Winter 2022

“Adpocalypse”

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By: Carl Rustad

“Youtube Hate Preachers Share Screen With Household Names.” “Google’s Youtube has Continued Showing Brands’ Ads With Racist and Other Objectionable Videos.” These are the headlines Google faced in March 2017, as ads for Google’s advertising partners allegedly appeared alongside hateful or inappropriate Youtube videos. Within days, high-profile advertisers including Wal-mart, Pepsico, General Motors, AT&T, Dish, and Starbucks all pulled their ads from the platform. 

Google responded to these allegations by “implementing broader demonetization policies around videos that are perceived to be hateful or inflammatory” and “strengthen[ing] advertiser controls for video and display ads.” Using algorithms, Youtube “automatically weed[s] out inappropriate content,” sorting each uploaded video into categories purportedly reflecting their desirability to advertisers. Advertisers can exclude videos from categories like “tragedy and conflict,” “sensitive social issues,” “sexually suggestive content,” “sensational and shocking,” and “profanity and rough language.” Clearly these options reach far more content than the originally-complained-of hate speech. Videos determined inappropriate for advertisers are “demonetized,” meaning ads will not appear on them, they are deprioritized in search, and content creators will not receive any ad revenue from the video. The resulting drop in ad revenue is referred to as “Adpocalypse.”

As a result of these efforts, Youtube claimed “many advertisers have resumed their media campaigns on Youtube,” but also acknowledged that content creators faced “revenue fluctuations” due to demonetization and promised to provide “more detail around advertiser-friendly guidelines.”  Meanwhile, some content creators on the platform claimed to see an initial 80 percent drop in ad revenue due to demonetization, leveling off to a “40, 50, 60 percent drop” as videos were deemed not suitable for all advertisers. Prominent vlogger Vlogbrothers opined “[demonetization] has really squeezed creators who are making content that’s maybe good, but not, like, super-happy-family-fun-time stuff.”

Private Platforms Provide Strong Extralegal IP Protections

Adpocalypse demonstrates both the interest and the power that companies have in protecting their brands on private platforms. Brands are already entitled to certain legal protections. A trademark holder is protected against damaging associations in several scenarios, including when unauthorized use of their trademark causes confusion as to the source or sponsorship of a product, or tarnishes the brand by association with “unsavory” ideas. See AMF, Inc. v. Sleekcraft Boats; Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC. On the other hand, there is no trademark infringement when the trademark is being used to describe a product or talk about a competitor’s product. See KP Permanent Make-Up Inc. v. Lasting Impression I, Inc. These are considered “fair uses” of a trademark.

But the companies on Youtube, of course, do not have to point to their carefully balanced intellectual property rights in order to control their representation on the platform. They can simply refuse to advertise on a platform if it tends to associate their brand with any less-than-ideal content. This is not a new phenomenon. Media has long catered to advertisers, with media scholar C. Edwin Baker claiming “the greatest threat of censorship in this country comes not from the government, but from advertisers . . . .” As online platforms mediate a steadily increasing amount of our time, advertiser censorship may become correspondingly more pervasive and omnipresent. With algorithmic and computing advances, such censorship can be systematically extended to hosted individual speech as seen in Adpocalypse.  

Real Time Content Moderation: The Future of Advertising? 

Adpocalypse concerned advertisers’ association with undesirable uploaded videos, which are scanned for content and demonetized and search deprioritized if they are deemed unsuitable for advertisers. This hawkish breed of moderation is enabled by advances in automated decision making. Over 500 hours of content are uploaded to Youtube every minute; each video must be scanned and categorized as safe or unsafe for advertisers. 

Platforms are now facing pressure to provide real time moderation to prevent violations of their terms of service by censoring disinformation, incitations of violence, and other abuses. Facebook Horizons already includes real time moderation features  allowing it to instantly deplatform or censor abusive–as determined by Facebook alone–virtual reality users. The advantages of such a system are obvious. Hate speech, harassment, and other universally-condemned behavior can be taken offline before it happens. Unfortunately, the concerns real time moderation raises are just as obvious. 

