The Tiffany & Co v. eBay trial began yesterday, and as this news article noted, the case is about who is responsible for the policing of counterfeit products on eBay.
It’s an important case, and implicates all e-commerce marketplaces, so it’s impact extends beyond just eBay. And its resolution may come down to whether you believe
sites like eBay are akin to a traditional retail store or more like a
facilitator between buyers and sellers, much like a flea market. Tiffany claims that eBay participates in and facilitates the
counterfeiting and trademark infringement of
its jewelry and other items in violation of the Lanham Act.
But here’s the kicker: Tiffany wants to enjoin eBay from selling any item on its site has hasn’t been made, sponsored, or approved by Tiffany. This goes too far, way beyond the policing of trademarks.
Instead, it appears that Tiffany would like to control the distribution channel, and use trademark law to do so. Retailers and distributors often hate that their products can be sold outside of their control. We’ve seen this attempt to control distribution when venues complain about the sale of event tickets on secondary market sites like StubHub, RazorGator and eBay.
eBay has an extensive program for dealing with intellectual property rights violations. Trademark owners should be vigilant when protecting their brands, not vindictive towards marketplaces that are themselves not the bad actors.
Here’s an email I got today on behalf of Steve Kelley, a former Minnesota state senator who is now Director of the Center for Science, Technology & Public Policy at the University of Minnesota.
A Message From Steve Kelley
Dear Friends,
I have appreciated your becoming part of my Internet community by signing up to get emails during the 2006 campaigns . . .
Needless to say, I never signed up to any Steve Kelley email list.
As a legislator, Kelley was active in a variety of efforts to regulate the Internet and e-commerce, and he passed legislation regulating ISPs’ information practices and attempting to prevent spam by outlawing deceptive subject lines.
Do ya’ think Minnesota is anything close to a spam-free state? Kelley’s work is little more than surplusage in the Minnesota code.
But given Kelley’s expertise, perhaps the Center for Science, Technology & Public Policy should start a project to outlaw political and academic spamming.
Our old friend Declan McCullagh, the dean of high-tech policy journalists, has just posted an excellent column outlining his concerns with the “Do Not Track List” notion that Harper and I blasted yesterday. As usual, Declan says it better than any of us can regarding why this is such a silly and dangerous regulatory proposal:
Nobody’s holding a gun to Internet users’ heads and forcing them to visit Amazon or Yahoo. They do it because they trust those companies to take reasonable steps to protect their privacy. To insist that the feds must step in because a few vocal lobbyists and activists don’t like those steps should be insulting to Americans: it suggests that they’re too simpleminded to make their own decisions about what’s best for them and their families. (It’s similar in principle to price regulation, when special-interest lobbyists insist that prices are too high or too low and must be altered by legislative fiat.)
What makes this an even sillier debate is that there already are a wealth of ways to accomplish “Do Not Track” without the feds. This is the third principle of Internet regulation: If technology exists to solve a perceived problem, it’s probably better to encourage its use rather than ask federal agencies for more regulations or demand that the techno half-wits in Congress draft a new law.
Amen, brother. He continues:
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Earlier today, Jim Harper raised some valid concerns about the new “Do Not Track List” that some groups are proposing be mandated by the FTC. I’d like to point out another concern with this concept. A mandatory “Do Not Track” registry creates a potentially dangerous precedent / framework for a nationwide mandatory registry of URLs of websites that some policymakers might deem objectionable in other ways beyond just spam. When I first read these two provisions on page 4 of the Do Not Track proposal, I could not help but think of how a savvy Net-censor might use them in an attempt to regulate Internet content in other ways:
“Any advertising entity that sets a persistent identifier on a user device should be required to provide to the FTC the domain names of the servers or other devices used to place the identifier.”
..and…
“Companies providing web, video, and other forms of browser applications should provide functionality (i.e., a browser feature, plugin, or extension) that allows users to import or otherwise use the Do Not Track List of domain names, keep the list up-to-date, and block domains on the list from tracking their Internet activity.”
I can easily imagine would-be Net censors using that language as a blueprint to regulate other types of online speech. For example, it could be rewritten as follows [with my additions in brackets]:
“Companies providing web, video, and other forms of browser applications should provide functionality (i.e., a browser feature, plugin, or extension) that allows users to import or otherwise use the [government-approved ] list of domain names, keep the list up-to-date, and block domains on the list [that are harmful to minors].”
Perhaps I’m just being paranoid, but because would-be Net censors have struck out on other regulatory fronts over the past 10 years, they are looking for a new framework. A mandatory Do Not Track List might give them an opening.
Some months ago, I noted that Betzip.com (since rechristened “PurePlay.com”) employs an intriguing legal hack to avoid anti-gambling regulations. It charges its customers a flat monthly fee, which qualifies them to win large prizes for winning online poker games. Non-paying customers can play the same games for free, too—though without qualifying for the largest prizes.
Why adopt that business model? Presumably, because it allows PurePlay to argue that it does not offer a gambling service. Specifically, PurePlay could claim that, because the amount players win has no relation to how much they stake, it dodges the “consideration” element of the legal definition of gambling. Query whether that claim would survive the devoted attentions of a prosecutor and court. I set that question aside, though, and here focus on PurePlay’s claim that they have patented their business model.
Curious about the scope of PurePlay’s patent, I searched its website for details. It offered none. I wrote to PurePlay asking for the patent’s number. PurePlay refused to say. So I put my able research assistant, Mr. Sherwood Tung, on the case. He found PurePlay’s patent, and more.
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Remember Bill 602b? That legislation, which you probably heard about in a message forwarded to you by a well-meaning relative or friend, would have placed a five-cent tax on e-mails.
