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?

My reaction to the news story was twofold. My initial reaction was “What took you so long to figure it out?” The main reason that the TV networks and movie studios are stonewalling writers’ efforts to get a cut of the money for repurposing their shows for the Internet is that the networks and studios see that the Internet (and wireless) is quickly going to become a major platform for their entertainment products. They want to make sure the stranglehold they exercise over the broadcast channels and movie distribution network will be duplicated online and they don’t want to have to share a major portion of the revenues from online distribution with the writers (or actors, directors, etc.) It is a classic case of monopolists in one industry trying to extend their monopoly into a new field. So, the thinking goes, if the creative talent can bypass the studios and networks and go directly to the Internet, they can break the bottleneck on getting their content to viewers and will be able to keep most of the revenues for themselves.

However, my second reaction was “This is a lot of hullabaloo about nothing.” Because even if Hollywood talent can get away from the current studios and networks that control their lives, they will simply be facing a new host of monopolists unless Congress insures network neutrality. Today, anyone can put up a website and (except for people living under repressive governments) everyone who has access to the Internet can access that site. So, when YouTube got started, every Internet user could go to www.youtube.com and watch the myriad videos posted online by users. And, if the writers want to start their own “network” online to showcase their own programming, anyone will be able to come to their website and watch the programs. But that is not likely to continue unless the government steps in.

Today, there is nothing that requires an Internet service provider, like Time-Warner, AT&T or Verizon, who have millions of subscribers to their Internet services, to allow their users equal access to all websites on the Internet. So far that has been the case, but there is no law that compels them to do so. There are no “must carry” rules, like the FCC used to impose on television networks, that require these ISPs to allow their users to freely surf the net and watch what they want. Thus, if Verizon (which happens to be my ISP) decided that if YouTube wants to be accessible to its subscribers, YouTube would be required to pay Verizon $1 million per month, Verizon could do so. And if YouTube refused to pay the fee, Verizon could block its users from having access to YouTube.

What if the ISPs that provide Internet access nationwide decide to act as the networks and studios have acted for years? What if they decide that only certain websites that carry entertainment content will be accessible to their subscribers? Or that they will only provide full-speed access to websites they control and degrade the quality of all other websites? And the favored websites are those that are controlled by the ISPs or have agreements with the ISPs under which the ISPs receive the advertising revenues from those sites, and pay the “talent” (writers, directors, producers) according to negotiated agreements, like we have today in the movie and television industries?
Nonesense? Paranoia? A lot of people are very concerned about this issue. As stated by the WGA-East on its website:

“The nation’s largest telephone and cable companies — including AT&T, Verizon, Comcast and Time Warner — want to be Internet gatekeepers, deciding which Web sites go fast or slow and which won’t load at all.

They want to tax content providers to guarantee speedy delivery of their data. They want to discriminate in favor of their own search engines, Internet phone services, and streaming video — while slowing down or blocking their competitors.

These companies have a new vision for the Internet. Instead of an even playing field, they want to reserve express lanes for their own content and services — or those from big corporations that can afford the steep tolls — and leave the rest of us on a winding dirt road.

The big phone and cable companies are spending hundreds of millions of dollars lobbying Congress and the Federal Communications Commission to gut Net Neutrality, putting the future of the Internet at risk.”

Net neutrality is extremely important to the future of the Internet and the future of those who operate websites and create content for these sites. Unfortunately, it is below the radar of most politicians and business people (other than the major ISPs). That needs to change.

Putting a date on when the field of computer law began is as difficult as putting a date on when the “modern” computer industry began. And yet the two fields are inexorably intertwined, and so, deciding when a “modern” computer was first used will provide us with the earliest possible date for the birth of the field of computer law.

Did the computer industry begin with Blaise Pascal, who many credit for building the first digital (but definitely non-electronic) digital computer in 1642? Or perhaps with Charles Babbage, who had an early model of his difference machine working in 1822, but later gave up on it and began designing his analytical engine – which he never completed?

Perhaps we should look at Herman Hollerith, who contributed to the development of automated computing with his invention of the punched card for use in the 1890 census? The punched card was adopted by International Business Machines, which built machines to read, add, multiply and sort them in the early decades of the 20th century.

World War II saw the development of the first electronic computer, based on vacuum tube technology, which eventually resulted in the ENIAC (“Electrical Numerical Integrator and Calculator”).² This computer and other research advances eventually led to the introduction of the EDVAC and UNIVAC computers to the commercial market in the 1950s. (More after the jump.)

Regardless of the seemingly primitive technologies used in each of these machines, you can be certain that all of these projects involving the drafting and negotiating of one or more contracts for the development of, and later the distribution and use of, these machines. Hence, one could argue that whatever date we choose for the development of the first digital computer, there were necessarily lawyers there preparing the necessary documentation – and hence that was also the date of the birth of computer law.

