YouTube Owns You! (Or at Least it Owns Your Posted Videos)

Two years ago, no one had ever heard the word "YouTube". Now, it's everywhere all the time. If you missed an episode of a TV show, it's there. In the mood for an obscure documentary on Transylvania? It's probably there somewhere. But what most people may not know is that under YouTube's Terms of Use policy, it owns anything you post on the site.

While you retain the original copyright to the material, you are also required to grant YouTube a "worldwide, non-exclusive, royalty-free, sublicense and transferable license to use, reproduce and distribute" your work. YouTube can also create derivative works of the submission.

I have not heard of YouTube doing anything with any of these licenses users have granted to them. And they may never do anything, but now that Google owns YouTube, that possibility certainly exists.

Here is the dicey bit from YouTube's Terms of Use page:

C. For clarity, you retain all of your ownership rights in your User Submissions. However, by submitting User Submissions to YouTube, you hereby grant YouTube a worldwide, non-exclusive, royalty-free, sublicenseable and transferable license to use, reproduce, distribute, prepare derivative works of, display, and perform the User Submissions in connection with the YouTube Website and YouTube's (and its successors' and affiliates') business, including without limitation for promoting and redistributing part or all of the YouTube Website (and derivative works thereof) in any media formats and through any media channels. You also hereby grant each user of the YouTube Website a non-exclusive license to access your User Submissions through the Website, and to use, reproduce, distribute, display and perform such User Submissions as permitted through the functionality of the Website and under these Terms of Service. The above licenses granted by you in User Videos terminate within a commercially reasonable time after you remove or delete your User Videos from the YouTube Service. You understand and agree, however, that YouTube may retain, but not display, distribute, or perform, server copies of User Submissions that have been removed or deleted. The above licenses granted by you in User Comments are perpetual and irrevocable.

View it here: http://www.youtube.com/t/terms

This information probably does not apply to 99% of us, but if you are putting a lot of time and money into marketing videos, training, feature movies, shorts or other original content, you may be giving away a lot if you're using YouTube's site to post it. As a matter of fact, all the free video posting sites I looked at require that as a condition of use you transfer to the site the right to use, modify, distribute, etc., your video content, including myspace.com, iFilm, and Yahoo Video, to name a few of the bigger ones. Again, I am not aware of any actual or proposed use of these license rights by the free video posting sites, but that doesn't mean they won't chose to avail themselves of the option in future. We lawyers tend to speak in terms of contingencies and worst case scenarios.

Most things that are free aren't. Be careful with your intellectual property. If you want to retain the rights to your original content, you may be better off going with one of the pay sites that are more limited in their licensing. But that's another post.

Compensation for the Wrongly Convicted--Another Argument for a Part-Time Legislature (As if we needed another one)

The creativity of Michigan's legislators in coming up with silly ways to spend our money never ceases to amaze. This time they want us to compensate inmates who are wrongly convicted and later freed. If this came to pass Michigan would join a growing number of states that also offer compensation to wrongly convicted criminals who are freed on the basis of DNA testing which, presumably, was unavailable when they were originally convicted. This proposed legislation was brought up in a state House Judiciary committee two weeks ago. The proposal mandates compensation to the wrongly convicted of $50,000 for every year spent behind bars, plus repayment for expenses, lost wages and medical care.

This newly proposed legislation is linked to another fairly recent law affecting the lot of Michigan inmates. In 2001 Michigan enacted a DNA testing law (MCL 770.16) which provides that any person convicted at trial of a felony prior to January 8, 2001 has the right to petition the court for testing of DNA material and, depending on the results, for a new trial based upon the new DNA evidence. The law contains a sunset provision requiring any such petition to be filed before January 1, 2009.

The compensation law would pay money to wrongfully convicted inmates who are freed under MCL 770.16. Leaders of the "Innocence Project" at Cooley Law School in Lansing testified before the Michigan State House Judiciary Committee in favor of the proposed new compensation law. Innocence Project advocates contend that under current law the wrongly convicted inmates receive far less assistance than other inmates when they are released from custody and that they are often ill-equipped to handle life on the streets. The wrongly convicted won't have criminal records and so don't need all the programs to assure their repatriation to society as useful, productive citizens, or so the thinking apparently goes. It seems the real solution would be to offer the wrongly convicted the same services that real criminals get. But that would be too simple.

The Committee also heard testimony from two actual inmates, one of whom would, presumably, benefit from the law. Their convictions were overturned based on DNA evidence that was tested after their original convictions as the science behind the technique advanced. One of the witnesses served eight years on death row before getting sprung (though obviously not in Michigan, which has no death penalty and, hence, no death row).

The cost to taxpayers would be relatively small, according to the bill's sponsor, Rep. Steve Bieda, D-Warren. Bieda makes this claim on the ground that there would be very few ex-inmates eligible. But the small cost needs to be balanced against the “immeasurably huge injustice” a wrongly convicted inmate has suffered, Bieda said.

Since the DNA testing law went into effect, the Cooley Innocence Project has received inquiries from more than 3,500 inmates looking to file DNA evidence petitions. Appeals have been initiated in more than a dozen cases since then, with two convictions being overturned so far.

