July 22, 2008

Two weeks ago, LVMH, the luxury brand, won a French court case against eBay for the sale on eBay of counterfeit goods bearing the LVMH name. Brad Stone now tells us a similar case went for eBay against Tiffany (*). At first glance, one may attribute the difference to the fact Tiffany sued eBay in an American federal court. According to the judge, "Tiffany has failed to demonstrate that eBay knowingly encouraged others to dilute Tiffany's trademarks". Contrast this opinion to the order issued by another American federal judge in the case pitting Viacom and YouTube. It resulted, as Kevin Allison reports (**), in an agreement by YouTube to "hand over 12 terabytes of data logs to Viacom's lawyers". Not exactly an endorsement of YouTube on an issue, copyright infringement by users of a major Internet listing service, which parallels the eBay affair.

Caution warns us that Tiffany may appeal and that Viacom may fail to find sufficient fire in its YouTube log pile. Experience tells us that US Federal Courts are known to agree to disagree. Nevertheless one thing looks certain, legal uncertainty clouds the prospects of any information-based intermediary. Internet is not the culprit per se, only a magnifying agent. Look at Stephanie Clifford and Jenny Anderson's article about attempts by the SEC to curb rumors (***). "Traders know there is false information in the market. They need to think twice if they are going to pass it on."

Our Information Age has reached a critical mess and I am afraid those legal decisions which are not bought outright by wealthy and crafty litigants are being made in a haphazard way, despite the best intentions of honest judges. If you want to convince me otherwise, please answer three simple questions. What is information? What is truth? Who owns it?

As long as these questions are left hanging, how can the SEC hope to catch "false information" consistently? Can one truly understand, let alone regulate, product placement, a growth behavior recently analysed by Stephanie Clifford (****)? And how can one settle the lawsuit brought by an ex-employee of Structured Settlement Investments, who "found out his former employer was reading his personal Yahoo e-mail messages, after he had left the company", a case examined by Jonathan D. Glater (*****)? Isn't our very motto, "Privacy, Identity, Responsibility", left meaningless?

Addressing each question is a major theme of these fillips, which I urge the reader to browse. Today we will be content to put down some markers.

Apropos YouTube Saul Hansell states "subpoena dispels illusion of privacy" and asks some awkward questions of his own (******). Boldly go a bit beyond and imagine that Structured Settlement Investments is not allowed free access to personal information left on its own computers while Viacom may luxuriate in snooping on personal information left on YouTube computers. Crazy? Yes. Possible? Certainly. Dangerous? Quite. Rightly recalled by Kevin Allison, the 2006 AOL lapse shows personal information becomes identifiable past a low critical mass.

Not all information is personal but no information appears without an author and a context. Doctoring photographs (1) distorts facts. But false information does not always rely on lying about content. Hide the author and you get a form of counterfeiting. Isn't it what problems about product placement are all about? Remove the context and you feed a rumor. Isn't this why the New Yorker cover featuring Barak Obama and his wife (2), so easily stripped of its satirical intent, generated controversy?

Much as privacy itself has being mocked as past its due date, it is tempting to ridicule such legitimate concerns, especially since knee jerk countermeasures tend to be "archaic and intrusive", as Stephanie Clifford puts it nicely. Offenders prefer to wink at the public, assumed to be in the know. False information? Get over it, everybody does it. This is exactly why, once entrenched, corruption is so difficult to fight.

The first step toward a solution is to stop belittling the issues. It can literally be a matter of life and death. Witness the abuse of the Red Cross symbol during the daring rescue of hostages from Colombian rebels (*******). Errors of this kind encourage errors of the worst kind. To kill potential masqueraders, one has only to shoot at all Red Cross representatives, in line with the current approach to national security.

As a second step, why not link business model to responsibility? In its fight against rumors, suppose the SEC fine any company trading in securities about which its employees had spread misleading statements. It is much easier to conduct such after the fact inquiries which do not focus on the source of a rumor. Searching email archives could be done without violating confidentiality. Made liable for verifying the information it passes on for profit, each company would then act in self-interest, free from any regulation.

Similarly the FCC should request that authors and sponsors be clearly listed before and after all entertainments, with corresponding corporate logos when appropriate. Anything less would be a falsification easy to track down after the fact but content should be left to speak for itself. When indulging in a passing peek, those who are entertained should be held responsible for guessing at the context and the authors as well as the plot.

If one considers business models, the case against eBay becomes convincing. Taking a percentage of each transaction, eBay cannot claim to be at arm's length from its sellers and ought to be partially liable for its sellers' misbehaviors. Can the same be said of YouTube, or the US Postal Service?

Can such a pragmatic approach clean up the current critical mess? Think again. By the same token, credit reporting bureaus would have to either become responsible for ID theft or change their business model. Instead expect flights from responsibility to remain overbooked.

Philippe Coueignoux

• (*) ................... EBay Cleared In Site's Sales Of Knockoffs, by Brad Stone (New-York Times) - July 15, 2008
• (**) ................ YouTube and Viacom reach data deal, by Kevin Allison (Financial Times) - July 15, 2008
• (***) .............. S.E.C Warns Wall Street: Stop Spreading the False Rumors, by Stephanie Clifford and Jenny Anderson's (New-York Times) - July 14, 2008
• (****) ............ Product Placements Acquire a Life of Their Own on Shows, by Stephanie Clifford (New-York Times) - July 14, 2008
• (*****) .......... Open Secrets, A Company Computer and Questions About E-Mail Privacy, by Jonathan D. Glater (New-York Times) - June 27, 2008
• (******) ....... Subpoena Dispels Illusion of Privacy, by Saul Hansell (New-York Times) - July 16, 2008
• (*******) ..... Colombian Soldier Wore Red Cross Logo in Hostage Rescue, AP report (New-York Times) - July 17, 2008
• (1) for a more recent example, read about the recent Iranian missile launch
• (2) here is the cover, by political illustrator Barry Blitt.
  This apparent lack of sensibility can be seen as a very clever case of ambush marketing by the New Yorker brand against the Obama brand.