copyright law
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How Kobalt is simplifying the killer complexities of the music industry
Backed by over $200 million in VC funding, Kobalt is changing the way the music industry does business and putting more money into musicians’ pockets in the process.
In Part I of this series, I walked through the company’s founding story and its overall structure. There are two core theses that Kobalt bet on: 1) that the shift to digital music could transform the way royalties are tracked and paid, and 2) that music streaming will empower a growing middle class of DIY musicians who find success across countless niches.
This article focuses on the complex way royalties flow through the industry and how Kobalt is restructuring that process (while Part III will focus on music’s middle class). The music industry runs on copyright administration and royalty collections. If the system breaks — if people lose track of where songs are being played and who is owed how much in royalties — everything halts.
Kobalt is as much a compliance tech company as it is a music company: it has built a quasi “operating system” to more accurately and quickly handle this using software and a centralized approach to collections, upending a broken, inefficient system so everything can run more smoothly and predictably on top of it. The big question is whether it can maintain its initial lead in doing this, however.
The business of a song
Image via Getty Images / Mykyta Dolmatov
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How a Swedish saxophonist built Kobalt, the world’s next music unicorn
You may not have heard of Kobalt before, but you probably engage with the music it oversees every day, if not almost every hour. Combining a technology platform to better track ownership rights and royalties of songs with a new approach to representing musicians in their careers, Kobalt has risen from the ashes of the 2000 dot-com bubble to become a major player in the streaming music era. It is the leading alternative to incumbent music publishers (who represent songwriters) and is building a new model record label for the growing “middle class’ of musicians around the world who are stars within niche audiences.
Having predicted music’s digital upheaval early, Kobalt has taken off as streaming music has gone mainstream across the US, Europe, and East Asia. In the final quarter of last year, it represented the artists behind 38 of the top 100 songs on U.S. radio.
Along the way, it has secured more than $200 million in venture funding from investors like GV, Balderton, and Michael Dell, and its valuation was last pegged at $800 million. It confirmed in April that it is raising another $100 million to boot. Kobalt Music Group now employs over 700 people in 14 offices, and GV partner Avid Larizadeh Duggan even left her firm to become Kobalt’s COO.
How did a Swedish saxophonist from the 1980s transform into a leading entrepreneur in music’s digital transformation? Why are top technology VCs pouring money into a company that represents a roster of musicians? And how has the rise of music streaming created an opening for Kobalt to architect a new approach to the way the industry works?
Gaining an understanding of Kobalt and its future prospects is a vehicle for understanding the massive change underway across the global music industry right now and the opportunities that is and isn’t creating for entrepreneurs.
This article is Part 1 of the Kobalt EC-1, focused on the company’s origin story and growth. Part 2 will look at the company’s journey to create a new model for representing songwriters and tracking their ownership interests through the complex world of music royalties. Part 3 will look at Kobalt’s thesis about the rise of a massive new middle class of popular musicians and the record label alternative it is scaling to serve them.
Table of Contents
- Early lessons on the tough road of entrepreneurship
- From band leader to music label founder
- Leaving music behind… but not for long
- So what exactly is Kobalt?
- The wind (finally) in Kobalt’s sails: music is booming again
- What Kobalt is today
- How I’ll assess Kobalt over the next two posts
Early lessons on the tough road of entrepreneurship
Image via Kobalt Music
It’s tough to imagine a worse year to launch a music company than 2000. Willard Ahdritz, a Swede living in London, left his corporate consulting job and sold his home for £200,000 to fully commit to his idea of a startup collecting royalties for musicians. In hindsight, his timing was less than impeccable: he launched Kobalt just as Napster and music piracy exploded onto the mainstream and mere months before the dot-com crash would wipe out much of the technology industry.
The situation was dire, and even his main seed investor told him he was doomed once the market crashed. “Eating an egg and ham sandwich…have you heard this saying? The chicken is contributing but the pig is committed,” Ahdritz said when we first spoke this past April (he has an endless supply of sayings). “I believe in that — to lose is not an option.”
