CL&P Blog

Mobile Payments and Consumer Protection

With over two-thirds of the world’s population having a mobile phone, companies are rapidly developing “mobile payment” options for consumers in both developed and developing nations. The University of Washington School of Law and Samuelson Law, Technology & Public Policy Clinic at Berkeley Law are hosting a one-day conference in Seattle on October 29, 2010, that will explore the promises and pitfalls of this emerging commerce platform. Titled, Mobile Payments and Consumer Protection Conference, the conference will deal with questions such as:

• What are the benefits to the consumer of mobile payments –(e.g. remittances, money transfer for the unbanked, efficiency, more security and control)?
• What advantages do mobile payments offer that other forms of payment mechanisms do not?
• How do mobile payments fit into existing regulatory frameworks in the US, EU and other markets?
• What sort of regulatory models will encourage mobile payments adoption in both developed and developing markets? Should telecommunications operators, financial institutions and other business entities be permitted to compete to provide these services?

Panelists and speakers include Ignacio Mas (Bill and Melinda Gates Foundation), Adam Levitin (Georgetown Law), Bill Maurer (U.C. Irvine), Thomas Brown (O’Melveny & Meyers LLP), Gail Hillebrand (Consumers Union), Chris Hoofnagle (Berkeley Law), and many others. The conference is free, although registration is required. 5.0 General CLE credits are available ($50 for CLE course materials). (Thanks to Colin Hector, who is helping organizing this conference, for the tip.)

Details are available at https://www.law.washington.edu/cle/seminars/mobilepay/ 

Ron Lieber Column: How ING's Mortgage Ads Are Misleading

Here.  An excerpt:

The ING Direct loan is called a 5/1 Orange Mortgage, and as of early September, it came with a 3.25 percent interest rate for the first five years and a projected interest rate of 3.375 percent for the 25 years after that.

Yes, you read that right, under 3.5 percent for the next 30 years.

But that is not right, in any number of ways. First of all, by not using the words “adjustable rate mortgage” or similar terms to describe the loan, ING Direct violated a simple Federal Reserve disclosure rule that was revised in 2008.

And that “projected” interest rate suggesting that today’s record low rates will continue for a generation? It is utter nonsense. But ING Direct seems to have had no choice but to use the numbers that it did, because of another relatively new Federal Reserve rule.

For more on the problems with the Truth in Lending disclosures, see my forthcoming Ohio State Law Journal article at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1531781.

Ninth Circuit says consumers may not own their software

by Greg Beck

Most people outside the software industry probably assume that when they pay money in exchange for a package of software, they have just purchased that software. In Vernor v. Autodesk, the Ninth Circuit today cast that assumption into doubt. The court held that Timothy Vernor, who purchased authentic, second-hand copies of software at garage and office sales to sell on eBay, did not own that software and thus had no right to resell it.

Public Citizen represented Vernor in his case against software-publisher Autodesk, which claimed that reselling the software on eBay was copyright infringement. The district court agreed with Vernor and rejected Autodesk’s copyright argument, holding that Vernor had a right to resell the software under copyright’s first-sale doctrine. The first-sale doctrine holds that the “owner of a particular copy” of a copyrighted work has the right to resell that work without permission of the copyright owner. The doctrine dates from a 1908 Supreme Court decision in which the Court held that a book publisher could not restrict the price at which its books were sold on the secondary market, and Congress subsequently added the doctrine to the Copyright Act as one of the law’s crucial consumer-protection provisions. Here, the district court held that Vernor was the “owner” of the software, and thus entitled to the doctrine’s protection, because Autodesk had distributed the software in exchange for a one-time payment and had no expectation that the software would ever be returned. In other words, because the transaction looked like a sale, it was a sale.

The Ninth Circuit disagreed, relying on the “license agreement” that Autodesk packages with its software. The license stated that Autodesk retained title in the software, restricted redistribution, and imposed some other terms that are pretty typical in the software industry, such as a prohibition on reverse engineering. The Ninth Circuit held that these terms were restrictive enough that anyone in possession of the software could not be considered its actual owner. Although Vernor never installed the software or agreed to its terms, the court held that license effectively bound him anyway because Autodesk, as the software’s legal owner, could dictate the terms on which it was used.