But DNA testing is hardly infallible. I am reminded of a story back in 2005 relating to the brutal murder of U of M law student Jane Mixer. Mixer was found shot and strangled with a pair of silk stockings in 1969. Re-testing of DNA found on the silk stockings in 2005 revealed something extraordinary. Two DNA matches turned up. One match was returned for Gary Leiterman, the original suspect in the crime. The second match was to a man who was just 4 years old at the time of the 1969 murder. While it is possible that the 4 year-old living in another state at the time participated in the murder of Mixer, it is highly unlikely. (Interestingly, the 4 year-old did apparently grow up to murder his mother, which is why his DNA was in the law enforcement system at all. Weird, huh? You can't make this stuff up). What this does prove, however, is that as advanced as DNA is, it's not infallible.

I can see situations where compensation might be in order. For example, where there is police or prosecutorial misconduct. The Duke Rape Case leaps to mind as a shining example of that scenario. But when everyone is doing his or her job to the best of their ability, with the best technology available at the time (within reason), compensation is unwarranted, particularly in light of Michigan's current budgetary . . . um . . . constraints. This would likely only apply to people convicted years, or even decades ago. Presumably in new cases filed against new suspects, in which law enforcement has state of the art DNA tests available (not to mention the Innocence Project waiting in the wings), false convictions will be few and far between.

Let's do the math just on the unlucky chap who spent all that time on death row who testified before the Judiciary Committee. He was in prison for 9 years. He probably spent another year in the county jail awaiting trial, so let's make it an even 10 years. Under Bieda's plan that means $50,000 per year for being locked up (that's $500,000) plus 10 years of lost income starting in 1998. Median income in 1998 was $38,885, inflation at 3% or so, that's roughly another $400,000. Then we add in medical and expenses (whatever that means). So, we're at roughly $1,000,000 per inmate. Assuming we will be drawing the wrongly convicted from a pool of inmates convicted before DNA testing reached its current state of advancement, that means the recipients of the state's payouts have all been inside the joint for a while. As noted above, Project Innocence has received requests from 3,500 inmates already. They've filed 12 appeals so far. At a cool $1 million or so per person (some will be a lot more, some less), if all 3,500 of those requests turn out to be real, that's $3.5 billion. Even if it's just 10% of that, those are scary numbers for a state in our condition.

Here is another case. In 2002 Eddie Joe Lloyd was freed after DNA testing revealed he did not commit the brutal rape and murder of a Detroit teenager. Lloyd did 17 years for the crime before being freed. Of course, he confessed to the murder. Lloyd was the first person in Michigan to be exonerated on the strength of post-conviction DNA testing. His payout under the proposed law would likely be $2 million plus.

If the issue is reassimilation of wrongly convicted inmates into society (one of the arguments made in favor or the bill), there are cheaper and smarter ways to do it than this law. Obviously if it's a situation of illegal police action or prosecutorial misconduct, then that is a different story. Civil (and even criminal) liability will attach in such cases. In cases involving perjured witness testimony there is also an existing legal remedy. But with all the constitutional checks, balances and protections built into the system, the likelihood of wrongful convictions where everyone is properly doing his or her job, is very slim. Creating a huge windfall for victims who are wrongfully convicted. There are many more reasonable and cost effective ways to compensate the wrongfully convicted.

Televising U.S. Supreme Court Proceedings--A Little Sunlight Never Hurt Anyone (Or Could It?)

There is a move afoot to begin televising proceedings of the highest court in the land. If the Senate Judiciary Committee has its way, that is. This happens every few years. It happened again this past February.

The Judiciary Committee has proposed televising Supreme Court hearings. It used to be the rule that Supreme Court Justices hated being on television. But lately they've been talking a lot more. This past month Justice Clarence Thomas was making the rounds to all the talking head shows with his new book, "My Grand Father's Son," under his arm. (A great read, I understand). Even before that we saw Justice Ruth Bader Ginsburg chatting it up with Mike Wallace (in her chambers, no less). There was Justice John Paul Stevens who waited until age 86 to do his first TV interview ever with ABC's "Nightline." And then came Justice Stephen Breyer at the big, round oak table with Charlie Rose (not exactly prime time, but a big step nonetheless). And let us not forget Chief Justice John Roberts' show-stealing performance on PBS' series on the Supreme Court. One of the earliest appearances I can recall was Chief Justice William H. Rehnquist's Booknotes interview with Brian Lamb (the brilliant guy behind C-Span) way back in July 1992 when he talked about his new book "Grand Inquest."

And none of these appearances were about inconsequential matters. Most touched on substantive issues and the positions held by the Justices. The discussions may have been couched in terms of the books they were hawking, but books are expressions of deeply held beliefs. Particularly with Supreme Court Justices, books are the expressions of their own beliefs and ideals. But it seems like the High Court may be getting the message that no one reads anymore. Or at least, not before someone like Brian Lamb or the Oprah tells them to.