But whatever date we choose, there is essentially no written record of developments in the field until 1960,³ with the publication of the first legal article on computer law.⁴ As the author of that pioneering article later reminisced:

“The early challenge in the practice of computer law was basic. The challenge was to recognize that, despite the novelty of the technology, the analytical process we learned in law school should be used for finding legal rules for the various facets of the new world of machines that perform operations similar to human thought.”⁵

For the purposes of this history, until someone unearths a prior publication on the subject, I will take as the genesis of the field of computer law the year 1960. This will be considered Year 1 of the First Epoch of Computer Law. It was a time of large mainframe computers dominated by IBM.⁶

Computers came as complete systems – hardware, software, maintenance and support, training, etc. Only a few government agencies, large corporations and research centers had the money to lease⁷ or buy⁸ these electronic behemoths. For those who could not afford to have their own machine, service bureaus⁹ allowed multiple users to purchase processing time on a single machine.
During the 1960s, a few software companies were formed, primarily to provide software to the government.¹⁰ There was little incentive for mainframe users to go to someone other than their vendor for software – and indeed, the hardware vendors actively discouraged customers from acquiring third party software (or hardware for that matter).¹¹ Thus, independent software companies were limited to niche markets that the mainframe vendors could not or would not service, such as developing custom software for the U.S. government. However, that all changed on June 23, 1969, when IBM, under pressure from pending antitrust litigation by various competitors and the U.S. government, announced that it would unbundle¹² much of its software and would price and license that software separate from its hardware and services.

© 2007, 2008 Michael D. Scott. All rights reserved.

Next: “The History of Computer/IT Law Second Epoch (1969-1982)”.

1. The dates that delineate each epoch correspond to significant technological or business developments in the computer industry. While the dates can be determined with precision, it generally takes some time for new developments to percolate through the industry (and in turn through society). As such, there is necessarily a lag time between the event itself and the impact of that event on the law.
2. There was a legal battle in the 1970s over whether ENIAC was actually the first digital computer using vacuum tubes, or whether that title belonged to a machine built in the 1930s by John Atanasoff at Iowa State College. In 1973 a court ruled in favor of Atanasoff’s claim. See Honeywell, Inc. v. Sperry Rand Corp., 1973 WL 903, 180 U.S.P.Q. (BNA) 673 (D. Minn. Oct. 19, 1973).
3. Practitioners in this field may argue that the first written discussion of the application of technology to the law was Lee Loevinger, Jurimetrics the Next Step Forward, 33 Minn. L. Rev. 455 (1949). However, that article was about the application of scientific methods to solving legal problems – not the application of law to technology. In the early days of the computer law field, there was significant confusion over whether the field included the use of computers in the practice of law or not.
4. Roy N. Freed, A Lawyer’s Guide Through the Computer Maze, The Practical Lawyer (Nov. 1960).
5. Roy N. Freed, A Functional Legal Approach to Information, With Some Reflections on the Genesis of Computer Law, 15 J. Marshall J. Computer & Infor. L. 3, 4 (1996).
6. The other companies involved in manufacturing mainframes at this time were derisively referred to as the BUNCH, which stood for Burroughs, Univac, NCR, Control Data and Honeywell. All together they had only a small fraction of the market as compared to IBM. Together the companies were referred to as Snow White [IBM] and the Seven Dwarfs [BUNCH plus GE and Xerox]. See Douglas W. Jones, A Bit of History.
7. At this time most computers were leased and not purchased due to cost. The lessee would provide the necessary facilities to house the machine, and would pay the vendor monthly fees based primarily on usage.
8. Prior to the 1956 Consent Decree IBM signed with the U.S. government to end its first antitrust lawsuit, IBM only leased its computers. See Comprehensive History of Information and Computing: Electronic Age 1951-present. As part of that consent decree, IBM agreed to offer its computers for sale as well as lease. See United States v. International Bus. Machines Corp., 163 F.3d 737, 738 (2d Cir. 1998).
9. A service bureau is a company that “owns or leases computer products and/or services and then performs data processing services for customers for a fee.” Telex Corp. v. IBM Corp., 367 F. Supp. 258, 273 (N.D. Okla. 1973), aff’d in part, rev’d in part, 510 F.2d 894 (10th Cir.), cert. dism., 423 U.S. 802 (1975).
10. See, e.g., Computer Sciences Corp., Our History.
11. IBM also supported a user group called SHARE, which encouraged users of IBM computers to submit software they had developed for sharing with other users. See generally IBM SHARE Library. The existence of this group and its free software library also discouraged the development of independent software vendors for IBM mainframes.
12. Unbundling meant that IBM would now offer its hardware and software separately, and at least theoretically, a customer was free to acquire the components it needed from any vendor or combination of vendors.

