After reviewing the commentary on Judge Stanton's summary judgment ruling in Viacom v. YouTube, I note the lack of substantive defenses of its legal merits. See Viacom Int'l, Inc. v. YouTube, Inc., 2010 U.S. Dist. LEXIS 62829 (S.D.N.Y. 2010) (the "Viacom Opinion"). This Opinion held that because the original founders of YouTube had responded to takedown notices, they were protected from civil liability for copyright infringement by § 512(c) of the Digital Millennium Copyright Act (the "DMCA")—even if they were also intentionally inducing mass copyright piracy like the Defendants in MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).

But this Opinion will be reversed on appeal for at least two reasons. First, no judge can legally find something so daft as a civil safe-harbor for criminal racketeering lurking in the unspoken implications of the "tenor" of excerpts of legislative history. Second, no judge can legally hold that the DMCA adopted terms that judges used to convey the lack of any knowledge requirement in order to tell judges to impose an "item-specific" knowledge requirement. As singer Katy Perry might put it, unless the DMCA was "a [law] bipolar," it did not use "in" to mean "out" or "up" to mean "down...."

Consequently, the Viacom Opinion is not really a huge win for those who want foreign corporations to be able profit by intentionally inducing mass piracy. Indeed, apart from the usual applause from the usual suspect—and a switch-of-sides at Slate—no one seems to be praising or even defending the substance of Judge' Stanton's legal analysis. And with good reason—it is indefensible.

On July 9th, Judge Nancy Gertner issued an Order holding that the $22,500/song jury verdict assessed against file-sharing, oath-violating, evidence-concealing, family-framing willful mass pirate Joel Tenenbaum was unconstitutionally excessive. Judge Gertner then reduced the award by 90% to $2,250/per song—the maximum award that her Constitution would permit. See Sony BMG Music Ent. v. Tenenbaum, 2010 U.S. Dist. LEXIS 68642 (D. Mass.).

But those who get their copyright news from the Internet might be shocked that the record labels have just dared to appeal Judge Gertner's allegedly brilliant legal analysis. After all, Public Knowledge hailed Judge Gertner's reasoning as a triumph of common sense. And at the blog TechDirt, Mike Masnick gushed, "Gertner knows this is going to be appealed, and she put a lot of effort into making the case for why this ruling was excessive, in hopes of having her reasoning help carry the later appeals."

Such fawning is silly. Judge Gertner's reasoning is far too profoundly flawed to have much chance of surviving appellate review. I will thus note three defects in Judge Gertner's analysis that should prove fatal. None is merely technical; all involve basic disregard for settled law, the facts, or reality itself.

I just read Judge Kimba Wood's 59-page summary-judgment Opinion in Artista Records, LLC v. Lime Group LLC. It held LimeWire LLC and its parent company, the Lime Group, liable under Grokster for intentional inducement of mass piracy. It also held Lime Group CEO Mark Gorton personally liable for his decade of deliberate contempt for the federal civil rights of artists and those who invest in their art.

Substantively, the Lime Group inducement ruling tracks the reasoning in Grokster. Indeed, it tracks so closely that Gorton and LimeWire surely knew that they were liable under Grokster by July of 2005. Nevertheless, they chose to keep on intentionally inducing piracy for five more years. One hopes that Judge Wood will keep that in mind when crafting injunctive, forfeiture, and monetary remedies. Otherwise, two other aspects of the decision are particularly interesting.

The Office of the United States Trade Representative (USTR) just released a draft of the Anti-Counterfeiting Trade Agreement (ACTA). After spending several years at the U.S. Patent & Trademark Office, advising USTR on the copyright-related provisions of many proposed and enacted trade agreements, my review of the draft ACTA text confirms, (as well as any draft can), that ACTA is precisely what USTR has said consistently during both the Bush and Obama Administrations: ACTA is an efficiency-enhancing effort that can be executed as an Executive Agreement because it will require no change--repeat, no change--in existing U.S. law.

Indeed, this is why I rarely write about, blog about, or closely follow the ACTA negotiations. ACTA is an important efficiency-enhancing effort intended to facilitate international trade. But--by definition--it will not address any of the most important unresolved questions about how to reconcile the benefits of enforceable copyrights and the benefits of the Internet.

