Dozier Internet Law, by John W. Dozier

Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:39 pm

ISPs Find A New Revenue Model in Commercial E-Mail, by John W. Dozier

June 07, 2007

Less than a week ago I criticized the US Attorney for helping major ISPs create a new revenue source (charging commercial e-mailers for the right to send e-mails) by bringing criminal charges against a purported major spammer. Today the new business model I was anticipating was announced. Comcast, Cox, Road Runner, Verizon and others are reportedly joining together to, in effect, create a toll booth in which they charge e-mailers for each e-mail the ISPs let through their systems. This is a first major step towards all commercial e-mail being assessed a postage fee and, given the huge volume, this simply adds a huge revenue line to the ISP financial statements and results at the cost of other businesses.

Commercial e-mailers are worried about civil suits from AOL, Microsoft and others, and the recent criminal indictment is going to scare them into these programs. The US Attorneys and Attorney General need to stop being so naive as to think that all of the "free" help they are getting from ISPs is purely to protect the public. Hogwash. It is to build a powerful new revenue model in which they can immediately monetize the size of their installed e-mail base. Expect now to see the ISPs make it easier to get on their "black lists" and more difficult, or altogether impossible, to get on their "white lists". This will really drive demand for their pay per e-mail services, and in conjunction with civil lawsuits and, most importantly, criminal indictments at taxpayer expense, the demand for this "get out of jail free card" pre-paid e-mail program will skyrocket.

The Department of Justice and local prosecutors should understand that while some of the criminal indictments may be about fraud and phishing, they and others always couch the prosecution in terms of the defendant being a spammer! That reinforces the need for commercial e-mailers, even if they are 100% compliant with CAN-SPAM, to seek shelter.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:40 pm

Real Internet Lawyers Find Solutions, by John W. Dozier

June 10, 2007

We are litigators. We are also trial lawyers. The two are not the same. Most firms have "litigators" who appear to be trial lawyers, but in the end most of the attorneys don't try cases. They litigate...which is the process of filing motions and making arguments, filing and responding to discovery, and all of the other aspects of taking a legal case through the process leading up to trial. We like nothing better, if the case is destined for trial, than to try a case against such a firm. Sure, they have lawyers that try cases, but the odds of getting a truly seasoned technology law trial attorney are slim. That is why you see so many settlements on the courthouse steps right before a trial begins. These are settlements that could have occurred long ago, even at the beginning of the case.

Sometimes the settlement is because the lawyers needed the time, at your expense, to figure the case out. Other times it is a fear of picking a jury and actually trying a case that motivates the firm to recommend settlement to a client. Lawyers know that senior partners often discourage settlement until the file is "mature" for settlement. Many lawyers take this to mean exactly what it often means: litigate it through discovery and motions and once appropriate revenue has been generated then look at settlement options.

If you are fortunate enough to actually have a trial lawyer representing you, then the issue becomes one of habit. Litigation lawyers are trained on the process of moving a case through the court process, and trial lawyers have highly developed skills in the art of trying a case to a jury. Note that neither has necessarily developed the skill of finding a win/win solution for the parties early on in the litigation process. Couple that void with what is often a superficial knowledge of the business and technology of the web and you begin to understand why many cases go on far too long and are settled on terms that could have been achieved without huge lawyer fees.

That is why in today's world, the best lawyers are often the few trial lawyers, seasoned at taking cases to jury trials and winning, with a strong business and technology knowledge base, who can take a complex set of facts, analyze those facts in the context of existing law, and implement a "push strategy"...pushing the dispute towards a win/win settlement. This isn't appropriate for every case; just most. And this approach isn't going to work in every case. Just most.

Clients have a tendency to think their case is one of the unique ones that will have to see the light of a courtroom and the eyes of a jury to prevail. This is rarely true. But the other side needs to think you are ready to go the distance, and that a trial and adverse jury decision is a real possibility. The lawyer on the other side needs to feel that he/she is at a knowledge and expertise disadvantage. After all, no one, particularly a lawyer, likes to be embarrassed.

Remember, it's about solutions! Don't let the time, effort and expense of litigation get in the way of growing your business. Every hour you spend on litigation matters is an hour you cannot be using constructively to develop, sell and grow your business. Every hour invested in legal issues is an hour away from driving your business towards success. When I was the CEO of an e-commerce company, I hated legal disputes and issues, and tried my best to stay out of them with pretty good success. Even for me it was a distraction. Every case will be a distraction for you also.