Platforms will continue to compete for ad revenue. As Adpocalypse demonstrates, online platforms are not simply censoring hate speech; they are beginning to censor anything not “advertiser-friendly”. Allowing fine control over the spaces in which advertisers’ products appear, not just how their ads appear, is a profitable course of action. One easily foreseeable use of real time moderation is to limit the visibility of advertiser-unfriendly speech in VR chat. But there is no reason to believe the technology will be confined to such transparent and simplistic uses. Facebook already sells sophisticated and hyper-targeted ads. Plus, US advertisers are willing to pay about $250 billion a year to control what consumers associate with their products. The market is there.

Given the impending capability and incentives for online platforms to moderate speech and the environment of speech in real time, it is time to take a hard look at the role of advertisers in platform censorship. While the First Amendment does not apply to private platforms, consumers should demand transparency from platforms about how speech is moderated and hold them accountable when moderation technology is abused to accommodate advertisers. 

An Artistic Expression of Critical Race Theory

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By: Stephanie Turcios

A picture is truly worth a thousand words. Many of us have seen Jonathan Harris’ painting entitled Critical Race Theory (see the artwork here on Mr. Harris’ website) while scrolling on social media this year. The image is sending shock waves through the art world and is impressing the importance of Black history upon the global consciousness. While it often takes legal scholars pages of rhetoric to explain, Harris has captured the significance of Critical Race Theory (CRT) in a single painting. The image depicts a blond person painting over prominent Black American leaders – Martin Luther King Jr., Harriet Tubman, and Malcolm X with white paint. 

Salient to Black History Month, Harris’ work depicts the danger of whitewashing history. Harris, like many black people in the U.S., assumed that Harriet Tubman was a well-known historical figure. However, during one of his shows at the Irwin House Gallery, a white woman noted that the painting was “a powerful piece” but asked why Harris chose to include Aunt Jemima with Malcolm X and Martin Luther King Jr. It was a serious question and an eye-opener to Harris. He questioned that if this woman doesn’t know who Harriet Tubman is, does she really understand the history of slavery and oppression that Harriet Tubman fought against. 

Further, when asked why he painted Critical Race Theory, Harris told Artnet News that “Black people [are] questioning if our history [is] in jeopardy …[w]e only know what we are taught. My mind went to, ‘how far can this actually go?” His inquiry is in response to the recent backlash against CRT as an academic discipline. Since January 2021, 37 states, including Washington, have proposed legislation to restrict or outright ban teaching CRT in public schools. Harris further opined that “[i]f we don’t push back as these bills are getting passed, this painting could be the future.” To many black people, erasing our history threatens the understanding of our experiences in this country. Our history explains the issues of today and is critical to undoing the harm that persists. 

But what is critical race theory? 

Earlier this year, the American Bar Association published an article by Janel George, a professor at Georgetown University Law Center, explaining CRT. CRT emerged as a subdiscipline of Critical Legal Studies (CLS) in the 1970s. CLS theorists departed from the traditional understanding that the law was a neutral force devoid of political or social considerations and instead posited that law was neither objective nor apolitical. Likewise, CRT theorists agree that the law is neither objective nor politically or socially neutral and that our legal system is instrumental in furthering racial inequality. 

Founding theorists such as Derrick Bell, Kimberlé Crenshaw, Cheryl Harris, and many others ultimately reject the theory of color-blindness, the idea that racism stems from “a few bad apples,” and instead raise structural questions as to why racism persists despite decades of reform efforts. Professor Crenshaw notes that CRT is not a noun but a verb because it is an evolving theory that recognizes that race is a socially constructed concept that is structurally and systematically embedded in many of our institutions, including our legal system. CRT argues that systemic racism perpetuates racial inequality, evidenced by the lived experiences of people of color and other marginalized identities. 

Conversely, opponents of CRT characterize the discipline as divisive. Christopher F. Rufo, an activist against CRT, argues that the discipline is nothing more than a reframing of identity-based Marxism that spreads anti-American ideology. Rufo, and opponents like him, fear that CRT will destabilize our institutions, which they see as “neutral, technocratic, and oriented towards broadly-held perceptions of the public good.” But is this a fair characterization of the theory? Is CRT teaching children to hate their country, or is it challenging us to think about the institutions that have perpetuated harm to people for centuries? 

