Archive for the 'Business Law' Category

Understanding Facebook’s Data Breach: The Legalities and Action Taken

Facebook has been in hot water after it came to light that as many as 87 million users had had their private data scraped, sold, amalgamated, and run through machine learning devices to create profiles all without their knowledge and right under Facebook’s nose. The story has been everywhere, but the details go as follows. Back in 2013, a Cambridge University researcher made an app for use on Facebook called “thisisyourdigitallife.”

The app was a basic personality quiz and was taken by about 270,000 users. However, the app permissions settings policies in Facebook were much more permissive back then. The researchers simple quiz had permissions, after you installed it, to scrape the data off your entire Facebook profile and-more dangerously-the Facebook profiles of the people on your friends list.

Some 30 million of these profiles were purchased in 2014 by Cambridge Analytica–a company run by Donald Trump’s former campaign manager and adviser Steve Bannon. The information run through machine learning devices to create larger profiles for each individual and chart trend among them. This information was used by the Trump campaign in their marketing after Jared Kushner hired Cambridge Analytica in 2016.

This is far from the first bit of criticism Facebook has faced in recent years, the fake news issues for instance. However, this also isn’t the first time it has come out that Facebook had not taken the best care of its users’ private data. It’s not even the first time in the last decade that an app has been misused to mine data for a presidential campaign-the Obama for America app did something similar back in 2012.

The whole situation has led to massive legal and media blockback for Facebook and its CEO Mark Zuckerberg. Zuckerberg has spoken before Congress in the last couple days and has been called to speak before MPs, the UK Parliament, and more. The situation has given rise to lawsuits, potential legal and legislative action from the U.S. government, state governments and even governments abroad.

facebookLegal Issues of the Breach Itself

There is an enormous amount of law that could be discussed here, so we’re going to focus on only the most immediately relevant to the situation. One of the central issues here, in terms of understanding Facebook’s legal duties to monitor the actions and content from their user’s posts revolves around a law that far pre-dates Facebook itself-the 1996 Communications Decency Act (CDA).

The CDA makes it so that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” This shields Facebook, and all ISPs and similar websites from liability when it comes to the statements and posts of third parties. There are obviously several exceptions to this.

For instance content which infringes copyright gives rise to separate Digital Millennium Copyright Act safe harbor issues. However, it means that websites such as Facebook are generally immune to many legal claims over the actions of their users as they are not treated “as the publisher or speaker” of that third-party information.

The goal behind this is to help preserve a more robust internet as the reality of the situation is that it is very difficult for a large website to track the actions of all its users. However, it also provides a great deal of legal shelter to a site such as Facebook.

The CDA applies to activities which occur on the internet, the defendant is a “provider or user of an interactive computer service” (this includes websites), and the defendant website isn’t the source of the posted content. It provides protection to websites for essentially any user posting of information online. It also requires the website to not encourage illegal content or design their site to require the input of illegal content.

There are some additional complications to this. However, suffice it to say, social media websites benefit quite a bit from these sort of protections. While there are state by state privacy laws, there’s very little law limiting use of private data at a federal level.

Unless something illegal is happening, the CDA will cover a site such as Facebook when it comes to quite a bit of potential legal issues. Instead, most of the obligations of a site such as Facebook are self-imposed through their privacy policies and terms of service.

These rules have seen some recent changes with the FOSTA-SESTA Acts. However, these changes will have a minimal effect on Facebook’s overall duties to monitor and filter its user’s posts. FOSTA-SESTA mostly acts as a bit of an overbroad attempt to fight online sex trafficking by adding duties on the part of online platforms to police their users, a bit of an odd choice as there is already law on the books which serves the same purpose.

Private Legal Action Against Facebook

Even with protections such as the CDA in mind, there has already been private legal action against Facebook. A class action lawsuit was brought against Facebook, Cambridge Analytica, and Mark Zuckerberg himself on March 22nd.

