revenues in the personal-computer market, but 28% of the profits. That’s real authenticity.

If getting the product “right” is the key, then the competition is about old school “my goods and services are better quality than yours.” If the story is also key, then we have to start asking whether Apple’s claims are accurate or myth-making “bullshit” as the Economist might say. I like Apple products as they fit my needs. I buy them despite the over-claimed genius we are all tech saviors rubbish they sling. It is authentic as long as it authentic here means 100% Silicon Valley hubris. So pure it …

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Santa Coke? Goodwill to All and the Corporate Sources of the Man in the Red Suit

Many may know, but in case you don’t, the image of Santa Claus as a round man in a red suit traces its roots to a riff on St. Nick in brown and green. The linked video story via Fortune has Coca-Cola historians sharing why this creation is so great in their view. There were challenges such as increasing sales of Coke in winter and making an image of Santa that was as iconic as the Quaker Oats man. Vision, ingenuity (dare we say innovation? Dare. Dare.), and world-wide advertising spread the new Coca-Cola-red-wearing Santa far and wide. I wonder whether the idea of promoting this history is to remind folks of Coke in general and create an extra felling of warmth towards the company. And I wonder whether today Coke would try to lock down the image or let it be as ubiquitous as it is. Would the spread of polar bears wearing red and white scarves or hats be smiled upon or would the Cease and Desist letters fill lawyers’ heads and stockings as well? I hope that Coke and other corporate creators see that some of the work is cultural and can be let go without fear of losing value and maybe, just maybe, spreading goodwill to all.

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Exploration and Exploitation – Ideas from Business and Computer Science

One of the key reasons I joined GA Tech and the Scheller College of Business is that I tend to draw on technology and business literature, and GA Tech is a great place for both. My current paper Exploration and Exploitation: An Essay on (Machine) Learning, Algorithms, and Information Provision draws on both these literatures. A key work on the idea of exploration versus exploitation in the business literature is James G. March, Exploration and Exploitation in Organizational Learning, 2 ORG. SCI. 71 (1989) which as far as I can tell has not been picked up in the legal literature. A good follow up to that paper is Anil K. Gupta, Ken Smith, and Christina Shalley, The Interplay Between Exploration and Exploitation, 49 ACAD. MGMT. J. 693 (2006). I had come upon the issue as a computer science question when working on a draft of my paper Constitutional Limits on Surveillance: Associational Freedom in the Age of Data Hoarding. That paper was part of my thoughts on artificial intelligence, algorithms, and the law. In the end, the material did not fit there, but it fits the new work. And as I have started to connect with folks in the machine learning group at GA Tech, I have been able to press on how this idea comes up in technology and computer science. The paper has benefitted from feedback from Danielle Citron, James Grimmelmann, and Peter Swire. I also offer many thanks to the Loyola University Chicago Law Journal. The paper started as a short piece (I think I wanted to stay at about five to eight thousand words), but as it evolved, the editors were most gracious in letting me use an asynchronous editing process to hit the final 18,000 or so total word count.

I think the work speaks to general issues of information provision and also applies to current issues regarding the way news and online competition work. As one specific matter, I take on the idea of serendipity which I think “is a seductive, overstated idea. Serendipity works because of relevancy.” I offer the idea of salient serendipity to clarify what type of serendipity matters. The abstract is below.

Abstract:
Legal and regulatory understandings of information provision miss the importance of the exploration-exploitation dynamic. This Essay argues that is a mistake and seeks to bring this perspective to the debate about information provision and competition. A general, ongoing problem for an individual or an organization is whether to stay with a familiar solution to a problem or try new options that may yield better results. Work in organizational learning describes this problem as the exploration-exploitation dilemma. Understanding and addressing that dilemma has become a key part of an algorithmic approach to computation, machine learning, as it is applied to information provision. In simplest terms, even if one achieves success with one path, failure to try new options means one will be stuck in a local equilibrium while others find paths that yield better results and displace one’s original success. This dynamic indicates that an information provider has to provide new options and information to users, because a provider must learn and adapt to users’ changing interests in both the type of information they desire and how they wish to interact with information.

Put differently, persistent concerns about the way in which news reaches users (the so-called “filter bubble” concern) and the way in which online shopping information is found (a competition concern) can be understood as market failures regarding information provision. The desire seems to be to ensure that new information reaches people, because that increases the potential for new ideas, new choices, and new action. Although these desired outcomes are good, current criticisms and related potential solutions misunderstand the nature of information users and especially information provision, and miss an important point. Both information users and providers sort and filter as a way to enable better learning, and learning is an ongoing process that requires continual changes to succeed. From an exploration- exploitation perspective, a user or an incumbent may remain isolated or offer the same information provision but neither will learn. In that case, whatever short-term success either enjoys is likely to face leapfrogging by those who experiment through exploration and exploitation.