Keep focused and strive to find solutions to problems. You won't develop new business models, drive your growth, or recruit employees and executives while sitting in depositions. Am I saying that every case should be settled? Absolutely not. Some are destined for trial. The ability to envision the destiny of a case, see how it may play out and what the ultimate result may be, is job ONE for your attorney. Sir Francis Bacon said that "knowledge is power", and whether it is the knowledge of the technology of the Internet, the business of the web, or jury trials, it certainly applies today when selecting a trusted adviser as a lawyer.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:41 pm

Defamation Immunity Isn't Clear, by John W. Dozier

June 17, 2007

Dozier Internet Law is often engaged to evaluate legal risk relating to a website. We also handle a lot of defamation matters in which businesses or professionals are being defamed by a third party posting on a site. The first question is whether there is Section 230 immunity under the Communications Decency Act for the site hosting the content. It is not a simple analysis typically. Keeping the apparent legislative intent in mind, it appears the intent of Congress was commendable when the bill was passed and signed into law. Basically, the argument went, no one should be liable for everything published by third parties on its website since traditional publisher liability implies oversight and editorial control over the content. That does not exist in the online world for the most part.

But, I believe the unintended consequences of such far ranging protection are changing the way the Courts interpret the immunity statute. And for good reason. Dozier Internet Law has seen rampant misconduct occuring among bloggers, including "blog rings" formed to effectuate a "mobosphere" attack for financial gain. Remember that the higher the traffic to a blog, the more a blogger can realize from selling advertising, and the blog site itself can be sold. It's a sleazy world out there. Just follow the money, and the motivation for attacking legitimate businesses is often clear.

Any meaningful editing of the content, manipulation of the information, or even re-characterization of the information, should result in a loss of Section 230 immunity. It's as simple as that. And Dozier Internet Law is starting to see Courts agreeing with this approach. Congress should tighten up Section 230 to make it clear that immunity is not available to those sites materially modifying or editing the content, those practicing selective optimization of posts, or those relying on the information by changing the character of the published defamation. There is a line to be drawn that needs some work, though. For instance, merely adding up results and presenting those without further material enhancement or manipulation should be fine, like Ebay's rating system seems to do. But when a site takes information, feeds it into a mathematical equation, blends it with other information, and materially changes the method, manner and nature of the information presented, then there should be no immunity. No one should be able to act like a traditional publisher, editing and controlling the message, but avoid liability.

Either the courts will take care of this problem, or Congress will step in. Expect that on one side of the debate in Washington will be the liberal free speech advocates opposing any changes except those that would extend the immunity protections, and on the other side of the debate will be the conservative, small business lobbies trying to get rid of the immunity altogether. I'd be surprised to see any movement on this with the present Democratic leadership in place, but you may see something happen if the Courts continue to contradict each other and struggle with the issue. Congress doesn't like the Courts "legislating from the bench". We'll see how this all develops in the coming months as this issue gets more and more attention.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:41 pm

When Are You Responsible For Your Affiliate's Misconduct?, by John W. Dozier

June 23, 2007

This is not, of course, a simple issue. Your affiliate marketer goes off and infringes on someone's trademark, steals copyrighted content, spams, or does any assortment of actions that are illegal. Under the CAN-SPAM Act, you may very well be liable for the affiliate's "creative" commercial email program, and will usually be sued as the beneficiary of the misconduct. Typically if you did not conduct due diligence, and had no meaningful monitoring or auditing program in place, you'll have liability. Some states have passed laws that make you absolutely 100% liable.

Other misconduct is more difficult to evaluate in this context. We go back to the old principle of the nature of the relationship: is the affiliate an agent or an independent contractor? This analysis centers upon your control over the vendor. Control, when we consider it in the context of third party misconduct, is defined for the most part as having the ability to direct and control the conduct. Think of the difference as being an employee working for you as opposed to a contractor doing its own thing in an office far away. The former is an agent, the latter is not. However, if you knew, or reasonably should have known, of contractor misconduct, and you did not take reasonable steps to stop it, you will likely have responsibility for the conduct either due to an agency relationship or through theories of conspiracy. The odds are high that if your affiliate is sued then you will be sued, and the cost of defending and winning such a suit should cause you to take steps, in a public way, to only let those with good reputations join your affiliate marketing program, and then to implement performance standards and actively monitor compliance of your vendors. When misconduct occurs, you should consider terminating the relationship, although this is not always an easy decision to make.