The lawsuit has six counts including fraud and deceptive practices, breach of contract, negligence, intrusion upon seclusion, and charges under the Stored Communications Act (SCA)–part of the Electronics Communication Privacy Act, one of the few federal privacy laws.

To make a very complicated law simple, the SCA makes it a crime to access without authorization and share with the government the contents of a communication stored online–after a 2010 court case this includes social media messages but not posts on a wall or similar public communications.

The action alleges that Cambridge Analytica mined data with the intent of influencing the 2016 election and Facebook, despite recorded warnings from entities such as the Irish government as early as 2011, irresponsibly let it happen under their nose.

Federal Investigation and Potential Action

At a federal level, we’ve obviously already seen Mark Zuckerberg testify before Congress. However, that is far from the full extent to which the federal government can-and in fact is likely to-go. From potential fines to litigation, there is quite a bit still in movement here.

We already mentioned that this isn’t the first time Facebook has been in trouble over their privacy practices. There is no simpler example of this than the 2011 settlement they reached with the FTC over charges that Facbook had deceived its users by not following its own privacy practices. Under the settlement, Facebook must give it users “clear and prominent notice” and obtain user consent before sharing the user’s information.

They also threw in the most obvious bit, Facebook had to promise not to make any further deceptive privacy claims. Now the question will become whether the FTC will come after Facebook for violating this settlement-known as a consent decree in situations such as this. The fine for such a violation, under the agreement, could be as much $40,000 per user per day–considering this is 87 million users over the course of months that number could end up astronomical.

This has the potential to be the largest fine levied in the history of government regulation, it could even break a trillion dollars. In comparison, the current largest government fine of all time was an approximately $13B fine levied on JP Morgan Chase over its subprime mortgage practices before the recession.

This was followed by a $4B fine levied against BP after their enormous oil spill in the Gulf. This fine, if the FTC chooses to act, has the potential to dwarf both of those combined. This being said, there is little indication of where the FTC plans to go with, so we’ll just have to wait and see where this ends up in the coming days.

Additional federal action could come in the form of new legislation adding additional privacy requirements on online actors, something the U.S. has historically been extremely hesitant to do-especially in light of the push and pull between privacy and the First Amendment. This being said, there are already bills under consideration which may get another look from Congress in light of current events.

A bipartisan bill known as the Honest Ads Act was introduced late last year and would have required social media and other media to disclose which group is running a political advertisement in an effort to increase transparency. The bill has seen little action since its introduction, sitting in the Senate Rules Committee without action. However, it has been backed in recent days by a number of high profile entities such as Twitter and even Facebook itself. This may lead to Congress revisiting the provisions.

State Action in Light of Facebook’s Breach

Individual states have also begun to take action in like of recent events. For instance, California has already put an initiative on the ballot–opposed by Facebook and essentially all broadband providers–that would require companies to disclose what information they gather, how they sell it, and allow people some measure of input over what a given business can do with their data. They’re also seeking to introduce a law which would require social media platforms to identify bot accounts.

Action Taken Abroad

There has been enormous movement on privacy abroad recently, although not really in response to the Facebook situation. The EU has introduced what is almost certainly the most sweeping and powerful privacy protection law ever passed in the world–the General Data Protection Regulation or GDPR.

Taking effect May 25th, the GDPR has had online companies doing business in the EU moving quick to ensure they meet the law’s stringent privacy requirements. With substantial fines for failure to comply, the GDPR applies to all companies doing business in the EU and–among an enormous number of provisions too detailed to even scratch the surface of here–requires companies to maintain full transparency about what information they gather and why.

The users themselves have the power to access this data and can tell companies how they may use it and even have the companies delete that data.

What is Facebook Doing in Light of This Scandal?

As of now, Mark Zuckerberg has said in his testimony to Congress that Facebook will provide apps less access to data and require more transparency as to what data individual apps gather. They have already changed their political advertising policies and, again according to Zuckerberg, will be beefing up their security measures.