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FAN 90 (First Amendment News) Law Professors Urge Justices to Honor Stare Decisis in Union 1-A case

Well, Senator, the importance of settled expectations in the application of stare decisis is a very important consideration. — John Roberts (Sept.13, 2005)

Andrew Pincus

Andrew Pincus

“A review of this Court’s decisions over the last 75 years—from 1940 through 2015— reveals that the Court has expressly overruled only ninety-one constitutional precedents, or slightly more than one case per Term. And when the Court does overrule a precedent, it typically—in 57 percent of the cases—acts unanimously or nearly-unanimously, with two or fewer Justices in dissent. In only twenty-one cases (23 percent) did a bare majority of the Court overrule a constitutional precedent.”

Thus did Andrew Pincus argue in an amicus brief he filed in Friedrichs v. California Teachers Association, et al.The brief was submitted on behalf of  four constitutional scholars in support of the Respondents. The professors are:

  1. Walter E. Dellinger III, Douglas B. Maggs Professor Emeritus of Law, Duke Law School
  2. Michael H. Gottesman, Professor of Law, Georgetown University Law Center
  3. William P. Marshall, William Rand Kenan, Jr. Distinguished Professor of Law, University of North Carolina School of Law, and
  4. David A. Strauss, Gerald Ratner Distinguished Service Professor of Law, University of Chicago Law School.
Professor David Strauss

Professor David Strauss

In urging the Court not to overrule the unanimous judgment in Abood v. Detroit Board of Education (1977), Mr. Pincus and the law professors offer five reasons to support the Court’s invocation of stare decisis: 

  1. First, “overruling Abood will significantly disrupt settled legal rules in related areas. . . .Because the legal principle underlying Pickering and Abood is essentially identical, overruling Abood would undermine the more relaxed First Amendment standards governing government regulation of employee speech applied in Pickering and its progeny. . . . Overruling Abood . . . would lead inevitably to significantly greater limitations on government regulation of employee speech in the workplace.”
  2. “Second, Abood is a forty year-old precedent decided unanimously and reaffirmed multiple times by a unanimous Court. It has been applied consistently in the government employee context and relied upon by the Court to resolve First Amendment questions in related contexts involving government restrictions on associational interests.”
  3. “Third, Abood has created significant reliance interests. Twenty-three States and the District of Columbia have enacted statutes in reliance on this Court’s decision—and not just those statutes, but these States’ entire collective bargaining regime, would have to be revised if Abood were overruled.”
  4. “Fourth, no changes in relevant facts or in society or in legal principles support overruling Abood. The decision’s basic premise—that the government’s vital interest in structuring its workforce permits gov- ernment as an employer to take actions that would be unconstitutional in other contexts—has been con- sistently reaffirmed by this Court in a variety of contexts,” and
  5. “Fifth, the Abood standard is workable, as the de cisions of this Court and the lower courts make clear.”

Additionally, they argue that

overruling Abood would likely trigger an avalanche of lawsuits against government employers and unions seeking agency fee refunds. That has already happened in the wake of this Court’s decision in Harris: plaintiffs have filed class actions in a number of states, including New York, Oregon, and Washington. One suit seeks the return of over $20 million in agency-shop fees paid by childcare workers.

Will such arguments stay the reversing hand of the same Roberts Court that set aside stare decisis in cases such as Citizens United v. FEC (2010), McDonald v. Chicago (2010), Gonzales v. Carhart (2007), and Parents Involved in Community Schools v. Seattle Sch. Dist. No. 1 (2007)? In all of those cases, among others, existing precedents were overruled by a bare majority of the Court.

→ Even if the Court should decline to formally overrule Abood, might it not do so functionally, by way of “stealth overruling“? After all, that tactic has been to such good use in the Miranda line of cases that even Chief Justice William Rehnquist (a longtime Miranda critic) declined to overrule the landmark Warren Court precedent when he had the chance to do so.

 The other Counsel for the Amici are: Eugene Fidell (Yale Law School Supreme Court Clinic), Charles Rothfeld, Michael Kimberly, and Paul Hughes (all of Mayer Brown).

→ See also FAN 28 (First Amendment News) — “The Demise of Stare Decisis?” (Aug. 20, 2014)

[ht: Tony Mauro]

Court Strikes Down Trademark Law on First Amendment Grounds Read More