If the affiliate is generating significant revenue for you and you value the relationship, there are ways to maintain it. But first determine what effect the improper conduct had on the revenue. If the revenue is in great part a result of the misconduct, discount that revenue from the value equation, and then decide if it is worth investing the time, effort, and resources to maintain the relationship. You'll be wise to seek legal counsel at this point to assist you. You need to be very confident that the affiliate can, and will, change its ways, that a reasonable person will believe that given all of the publicly available facts, and that you are willing to undertake a program of monitoring that will show ongoing vigilance. There are a lot of factors to take into consideration in handing out "second chances".

So, you need to have a due diligence program in place before accepting an affiliate marketer, you need to have performance standards established, you need to have an audit program in place to assure compliance with the standards, and you need to act swiftly when problems arise. Otherwise, you may very well end up on the receiving end of a federal lawsuit, and that is never a pretty picture.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:42 pm

Google and E-Bay Fight It Out, by John W. Dozier

June 25, 2007

In an effort at full disclosure, I own Google stock. I don't own E-Bay stock.

Is it my imagination, or are two leaders of the online world acting a bit childish? First, Google pulls an immature move by running a competing event for its check-out service at the venue of the annual E-Bay convention, which of course competes with Paypal. E-Bay, in retaliation, pulls its PPC ads from Google, and then reinstates them but claims to have "tested" the alternative search engines and the results will mean less spend at Google. Come on, that is ridiculous. If you, E-Bay, weren't already doing this testing, shame on you. We even do it at our small law firm. This window of opportunity for E-Bay to conduct testing was no window at all. They could do it at any time, even while the Google ads were still running.

Of course, both of these companies may be acting a bit aggressively, and some even see it as a matter of immaturity, but this is typical technology company mischief. The only take I get out of it is that E-Bay shoud be embarassed because they apparently have not been running campaigns on all the search engines and evaluating performance on an ongoing basis. Oh, E-Bay, by the way, the demographics are different on each search engine so you WILL get better results on non-Google PPC advertising for some products and services. And even better results when you start up a new campaign reaching fresh prospects. There. The secret is out of the bag!

Maybe E-Bay just needs to hire some quality SEOs. Or, just maybe, they are still a bit upset at Google and they are trying something cute. This is what happens when "strategic partners" start competing. It's not a pretty picture.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:43 pm

Music Industry Record Labels Are In Trouble, by John W. Dozier

July 21, 2007

We've seen it for years. Disruptive technology disrupts business models. Disruptive applications of technology force innovative change. Some companies react and transition well when faced with innovation that threatens their businesses. Others (most) don't.

The music industry record labels were slow in reacting to the fundamental shift from CD to online distribution. Think about it. Artists used to dream of signing with a label. The label could be very selective in picking artists and controlling support for, and distribution of, the artist's work. And rightfully so, since their revenue was generally based on a percentage of CD sales. So, what happens when CD sales are replaced by online distribution? Merely changing the method of distribution shouldn't make much difference, you would think. Well, how would you feel if you owned a professional baseball team, and you only controlled the ticket prices? The parking, the concessions, the TV and radio rights, and all of the other related revenue streams were controlled, and revenue realized, by third parties? For a change, you, as the owner, would be calling for renegotiation of the player contracts. And, so, we find the same thing happening today.

Labels want to renegotiate their deals. They want a percentage of ALL revenue from CD sales, online sales, appearances, tours, product sales...they want to own a cut of the entire revenue stream. Quite smart. Too bad they didn't figure this out years ago and start transitioning to this new model in a more manageable way by educating the industry as to the coming challenges. Are labels going the way of stock brokers? Has the music industry finally succumbed to "disintermediation", another fancy term for taking out the middle guy? We'll have to wait and see. One thing is for sure, though. If the labels can't figure out how to add value commensurate with their compensation, they are in for a rough road ahead.