Entrepreneurial hardship though is something that Ahdritz had early experience with. Born in Örebro, a city of 100,000 people in the middle of Sweden, Ahdritz spent a lot of time as a kid playing in the woods, which also holding dual interests in music and engineering. The intersection of those two converged in the synthesizer revolution of early electronic music, and he was fascinated by bands like Kraftwerk.
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Can the law be copyrighted?
UpCodes wants to fix one of the building industry’s biggest headaches by streamlining code compliance. But the Y Combinator-backed startup now faces a copyright lawsuit filed against it by the International Code Council, the nonprofit organization that develops the code used or adopted in building regulations by all 50 states.
The case may have ramifications beyond the building industry, including for compliance technology in other sectors and even individuals who want to reproduce the law. At its core are several important questions: Is it possible to copyright the law or text that carries the weight of law? Because laws and codes are often written by private individuals or groups instead of legislators, what rights do they continue to have over their work? Several relevant cases, including ones involving building codes, have been decided by different circuits in the United States Court of Appeals, which means the UpCodes lawsuit may potentially be heard by the Supreme Court.
Brothers Scott and Garrett Reynolds founded UpCodes in 2016. While working as an architect, Scott says he realized how laborious code compliance is for builders, who are required by law to follow codes that determine things like the height of handrails from the ground, minimum width of openings for bedroom windows, placement of light switches or how many electrical outlets to have in a hallway.
These details are important to ensure buildings are safe and accessible and an oversight may subject builders and property owners to legal penalties, fines and costly rebuilding. Firms that can afford to do so hire code consultants, but on an industry-wide level, the process of code compliance has been cited as a key reason for reduced productivity in the construction industry and rising home prices.
Scott decided to leave architecture to develop tools that would simplify the process, and was joined by his brother Garrett, then a software engineer at construction management software company PlanGrid. The two completed Y Combinator’s accelerator program in 2017 and so far have announced $785,000 in funding from angel investors, Y Combinator and Foundation Capital.
Brothers Scott and Garrett Reynolds, who founded UpCodes to streamline building code compliance
UpCodes’ first product, an online database, gives free access to codes, code updates and local amendments from 32 states, as well as New York City. For building professionals and others who want more advanced search tools and collaboration features, UpCodes sells individual and team subscriptions. In 2018, UpCodes released its second product, called UpCodes AI. Described as a “spellcheck for buildings,” the plug-in scans 3D models created with building information modeling (BIM) data and highlights potential errors in real time.
Just as technology has dramatically streamlined the compliance process in other highly regulated sectors, including finance and healthcare, Scott and Garrett Reynolds say tools like UpCodes’ can increase productivity in the building industry. The startup currently has more than 200,000 monthly active users, and has served over 10 million page views and 2 million users since launch.
It argues that its use of building codes is covered by fair use. The ICC, on the other hand, claims that products like UpCodes’ database harm its ability to make revenue and continue developing code. The ICC wants UpCodes to take down the building code on which it claims copyright, and has also sued for damages.
Making building codes more accessible
Served on UpCodes in September 2017 by the ICC and the American Society of Construction Engineers (ASCE), the lawsuit also names each of the brothers as a defendant. (UpCodes settled out of court with the ASCE).
‘We have a very long tradition that in a society governed by the rule of law, people have the right to access the law by which they are governed.’ Corynne McSherry, legal director of the Electronic Frontier Foundation
The brothers say they were shocked because they believed they were covered by the fair use doctrine. In the US, fair use is determined using four factors: the purpose and character of the use, the nature of the copyrighted work, the amount and substantiality of the portion taken and the effect of the use on the potential market for or value of the copyrighted work. In one of the circuit court cases that involved building code, Veeck v Southern Building Code Congress International (2002), the judges ruled that when model codes are enacted into law, they enter the public domain.
“The people who are impacted are obviously architects, engineers, industry professionals, but also any homeowners or people living in a house or apartment are affected, too,” says Scott Reynolds. “If you want to do a renovation or move a wall or add an extension to your house, it is the exact same law that governs those as well. It’s a pretty dangerous precedent to set, copyrighting law in a democracy.”