But they aren't all on the same page on this issue. I'm not sure what the positions of the other justices are, but their actions in appearing on TV in their private lives sheds some light. On the other side of the argument is Justice Anthony Kennedy. He appeared before that same Senate Judiciary Committee in February to implore them not to open up the proceedings to the dreaded cameras (oral arguments have been audio taped for decades). He beseeched the committee to remove the provision from the bill that would televise the hearings. His concerns, as expressed to the committee, are that justices may "play to the camera" and that by making hearings public it could "change our collegial dynamic" and forever "alter the way we hear cases." Wow. I guess he doesn't think much of his colleagues or their ability to get the job done without mugging for the cameras.

I am agnostic on the idea, really. There is a certain mystique about the Court now, even though you can hear the audio from past arguments. I read once that toward the end of his tenure on the bench Justice Thurgood Marshall used to fall asleep during oral arguments. I'm not sure showing things like that is very beneficial to the prestige of the Court. And it should have its prestige intact. It's not like we can vote these guys out.

One reason our system works so well--and why it has always worked so well, is the amazing deference we give the judiciary. Think about it: the Supreme Court doesn't have an army, they don't have secret police, no Sonny Barger and the Hell's Angels, or some burly guys with crooked noses hanging around waiting for orders. The Court has no real ability to enforce its own decisions by threat of violence. And yet, everyone just listens to them because it makes sense that in a society governed by the rule of law, you have to abide by the decision of the highest court in the land. Period. End of story. This is the difference between our system, and every other system of government where an AK-47 trumps the rule of law.

Justice Kennedy's impassioned testimony also gives me hope on another front. His greatest fear seems to be that the cameras will change the way oral arguments are conducted. His unspoken premise underlying that fear is that oral argument actually matters. He clearly believes that the questions the Justices ask and answers given by the lawyers for each side are relevant and are important to their decision on the case. It gives the impression, at least, that the Justices on the highest court in the land don't come into the case with their minds already made up. We forget about this sometimes. The Michigan appellate courts could take a lesson from that.

On the other hand, what a wonderful legacy that would make to be able to actually see the arguments in important cases like Brown vs. Board of Education or Gideon v. Wainwright or Miranda v. Arizona or Roe v. Wade. A powerful counter-argument could be made that it will only increase the respect for, and understanding of the Court. Or maybe not.

Ultimately, I'm just not sure I'm ready for the idea of being able to watch the Supreme Court hear oral arguments on my iPod. It feels a little . . . unseemly.

Once Made, Child Support Payments are Written in Stone

The Michigan Court of Appeals recently handed down another lulu of a decision. In Fisher v. Fisher (Published decision, dated August 28, 2007). In this ruling a panel of the Court (Davis, Schuette and Borrello) held that there are no refunds for overpayment of child support.

The story goes like this: Grant and Joanne Fisher divorced in 1992. At that time Grant agreed to pay $80 per week in child support. Six years later, the court increased his weekly payment to $117. In 1999, the court determined that Grant's only source of income came from his Social Security disability benefits, so the Friend of the Court again modified the order and began to withhold $510.80 per month from his check to cover his obligation to Joanne. This is where things get a little weird.

Even with all those withholdings, Grant Fisher managed somehow to rack up more than $18,000 in arrearages in his support payments. But at the same time, Joanne ended up collecting nearly $20,000 in excess child support payments. It just gets curiouser and curiouser. This is how she did it: in addition to receiving the funds that were being withheld from Grant's disability checks, Joanne also applied for and began receiving Social Security benefits directly on behalf of the child. The dependant child of an individual on social security disability is also entitled to payments. With all those payments rolling in to Joanne directly from Grant and also from the social security administration , Grant was eventually able to get square on the arrearage. He also overpaid by $20,000. Joanne evidently never bothered to mention to Grant that she was receiving the double payments.

When Grant realized how much Joanne had actually received, he wisely took her to court seeking reimbursement for all those overpayments ($20,000 is a ton of money to almost everyone, but think what it means to someone in Grant's position who is disabled).

The opinion, authored by Judge Alton T. Davis, held that she gets to keep the money: "The relief plaintiff seeks is precluded by MCL 552.603. That statue establishes that 'each support payment [is] the equivalent of a final judgment and prohibit[s] retroactive modification' thereof." This translates into the Friend of the Court doesn't have to give refunds even when it's wrong.

So, Grant Fisher, and every other parent who has overpaid, loses. It is up to each parent paying support carefully monitor the amount he or she is paying because the courts won't do it for you and the Court of Appeals won't give it back to you if you pay too much. Anytime your income changes, seek a modification. This decision would seem to create an added incentive for unscrupulous parents to try to engineer as much overpayment as possible. While the situation in this case is unusual because there was a simultaneous payment being made directly by the government along with the one by Grant, Joanne will never answer for what amounts to a grand deception.

On the bright side, since this was child support, there is some consolation in knowing that Grant's hardship directly or indirectly benefited his child. Which is really the point, I suppose.

Click here for the full text of the decision: Fisher v. Fisher.