And here's the hard part. The online revenue streams today are complex, and negotiation on a case by case basis with artists will likewise by complex. Both sides need to understand all of the sources of revenue that exist today and are likely to exist in years to come. Relationships are less employer/employee-like, and more partner-like. For instance, if you are a label, and you agree to a revenue split for online record sales, I can easily imagine a business model that generates signficant non-sales revenue you don't get a cut of. And how about sharing online advertising revenue from streaming free video? There the parties need to decide who will take the lead on cutting deals. Are artists going to understand the online music world, and related revenue streams today and in the future, to make good decisions? How, as an artist, do you make sure revenue is accounted for fairly when your song is packaged with other artist's songs on a membership site? Your revenue share might be a percentage of membership dues, but is the percentage of dues fair, and what formulas can be put into play that will adjust compensation fairly? How do you make sure you are being paid fairly?

It is going to be an interesting process to be involved in over the coming months and years. Today, the artists are in a commanding position. They can opt to go it alone and distribute product directly online. Labels have to come to the table with a great value proposition. They don't seem to have any real options. My guess is that labels will try to treat the online music sites the same way they treated the brick and mortar music stores. We'll see if they can pull it off and control the distribution point. If they can, they'll be in control once again. It will take some remarkable strategic and tactical thought leaders working outside of the box to pull this off. Is it possible? I think so. Is it likely? Doubtful.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:43 pm

The Law of Protecting Data, by John W. Dozier

August 04, 2007

In my former life, I was the architect of a high volume credit card account processing system allowing hundreds of businesses to conduct highly secure and reliable e-commerce with major financial institutions. Our clients were some of the largest banks and credit card issuers in the world. It was a hard sell to very conservative banks in the mid-1990's, to be sure. Data security and privacy concerns had to be overcome. Today, legislation in the banking and medical industries mandate security requirements surrounding data. But what laws mandate best of breed data security policies and practices for the typical online retailer? Some states have laws requiring disclosure of data losses. But, for the most part, legislators have stayed away from creating standards for data security. The reasoning is that Government can only go so far when it comes to dictating how companies operate internally. I like the concept of a "hands-off" approach to governmental intervention. I prefer to let the industry set and, most importantly, enforce data protection standards. And that is happening. Take a look at the PCI Data Security Standard from the payment card industry that everyone is required, by contract, to follow. Nothing about it seems particularly onerous. It includes logical steps a company should be taking already to protect systems and data, requires appropriate documentation, and it also mandates ongoing auditing. It looks a lot like the business requirements we worked with ten years ago.

And with the hands off approach so far of the federal government, everyone would be wise to implement the data protections standards and program voluntarily. Self regulation is critical to avoid the burden of another federal law that increases the cost of doing business. Once again, these regulations are part of the contract with all credit card issuers today, and the penalties for non-compliance are huge, and they apply to everyone accepting credit cards to varying extents.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:44 pm

Silicon Valley Lawyer this Week, by John W. Dozier

August 17, 2007

Just got back from HostingCon in Chicago, and I'm off again to San Jose for SES this week. We'll be there to meet many of our Silicon Valley clients and everyone else who wants to drop by. It's refreshing to get out and get some face time with those innovating the latest and greatest web based business strategies. I've been in this industry since 1994, raised venture capital and gone through the Internet bubble of the late 1990's as an entrepreneur, and with the evolution of technology and the business of the web that seems a long time ago now. I cannot imagine how I could practice in this field if not constantly engaged in the latest and most exciting changes. You definitely need to live the web constantly to stay in touch with the legal issues.

We've been working with a lot of start-ups lately. Now that the VCs are investing aggressively again, things are really heating up. It's tough to draw the line between my Internet entrepreneur days and my lawyer's role today. Business decisions are for clients. Fortunately we are able to ask the right questions, I think, to help our clients avoid some really imprudent decisions. We have a lot of smart clients working on launching new businesses and with a little prompting they do a very good job of figuring things out and weeding out faulty business models or strategies. The market is so up and down right now that it is hard to say what the future holds, but VC money is back, and in a big way. With some luck we'll see some more successful IPOs, and with that will come higher valuations for clients and better VC terms. We'll see how that plays out.