The brothers see their database as an easy-to-use resource for anyone who wants to research building code. For example, they say they heard from an older couple who used UpCodes’ free access to confirm they had the right to demand a broken elevator in their building be fixed within a certain timeframe.
Formed in 1994 by the merger of three regional model code groups, the International Code Council is a nonprofit with 64,000 members headquartered in Washington DC. Its model codes and standards are developed by committees made up of volunteers from its membership and ICC staff. The ICC lobbies for the code to be enacted into law, and earns revenue by selling code books and running accreditation programs.
Some places, including Michigan, direct people who want to research building codes to buy the books from the ICC’s site. The ICC’s website has code posted for free viewing, but copy and paste, highlighting, printing and other functions are disabled unless users pay a subscription fee. Scott and Garrett Reynolds say this makes it more difficult to research code compliance, especially for non-professionals. UpCodes uploads building codes from various sources, including government websites, the ICC’s site and ICC code books ordered online, scanned and put into its database. The ICC argues that this violates its copyright and hurts the organization’s ability to raise revenue through code book sales.
“What is really at the crux of this lawsuit is that we develop the highest quality codes that are adopted and used by governments at essentially no cost to the taxpayers and UpCodes is misappropriating ICC codes to generate their for-profit business,” says Mel Oncu, ICC’s general counsel.
When adopting code, many jurisdictions look at what others are doing, which has helped increase the use of ICC’s code. But codes still vary between cities and states, with the Economist reporting in 2017 that American counties and municipalities use a combined total of 93,000 different building codes, and are updated frequently, adding another layer of complexity to the compliance process.
Corynne McSherry, legal director of digital liberties advocacy group the Electronic Frontier Foundation, says at stake in the case is the principle of access to the law.
“Many of us don’t think about this area of law, but it’s one of the most influential to our daily lives. We think of law in terms of what we see onscreen, but not too many of us normally have to engage with a crucial constitutional problem like those portrayed in movies. Hopefully most of us don’t have to encounter criminal law that much. But building codes actually shape our daily lives in incredibly concrete ways,” McSherry says.
Because the codes are legally binding, “that makes a pretty significant difference under copyright law and under fundamental constitutional law. We have a very long tradition that in a society governed by the rule of law, people have the right to access the law by which they are governed,” she adds.
An issue that’s come up before
Questions surrounding copyright and access to the law have been litigated several times in the United States courts of appeals. Two cases in particular may help UpCodes’ argument: Building Officials and Code Administration (BOCA) v Code Technology (1980) and Veeck v Southern Building Code Congress International (SBCCI) (2002). Two more recent cases involving Public.Resource.org, a nonprofit group that publishes public domain materials to its website, may also bolster UpCodes’ position: Code Revision Commission v Public.Resource.org (2017) and American Society for Testing and Materials et al. v Public.Resource.org (2018).
BOCA (one of the three groups that merged into ICC in 1994) developed a model building code that was adopted by Massachusetts, with some minor modifications, which BOCA then published as the Commonwealth of Massachusetts State Building Code. When private publisher Code Technology began publishing and selling its own edition of the code, BOCA sued. The case made it to the First Circuit, which ruled in Code Technology’s favor, stating that it was “far from persuaded that BOCA’s virtual authorship of the Massachusetts building code entitles it to enforce a copyright monopoly over when, where and how the [code] is reproduced and made publicly available.”
Then more than two decades later, another case resulted in a similar ruling. The Southern Building Code Congress International, another one of the three regional groups that formed the ICC, published a model building code adopted by local governments, including the towns of Anna and Savoy in Texas. Peter Veeck, who ran a website with free information about North Texas, bought copies of the code from the SBCCI, then scanned and uploaded them.