Why CRT matters. 

The discipline of CRT does not share in the notion that destabilizing the law will stop racial injustice. As Professor George notes, CRT recognizes that although the legal system has historically been used to deepen racial inequality, it also has significant potential to help secure racial equality. We must shift our focus from reform of our institutions to examining the root causes of racial disparity and dismantling those causes through structural change.  

In the New York Times, Mari Matsuda, a CRT founder and law professor at the University of Hawaii, explains the significance of the theory as follows: “I see it like global warming…[w]e have a serious problem that requires big, structural changes; otherwise, we are dooming future generations to catastrophe. Our inability to think structurally, with a sense of mutual care, is dooming us — whether the problem is racism, or climate disaster, or world peace.”

The beauty of art. 

We live in a time where people are quick to speak and slow to listen, where nuances in arguments are lost, and the “all or nothing” mentality prevails. But the beauty of art is that in order to appreciate it, you must sit and reflect on it. You must pause, take a moment, and ask yourself: is Harris’ depiction of our future what we really want?

Stratton Oakmont v. Prodigy Services: The Case that Spawned Section 230

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By: Mark Stepanyuk

The United States led the world in internet usage throughout the 1990s and “[a]t the time of the Dot-com-crash less than 7% of the world was online.” Traversing this previously uncharted territory en masse necessitated a promulgation of rules that would govern the new frontier. Naturally, those rules emerged to conform with existing legal standards. Wrapped up in this context is a story about how the firm started by “The Wolf of Wall Street”, also known as Jordan Belfort, would have a hand in bringing about the existence of arguably the most influential legal rule shaping the internet to this day. 

Enter Stratton Oakmont v. Prodigy Services

Jordan Belfort founded Stratton Oakmont in 1986 as a brokerage firm specializing in trading “over-the-counter” securities. The world became familiar with this story when Leonardo DiCaprio portrayed a lecherous and drug-addled Belfort in the 2013 academy-award nominated film The Wolf of Wall Street. 

Prodigy Services was an early online service network that provided its subscribers access to various information services such as bulletin boards where third parties exchanged information. In the early-to-mid-1990s, Prodigy was considered one of the major players in the  information services space providers alongside CompuServe. 

Prodigy, unlike CompuServe, had “held itself out” as exercising editorial control over the content of its computer bulletin boards. One of Prodigy’s bulletin boards was called Money Talk, a popular forum where members would post and discuss financial matters. Prodigy contracted with Board Leaders (or moderators or mods in today’s parlance) to, among other things, oversee and participate in board discussions.

On October 23rd and 25th in 1994, an unidentified individual posted to the Money Talk bulletin board claiming that Stratton Oakmont committed criminal and fraudulent acts in connection with an IPO that it was involved in. The anonymous poster made statements claiming that the offering was “major criminal fraud” and “100% criminal fraud.” The individual also posted that Stratton Oakmont was a “cult of brokers who either lie for a living or get fired.” 

Stratton Oakmont and Daniel Porush—the individual that Jonah Hill’s character in The Wolf of Wall Street film was loosely based on—filed suit against Prodigy in the New York Supreme Court, the state trial court, alleging libel, among other things.

On a partial summary judgment motion brought by Stratton, the court considered Prodigy’s own statements and went through the classical libel analysis to determine whether Prodigy was a “publisher” or “distributor,” where if Prodigy was deemed a ‘publisher,’ then it would be as if they themselves had posted the allegedly libelous statements. By the way, those statements later turned out to be true. 

The court concluded that Prodigy was indeed a “publisher.” Reasoning that Prodigy “held itself out to the public and its members as controlling the content of [Money Talk] …,” and, by contracting with the mods, “actively utilize[ed] technology and manpower to delete notes from its computer bulletin boards on the basis of offensiveness and ‘bad taste[.]’” 