To the contrary, in the ACTA negotiations, developed nations that have already joined and implemented all of the major multilateral IPR-related international treaties--like the Agreement on Trade Related Aspects of Intellectual Property Rights ("TRIPS"), the Berne Convention, and the WIPO Copyright Treaty--are trying to see whether they can agree on what an good implementation of these already-ratified, already-implemented treaties should require.

While such an agreement could further trade among developed nations, it would be even more beneficial to developing and least-developed nations. Most developed nations, including the U.S., already require their preferred trading partners to fully implement the leading international IPR treaties, but each such developed nation now has differing ideas what an "good" implementation of these treaties requires. As a result, any country that wants to increase trade with developed nations in the Americas, Europe, and Asian must now separately negotiate with many nations about the efficacy of its implementation of existing IPR treaties, and it may have to revise its IPR laws repeatedly.

ACTA seeks to reduce or eliminate the resulting delay and duplication of effort. In effect, ACTA seeks to answer the following question: Given that many developed nations already require their preferred trading partners to complete a "good" implementation of the existing IPR treaties, shouldn't they try to reach as least broad agreement on what a "good" implementation of existing IPR treaties requires? If so, then any nation interested in updating its IPR laws in order to better protect its own creators and improve its trade relations could know what to do in order to facilitate trade with many of the world's most attractive trading partners. Consequently, developed nations that already incorporate support for IPR protections into their international-trade strategies could promote trade, reduce waste, avoid petty disputes, and better promote improved IPR protections if they could agree on what a really good implementation of the existing international IPR treaties should require. This is, perhaps, the critical benefit that ACTA seeks to achieve.

This is why the structure and the text of ACTA so closely resemble the structure and text of the IPR Chapter of many existing bilateral and multilateral U.S. Free Trade Agreements ("FTA")--none of which required the U.S. to amend its existing IPR laws. Those similarities are no coincidence. In effect, ACTA attempts to reach at least a general consensus on what the IPR chapters that many developed nations already incorporate into their trade agreements ought to contain.

Nevertheless, while developed-world IPR laws are so generally similar as to permit such consensus, they are not identical. Consequently, the ACTA negotiators must craft language specific enough to provide precise guidance, (as the IPR chapter of a developed-world trade agreement would today), while accommodating some of the differences in the national laws of developed, IPR-exporting nations--each of which is quite convinced that its laws already reflect a "really good" implementation of the existing multinational IPR treaties.

This is why the Internet teapot-tempest over ACTA merely confirms that USTR should be strongly commended for its longstanding decision to pursue ACTA as an Executive Agreement. For precisely the reasons just mentioned, the language of ACTA will almost certainly closely, but not precisely, track the language of the IPR Chapters in those many existing U.S. FTAs. This could have raised legitimate--as opposed to contrived--concerns that ACTA might change to U.S. law. But by negotiating ACTA as an Executive Agreement, USTR eliminated all such legitimate concerns. By definition, an Executive Agreement cannot require any change in existing U.S. law.

Moreover, by negotiating ACTA as an Executive Agreement, USTR not only eliminated any legitimate domestic concerns about ACTA changing U.S. law, it also put all other nations participating in the ACTA negotiations on notice: if the U.S. agrees to particular language, then that is because it has concluded that its existing domestic laws already implement that language. Therefore, should the ACTA negotiations conclude successfully, no co-party to ACTA can argue, credibly, that it could possibly have thought that existing U.S. law failed to implement the Agreement.

These observations are subject to a caveat: the released draft of ACTA is an early-stage draft consisting mostly of bracketed counter-proposals. Multiparty negotiations among many global leaders in international trade never proceed quickly. Nevertheless, the released draft suffices to confirm that ACTA is precisely what USTR has said it is throughout the past two Administrations, and that USTR should be commended for providing both domestic and international clarity by pursuing it as an Executive Agreement.