One of the hottest areas right now is music industry sites. With all of the attention the music industry has been receiving lately, it's no wonder a lot more of these sites are being proactive in managing risk. It's really not rocket science to get protected from trademark, copyright, defamation, privacy, and 2257 liability, but I am not sure there are many law firms out there willing to stick their neck out to give a definitive opinion on what to do to protect yourself. I'll blog a bit about the Search Engine Strategies conference upon my return.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:45 pm

SES Conference Update, by John W. Dozier

August 26, 2007

The search engine industry conference in Silicon Valley was quite a show. Several thousand attendees (many of the biggest names in online search). Keep an eye out for an interview I did with the main Search Engine Watch website on trademark infringement and related issues for the SEO industry. There will also be a video coming out on Youtube from an interview I did with another industry site.

My take is that the industry is maturing, but Google basically is in the driver's seat. The entire SEO and online marketing industry follows Google's lead in almost every arena. Remarkable to see the devout following. It's also interesting to watch Microsoft, Yahoo and others mimic many of the Google offerings and business models (months or years behind Google). If anyone questions the dominant role Google is playing in the online advertising space they probably weren't at the conference.

Also had the opportunity to spend some time at the Google HQ. Interesting place, obviously, and the reputation is seemingly deserved. I heard one young recent college grad explain to another Googler that he had been there three weeks, and it was like Disneyland and he never wanted to leave. I guess having employees who are enthused and want to work all the time is business justification for the unique and relaxed work environment.

Our Beverly Hills office is jumping with music industry work. This area is exploding. We met alot of people from the mainstream music labels and related businesses looking to leverage assets into online businesses. Legally most of the sites will be fine. The success will lie in execution, and it will be interesting to see how the artistic and creative types do in a technology and business environment with competition coming from all corners of the globe.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:45 pm

"Internet Attorney": How We Work, by John W. Dozier

August 29, 2007

You go to a large firm, arrange a conference call, and tell the Intellectual Property lawyer that someone came to your site, ran a spider, took your content, and launched a competing site. That someone, you just found out, is a former business partner who is also defaming your company on blogs. The IP lawyer, adept at filing copyrights and trademarks, drafting licensing agreements, and all of the standard IP work, looks dazed. He sees a litigation issue, and reschedules the call so he can include the litigation team. The litigation team asks you to explain what a spider is to them, but instead opts to bring in a young lawyer in an unrelated department who "knows technology" to assist them. When the business partnership issue comes up, they call their corporate and business organization lawyer to see what actual legal obligations exist and the issues surrounding the business entity ownership. While they are doing this, the contract department lawyer is called to get his feedback on your site's user contract to see if the access was prohibited by contract, and then the post judgment remedies lawyer (bankruptcy and collections) will evaluate the ability of this ex-business partner to pay a judgment if monetary damages are pursued. And, of course, the IP lawyer is still involved to guide the team on the copyright issue, but he is busy getting the Ist amendment lawyer involved to see whether you can obtain an injunction prohibiting this former partner's blog attacks. You can envision a very funny Youtube video about this process, can't you? A week later you realize that the legal issues include contract, copyright, business organization, litigation, torts, freedom of speech, bankruptcy and collections.

Here is how we work. Our firm is organized by the nature of the client. But instead of having a general practice in which this would be difficult to manage, we only handle the law of the web. If your legal issue is outside this subject matter, we refer you to another firm. That way, we can organize our practice around the subject matter of the web, and not have to divide our expertise by legal category. In the example above, this meeting would have involved one lawyer with the expertise to explain to you the issues involved with the legal partnership entity, the terms of use, the copyright and related infringement, the unauthorized access under state and federal computer crimes statutes, litigation, first amendment, and debt collection if this ex-partner filed bankruptcy.

Yes, we work in a highly collaborative environment as a team, but one team working on the same type of issues every day. I think that makes a big difference to our clients, particularly when a quick answer is needed to a pressing need. Big firms struggle with this because their skill sets are spread out among many different departments. Small boutique firms with an intellectual property practice struggle because they often don't have the wide scope of experience necessary.

I am not sure that firms can ever move away from being organized by legal specialties because it adds significant value to the big client. Lawyers who organize and manage corporate filings and registrations are really good at that. Employment lawyers are really good at dealing with employment and personnel matters. Litigators are trial lawyers, and they are really good at trying cases. This creates an obvious benefit for most clients of the firm. But not for the Internet business client who is faced with a problem that requires expertise across multiple legal practice areas.

Our skills are very broad in nature, but highly focused in application. Holistic analyses of problems or issues are at the core of our value equation. So for all of you who wonder why we limit our practice so "narrowly" to the law of the web, that's why.
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