When the SBCCI demanded he stop, Veeck responded in a court filing that posting the code did not violate the Copyright Act and was covered by fair use. The SBCCI counterclaimed for copyright infringement. While the district court ruled in the SBCCI’s favor, the appeal made it to the Fifth Circuit, where Judge Edith Jones wrote in her opinion for the nine-judge majority that “as law, the model codes enter the public domain and are not subject to the copyright holder’s exclusive prerogatives.” The SBCCI’s attempt to appeal to the Supreme Court was denied.
The Economist reports there are 93,000 building codes in use between American jurisdictions and municipalities
Building codes and copyright were also at the center of the two cases involving Public.Resource.org. A lawsuit filed by the state of Georgia’s Code Revision Commission in 2015 sought to stop it from publishing the Official Code of Georgia Annotated (OCGA) after founder Carl Malamud purchased a hard copy of the OCGA, scanned it and sent copies on USB sticks to Georgia legislators. The Code Revision Commission argued that the annotations they wrote placed it under state copyright, but the Eleventh Circuit ruled in Public.Resource.org’s favor last year.
In another recent case, six industry groups, including the American Society for Testing and Materials, sued Public.Resource.org for scanning and publishing building, fire and safety codes they considered their copyrighted property. After the District Court for the District of Columbia ruled against Public.Resource.org, the case went on appeal to the DC Circuit. In July 2018, a three-judge panel reversed the decision, and sent the case back to the district court for further consideration, stating that “in many cases, it may be fair use for PRO to reproduce part or all of a technical standard in order to inform the public about the law.”
One difference between the Public.Resource.org cases and UpCodes’ is that Public.Resource.org is a non-commercial group, a fact that strengthens their fair use argument. UpCodes, on the other hand, is a commercial company, which will become part of the fair use analysis if their case makes it to trial. But that is not a decider, says McSherry, who represented Public.Resource.org in both cases, and the judges are likely to consider the Public.Resource.org cases, as well as the Veeck and other building code cases.
Because the Veeck case never made it to the Supreme Court, that means it hasn’t heard a case on the copyright availability of legal codes, or codes with the force of law, in a very long time, says Joe Gratz, a lawyer who has litigated several high-profile internet copyright and trademark disputes and is representing UpCodes and the Reynolds brothers. This opens the possibility of the ICC lawsuit making it to the Supreme Court.
“So now you have at least three of the circuits — DC, Fifth and Eleventh — all totally lined up, effectively saying that Veeck was right,” Gratz adds.
The ICC’s argument
But the ICC’s position is that the Veeck case is “bad law,” says Oncu, adding that the decision was made two decades ago, before developments in technology allowed the organization to host free access to codes on its own website.
The ICC’s lawyers note that the organization also works with third-party distributors that license the code. “UpCodes could have come to ICC at any point and asked to lawfully reproduce the codes that we own. The idea that they can’t accomplish their mission without violating our copyright doesn’t make much sense to me,” says Oncu.
(In response, Garrett Reynolds says “It’s absurd to license the law. ICC thinks they’re the gatekeepers and anyone wanting to share the law needs to pay their toll. ICC doesn’t get to decide who’s allowed to create new innovations to help people follow the law.” UpCodes did not ask ICC to license the code.)
There are two copyright cases, decided in circuit court, that support ICC’s position, says lawyer Kevin Fee, a Morgan Lewis partner who is representing the organization: CCC Information Services v. Maclean Hunter Market Reports (1994) and Practice Management Information v. American Medical Association (1998).
’The idea that they can’t accomplish their mission without violating our copyright doesn’t make much sense to me.’ Mel Oncu, International Code Council’s general counsel
In 1994, the Second Circuit sided with Maclean, publisher of used car valuation reference Red Book, which alleged CCC, a data and service provider for the automotive industry, violated its copyright by uploading information from the guide to its online network. In its decision, the court said “We are not prepared to hold that a state’s reference to a copyrighted work as a legal standard for valuation results in loss of the copyright.”
In the second case, Practice Management Information, a medical coding products company, sued the American Medical Association over the use of Current Procedural Terminology (CPT), a medical code set that is required by Medicare and HIPAA and appears in the Federal Register. Practice Management claimed that this meant AMA’s copyright was invalid, but the Ninth Circuit disagreed, writing in its 1997 decision that “the AMA’s right under the Copyright Act to limit or forgo publication of the CPT poses no realistic threat to public access.”