It was a hoax, of course. No such bill ever existed. But now comes word that the Internet tax bill passed by the House last week actually would allow such taxes to be imposed.
According to a Congressional Research Service memo sent Wednesday to Sen. Ron Wyden, D-Ore., the bill’s definition of “Internet access” would allow taxation of “many more products and services” than the existing moratorium. Including, CRS said, taxes on e-mails.
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In response to my post two days ago about my new paper on interoperability standards in the cable marketplace, one of our savvy TLF commenters (Eric) made the following argument about how he believed the lack of standardization killed high-def audio:
“In the world of high definition audio, the lack of standardization did not lead to innovation and exciting new services. It led to the languishing of two competing formats, SACD and DVD-Audio. The current fight between two high definition video formats may delay the mass market penetration of any hi-def video disc. Virtually everyone loses. … Freedom is great, but when you need a mass market application, standardization becomes a crucial consideration.”
But another reader (Mike Sullivan) makes an excellent counter-point when he notes:
“Isn’t it also possible that the two HD audio formats have “languished” not because of the fact that there are two competing formats, but because there is limited demand for HD audio recordings at a premium price?”
This is something I happen to know quite a bit about, so I wanted to respond in a separate, detailed post.
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A new Zogby/463 Internet Attitudes poll finds that:
“More than half of Americans believe that Internet content such as video should be controlled in some way by the government. Twenty-nine percent said it should be regulated just like television content while 24% said government should institute an online rating system similar to the one used by the movie industry. In contrast, only 36% said the blocking of Internet video would be unconstitutional. The older you get, the more likely you are to support government restrictions. Only 33% of 18 to 24 year-olds supported government stepping in on content, while 72% of those over 70 years of age support government regulation and ratings.”
This is really troubling to me because almost all my public policy work is devoted to the proposition that the Internet should not be regulated like broadcasting and communications. As the Net continues to rapidly erode the legitimacy or practicality of traditional regulatory systems and institutions, it will increasingly prompt an obvious response from policymakers: We must grow regulation! We must expand the tentacles of the regulatory state to include all those new technologies of freedom! We cannot let people think and act for themselves!
But while we know that’s how policymakers will respond as they see their traditional power over media and communications slipping away, it’s always been less clear to me how average Americans will respond. Will they begin calling for the renewal and extension of the old regulatory standards to new technologies? This new poll suggests that many of them will. That’s troubling because it reinforces what many policymakers want to do. And that’s how we’ll end up with a heavily regulated Internet (taxes, speech controls, Net neutrality regulations, etc, etc.).
As Tom Galvin, a partner with 463, notes: “Some view the Internet as their new best friend, others as an increasingly powerful tool that can infect our youth with harmful images and thoughts and therefore must be controlled. Our challenge as a society is to let the Internet flourish as a dynamic force in our economy and communities while not chipping away at the fundamental freedoms that created the Internet in the first place.”
Amen, brother.
As the days tick down to Halloween — and the formal expiration of the Internet tax moratorium — there’s a strong feeling of deja vu in Washington. It’s like we’ve all been through this before.
We have. In 2004. And 2001. The periodic last-minute extension of the moratorium has become a regular feature of Washington’s political life. Which leads many to wonder: Why not just make the tax ban permanent?
The arguments for restrictions on state and local taxes are strong (they are summarized in a new Heritage Foundation paper just released this week). But still, policymakers seem reluctant to take the plunge toward permanence, with the House voting last week for yet another temporary extension.
Opponents — such as Tennessee’s Lamar Alexander — have argued strenuously against anything more long-lasting. With the Internet changing so quickly, it doesn’t make sense to write Internet tax policy into stone, they argue.
But it’s hard to believe that many are actually convinced by this. After all, with nine years’ experience with the moratorium, this is hardly an experimental policy. And Congress always keeps the option of changing things if the needs arise. Just look at the amount of tinkering that goes on with the rest of the tax code.
So why so much support for yet another temporary suspension? It’s certainly not because Internet taxation is popular — there just aren’t a lot of voters out there demanding more fees on their DSL lines.
Strangely, the problem may be the opposite: The idea of taxing the Internet is unpopular, and members get a boost from voting to ban it. And temporary extensions let them vote to ban it again and again and again. A permanent ban would stop the fun.
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It appears that Senator Lamar Alexander has a different tactic in his
opposition to a federal prohibition of the states ability to tax Internet
access (he’s been an ardent with his states’ rights rhetoric in the past).
In support of a temporary ban, not a permanent one, he’s
saying that it’s in the public interest that Congress periodically review the
ban so that it can keep up with new technologies. He even says that "since
the moratorium was enacted in 1998, we’ve extended it twice while changing the
law substantially to meet changing technology." Um, not really.
The Senator has it backwards about why we had to revise the
moratorium twice. It’s not to update the law for new technologies.
Instead, it’s to close loopholes that states have used to tax what the
Moratorium said they could not tax.
Note this excerpt from the House Judiciary Committee report:
While it is true that Congress has made changes to the law
virtually every time it has extended the moratorium, those changes have largely
been directed at preventing states from circumventing the law….For
example, the definition of ‘‘Internet access’’ was modified in 2004 to prevent
states from taxing Internet access providers that purchase capacity over wire,
cable, fiber to connect end-users to the Internet backbone. That definition is
modified again in this bill, also to ensure that States do not tax the Internet
backbone. Why does Congress have to make this change again? Because eight
States (AL, FL, IL, MN, MO, NH, PA, WA)
continue to tax the Internet backbone, despite Congress’ clear admonitions
to the contrary.
Now’s also a good time to remind the Senator that rural
areas of Tennessee aren’t going to get the next generation of broadband
buildout if new taxes suppress consumer demand. Here’s why:
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The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.