Finally, a word about ACTA and "secrecy." Negotiating drafts of ACTA have been no more and no less "secret" than negotiating drafts of any other proposed U.S. trade agreement negotiated in the last few decades. And such "secrecy" is perfectly sensible: negotiating nations do not published their negotiating drafts and strategies for the many of the same reasons that poker players do not "publish" the contents of their hands during a game--"transparency" is good; crippling your own negotiators is not. Nor is the resulting "secrecy" that secret: Any Internet reporter who wanted to review an earlier draft of ACTA would have had to do little more than sign a simpler version of the sort of nondisclosure agreement (NDA) that gadget reporters routinely sign in order to get an early look at the latest iWidget.

I may have more to say later about the shrill, dishonest, juvenile histrionics that have passed for most Internet "commentary" on ACTA. For now, I need only congratulate the shriekers for the success of their latest campaign to convince even more federal officials that most Internet commentary on almost matters relating to intellectual property rights, (other than those that protect technology companies or open-source software), will tend to consist of shrill, dishonest, juvenile histrionics.

Indeed, the histronics over ACTA recall the histrionic wailing that filled the Internet during the lead-up to the Supreme Court decision in Grokster. Back then, many of the same groups and individuals now shrieking about ACTA were shrieking that holding the most blatant commercial copyright pirates on the Internet liable for the intended consequences of their own actions would crush innovation and outlaw, (to cite but a few examples), iPods, transistors, Legos, broadcast radio, The New York Times, and--worsf of all--Silly Putty. Today's ACTA histrionics seem equally rational, balanced, informed, and thoughtful.

With another income tax day behind us, this year's penance may be the last "simple," "unfettered" return we file in a while.

The CBO projects that with current policies in place, addled by a wave of retiring Americans, our tax burden as a nation (in terms of revenues received through income, payroll and excise taxes) will rise 1.5%, to nearly 20% in 2020. That growth aside, revenues will still fall nearly 5% less than Uncle Sam will be spending at that time.

Thus, according to a growing coterie of pundits and officials, more taxes are on the way (spending cuts would be nice, but I digress).

Please join us for this Progress & Freedom Foundation luncheon briefing on Friday, April 16, 12-2 pm in the Capitol Visitor Center, Room SVC 208/209 at E Capitol St NE & 1st St NE. I'll be moderating a discussion of the growing powers of the Federal Trade Commission (FTC) and what it might mean for consumers, advertisers, media creators, and the Internet.

As I've discussed here, here and here, financial reform legislation passed by the House (HR 4173) and now under debate in the Senate would give the FTC sweeping new powers to regulate not just Wall Street, but also unfair or deceptive trade practices across the economy. This could reshape regulation in a wide range of areas, such as privacy, cybersecurity, child safety, COPPA, and child nutrition, affecting media online as well as offline. Unfortunately, as Adam and I have noted, there seems to be a disconnect at the FTC between concerns over the future of struggling media creators and efforts to step up regulation on a number of fronts, especially privacy. The FTC has also asserted expanded authority to regulate "unfair" competition in its lawsuit against Intel, based solely on the FTC's Section 5 unfairness authority rather than traditional antitrust law. PFF has assembled a group of expert panelists--veteran FTC practitioners, scholars and insiders--to discuss these issues and more. Here's our panel:

• Jack Calfee, Resident Scholar, American Enterprise Institute for Public Policy Research (AEI) & author of Fear of Persuasion: A New Perspective on Advertising and Regulation (1998)


• Maureen Ohlhausen, Partner, Wilkinson Barker Knauer, Consumer Protection Law and Competition Law practices, & 11-year FTC veteran


• Jim Davidson, Chair of the Public Policy group, Polsinelli Shughart PC


• Stu Ingis, Partner, Venable LLP

When you read a "business magazine" edited by persons with at least a GRE-level grasp of modern economics, you will not encounter headlines like "Walmart Whines That It Would Be Richer If Poor People Didn't Shoplift," or "DirectTV Whines That Signal Theft Keeps 'The NFL Sunday Ticket' from Raking In More Cash," or even "Capitalist Stooge Steve Jobs Whines That iPod Counterfeiting Keeps Him from Becoming Even Richer."

Predictably, real business magazines and journalists don't publish such quasi-Marxist drool because it is so vacuous. As economist Joseph Schumpeter famously argued, profits enrich particularly thoughtful, creative capitalists because market economies drive producers to innovate. Instead of engaging in a Punch-and-Judy battle to "perfect" competition against non-innovative producers of fungible goods, smart producers can make risky investments in order to innovate and differentiate their products so they can--if consumers really love their work--earn significant profits, (some of which must be re-invested in the next round of risky innovation).

