Several years ago, the school began looking into how the Internet could be used to provide a totally online LL.M program. After an enormous amount of planning, our online LL.M program in entertainment and media law will be launched this fall. Internet law courses will be an integral part of that program. Information on the program is available here.

Restructuring traditional courses to work online has been – and continues to be – a challenging, but surprisingly satisfying, experience. It has allowed me to rethink each of the courses I have been teaching face-to-face, and to reimagine how the subject matter can be taught online. I have found it necessary to totally redo my syllabus, the way in which I organize my lectures, and what reading materials are best suited for a distance-learning environment. This effort has made me realize how some of these innovations can be integrated back into my traditional courses, which I believe will make the classroom experience significantly more engaging, and in the end more effective.

For many traditional law courses, which change little from year-to-year, once the syllabus is created and the lectures are “in the can,” most of the hard work of an online course is done. But in the area of Internet law, the subject matter is changing virtually every day. One of the major challenges has been to organize the materials and to structure the lectures and assignments in such a way that it won’t be necessary to redo the course entirely every time it is given (which will be three times a year). Instead of long-form lectures, the course has been designed with a series of shorter, topic-specific lectures. Some of the lectures will be usable from term-to-term with little or no updating. Other lectures will need to be re-recorded virtually every term to incorporate the newest developments in case law, statutory provisions and technological developments.

Of course, whether my course design will work online (or not) will be largely theoretical until I have been through the course at least once. Only when I look back at how well the structure worked the first time, and envision how well it will work the second and third time out, will I know if my redesign worked – or whether another redo will be in order. I’ll let you know in six months or so.

As a result, the Commission is looking for ways to leverage its existing powers to encompass net neutrality regulations. The Commission plans to draft more specific rules governing Internet companies is the result of the Comcast decision last month, where the D.C. Circuit panel agreed with ComCast that the agency had overstepped its explicit legal bounds when it reprimanded Comcast for throttling Internet access.

To address legal ambiguity created by the court’s decision, Chairman Julius Genachowski has announced that he will seek a new approach to Internet regulation — regulating Internet providers with a number of FCC rules that already govern phone companies. The telcos and cable companies, not surprisingly, are bitterly opposed to any regulation of their Internet offerings and are filling the coffers of their supporters in Congress, as well as preparing for court challenges to any new FCC regulations.

This is a defining moment in the growth of the Internet in the United States. Other countries have seen the growth of their digital economies stymied by telcos and other providers who charge high access fees, limit bandwidth and play favorites among websites and e-commerce providers. One reason that our digital economy has grown as quickly and as large as it has is because ISPs traditionally have provided access at a reasonable price to all comers. Now these entities are trying to change the rule of the game to the disadvantage of both consumers and online vendors. The government is the only entity that can protect consumers from those who put short-term profits over the good of the nation and its economy.

But that was several lifetimes ago (in Internet years), and the content industry is having a difficult time grasping the current reality. Content is no longer king. Instead, distribution is king.

For decades in the book, music and movie industries, distribution was viewed as a necessary evil. Antitrust cases forced some content creators out of the role of distributors of their own content, and other industries just found in easier to let others distribute their content. Content creators developed close relationships with the distributors of their product –- making sure that the distributors made enough money to stay in business, but not allowing the distributors to make too much money, or to have too much control over distribution of their content.

After all, those developing the content were the creative people who wore the tuxedos and designer gowns at the gala celebrations of their industry, while the distributors were those faceless minions who got their hands dirty warehousing and shipping content through a maze of wholesalers, jobbers and retailers, until that content finally reached the consumer. Content creators made money by the millions, while the distributors made a few cents per unit. Content creators were household names. And that was the way it was suppose to remain.

But no one told the Internet entrepreneurs. Steve Jobs, Jeff Bezos and others did not grow up answering to the entertainment industry content owners. They grew up talking to venture capitalists, investment bankers and major shareholders. As long as they had a vision for their companies and could execute on that vision to the satisfaction of their investors, they were free to do virtually whatever they chose.

In the early days of the Internet, the major interactions between the techies on one hand, and Hollywood and the publishing industry on the other, were generally in the area of licensing pre-existing content for videogames, CD-ROM titles and the like. At that time, the low processing speeds of personal computers (and videogame consoles), combined with low network speeds and limited storage capacity, did not allow for the distribution of music or movies online. While books and other printed materials could have been distributed online, few viewed that as a viable business model.