But we must go back in time to see how the situation got to where it is today. The Digital Millennium Copyright Act (DMCA) was enacted in 1998. The DMCA is very much a compromise law containing something for everyone. In particular, the Act sought to reach an accord between Internet Service Providers and website owners that wanted immunity from liability for third party postings of the copyrighted content of others, and copyright owners (such as Viacom) that wanted ISPs and websites held strictly liable as copyright infringers for such posted content. The DMCA tried to reach a balance by giving ISPs/websites immunity from copyright liability if they abide by certain notice and takedown procedures spelled out in the act and block repeated infringers. ISPs and websites have no obligation to monitor third party content, nor do they have to implement filtering or other technology to block third party postings of copyrighted materials. They only need act upon receiving a proper notice sent by the copyright owner.

Many online sites have been established as a result of the protection provided by the DMCA. Some, such as Napster and Grokster have run afoul of the law because the content on their sites were almost exclusively infringing materials and their business plan was primarily based on making money from the sharing of infringing materials. YouTube, Google and other sites are different – the vast majority of content posted on the sites are developed by the poster (such as an amateur videographer) or developed for non-commercial distribution. On YouTube, it is estimated that 90%+ of the videos posted on the service are not owned by major content providers and are posted either with the consent of the copyright owner or are not objected to by the copyright owner. A recent study concludes that of the most popular videos on YouTube, only 9% had been removed due to DMCA take-down requests, and those potentially infringing videos generated less than 6% of all viewings.

Having based its business model on the safe harbor protection provided by the DMCA, YouTube has no obligation to police or take down infringing content without notice. And providing notice is expensive for content providers. Even if the copyright owner provides notice and YouTube takes the video down, it may be reposted, and a new DMCA notice required. What is a content owner to do? YouTube offers a solution – sign a license agreement with the company and it will make sure only authorized versions of your copyrighted content are posted on YouTube. YouTube has software that can prevent uploading of unauthorized content by analyzing the “audio signature” of a video clip, which it will be pleased to use, but only if the copyright owner signs a license agreement. If not, YouTube will withhold the software and require the copyright owner to jump through the “DMCA notice and takedown” hoops.

Viacom did not like this strategy and decided to “soften” YouTube up for some more amenable negotiations. It is reported to have employed up to 15 people whose sole job was to search YouTube for videos that allegedly infringed Viacom’s copyrights. Then Viacom laid 100,000 takedown notices on YouTube. Viacom obviously thought that the avalanche of notice would bring YouTube to the negotiating table. But it didn’t. YouTube merely set its minions to work taking down the identified videos. Viacom’s strategic use of massive takedown notices to force YouTube to change its licensing strategy and implement its blocking software for Viacom’s copyrighted content didn’t work. So Viacom sued.

To my way of thinking, both parties are abusing the “rights” granted to them under the DMCA. YouTube is using its right NOT to implement blocking software it already has in its possession unless a copyright vendor agrees to its licensing terms. Viacom is attempting to bludgeon YouTube into implementing the software (or otherwise block Viacom content from its service) despite YouTube’s DMCA safe harbor rights. While both parties are complying with the letter of the law, they are not complying with the spirit of the law. The risk, in my opinion, is that their behavior will get the attention of Congress, who may decide to revisit the DMCA safe harbor provisions. And if that happens, who knows what might result?

1. Viacom actually thought that this was a smart business decision intended to protect its intellectual property. Never mind the fact that once the videos are taken down by YouTube, many of them will probably just be reposted by the same people who posted them in the first place. And never mind the significant, negative publicity this act has garnered.
2. Viacom thought it would financially cripple YouTube (now owned by Google) and force the company to install software to block infringing software. The first is unlikely. Removing the videos will cost something, but certainly won’t bankrupt the company. Whether it decides to install blocking software will not result from Viacom’s takedown orders. If it happens, it will result from business arrangements it enters into with content providers who want to insure that all of their content available on YouTube is “official,” of the best quality, and chosen specifically by the content providers.
3. Viacom wanted to deter others (users? posters? other online services that allow the posting of videos?) from posting its content online. If history has shown us anything, takedown orders and litigation have not deterred anyone from posting content online if they decide they want to do so. The number of illegal downloads of music increased after Napster was shut down, and even after the RIAA began suing users for downloading music.
4. Viacom needed to show its investors that it was doing something to protect their investment. This is more probable than any of the foregoing. Perception is often more important that reality – particularly when you are dealing with people who are not particularly technological savvy and who would themselves be deterred by such actions. Even if the takedown demands do not result in any appreciable decrease in Viacom content on YouTube (or elsewhere), investors will be pleased to see Viacom is taking action.
5. Viacom wanted to “soften up” YouTube, so that it can get a better licensing deal for legally posting its content on the service. Some commentators are opining that Viacom only sent the notices after YouTube turned down its licensing proposal. Viacom’s CEO has told the Wall Street Journal that “We cannot continue to allow YouTube or Google to continue to profit from our content without a reasonable commercial agreement.” Google may decide that it is cheaper in the long run to cut a better licensing deal for Viacom content than to periodically have to remove thousands of videos. Or it may decide to negotiate with other, more cooperative content providers and leave Viacom out in the cold.