Michigan Legislature Could Reverse Protection for Drug Companies

Michigan is a real anomaly, legally speaking, in the way it protects drug companies from lawsuits. Michigan is the only state in the country that precludes an injured person from suing a drug manufacturer for injuries caused by that drug if it was approved for use by the FDA. On its face the statute, MCL § 600.2946, may make sense. Before the FDA approves any drug it has to go through a bunch of clinical tests and, if safe, it will be approved. Our system is much more cautious than those employed by European countries, and forget the Third World. Our drugs are the safest in the world right? Not really. The FDA makes mistakes all the time.

This past February the State House voted to change this rule and bring it more in line with the drug liability laws in other states. As yet, it has not passed the State Senate or gone to the Governor to be signed into law. The bill would make liability retroactive, which means if you were injured before the law went into effect you can still sue. The bill is now in the Republican-controlled State Senate. It is unlikely that the Senate will pass the measure, but hope springs eternal.

Because of Michigan's weird law, even if you are killed by a drug in Michigan you generally cannot sue the manufacturer. Perhaps the names Fen-Phen, Prempro, Vioxx, Ephedra, Zelnorm and Propulsid, to name just a few, may ring a bell. All were FDA approved. All caused serious health problems or death. The FDA got it wrong. But if you died here, you could not sue.
The only way you could sue is if you could prove that the drug company who sold the drug somehow "fooled" the FDA into approving it even though it was unsafe or if the company sold the drug after it was recalled by the FDA.

The primary purpose of tort liability for drug and other product manufacturers is to make sure that they do everything possible to turn out a safe product. That they do the proper testing in their labs (not that we do the testing for them in our living rooms). Potential liability verdicts are a great disincentive to kill and injure people. The company American Health Products (AHP) set aside more than $18.6 billion to compensate victims of its heavily marketed diet drug Fen-Phen. If that is not an incentive to proceed with caution when marketing powerful and potentially dangerous drugs I don't know what is.

Here is the text of the law in pertinent part:

(5) In a product liability action against a manufacturer or seller, a product that is a drug is not defective or unreasonably dangerous, and the manufacturer or seller is not liable, if the drug was approved for safety and efficacy by the United States food and drug administration, and the drug and its labeling were in compliance with the United States food and drug administration's approval at the time the drug left the control of the manufacturer or seller. However, this subsection does not apply to a drug that is sold in the United States after the effective date of an order of the United States food and drug administration to remove the drug from the market or to withdraw its approval. This subsection does not apply if the defendant at any time before the event that allegedly caused the injury does any of the following:

(a) Intentionally withholds from or misrepresents to the United States food and drug administration information concerning the drug that is required to be submitted under the federal food, drug, and cosmetic act . . . and the drug would not have been approved, or the United States food and drug administration would have withdrawn approval for the drug if the information were accurately submitted.

(b) Makes an illegal payment to an official or employee of the United States food and drug administration for the purpose of securing or maintaining approval of the drug.

Just in case you were wondering how the law impacts real people, here's a story for you. In 2005, 187 Michigan residents injured by the diabetes drug Rezulin filed claims against the manufacturer, Warner-Lambert, in New York. Rezulin, as you may recall, was pulled off the market in 2000 after it was linked to nearly 400 deaths and thousands of other cases where the patients suffered liver failure. The claims by Michigan residents against Warner-Lambert were dismissed by a New York federal court judge because of the Michigan law. And there are thousands of similar stories.

The change in Michigan's goofy drug liability law would bring our jurisprudence in line with the rest of the country. If you are hurt, you can sue--FDA approvals be damned. Of course, as a practical matter, another feature of Michigan law may still prevent the vast majority of people injured by a dangerous drug to sue. The Michigan legislature also put into place caps on product liability awards. As the caps presently stand, it is very difficult for an injured person to find a lawyer to represent him or her on any products liability case in Michigan. Between the cost of litigation and experts, it is not economically feasible to pursue product liability cases in Michigan, at least on an individual basis. Class actions can provide a way. But repealing the drug liability law would be a great start.

New Law on Admissibility of Drug Field Test Result Doesn't Endanger Constitutional Rights

On September 30, 2007 Governor Granholm signed into law an amendment to the Michigan criminal procedure statute. The amendment, called Public Act 89 of 2007, allows the results of a field drug test to be admitted at the preliminary exam in felony prosecutions for the purpose of establishing probable cause that the suspected drug is indeed a controlled substance. This legislation was passed in an effort to reduce the backlog of drug tests swamping state crime labs which at last count number around 24,000. The delay in processing of drug test results is (or was) anywhere from six to nine months.

The problem has been that many prosecutors refuse to issue an arrest warrant until the test results are received from the state lab. This creates an obvious problem with lots of felons running around committing crimes--and doing whatever else it is that drug felons do--for 6-9 months while the police wait around for the test results to arrive. There are no statistics on how many of those undesirables skip town or, even worse, stay in town and continue to engage in bad behavior.

The new law only pertains to preliminary exams. It permits the prosecutor to use the field test results to show that there is probable cause (a lower threshold showing) to believe that the suspicious substance is, in fact, drugs. At a preliminary exam, a finding by the district court judge that there is probable cause to believe that the defendant committed a crime involving drugs and that there is probable cause to believe that the evidence is drugs allows the defendant to be bound over for trial to the circuit court (the next step in the process).