But that has all changed over the last decade, as computers have become blindingly fast, storage has become dirt cheap, technology has permitted enormous files of music and video to be compressed to a manageable size, and broadband technologies have made it possible to distribute content almost instantaneously to an array of devices – from computers to cellphone and e-book readers.

Today, digital content distributors, such as Apple’s iTunes Store, Amazon’s Kindle Store and Google, have established themselves as the gatekeepers for the distribution of music, books and virtually everything else. Content creators/owners are still acting as if they controlled the distribution of their own products –- when it is obvious to virtually everyone outside the hallowed halls of content companies, that they do not.

That is not to say that the content creators are incapable of establishing their own online distribution networks that could rival (or exceed) those of Apple, Amazon, Google, et al. But the fact is, they have not done so, and there is no evidence that they will do so (at least not in the near future). The question is why they have failed to do so.

There are myriad factors that have lead to the situation that content creators find themselves in today, but there are two that are paramount. First, those in charge of the major content creators today (the movie studios, the record companies and the book publishers) reached the top of their professions because they were good at executing the old business model. Today’s movie moguls were good at distributing films to movie houses (and more recently distributing movies on shiny discs for home viewing). The same is true for record company executives, who reached the pinnacle of their industry by being good at distributing shiny discs to consumers through a multi-layered distribution system. Similarly for print publishers, who know how to print and distribute paper-based products. Not one of these top-level executives became successful by executing an online, digital distribution business model. To them, the choice is either try to squeeze a few more years of profitable operations out of their tried-and-true business model until they can retire with a fat pension -– dumping the digital transition in the laps of their successors. Or to try to execute a risky, digital distribution model with a significant chance of failure. Not surprisingly, most have chosen the former -– using litigation and lobbying for new laws to help them prolong the old business model and slow down the digital juggernaut.

The second primary reason for their failure to develop a successful digital distribution model is the fact that content creators are still dependent on their existing distributors for the bulk of their revenues. Despite all of the hoopla surrounding digital distribution, the fact is that the vast majority of content is still delivered the old fashioned way — in tangible form. Content creators cannot alienate their traditional distributors, who also see that their business model is going away and are trying to hang onto their markets as long as possible. Content creators cannot be seen as favoring digital distributors over the traditional distributors and cannot establish their own digital distribution systems that would be seen as competing with their traditional distributors.

Content industry executives, who may have hidden their heads in the sand when digital distribution was in it infancy, fully understand where the future lies. Unfortunately, they are carrying an enormous amount of baggage that they cannot just jettison for a new digital business model. As a result, entrepreneurs who are not encumbered by such baggage have been able to establish themselves as the dominant players in the digital distribution market. They are the ones who are wearing the crowns and reaping the spoils from their investment in technology. They are the kings.

There is no hard-and-fast definition of “network neutrality.” However, as a baseline, “network neutrality” (or “net neutrality”) should include the general principles that ISPs that provide access to the Internet should not be allowed to discriminate between users, websites or content. ISPs should provide the conduits for the exchange of messages, data and content, and should otherwise stay out of the way.

The Federal Communications Commission has jumped into this debate in its Comcast ruling on August 20, 2008, where it held that Comcast had violated the agency’s Internet Policy Statement when it blocked certain applications on its network. This practice, the FCC concluded, “unduly interfered with Internet users’ rights to access the lawful Internet content and to use the applications of their choice.”

Comcast appealed to the U.S. Court of Appeals for the D.C. Circuit, as have other public interest groups. Comcast argued that the FCC does not have the authority to enforce its Network Management Principles and the Commission’s order was invalid for that reason. The FCC argued that it has ancillary authority under Title I of the Communications Act to implement the broad statutory goals for an open, user-controlled Internet laid out by Congress.

A recent hearing (January 8, 2010), before the D.C. Circuit, did not go well for the FCC. The three judges were openly skeptical of the Commission’s assertion that several provisions in various laws, including the 1996 Telecommunications Act, gave the FCC the ancillary authority required to regulate network management.

If the appellate court rules against the FCC, which is likely, there are several avenues that the Commission can pursue. It can appeal the decision to the U.S. Supreme Court. It can also go to Congress to ask for legislative authority to pursue network neutrality.

It is also possible that the Federal Trade Commission could step in and develop network neutrality principles, under its general authority under Section 5 of the FTC Act, to go after unfair and deceptive trade practices.

To a great extent, the future of the Internet depends on enforceable network neutrality rules. Without them, the Internet may become balkanized, with different ISPs applying different rules to websites, users and content.