The court distinguished this holding from a 1991 case involving CompuServe four years earlier. There, the United States District Court for the Southern District of New York dismissed a libel case on the basis that CompuServe was a “distributor” (where they would only be liable if they knew or had reason to know of the libel) Unlike Prodigy, CompuServe did not review any content before it was posted to its bulletin boards. The court reasoned that, without knowledge of the libel, CompuServe would not be liable. 

Legislative Reaction to the Stratton Oakmont Case

Some legislators thought the results in Stratton Oakmont and the CompuServe case were backwards. Chris Cox (R-CA) stated that the “[t]he perverse incentive this case created was clear: any provider of interactive computer services should avoid even modest efforts to moderate the content on its site.” After seeing a Wall Street Journal article about the case, Cox reached out to Ron Wyden (D-OR) to work on the bill that would later become Section 230 in an effort to address these “perverse incentives.” This effort initially culminated in the Internet Freedom and Family Empowerment Act. The bill was enacted as part of the “Communications Decency Act,” (CDA) but when the rest of the CDA was struck down on first amendment grounds, section 230 survived. It can be found here. 

What does Stratton Oakmont Teach Us About Section 230 today?

Section 230 was passed largely to address those “perverse incentives” regarding moderation by online service providers. In 1990, Prodigy’s Director of Market Programs and Communications stated that “[Prodigy] make[s] no apology for pursuing a value system that reflects the culture of millions of American families we aspire to serve.” In the same NYT article, “social responsibility” was given as a reason to exercise editorial discretion—does that sound familiar? These seemingly recurring themes lead experts to opine that the current discourse about Section 230 is a bit phony—that it’s really a proxy for a conversation about the first amendment. The legal differences between a publisher and distributor are First Amendment distinctions, and since the enactment of Section 230, “that’s not really been an issue for the internet.” So functionally, those underlying First Amendment issues haven’t mattered as much in light of Section 230.

In the United States, we are still figuring out the rules of this relatively new frontier. Some folks argue that Section 230 helped make the digital economy what it is in the United States. Globally, the United States comes third in the total number of internet users with around 250 million, behind China (over 750 million) and India (over 390 million). Though here in the U.S., we will continue to arbitrate what speech should and should not be protected in light of the first amendment, it’s likely that the reasonability of how we approach an equilibrium will be a function of global influence and time. The internet rules of the future are certain to be impacted by technology (even more new frontiers) and the continued influence of globalization (i.e., different value systems, standards, and interpretations). 

Lawmakers Set Their Sights on Restricting Targeted Advertising

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By: Laura Ames

Anyone who spends time online has encountered “surveillance advertising.” You enter something into your search engine, and immediately encounter ads for related products on other sites. Targeted advertising shows individual consumers certain ads based on inferences drawn from their interests, demographics, or other characteristics. This notion itself might not seem particularly harmful, but these data are accrued by tracking users’ activities online. Ad tech companies identify the internet-connected devices that consumers use to search, make purchases, use social media, watch videos, and otherwise interact with the digital world. Such companies then compile these data into user profiles, match the profiles with ads, and then place the ads where consumers will view them. In addition to basic privacy concerns, the Consumer Federation of America (CFA) points to the potential for companies to hide personalized pricing from consumers or to promote unhealthy products and perpetuate fraud. Perhaps the largest concern is that the large stores of personal data that these companies maintain put consumers at risk of having their privacy invaded, identity theft, and malicious tracking.   

In response to these concerns, Democratic lawmakers unveiled the Banning Surveillance Advertising Act (BSSA) in an attempt to restrict the practice and under a general consensus that surveillance advertising is a threat to individual users as well as society at large. This move prompted opponents to argue that the BSSA is overly broad and will harm users, small businesses, and large tech companies alike.

What Does the BSSA Do? 

The BSSA is sponsored by Senator Cory Booker and Representatives Jan Schakowsky and Anna Eshoo. The bill bars digital advertisers from targeting their ads to users and also prohibits advertisers from targeting ads based on protected information like race, gender, religion, or other personal data purchased from data brokers. According to Senator Booker, surveillance advertising is “a predatory and invasive practice,” and the resulting hoarding of data not only “abuses privacy, but also drives the spread of misinformation, domestic extremism, racial division, and violence.”