The new law allows law enforcement to go ahead and issue the arrest warrant immediately without the need to wait for the state lab test results and to instead use the field test at the preliminary exam in district court. Then, only if the felon decides to take the case to trial does the prosecutor need to have the suspected drugs tested at the state lab. Since the vast majority of criminal cases are pled out (usually down to a lesser charge) before trial, this should significantly cut down on the number of tests being done by the state lab and allow lab personnel to do other important lab work. This will save the state a lot of money on unnecessary testing.

Law enforcement officers generally carry test kits containing chemical reactants that are used to test substances believed to be drugs. Currently law enforcement officers carry kits to test for a variety of controlled substances, including heroin, cocaine, methamphetamine, and marijuana. If an officer suspects that a substance obtained during a traffic stop or in the course of a search is drugs, he or she can use one the kits to identify the substance. A positive test result can lead to the person's arrest.

So, the question becomes, is there a downside here? That is, is there a constitutional question involved? Are our Fourth or Fifth Amendment rights in danger of being violated? Probably not. The field test kits used are remarkably accurate--up to 99% in most cases. And if there is any doubt on the part of the accused as to the accuracy (oregano being mistaken for hashish, and so on), he or she can still contest the testing, results, training, accuracy and all the rest. By getting these hoods off the streets sooner, fewer people will be victimized. The new law is going to be given prospective application only and will not apply to cases filed or pending before the law passed.

Of course, the law of unintended consequences being what it is, this could lead to another problem--more crowded prisons. As I noted above, there is currently a 6-9 month delay between arrest and receipt of the test results. If there is a propensity during the long delay for drug felons to flee the state or get killed while taking or selling drugs, then a much faster arrest-trial-sentencing-jail cycle may mean more clients for the prison system.

Read more about the new law as well as the full text here: http://www.michiganvotes.org/2007-HB-4228

Freedom at What Price? Repeal of Michigan Helmet Law Not a Bright Idea

For 37 years, Michigan has had in place a mandatory helmet safety law requiring motorcycle riders to wear an approved helmet when riding. Michigan is one of 15 states that still have mandatory helmet laws. This week the Michigan Legislature voted to repeal our mandatory helmet law. In principle I absolutely agree that the state should not be able to force anyone to do anything, including wear a helmet. However, in this tangled social web we live in where everyone is responsible for everyone else, the person who is catastrophically injured by his own stupidity never bears the financial cost of that decision. Tax payers and the medical system do. It's a bad law and, much as it pains me to say it, Granholm should veto it again.

The governor vetoed a similar bill just last year. Last year's bill just repealed the helmet law without imposing any responsibility on the injured rider. The new bill at least addresses that issue.

The new bill would allow motorcyclists over 21 to ride without helmets if they pay for a special permit: $100 annually or $200 for a three-year permit. They also would have to complete a motorcycle safety course, carry at least $20,000 of medical insurance and have been licensed to operate a motorcycle for at least two years before chucking their helmets. Unfortunately, the provisions are too anemic to alleviate the problem created: radically increased costs on the system.

No one really disputes that wearing a helmet significantly reduces injuries and fatalities caused by motorcycle accidents. For comparison's sake, the per capita rate of motorcycle deaths in states which do not require that helmets be worn by adult riders is 41% higher than in states with mandatory helmet laws.

According to a 2004 study undertaken by the Michigan State Police, it is estimated that, if passed, this new law will result in at least 22 additional fatalities each year, and 742 additional injuries and $140 million in added economic costs to Michigan citizens. In 2005, there were 3,605 motorcycle crashes involving motorcycles in Michigan which resulted in 122 riders killed and 2,721 injured. And these victims don't all expire instantly on the road. The majority linger for a time in the hospital while natural selection catches up with them. The average cost of a hospital stay is now somewhere north of $8,000 per day, not including surgeries or special rooms. That means the mandatory $20,000 medical coverage imposed by this bill will provide barely two days of hospital care.

A recent federal survey found that the average hospital cost to treat a head injury in an accident was $45,602. But that is just the hospitalization costs. Following that, a moderate to severe closed head injury typically requires months or years of rehab. According to the Michigan Association of Insurance Agents, a survivor of a severe closed head injury is likely to need $9 million in care over a lifetime. Obviously the paltry $20,000 in medical coverage is nowhere near adequate to cover even the hospitalization costs, much less the follow up care. Nor does it attempt to address the issue of long-term or permanent disability.

When Florida repealed its helmet law in 2000, motorcycle fatalities in that state increased by 49% in just the first year, according to a study published in the American Journal of Public Health. A University of California study found that after California passed its mandatory helmet law in the early 1990's, there was a 35% reduction in health care costs for motorcycle related injuries.

It is estimated the increased license fees will raise an additional $15 million for the state. That's good news, right? Unfortunately, the Michigan Office of Highway Safety Planning estimates that repealing the helmet law would add $140 million in costs for the state to cover the injured, brain damaged and paralyzed and their families.