If standard fine-print license terms like Autodesk’s are enough to withhold ownership, it is safe to assume that most people do not own the software they believe they have bought. And, unfortunately, there is no obvious reason why other publishing industries couldn’t begin imposing the same terms. If they do, it may be the end of ownership of books and music.

The Ninth Circuit acknowledged the seriousness of some of these concerns, but held that its hands were tied by prior circuit decisions. Hopefully, the en banc court will be willing to reconsider those decisions.

Jeff Gelles on "Click and Trick"

Here and here. The practice, sometimes called "data pass," refers to a transaction in which a consumer deliberately purchases something on the web and then agrees to a second transaction without realizing it because the consumer's credit card information is provided directly to the second company without the consumer supplying it again.  Visa has agreed to stop participating in such transactions, and Senator Jay Rockefeller plans to propose legislation to bar the practice.

The Hot News Doctrine Rides Again

by Paul Alan Levy

 Does a firm that expresses an opinion "own" that opinion, and thus have the ability to prevent others from reporting on the fact that the firm has expressed the opinion?  When a newspaper or other entity reports some facts, does it "own" the news and can it prevent others from truthfully reporting the same facts?  Granting ownership in important public facts would seem to be at odds with intellectual freedom, yet it takes resources to develop the facts and news organizations have been struggling to invoke concepts of ownership as a way to ward off competition for readers from online news web sites that re-report what the established media are reporting.

A ruling yesterday by U.S. District Judge Denise Cote holds the online financial reporting firm theflyonthewall.com liable for both copyright infringement and misappropriation for engaging on the business of obtaining trading recommendations issued by the financial analysts at major brokerage and investment firms and publishing them before the market opens.  As in many situations involving a hot news claim, the defendant was also republishing copyrighted content, thus making it much harder to sympathize with the defendant. At the same time, one might well wonder why copyright law does not provide sufficient protection for the public interest in encouraging the creation of the underlying intellectual work, and whether the threat to freedom posted by the hot news doctrine is justified as a matter of public policy by a need to foster the creative endeavor.  

Although the so-called hot-news doctrine has been acknowledged in strong dicta in a number of Second Circuit cases, most notably NBA v Motorola in 1997, that court has not issued a holding in the modern era on whether the Supreme Court’s World War I era ruling in International News Service v. Associated Press survives either copyright preemption or the First Amendment.  With the defendant declaring its intent to appeal, the case will likely set up a major test of this hoary doctrine.

Using the DMCA to Remove a Video Because It Is Embarrassing

by Paul Alan Levy

The New York Times has a story today about a video prank and its consequences for Domino's.  Two employees made up a story about polluting products at Domino's pizza with mucus and such, made some short videos in which they claimed that they were producing such Domino’s cheese steaks for delivery, then posted them online. In one of the videos, the female voice remarks that the employees’ manager doesn’t know what they are doing because the manager “is back in the back reading the newspaper, like always, while we are out here, clowning around, putting snot in people's food.”

The story reports that the videos have been removed from YouTube "because of a copyright claim from Ms. Hammonds" (one of the two employees).  But the Times links to a YouTube video from the CEO of Domino's profusely apologizing for the actions of the two "team members" (that awful euphemism for "employees") and assuring the public that the food available for purchase at Domino's is not adulterated.

Somehow it seems hard to judge all this without seeing the context of the YouTube posting.  We may presume the falsity of the assertions that these food products were actually prepared for delivery to customers (and the implicit assertion that Domino's staff engage in such abuses regularly).   And yes, Domino's deserves protection from having knowingly false statements about it online.  But somehow it seems a perversion of copyright law for the DMCA to have been used to take the video down.  Since it was Hammonds who made the copyright complaint, she must not have been the one who posted it to YouTube (she could take down her own video after all).  Once there is a controversy, might not the posting of the video, as a way of informing the public about the misconduct of Domino's staff, be fair use?  Or perhaps this is really a commentary on the hostility of low-paid fast food "team members" toward a higher paid "team member." Why should the video be removed before the the poster has had a chance to respond to the copyright infringement charge?

Taking down the YouTube "prank video" about Domino's seems a bizarre abuse of the DMCA.  Yes, Domino's would be entitled to complain about a libelous video, and to publicize its response, but here we are seeing only the Domino's response, but not the subject of the response.

I wonder if this doesn't tend to reinforce the need to change the DMCA so that takedowns don't happen without notice and an opportunity to respond 

Note: the videos are still available on the always reliable Consumerist.