Rupert Murdock, head of News Corp., and Dean Singleton, chairman of the Associated Press, have both singled out Google, claiming that Google is “misappropriating” their news. They claim that Google should be forced to pay to link to the news articles that they already post online – for free. Or, in the alternative, or perhaps in addition, they want to charge Internet users for access to that news.

What they don’t seem to realize is that news is NOT the issue. Instead, the problem with newspapers is that the Internet is a much better place for most advertisers than print publications. It is the loss of advertisers that is killing newspapers, not Google.

It is Craigslist, and eBay, and a thousand other online services that have siphoned off newspapers’ classified ad revenues. Once viewed as one of the most lucrative revenue generators, classified ad sections today are a shadow of their former selves. Those advertising dollars have moved online.

The same is true for display ads. For Macy’s to advertise a nationwide sale, it must either pay local newspapers in every geographic region in which it has stores to run multi-page ads (at enormous expense), or it can spend a fraction of that money to place those same ads on its own website, as well as mounting an effective email marketing campaign directly to its customers. It’s no wonder that the big, fat Sunday newspapers of yesteryear are now about the size of a Tuesday edition.

Newsstand and subscription revenues don’t ever cover the costs of distributing newspapers, let alone the costs of an editorial staff. No matter what Google does, if newspapers can’t attract and maintain advertisers, they are doomed.

The program will be divided into four panel discussions addressing a variety of topics, including:

1. The New Government Energy Policies and CleanTech’s Opportunities: Incentives and Market Drivers

2. Learning from the World’s Renewable Energy Leaders

3. Clean Technology Innovation and Protection (focusing on cleantech patents, licensing and tech transfer)

4. Financing Clean Technologies

The keynote speech will be given by Ted Flanigan, President, EcoMotion, Irvine, CA

More detailed information on the event, as well as a copy of the conference brochure, is available here.

The cost for the entire event is only $195 (early bird discount) and 5 CLE credit hours are available. (Space is limited to 95 attendees, so early registration is advised.) Online registration is available here.

I look forward to seeing you and your colleagues at the Summit. If you have any questions, please do not hesitate to contact me directly at mdscott@swlaw.edu.

Some fads, however, do seem to peak. While virtual worlds still seem to be growing, they are not expanding nearly as quickly as in their early days. Many of those who went into virtual worlds thinking that they would be as liberating as the Internet was in its early days have been disappointed and have scaled down their presence or left entirely.

Music-based videogames, like “Guitar Hero,” seem to have peaked and people are talking about “Guitar Hero burnout” – people seem to be tiring of the genre.

Today, “cloud computing” seems to be all the rage. Virtually every computer industry publication is filled with articles about the subject, even though people vary greatly on what they mean by the term. As stated in the IT Law Wiki:

Cloud computing involves the sharing or storage by users of their own information on remote servers owned or operated by others and accessed through the Internet or other connections. Cloud computing services exist in many variations, including data storage sites, video sites, tax preparation sites, personal health record websites, photography websites, social networking sites, and many more.

From a legal perspective, the critical factor in “cloud computing” is that the applications programs and your client’s data reside on computers that are not under your client’s control. This obviously raises security and privacy issues. One of the “benefits” of the “cloud” is that the user does not need to be concerned about where the computers are located. A given application could use computers in multiple jurisdictions to provide services and the user is unaware of where the computers are located. But since sensitive data is being processed in these cloud computing applications (e.g., corporate payroll, individual tax returns), the user must be concerned about where that data is being processed and stored.

Not all countries have the same data protection laws as the United States, yet U.S. laws may place a non-delegable legal obligation on your client to safeguard that data, no matter where it is physically located. Adding to the problem is the fact that many cloud computing applications are contracted for online using a clickwrap license, which does not give the client the opportunity to negotiate appropriate safeguards for the data to be supplied.

Another problem with cloud computing is the possibility that the vendor will cease doing business. Not only will the applications no longer be available to process the company’s data, but the data may disappear as well. And even if the client retains backup copies, the data may be useless without access to the applications needed to run it, display it, or even port it to a different vendor.

Whether cloud computing is a fad is still an open question. But whether or not it is, there are some real legal issues that exist today that clients need to be concerned about and must be dealt with before they jettison their in-house computer systems and move to the cloud. Clients cannot afford to bury their heads in the cloud!

This summer will be the inaugural program in International Information Technology Law sponsored by Southwestern Law School, Los Angeles, The program will be held at the University College of London Law Faculty building (Bentham House) in the heart of the UCL campus and just off of Russell Square — in the heart of London.