Consequently, real business journalists know that stealing from today's "rich" innovators merely punishes and deters the risky, costly innovation that drives the American economy and creates American jobs. Competent "business magazines" thus reject the economics of dictator Robert Mugabe: they do not smirk and sneer that whenever capitalists innovate successfully and get "rich," then they should not "whine" if others steal from the investors who made the risky investments that let them get rich by innovating.

But Business Insider is not a real business magazine. It has seemingly embraced "Mugabenomics." It appears that Business Insider would thus condemn Steve Jobs if he "whines" about the counterfeiting or shoplifting of iPods. Surely Jobs is now rich enough that stealing from Apple is OK with Business Insider--even though, from the perspective of Apple's investors, the vast sums paid to Jobs are a cost of doing business that reduces their potential profits and their ability to re-invest in more new innovations.

The recession has been many things to many people. For most of us, these are trying times, to say the least. But like a newscaster or mortician who profits from some of life's worst experiences, the states see the recession somewhat more optimistically than the rest of us.

Sure, in the next fiscal year states face nearly $180 billion in budget deficits, with many in dire straits (as this somewhat hyperbolic article touches upon). Yet, letting no crisis go to waste, this has honed where many of those cash-strapped states are looking for their next meal.

The Wall Street Journal recently noted that the slump has brought back to life an idea that many of us thought had died - requiring e-retailers to collect sales tax from out-of-state customers. The state's new tool of choice? The so-called "Amazon.com tax."

It works like this.

Remote / online merchants that have "local marketing affiliates" (i.e., entities essentially operating website pointers to remote merchants) in a given state, must collect state sales taxes for customer purchases of their products - all because the "local affiliate" in that given state pointed any sale (not even the specific sale) to the out-of-state retailer. This controversial tool (now being contemplated by 6 states, and in effect in 3 others) allows states to get around constitutional requirements of physical presence in a state to collect sales taxes. It also gets around the inconvenient fact that in most states with sales taxes, customers largely ignore their obligations to pay that tax (e.g., use tax) if it isn't collected by the Internet / remote merchant.

Having just spent some quality time with the opening summary-judgment briefs in Viacom Int'l Inc. v. YouTube Inc., ("Viacom"), I wanted to post a few preliminary reactions. First, the procedure that the Court and parties are using (simultaneous filing of cross-motions for summary judgment) tends to have real benefits, particularly in complex, high-profile cases, but because lawyers usually avoid anticipating their opponent's arguments, it can produce a first round of opening briefs that seem to be arguing the merits of utterly unrelated lawsuits.

Nevertheless, in a well-argued case, (and this one is), you can usually scrutinize these seemingly discordant briefs and discover that both are mostly telling the truth--or, rather, different parts of a larger truth.

Such are the opening briefs of the Viacom Plaintiffs and Defendants. The Defendants' Brief focuses on whether YouTube actually knew that particular videos were infringing and the copyright-respecting and responsible online service provider that YouTube is today. The Plaintiffs' brief focuses on intent to profit from pervasive infringement, vicarious liability, what YouTube was when it began, and what inspired Google to purchase this "video Grokster" from founders who compared it to "napster," and "kazaa."

Matthew Yglesias is the "progressive" mind behind the modestly titled blog Yglesias. In three recent posts, he turned the vast erudition bestowed by his B.A. in Philosophy toward the analysis of the economics of music and intellectual property. Indeed, Mr. Yglesias did so with such profound, if baseless, confidence that he deigned to declare those who disagree with him "absolutely insane."

In The Futile Struggle Against Free Content, Intellectual Property is About Consumers, and Marginal Costs and Average Costs, Mr. Yglesias thus proved publicly a point that research and humility enabled me to discover privately: an Econ-101-level understanding of economics is woefully inadequate to understand almost any real-world market, much less the economics of music or intellectual property. As a result, Mr. Yglesias' posts are useful not because they provide useful insights--they don't--but because they nicely illustrate five fatal mistakes in the economic analysis of intellectual property often made by those whose self-esteem exceeds their self-edification.