However, by Zuckerberg’s own admission, the issue will be a difficult one to completely address. Regardless of what steps are taken, the reality is that the road to eliminating data sharing and breaches is an extremely difficult one just based on the sheer scope of data out there, number of users, and the ever-shifting nature of security threats

As to legal steps on the issue within the U.S., there is a push and pull between limiting the dangers from the content on Facebook and ensuring the proper First Amendment speech protections when it comes to the government creating laws on this issue.

That being said, Facebook is completely free to limit speech, methods of use, etc. through its platform in essentially any way it sees fit through its privacy policies and terms of use. As a private corporation, they are not subject to the First Amendment limitations that the government is. Privacy protections in law are woefully lacking, but complicated to effectively craft. This is an issue should not be rushed, but getting it right is crucial to the ongoing existence of a healthy internet.

Jonathan Lurie is a Founding Partner of The Law Offices of Lurie and Ferri (Contact Info). He primarily handles business law, employment law, and intellectual property issues, but works with all types of civil matters. He is a Vice-Chair of the Sports and Entertainment Interest Group of the California Intellectual Property Section and has won awards for his knowledge of intellectual property, start-up business issues, and California civil procedure. 

Waterpark Co-Owner Charged With Reckless Murder In Connection With Boy’s Death on Ride

In 2016, 10 year old Caleb Schwab was decapitated during a waterslide. Caleb’s raft became airborne during the ride and hit hoops and netting overhead. Two other adults were injured and Caleb was killed.

Co-owner of Schlitterbahn Waterparks and Resorts, Jeffrey Henry, was arrested for aggravated battery and aggravated child endangerment. The Kansas Attorney General’s office arrested ride designer John Schooley as well, and charged both Henry and Schooley with reckless second-degree murder.

According to the indictment, Henry dropped out of high school and had no technical or engineering background. However, he controlled many decisions regarding Schlitterbahn construction and design projects.

The Attorney General claims the park rushed to complete the world’s tallest waterslide to impress producers of Xtreme Waterparks, a Travel Channel show. Schwab’s death was believed to be an isolated incident until whistleblowers claimed their bosses had covered up prior accidents.

Schwab’s family received a $20 million settlement. The charges against Henry are being filed by the state of Kansas, which is independent from the victims.

waterparkShould Corporations Be Criminally Liable?

Second degree murder is defined in most jurisdictions as non-premeditated murder – i.e. the murder was intentional, but not premeditated. This usually involves “crimes of passion,” like a husband who comes home and finds his wife in bed with another man.

The other type of second degree murder occurs when the defendant acts in a manner that shows complete disregard for life. A man who points a loaded gun at everyone he comes across in public and then accidently shoots someone might not have planned to kill someone. However, he had to have known that using his gun like that might result in a dead body.

It would unjust to hold a person responsible for a crime that he or she did not commit. Corporations and other business entities are organizations with multiple individuals, many of whom may not know what other employees are doing. The law only imposes criminal liability on businesses in two instances: first, when the employer is vicariously liable for an employee’s criminal actions.

However, the standard for criminal vicarious liability is higher than civil vicarious liability – the employer must authorize the criminal acts, rather than the employee acting in the employer’s name. Second, the business owner themselves may be held liable if they committed the criminal acts personally.

In this case, prosecutors are alleging that Henry, as an owner, was acting so recklessly that any reasonable person would have known that it would endanger someone’s life. Henry was making important design and construction decisions even though he had no background in engineering.

His decisions were likely influenced by a desire to impress television producers instead of public safety. Henry also knew that the ride was dangerous as employees reported he had helped cover-up similar accidents. While Henry might not have wanted anyone to die, he had to know that his actions would almost certainly lead to death(s).

Business’s Increasing Responsibility to Society

The biggest concern is increased criminal liability for business owners. The goal of every business is profit. Some business owners will put public safety as a lower concern than making money.

There should certainly be consequences if they do not sufficiently prioritize safety, but those consequences were restricted to civil court through personal injury and product liability laws. Criminal courts should only be used if the actors were intentionally malicious.

On the other hand, it is arguable that society has been too lenient on businesses. Big banks played a large role in 2008 recession, but few were punished. Many received bonuses for tanking the global economy.