We have an outstanding faculty:

* Prof. Susan Brenner, University of Dayton (International Cybercrimes)
* Prof. Ian Walden, Queen Mary School of Law, London (Comparative Information Privacy Law and Regulations)
* Prof. Michael Scott, Southwestern Law School, Los Angeles (Drafting Information Technology Agreements), and
* Dr. Julia Hörnle, Queen Mary School of Law, London (Comparative Electronic Commerce Law and Regulation).

The program will run from June 21-July 24, 2009. Students will stay in College Hall, a recently opened housing facility, which is only a short walk from the classrooms. Classes go from 9-1:10 from Monday-Thursday, giving students every afternoon to explore all that London has to offer, plus every weekend is a three-day weekend for those who would like to travel outside of London.

Due to space limitations, we can only accept 48 students. So if you are interested, or know someone who might be, please let them know.

The fact is lawyers have been “specializing” in videogame law since the 1980s. When I began working as General Counsel for a multimedia developer in the early 1990s, the basic legal issues of videogame law already had been well established. What was still unclear was the appropriate business model/licensing structure for such games – particularly when a videogame was to be based on a movie, or when a multimedia product was going to include pre-existing content (music, video clips, text) from other sources. And while entertainment companies and videogame developers are still debating which entity provides the most “value” to a given interactive product, the basic legal issues surrounding their relationship are well settled.

When the Internet emerged as a burgeoning field in the mid-1990s, a lot of young lawyers touted “Internet law” as the next big thing. However, except for a few areas, such as domain names as trademarks and privacy issues, most of the bread-and-butter legal issues (copyright infringement, licensing, business deals) were merely variations on what had gone before.

And while it is true that the emergence of MMOs (Massive Multiplayer Online games) have given rise to several interesting new issues (particularly ownership of “virtual property”), most of what lawyers do in the videogame arena is well-settled.

The fact is that “Videogame Law” is so well established that law schools are offering courses (see here and here) in the field to law students.

In light of these facts, it is hard to understanding why two well-respected newspapers would run articles on this issue as if it was something brand new. Perhaps a slow news day?

The settlement has Google paying the book publishers $125 million in exchange for essentially a perpetual license to digitize and store all of their books now in existence, as well as future books that they may publish. It places strict limitations on Google’s ability to display books that are in-print and in-copyright, but allows Google to not only display portions of out-of-print, but still in-copyright books, but to sell access to those books. Google can charge for access to the digital version of those books, and will be allowed to retain 37% of all revenues generated from the sale of those books and certain advertising revenues it may generate as well. In exchange, the publishers will dismiss their infringement action, and since it was filed as a class action, the settlement will bind both the named plaintiffs but all other U.S. publishers as well, unless they opt out.

This settlement has not gone unnoticed by Viacom, Inc., which also has a major copyright infringement suit pending against Google. Unlike the publishers’ case, the Viacom action involves the posting of Viacom owned videos on YouTube, a company owned by Google. Executives of Viacom are quoted as saying, basically, that since Google settled the publishers’ case, there is no reason it shouldn’t settle with Viacom (and pay Viacom a hefty settlement fee as well). While Google might decide to do so, if it made business sense to do so (as it did in the publishers’ case), the two cases have very little in common, other than the fact that they both involve Google as a defendant and they are both copyright infringement cases.

The Viacom case did not arise from a direct infringement by Google (or YouTube) of any copyrights owned by Viacom – which was the claim in the publishers’ case. Instead, the Viacom action seeks to hold Google liable for third party postings of Viacom videos on the YouTube website. Instead, of having to fit its actions under the fair use doctrine of copyright law, whose reach is very fact-specific, in the Viacom case, Google is able to take advantage of the DMCA “safe harbor” provisions, which immunize Google from any liability, as long as it complies with the requirements of the DMCA. While Viacom is arguing that Google cannot take advantage of the “safe harbor” provisions, that is an uphill battle that Viacom is likely to lose.

These are two very different lawsuits based on two very different provisions of U.S. copyright law. While Google may decide to settle with Viacom for business reasons, or Viacom may be able to convince a judge that Google is not entitled to the protections afforded by the DMCA, the two cases are entirely unrelated. Viacom is taking a big chance by pursuing this case, since of it loses, it will open the floodgates to having its videos posted all over the Internet (even more so that today). It is Viacom that should be looking for a way out of this mess it has gotten itself into, not Google. And you can be sure that any settlement entered into will be much more favorable to Google than to Viacom. (IMHO).