Now, I'm all for the government not telling me what to do. Even though I don't own a motorcycle or smoke, I sympathize with motorcycle riders and smokers alike. Lansing and the feds have no business telling us what to do--even if it's bad for us. It may just be cigarettes and motorcycle helmets today, but next week it's going to be bacon and foie gras. (Don't laugh--Chicago has outlawed foie gras. That's what happens when the Goose Lobby gets too powerful).

The problem is, when the Parliament in Lansing passes a no-fault insurance law that requires me to pay for all medical treatment to an injured motorcycle rider who rode without a helmet, that's where I have a problem. As the insurance law presently exists, if a motorcyclist is injured in an auto accident with a car, the PIP insurance on the car pays for his medical bills, wage loss, rehabilitation, and a whole host of other expenses--possibly for the rest of the rider's life if he or she survives.

If the crash does not involve a car and just involves the motorcycle, then the injured rider's coverage will likely pay. It will, that is, if the rider has purchased the optional PIP coverage or, failing in that, if he has the new mandatory health care coverage mandated by the law and if it covers the injuries. If he is uninsured or underinsured, basically all of us pick up the tab through Medicaid, taxes or increased medical costs charged by the hospitals to cover uninsured patients. And then, if the guy is really hurt and can't go back to work, well, he gets to go on SSI and we still pay the bills.

Amazingly, another study done in 2004, this one by the University of Michigan Transportation Research Institute, found that 44% of motorcyclists involved in a crash are not even licensed to operate the machine. That means that even if the injured rider has the optional PIP insurance or the mandatory$20,000 under this bill, the carrier likely won't pay. And so we're back to the public footing the bill through higher taxes and higher medical costs. And let's not forget that not every rider is single with no children. When the bread winner in the house is disabled or killed, the rest of the family has to be supported by us, too.

People who don't engage in risky behavior are perpetually subsidizing people who do, and there are precious few penalties built into the system to shift the real costs to those who are doing dumb things and overburdening the system. Whether it's smoking or riding without a helmet, there should be some downside to engaging in that behavior so that I don't have subsidize it. While this bill seems to at least acknowledge that problem, it creates much more of burden than it remedies.

And where do these people in Lansing find the time to work on stupid bills that they know are going to be vetoed? They've known that this hideous budget crisis was coming for a year and instead of fixing that problem, they waste time and scarce resources passing this kind of vanity legislation. Another beautiful argument against a full-time legislature (like we needed another one).

If this bill were drafted in a perfect world as the ultimate embodiment of the pay-as-you-go, laissez-faire, assume-your-own-risk philosophy, and helmetless riders were forced to assume all of their own injury costs in the event of an accident with absolutely no cost passed on to the medical system or taxpayers (including the costs to support their widders and orphans), then it would make sense. But as long as "we're all in this together" it's a bad idea. Now, where did I put my foie gras and bacon sandwich. . .?

Britney Spears! Now That I've Got Your Attention, Let's Talk Trademarks on the Web

An interesting legal battle is emerging between Google and, well, everyone. Or at least everyone who has a trademarked good or service and has a web presence. And, as usual, the courts are a decade or so behind the technology curve and are still struggling to find a workable remedy.

The controversy was born out of the way Google sells ads. Google uses a feature called "AdSense" to generate revenue. AdSense ads are those simple, text ad links that appear off to the side or along the top of some web pages. A number of companies, including one from Michigan, are lining up to try to force Google to stop engaging in trademark infringement in its Adsense program. Here is how it works.

Google sells advertisers certain search terms. Let's say you have a store that sells cheese. If you purchase the term "cheese" from Google, then every time someone enters a search request containing the word "cheese", websites with that phrase will be returned in response to the search request. If the web page participates in AdSense, it has some invisible code embedded into the page which causes Google ads to appear. Those ads are calculated to pertain to your search terms. In the cheese example, you might get AdSense ads that offer cheesecake, brie, or cheese knives for sale. For embedding the AdSense code, the owner of the web page gets a few cents (or more) if people click on the ads. The advertisers, in turn, pay Google, usually on a pay- per-click basis, when people click on the AdSense add. Per click fees range from a few cents to $10 or more for some search terms. It works well. Last year Google reported in excess of $10 billion in revenues from Adsene. No problem, right?

Well, not exactly. You see, the problem is that Google will sell any term as an AdSense search term. This is even true of search terms that are part of the registered service mark or trademark of another company who is a competitor of the company that bought the word from Google.

A Michigan company called American Blind & Wallpaper Factory, Inc. recently sued Google in a California Federal District Court alleging that Google had sold trademarked material to a competitor of American Blind in violation of the Lanham Act (15 U.S.C. 1051) which protects trademarks.

Google had sold to American Blind's competitors search terms like "American Blind", "American Blinds Wallpaper" and even "americanblinds.com". This meant that if a Google searcher, who maybe half remembered driving by the American Blind and Wallpaper store, typed in the term "American Blind", he or she would get back a bunch of web pages to look at, many of which would have Google Adsense adds down the side of the page with links like Americanblinds.com. Trouble is, that link would not take you to the real American Blind and Wallpaper Factory website. Instead, it would take you right to the a competitor's website. Even though the American Blind Company objected, Google kept selling the ads.