Because of the haphazard way that Viacom proceeded, there is certain to be litigation arising from this event. The Electronic Frontier Foundation is already looking into the wrongful takedown notices that resulted in a large number of non-infringing videos to be removed. It may also motivate YouTube to file suit.
But the best result for consumers would be for this incident and its fallout to get the attention of Congress, that needs to take a long, hard look at the DMCA. Congress needs to put some teeth into the law to deal with the increasing misuse of the law for political and other reasons only tangentially related to the protection of copyright. Remember Diebold’s using the DMCA to prevent potentially embarrassing documents about its electronic voting machines from being posted online?
Allowing companies like YouTube to recover significant damages for wrongful takedown notices would send an important message to copyright owners who are abusing the DMCA. But even better would be if Congress gave users a useful cause of action, with a real possibility of recovering significant damages (and possibly punitive damage) for DMCA misuse. That would level the playing field, dissuade copyright bullies from abusing the law and hopefully bring some sanity back into the mix.
Is that too much to ask?

Record companies also were saying just a few years ago that they would never sell music downloads since that would interfere with their current distribution networks. But, of course, Napster forced their hand (or some would say gave them an excuse for turning their backs on their distributors and retailers). Napster showed that there was an enormous demand for music downloads, and if there were not legitimate download sites, users would download music illegally. Now we have iTunes and many other legitimate download sites that are putting millions of dollars into the coffers of the record companies, leaving the traditional distributors to fend for themselves. The bankruptcy filings of Odyssey Records, Tower Records, and massive closings of Sam Goody stores and those of other CD retailers was not just a coincidence.

Now the television networks are starting to provide downloads of their hit shows on iTunes and other services and network affiliates are complaining. If viewers can download their favorite shows to their computers for viewing at the user’s convenience, fewer people will be watching the shows on their televisions, which will translate into less advertising revenues for the local stations. Local TV stations (and cable operators) are beginning to demand that they get a portion of the revenues generated from these Internet downloads.

And Disney and other movie studios are planning to allow users to download entire movies from the Internet. Pay-per-view cable channels who make their money by showing recent films are crying foul. They want studios to delay releasing movies online until their contractual window for showing the movies has expired.

All of these problems arise from the fact that record and movie companies are increasingly viewing the Internet as an efficient and profitable means of getting their products to users without having to deal with the hassles and cost of traditional distribution channels.

However, these actions are a two-edged sword. While it makes economic sense in the short term for these companies to utilize the ‘Net for distribution of their product, in doing so they are also creating a distribution channel for songs and movies over which the record companies and TV and movie studios have no monopoly. As the public begins to use (and accept) the Internet as a viable medium to receive entertainment content, it will become easier for independent content developers to distribute their content online as well.

Historically, musicians who have tried to buck the record industry’s monopoly over the distribution channels have found it difficult to create a following online. The public has just not been willing to go online for their music. They were used to getting it on shiny metal disks from a brick-and-mortar retailer. There was something “wrong” with a recording artist who did not use the traditional channels to distribute his or her music (i.e., if this guy is so good, why can’t he get a recording contract?). The same was true for independent film makers, who generally had to distribute their works for free on various “fan” sites.

But once the “big boys” legitimate the Internet as an “appropriate” medium of distribution for their creative content, they will also be legitimizing the Internet as a medium of distribution for everyone’s content. Indeed, a recent news report indicates that a song by the band Gnarls Barkley became #1 on the UK singles list based solely on its downloads online, not from traditional record sales. This is the wave of the future.

So go ahead big entertainment companies. Legitimize online channels for music, movies and TV shows. By doing so you make be sowing the seeds of your own destruction. Why will a band or film director need a major company to distribute their product, when they can do it just as well (and possibly even better) themselves? Once everything is digitized, creative talent will not need companies who produce shiny disks, or ship shiny disks, or warehouse shiny disks, or sell shiny disks from storefronts. The entire marketing and distribution function can be done digitally by an individual from a PC in his bedroom.