The ICC claims that its training and education certification business isn’t enough to fund code development.
“Copyright protection of our codes is essential to our ability to continue to update our codes,” says Oncu. She adds that the ICC believes if the lawsuit is ruled in UpCodes’ favor, it may potentially set a precedent that will make it difficult for it to have a revenue stream and continue creating high-quality codes.
Scott and Garrett Reynolds, however, say that the ICC appears to have healthy revenue. In its 2016 annual report, the ICC said its consolidated revenue in 2015 was $66 million, an increase of $4.3 million compared to 2014, and that it “consistently records over $1 million in sales per month” through its online store. Then from 2015 to 2016, ICC’s revenue increased by $12 million, according to a report presented by chief executive officer Dominic Sims at an annual meeting. (The ICC did not disclose an amount for consolidated revenue in its 2017 annual report, and hasn’t released its 2018 annual report yet.)
The UpCodes founders also note that Sims, the ICC’s CEO, was paid $709,000 in 2016, according to a tax filing, much more than the $104,000 median annual salary for nonprofit CEOs. (Oncu says that ICC’s salaries are comparable to other standards organizations.)
Potential implications for innovation
One of UpCodes’ angel investors, Cyrus Lohrasbpour, decided to back the company when he saw them present during Y Combinator’s Demo Day. Lohrasbpour says he was impressed by the accessibility of the website and its team collaboration tools.
“I immediately understood the value proposition of the company,” he says. “It was hard for me to understand why building codes didn’t have something like this already.” Lohrasbpour was one of two investors deposed by the ICC as part of the lawsuit, but despite being questioned for five hours by lawyers, he says the experience made him more determined to support UpCodes. “If you invest in a company that will disrupt an incumbent, there is always a chance that something like this occurs.”
Scott and Garrett Reynolds say that lawsuits like the one they are facing may potentially deter other developers from working on tools to automate building and safety processes, such as calculating fire resistance in walls. The UpCodes suit, and the other cases that came before it, aren’t just relevant to builders. Technology has been able to streamline the process of regulatory and legal compliance in several industries, but innovation may slow if would-be founders are unclear about how copyright law applies to them.
The Electronic Frontier Foundation takes on clients like Public.Resource.org pro bono because “lawsuits can be a way of shutting down innovation in its infancy,” says McSherry. “It can be intimidating to people trying to experiment in this space.”
ICC’s stance is that it is already making its code more accessible by putting it online.
“Code compliance has never been easier. If you wanted to access the codes before the internet, you had to buy a hard copy of the codes or go to the library to figure it out. Now ICC has made its codes available online for free. All you need is a phone in your hand or internet access to know what the codes say,” says Fee.
But UpCodes’ argument is that part of the value of their product is its ease of use, including the ability to cut, paste and highlight text, which ICC’s online codes lack unless you pay a subscription fee. At the same time, the government website of many municipalities direct residents to the ICC’s website to read or purchase code, including Michigan and California.
“I think citizens being able to freely access and discuss laws is critical to democracy and to hold the government accountable,” says Garrett Reynolds. “If one private entity controls access to the law and they get to decide who can access it when and how, it might be appropriate in a dictatorship, but not in a democracy. The people are the owners of the law.”
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Fortnite, copyright and the legal precedent that could still mean trouble for Epic Games
Anne Friedman is of counsel at DLA Piper where she focuses her practice on structuring and negotiating large scale sourcing and technology transactions.
Andrew Deutsch
Contributor
Contributor
Andrew Deutsch is a partner at DLA Piper concentrating on intellectual property litigation and advice, including copyright, trademark, defamation and other First Amendment concerns, trade secret, unfair competition and misappropriation, advertising law, and law of the Internet, social media and electronic databases.
Ric Flaggert is a partner at DLA Piper where he focuses his global practice on entertainment, media, and communications matters.