American Blind settled the case a few weeks before trial, apparently because it ran out of money. There should be little doubt that Google can outspend just about any opponent in court these days. Other companies are also lining up to sue Google. American Airlines is the next big player to take Google on over this issue. It filed suit in the U.S. District Court for the Northern District of Texas in August of this year. Happily, American has more resources to throw at the problem than American Blind did. But bravo for American Blind for taking on the Googlemonster.

Unfortunately, the courts are a little behind the curve on this. There is a split among the federal circuits as to whether this really is a violation of U.S. Trademark Law or not. In one of the more relevant cases, the 2nd Circuit got it wrong. In 1-800 Contacts, Inc. v. WhenU.com, Inc., decided in 2005, the 2nd Circuit Court of Appeals held that "pop-up" ads that did not use or display the actual service mark of the competitor brand did not violate federal law.

However, there are brights spots. In 2006 the U.S. District Court for Minnesota decided the case of Edina Realty, Inc. v. TheMLSonline.com. The Edina Court held that the defendant's purchase of a trademark as a search term violated the trademark where there were other ways for the defendant to describe its product or service.

The underlying facts in Edina expose the big problem with this type of case. In that case, Edina Realty sued its competitor, another realtor, to force it to stop violating its trademark. Edina did not sue the search engine that was selling the ads. It's a little like treating the symptom rather than the disease. You have to keep lancing those pesky boils. The Edina Court did not address the contrary result reached by the the 2nd Circuit in the 1-800-Contacts, Inc. case. At this writing it does not appear that Michigan U.S. District Courts or the 6th Circuit have addressed the issue.

Bottom line here is just because you have gone to the trouble and expense of protecting your trademark, servicemark or domain name, don't feel too secure in the knowledge that you are fully protected against all comers. Your competitors make be stealing your good name and business aided and abetted by Google. Rather than take on Google (or some other search engine behemoth), it may be easier (and cheaper) in the short run to take on your competitors, one by one--at least until the courts get it right.

Hopefully American Airlines will have better luck on the Google front. It would be unfortunate if Google were allowed to write its own rules that adversely affect so many thousands of companies just because no one can afford to take it on.

iPods, Napster and Kazaa, Oh My

Yesterday a federal jury returned a verdict of $220,000 against a woman from Minnesota named Jammie Thomas in a music copyright violation case. She was sued in that case by the Recording Industry Association of America (RIAA) for allegedly making available "for sharing" over 1,700 songs through the Kazaa peer-to-peer website. In spite of the actual number of songs she illegally uploaded to the site and made available for download, only 24 songs were at issue in the case. The jury sided with the RIAA and returned a verdict against her of $222,000, though the award could have been much higher under current copyright law. First, a little history on music file sharing is in order.

You may remember a site from a few years ago called "Napster." That was one of the original (and largest) peer-to-peer music sharing sites. A "peer-to-peer" network is basically a big database of songs which allows anyone with access to the network to upload or download songs. Problem is, each time a song is shared for free in this fashion, it violates the copyright of the song's owner.

Napster came about in 1998 when a college student named Shawn Fanning wrote a clever new file sharing software program. The program allowed music lovers to share songs over the internet. The real innovation was that the Napster program was faster and easier than anything before it and that, unlike other sites, the actual song files did not reside on Napster hardware. Instead, the song files were sitting on each user's own computer. Napster was like the dating service that linked users together. What the users did with their songs was their business.

In 1999 Napster, Inc. set up shop in California and by December of 2000, the wildly popular site had over 20 million users. But, this system was just too fun and too easy and too cheap to last. Eventually the heavy metal band Metallica alleged copyright infringement by Napster. The musicians sought to force Napster to shut down or to pay them the royalties they were losing on the freely-traded songs. Ironically, some bands, like Limp Bizkit, embraced the new technology and actively promoted it, going on Napster sponsored music tours.

Napster interposed basically two defenses against the corporate juggernaut. First, that Metallica (and others) could not prove that users of Napster's software were breaking the law. No one had any proof that users were illegally sharing music over Napster's site for free. To counter this, Metallica hired a company called NetPD to investigate Napster file downloads. NetPD proved that Napster users had illegally swapped over 300,000 Metallica songs in just 3 days. Napster shut down those users and extracted promises and affidavits from others that they would not misuse Napster's system to break the law. Other complaints followed by musicians like Dr. Dre, using the same technique Metallica did.

Many may recall the impassioned testimony by Metallica's drummer, Lars Ulrich, before congress. Some also remember that as the day heavy metal died.

Next Napster argued that it was not actually trading in the copyright protected music itself--the users were doing it from their own computers. This is the same logic that protected VCR makers under the Digital Millennium Copyright Act. But the courts saw things differently and ordered Napster to stop trading in copyrighted material. The essence of the reasoning is this: Making a file available for other users of a peer to peer network to download constitutes an infringement of the exclusive distribution rights of the owners, as well as of the reproduction right. Napster shut down in 2001 and reopened a few years later to sell music in accordance with copyright law.