The BSSA is broad, but it does provide several exceptions. Notably, it allows location-based targeting and context advertising, which occurs when companies match ads to the content of a particular site. The bill suggests delegating power to the FCC and state attorneys general to enforce violations. It also allows private citizens to bring civil actions against companies that violate the ban with monetary penalties up to $1,000 for negligent violations and up to $5,000 for “reckless, knowing, willful, or intentional” violations. The BSSA has support from many public organizations and a number of professors and academicians. Among several tech companies supporting the BSSA is the privacy-focused search engine DuckDuckGo. Its CEO, Gabriel Weinberg, opined that targeted ads are “dangerous to society” and pointed to DuckDuckGo as evidence that “you can run a successful and profitable ad-based business without building profiles on people.” 

The BSSA as Part of a Larger Legislative Agenda 

The BSSA is just one bill among a number of pieces of legislation aiming to restrict the power of large tech companies. Lawmakers have grown increasingly focused on bills regulating social media companies since Facebook whistleblower Frances Haugen testified before Congress in 2021. These bills target a wide variety of topics including antitrust, privacy, child protection, misinformation, and cryptocurrency regulation. Most of these bills appear to be rather long shots, however, because although the Biden administration supports tech industry reform, so many other issues are high priorities for it. Despite this hurdle, lawmakers are currently making a concerted push with these tech bills because the legislature’s attention will soon turn to the 2022 midterms. Additionally, Democrats, who have broader support for tech regulations, worry they could lose control of Congress. Senator Amy Klobuchar argued that once fall comes, “it will be very difficult to get things done because everything is about the election.” 

Tech and Marketing Companies Push Back

In general, tech companies tend to argue that targeted advertising benefits consumers and businesses alike. First, companies argue that this method allows users to see ads that are directly relevant to their needs or interests. Experts rebut this theory with the fact that in order to provide these relevant ads, tech companies must collect and store a great deal of data on users, which can put that data at risk of interference by third parties. Companies also argue that this legislation would drastically change their business models. Marketing and global media platform The Drum predicted that the BSSA “could have a massive impact on the ad industry as well as harm small businesses.” The Interactive Advertising Bureau (IAB), which includes over 700 brands, agencies, media firms, and tech companies, issued a statement strongly condemning the BSSA.  IAB CEO David Cohen argued that the BSSA would “effectively eliminate internet advertising… jeopardizing an estimated 17 million jobs primarily at small- and medium-sized businesses.” The IAB and others argue that targeted advertising is a cost-effective way to precisely advertise to particular users. However, the CFA points to evidence that contextual advertising, which is allowed under the BSSA, is more cost-effective for advertisers and provides greater revenue for publishers. 

Likelihood of the BSSA’s Success

In the past several years, there has been growing bipartisan support for bills addressing the increasing power of tech companies. This support would seem to suggest that these pieces of tech legislation have a better chance of advancing than other more controversial legislation. However, even with this broader support, dozens of bills addressing tech industry power have failed recently, leaving America behind a number of other countries in this area. One of the major problems impeding bipartisan progress is that while both parties tend to agree that Congress needs to address the tremendous power that tech companies have, they do not align on the methods the government should use to address the problem. For example, Democrats have called for measures that would compel companies to remove misinformation and other harmful content while Republicans are largely concerned with laws barring companies from censoring or removing content. According to Rebecca Allensworth, a professor at Vanderbilt Law School, the larger issue is that ultimately, “regulation is regulation, so you will have a hard time bringing a lot of Republicans on board for a bill viewed as a heavy-handed aggressive takedown of Big Tech.” Given Congress’ recent track record in moving major pieces of legislation, and powerful opposition from the ad tech industry, the BSSA might be abandoned along with other recent technology legislation.  

NFTs: Coming Soon to a Patent Portfolio Near You?