A new U.S. Supreme Court decision is pitting entertainers and video game developers against one another in a high-stakes battle royale.
The decision in Fourth Estate Public Benefit Corp. v. Wall-Street.com LLC raises interesting questions about several lawsuits brought against Epic Games, the publisher of popular multiplayer game Fortnite.
In Fortnite, players may make in-game purchases, allowing player avatars to perform popular dance moves (called emotes), such as the Carlton, the Floss, and the Milly Rock.
Five performers, all represented by the same law firm, recently filed separate lawsuits against Epic Games in the Central District of California, each alleging: (i) the performer created a dance; (ii) the dance is uniquely identified with the performer; (iii) an Epic emote is a copy of the dance; and (iv) Epic’s use of the dance infringes the plaintiff’s copyright in the dance move and the dancer’s right to publicity under California statutory and common law.
In short, the dance creators argue that Epic Games used their copyrightable dance moves in violation of existing law.
The building battle
What do these Fortnite lawsuits in California have to do with the US Supreme Court? US copyright law says that a copyright owner can’t sue for copyright infringement until “registration of the copyright claim has been made” with the US Copyright Office. Prior to the recent Supreme Court decision in Fourth Estate, lower federal courts split over what this language means.
Some (including the federal courts in California) concluded that a copyright claimant could sue an alleged infringer upon delivering a completed copyright application to the Copyright Office. Other lower federal courts held that the suit could not be brought until the Copyright Office issued a registration, meaning that the Office viewed the work to be copyrightable.
Because the Copyright Office now takes over seven months to process a copyright application and issue a registration, claimants often chose to sue in California federal courts, which had adopted the quicker “application approach.” This was the route chosen by the plaintiffs in all five Fortnite cases.
Down (but not out)
On March 4, 2019, in Fourth Estate, the Supreme Court ruled that California federal courts and others following the application approach were wrong, and that a plaintiff cannot sue for copyright infringement unless the Copyright Office has issued a copyright registration.
This had an immediate impact on the Fortnite lawsuits because the Copyright Office had not yet registered any of the dances and, indeed, had found two of the plaintiffs’ dances uncopyrightable. Recognizing their vulnerability, plaintiffs preemptively withdrew these lawsuits, announcing they would refile the complaints once the Copyright Office issued registrations.
Epic question #1: are the emote dances copyrightable?
The central question is whether the dances used in Fortnite emotes are copyrightable material protected under US law. If not, then Epic Games’ use of the dances is not copyright infringement, and in-game sales of the particular dances may continue unfettered.
Dance moves fall into a gray area in copyright law. Copyright law does protect “choreographic works,” but the Copyright Office says that “social dance steps and simple routines” are not protected. What’s the difference between the two? The Copyright Office says that choreography commonly involves “the composition and arrangement of a related series of dance movements and patterns organized into a coherent whole” and “a story, theme, or abstract composition conveyed through movement.” Dances that don’t meet this standard can’t be copyrighted, even if they are “novel and distinctive.”
So are the Fortnite plaintiffs’ dances “choreographic works” in the eyes of the Copyright Office? Herein lies a clash of cultures. The performer-plaintiffs undoubtedly feel they have created something not just unique, but a work entitled to protection for which they are owed damages. But the buttoned-down Copyright Office may not agree.
The Copyright Office has already denied Alfonso Ribeiro a copyright registration for the Carlton, a widely recognized dance popularized by Ribeiro during his days as Carlton Banks on the show Fresh Prince of Bel Air. The Office stated that the Carlton was “a simple routine made up of three dance steps” and “is not registrable as a choreographic work.”
The plaintiffs’ lawyer in the Epic Games cases has disclosed that 2 Milly’s application for copyright in the Milly Rock was also rejected, but that a long “variant” of Backpack Kid’s Floss dance was accepted for registration. The Copyright Office’s view on the other two plaintiffs’ dances has not yet been reported.