Lawsuits forced Napster to go legit and now it's basically just another version of iTunes, with a better logo. The heir apparent to Napster for the past few years has been Kazaa, also a peer-to-peer music sharing site.

Now back to the Jamie Thomas case. She tried some of the same defenses that Napster used, contending that they could not prove that she downloaded anything or was involved with Kazaa. Unfortunately, she foolishly used the same user ID name for her e-mail and for the Kazaa account. Suspicious. The RIAA was also able to match an IP address to Thomas. That's all the jury needed to finger Thomas as the Kazaa account owner.

Here are the two key jury instructions that sealed the deal:

JURY INSTRUCTION NO. 14: The act of downloading copyrighted sound recordings on a peer-to-peer network, without license from the copyright owners, violates the copyright owners' exclusive reproduction right.

JURY INSTRUCTION NO. 15: The act of making copyrighted sound recordings available for electronic distribution on a peer-to-peer network, without license from the copyright owners, violates the copyright owners' exclusive right of distribution, regardless of whether actual distribution has been shown.

Obviously Instruction No. 15 is the killer. Just by making the songs available for download--even if no one ever downloads a song--is a violation of the law. The jury actually did Thomas quite a favor. The jurors awarded $9,250 in damages for each of the 24 songs, for a total of $222,000. They could have awarded up to $18,000 per song. For 24 songs that's $720,000. But, they split the baby. Maybe there were a few old Napster users on the panel.

So, if you or your kids are sharing mp3 music files using Kazaa or a similar site, save your pennies. The RIAA is coming for you. I wonder what Beethoven would have made of all this.

This excellent post by Declan McCullagh has some good links and information: Article.

Gypsies, Tramps and Thieves

I doubt that the fortune tellers saw this one coming. Palm readers, fortune tellers and the singing telegram set will find themselves a little poorer starting December 1, 2007. Early on Monday October 1 the state legislature agreed to a budget deal that will raise the Michigan state income tax and expand the state sales tax to include a vast array of services not formerly taxed. The income tax rate was raised from 3.9 to 4.35%. All this to avoid the dreaded government shutdown. What is so terrible about a shutdown anyway? The casinos are staying open. Has everyone forgotten that the most terrifying words in the English language are "I'm from the government and I'm here to help you"? Bring on the shutdown.

The victims of the increase are, as usual, the working class who take the hit on the income tax. But more troubling is the expansion of the sales tax to certain services. Lansing's political class has now deputized a whole new crop of revenue collectors. But the vast majority of the providers of these services are also the least able financially comply with yet another level of government paperwork in connection with their businesses. Remember, very few of these new tax targets currently collect or remit sales taxes to the state. They have to start tax collecting from scratch--and soon. Very few private investigators or singing telegram deliverers also have a gift shop in the lobby that makes them worry about collecting sales taxes. I wish I were an accountant right now.

The list of services that will now be taxed include:

• Tanning salons


• Escort services


• Massages


• Administrative services (such as payroll)


• Investment advising


• Janitorial


• Armored cars


• Private investigators


• Packaging and labeling


• Commercial landscaping


• Skiing


• Business service centers


• Carpet and upholstery cleaning


• Courier services


• Document preparation


• Self-storage


• Transit


• Ground passenger services


• Travel agents


• Scenic transportation


• Service contracts


• Interior design


• Warehousing


• Storage


• Baby shoe bronzing,


• Balloon-o-gram services


• Palm reading


• Pay phones


• Singing telegrams


• Psychics


• Phrenology services


• Personal trainers


• House sitting


• Shoeshine services
  

On the bright side, these services will not be subject to the expansion of the sales tax:

• Cable or satellite television


• Sports and concert tickets


• Vehicle repair


• Golf greens fees


• Marina fees


• Movies


• Legal fees


• Accounting fees


• Haircuts

As this list makes clear, it is obvious that palm readers, phrenologists and baby shoe bronzers are vastly underrepresented in the state legislature. Indeed, I doubt there is a single tarot card reader in the Lansing parliament. By the same token, cable TV, accountants, teachers, barbers and lawyers (all of whom apparently enjoy golf, large boats, and expensive haircuts) are overrepresented.

If there is any justice, the afflicted professions will get together and sue to repeal the tax. I don't know that it will pass constitutional muster. What is the rationale for taxing phrenologists but not accountants or lawyers? And what did palm readers ever do to anyone? I would be willing to be bet that doctors kill way more people every year than palm readers or paid escorts.

You would think that a full-time legislature could come up with a better solution this. On the other hand, maybe they've got their eyes on the real prize. Maybe we aren't getting the big picture here. This massive tax hike bumps Michigan up to number 11 in the list of states with the highest tax burden (up from 14th). Obviously having the highest unemployment rate in the nation is not enough for these ambitious politicians. Being the most highly taxed state.

On the bright side, I doubt the taxes on these services will generate the revenue the political class in Lansing think it will. Cash is certainly king in the escort and massage business, after all. Maybe I'll get my government shut down when all is said and done. The small business people in the state could use the break.