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By: Hannah Avery

At this point the craze surrounding NFTs is far from breaking news. NFTs (“non-fungible tokens”) have been created for everything from the “Disaster Girl” meme to the world’s first tweet. They have been the subject of numerous articles, publications, and blogs, including this blog by the Washington Journal of Law, Technology, and the Arts’ Associate Editor-in-Chief Joanna Mirsch, discussing video game-related NFTs. Despite NFTs’ widespread popularity, early “NFT craze” trends seemed at odds with established American intellectual property rights, with many works being minted as NFTs without the consent of the original creator. At the very least, ownership of NFTs was widely regarded as independent of ownership of the underlying intellectual property rights. But… what if they weren’t?

While the sale of an NFT by itself does not automatically confer the underlying IP rights, the use of self-executing contracts in conjunction with the sale of an NFT can. This is the exact type of transaction that IBM was betting on when it teamed up with IPwe to create a platform for block-chain-enabled IP transactions. The IBM/IPwe platform transfers patent rights by building a smart contract with standardized terms into the token. The patent owner is able to set the terms of that contract, including what information is public and what is not. With this big bet on patent NFTs by IBM, the launch of IPwe’s secure licensing & selling capabilities, and the first sale of a patent and the related patent rights as an NFT in April 2021, many forward-looking patent-holders may be wondering whether they should convert their patent portfolios to NFTs.

Unsurprisingly, the press release for the IBM-IPwe partnership touts a number of benefits of blockchain-based IP transactions including increased transparency, reduced transaction costs, and greatly improved capacity for patent-holders to manage, value, and transfer their IP assets. Additionally, blockchain-based patent transactions could help to prevent future SEP licensing disputes and/or to simplify their resolution. However, there are also a number of potential risks which could dissuade those who would otherwise be early-adopters.

Increased transparency of ownership

Since the introduction of blockchain technology, one of its most praised features has been the unique ability to create an indisputable record of a series of transactions. As applied to patent rights, this feature would allow users to track the ownership of patent NFTs and the transactions associated with patent license NFTs. This tracking mechanism would provide clarity of ownership of the patent rights. According to IPwe’s Chief IP Officer Cheryl Milone Cowles, “distributed network verification . . . provides the confidence of transacting with a clear current title and history.” While such assurance is undoubtedly appealing to potential investors, it may be too good to be true… at least for now. Given the nature of this technology and the current case law governing patent ownership disputes, situations could arise where a legal approach or remedy would be unclear. Some experts have raised concerns including: whether an owner of a patent whose NFT was stolen through a ransomware attack would be able to reestablish ownership through the legal system; whether a court would recognize transfer of a patent via NFT absent a more standard, written assignment; and, if courts do prove willing to recognize such an assignment via an NFT sale, what evidence will be considered sufficient to demonstrate ownership. Such uncertainties could easily lead to unfavorable, or simply unsatisfying,  outcomes for purchasers.

Cost-reduction

Historically, the costs of obtaining, maintaining, and licensing IP have been high. Therefore, the promise of a platform that could lower those costs, as IPwe claims, would be welcome news to many players in the IP space. While the technology behind the platform may be complicated, the theory of potential cost-savings is simple — the smart contracts included in token sales, as discussed above, would replace the current process of IP sales and licensing that is laden with attorneys fees, paperwork, and onerous contract negotiations. Such savings would be embraced by any organization accustomed to shouldering the burden, but it has the potential to be game-changing for small and medium-sized companies who may have previously been reluctant to engage in IP-related transactions because of current prohibitive costs.

Portfolio management

While tokenizing IP assets may interfere with a company’s existing portfolio management strategies, such disruption of existing strategies could also reap rewards for the first movers in this space. For example, the potential for easy resale of an IP asset could increase the value of that asset at the time of the initial sale. Or, standard essential patent holders could also utilize smart contracts to avoid expensive litigation while capturing licensing fees with each sale or resale. The possibilities are endless.

* * *

All in all, tokenizing patent assets may reduce the costs associated with patent licensing and streamline portfolio reporting. However, early adopters of this approach will have to navigate uncertain legal areas regarding the ownership of their tokenized IP rights. In our information-based economy, adopters could be risking some of their most valuable assets in their effort to become an industry leader. Is it worth the risk?