If a registration is denied
Denial of a copyright registration is not necessarily a dead end for these lawsuits. The Copyright Act allows a plaintiff who has been refused a copyright registration by the Copyright Office to still sue a potentially offending party for copyright infringement. However, the Copyright Office can then join the lawsuit by asserting that the plaintiff’s work is not entitled to copyright protection.
Historically, the federal courts have usually followed the Copyright Office’s view that a work is uncopyrightable. If the other Fortnite plaintiffs are denied registration, as Ribeiro and 2 Milly were, they will all face an uphill fight on their copyright claims.
Other issues to overcome
Even if the plaintiffs’ copyright claims survive, they face other problems, including originality, which is a requirement of copyright. If their dances are composed of moves contained in dances previously created by others, the plaintiffs may fail to convince the court that their dances are sufficiently original to warrant their own copyright. For example, Ribeiro has stated in interviews that moves by Eddie Murphy, Courtney Cox and Bruce Springsteen inspired him when he created the Carlton.
Ownership of the dance can also be at issue if the dance was created in the course of employment (such as while working as an actor on a television show), as the law may hold that the employer owns the copyright.
Epic question #2: the right to publicity
The plaintiffs’ right to publicity arguments could go further than their copyright infringement claims. The right to publicity claims were based on the assertion that plaintiffs’ dances are uniquely associated with them and that Epic Games digitally copied the plaintiffs performing the dances, then created a code that allows avatars to identically perform the dances. Some side-by-side comparisons of the original dance performances and the Epic emote versions (speed adjusted) look strikingly similar for the few seconds the emote lasts. According to plaintiffs, this use misappropriated their “identity.”
Their assertion is not as far-fetched as it may seem, given the broad reading courts in California have given to the state’s common law and statutory publicity law. For example, the Ninth Circuit has previously ruled that an ad featuring a robot with a wig that turned letters on a board wrongfully took Vanna White’s identity, and that animatronic robots sitting at airport bars vaguely resembling “Norm” and “Cliff,” characters from the popular TV show Cheers, misappropriated the identities of the actors who played the roles, George Wendt and John Ratzenberger.
There remains an open question on whether the courts will be willing to take another step and find that a game avatar having no physical resemblance to a performer misappropriates the performer’s publicity rights just because the avatar does a dance popularly associated with the performer.
Once the Copyright Office announces its decisions on the outstanding copyright applications, the Fortnite plaintiffs may choose to re-file their cases; and this question could eventually be decided.
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Scooter startup Bird tried to silence a journalist. It did not go well.
Cory Doctorow doesn’t like censorship. He especially doesn’t like his own work being censored.
Anyone who knows Doctorow knows his popular tech and culture blog, Boing Boing, and anyone who reads Boing Boing knows Doctorow and his cohort of bloggers. The part-blogger, part special advisor at the online rights group Electronic Frontier Foundation has written for years on topics of technology, hacking, security research, online digital rights and censorship and its intersection with free speech and expression.
Yet, this week it looked like his own free speech and expression could have been under threat.
Doctorow revealed in a blog post on Friday that scooter startup Bird sent him a legal threat, accusing him of copyright infringement and that his blog post encourages “illegal conduct.”
In its letter to Doctorow, Bird demanded that he “immediately take[s] down this offensive blog.”
Doctorow declined, published the legal threat and fired back with a rebuttal letter from the EFF accusing the scooter startup of making “baseless legal threats” in an attempt to “suppress coverage that it dislikes.”
The whole debacle started after Doctorow wrote about how Bird’s many abandoned scooters can be easily converted into a “personal scooter” by swapping out its innards with a plug-and-play converter kit. Citing an initial write-up by Hackaday, these scooters can have “all recovery and payment components permanently disabled” using the converter kit, available for purchase from China on eBay for about $30.
In fact, Doctorow’s blog post was only two paragraphs long and, though didn’t link to the eBay listing directly, did cite the hacker who wrote about it in the first place — bringing interesting things to the masses in bite-size form in true Boing Boing fashion.
Bird didn’t like this much, and senior counsel Linda Kwak sent the letter — which the EFF published today — claiming that Doctorow’s blog post was “promoting the sale/use of an illegal product that is solely designed to circumvent the copyright protections of Bird’s proprietary technology, as described in greater detail below, as well as promoting illegal activity in general by encouraging the vandalism and misappropriation of Bird property.” The letter also falsely stated that Doctorow’s blog post “provides links to a website where such Infringing Product may be purchased,” given that the post at no point links to the purchasable eBay converter kit.
EFF senior attorney Kit Walsh fired back. “Our client has no obligation to, and will not, comply with your request to remove the article,” she wrote. “Bird may not be pleased that the technology exists to modify the scooters that it deploys, but it should not make baseless legal threats to silence reporting on that technology.”
The three-page rebuttal says Bird used incorrectly cited legal statutes to substantiate its demands for Boing Boing to pull down the blog post. The letter added that unplugging and discarding a motherboard containing unwanted code within the scooter isn’t an act of circumventing as it doesn’t bypass or modify Bird’s code — which copyright law says is illegal.
As Doctorow himself put it in his blog post Friday: “If motherboard swaps were circumvention, then selling someone a screwdriver could be an offense punishable by a five year prison sentence and a $500,000 fine.”
In an email to TechCrunch, Doctorow said that legal threats “are no fun.”
AUSTIN, TX – MARCH 10: Journalist Cory Doctorow speaks onstage at “Snowden 2.0: A Field Report from the NSA Archives” during the 2014 SXSW Music, Film + Interactive Festival at Austin Convention Center on March 10, 2014 in Austin, Texas. (Photo by Travis P Ball/Getty Images for SXSW)
“We’re a small, shoestring operation, and even though this particular threat is one that we have very deep expertise on, it’s still chilling when a company with millions in the bank sends a threat — even a bogus one like this — to you,” he said.
The EFF’s response also said that Doctorow’s freedom of speech “does not in fact impinge on any of Bird’s rights,” adding that Bird should not send takedown notices to journalists using “meritless legal claims,” the letter said.
“So, in a sense, it doesn’t matter whether Bird is right or wrong when it claims that it’s illegal to convert a Bird scooter to a personal scooter,” said Walsh in a separate blog post. “Either way, Boing Boing was free to report on it,” she added.
What’s bizarre is why Bird targeted Doctorow and, apparently, nobody else — so far.
TechCrunch reached out to several people who wrote about and were involved with blog posts and write-ups about the Bird converter kit. Of those who responded, all said they had not received a legal demand from Bird.
We asked Bird why it sent the letter, and if this was a one-off letter or if Bird had sent similar legal demands to others. When reached, a Bird spokesperson did not comment on the record.
All too often, companies send legal threats and demands to try to silence work or findings that they find critical, often using misinterpreted, incorrect or vague legal statutes to get things pulled from the internet. Some companies have been more successful than others, despite an increase in awareness and bug bounties, and a general willingness to fix security issues before they inevitably become public.
Now Bird becomes the latest in a long list of companies that have threatened reporters or security researchers, alongside companies like drone maker DJI, which in 2017 threatened a security researcher trying to report a bug in good faith, and spam operator River City, which sued a security researcher who found the spammer’s exposed servers and a reporter who wrote about it. Most recently, password manager maker Keeper sued a security reporter claiming allegedly defamatory remarks over a security flaw in one of its products. The case was eventually dropped, but not before more than 50 experts, advocates and journalist (including this reporter) signed onto a letter calling for companies to stop using legal threats to stifle and silence security researchers.
That effort resulted in several companies — notably Dropbox and Tesla — to double down on their protection of security researchers by changing their vulnerability disclosure rules to promise that the companies will not seek to prosecute hackers acting in good-faith.
But some companies have bucked that trend and have taken a more hostile, aggressive — and regressive — approach to security researchers and reporters.
“Bird Scooters and other dockless transport are hugely controversial right now, thanks in large part to a ‘move-fast, break-things’ approach to regulation, and it’s not surprising that they would want to control the debate,” said Doctorow.
“But to my mind, this kind of bullying speaks volumes about the overall character of the company,” he said.
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