Recent events reveal that social media companies like Facebook will abuse their consumer’s privacy if left alone. Perhaps if executives were liable for criminal liability as well as financial liability we’d have less corporate and business abuses than we’ve had so far in the 21st century.

Uber Stops Self-Driving Cars After a Pedestrian is Killed

Uber has pumped the brakes on its self-driving cars program. 49-year-old Elaine Herzberg was killed by a self-driving Uber car on March 18. Dash cam footage shows that Herzberg was looking at the other side of the road as she was riding her bicycle when the car hit her.

The car was going 40 mph prior to the accident and did not slow down when it hit her. The Uber safety driver showed no signs of impairment and the weather was clear and dry. Neither the car nor the safety person saw her until she was struck.

In response, Arizona Governor Doug Ducey suspended Uber’s right to run self-driving cars in Arizona (the company had announced it would suspend its program prior to the announcement).  The suspension was a 180 degree turn on Governor Ducey’s part. After taking office in 2015, Ducey had welcomed high tech companies seeking to test autonomous cars, especially Uber.

Ducey issued executive orders compelling state officials not to enforce taxi licensing rules for self-driving cars. Ducey permitted Uber to test its vehicles in Arizona as long as there was a human driver ready to assume control should there be a need to. Ducey also gave Uber his blessing to operate fully driverless cars on university campuses in the state.

Ducey’s administration claims that his aggressive pursuit of Uber was part of the governor’s plan to poach high-tech companies from California. The Golden State has lead the country in high tech for the 21st century, but states across the country have been courting its companies with offers of tax breaks and other incentives.

Arizona’s pitch to Uber and other companies looking to test self-driving cars was less regulations to interfere with their operations. This was a sharp contrast with California, which had recently voted to impose additional restrictions on driverless cars.

uberUber argues that while the accident was tragic, it is all in pursuit of science. Safety and efficiency requires experimentation and there may be accidents along the way. However, emails obtained by the Guardian between Uber and Governor Ducey indicates that there may be more to the relationship than Ducey’s desire for a business-friendly environment.

Emails show that Uber offered Ducey shirts and office space in San Francisco as the Governor spearheaded deregulation in Arizona. Although Uber has already settled with Herzberg’s estate, the emails renew a new legal debate: who is liable for Ms. Herzberg’s wrongful death?

Is There Potential Liability for Uber and the State?

If Herzberg’s estate wants to pursue a lawsuit, there are two realistic claims: the safety driver in the car or Uber itself. Any claims against the state of Arizona and Governor Ducey would be protected by sovereign immunity. If Governor Ducey did anything illegal, it would be prosecuted by the state Attorney General’s office instead of a private citizen.

Although self-driving car cases are new, the case here is still analogous to a normal accident involving an employer licensed vehicle. Suppose that a UPS or FedEx driver hits a vehicle. UPS and FedEx would be vicariously liable for the injury it caused. Although the Uber vehicle was on auto-pilot, there was a human safety person behind there.

Video footage clearly shows the person was not paying attention when the accident occurred. Given that the person’s job was to take over in the event of an accident, the safety person had clearly failed his or her standard of care. Since the person was an Uber representative, Uber would be responsible for the safety person’s negligence.

Even without the vicarious liability of a careless employee, Uber would still be liable. Self-driving vehicle may be new, but defective product cases are not. If the auto-driving car was supposed to detect pedestrians and failed to do so, then the car, the product, was defective.

The main complication is that the users of the product usually bring a defective product suit, not the victims of it. This should not stop a defective product claim though, as there are plenty of lawsuits involving people injured by products that they didn’t purchase themselves.

One potential hitch in the pedestrian’s suit against Uber is that Herzberg was clearly jaywalking. Many states will bar the plaintiff from recovering if he or she contributed to the accident. However, Arizona is a comparative negligence state.

This means that Herzberg’s estate is not barred from recovery even if she were found to be 99% at fault. The recovery amount would be reduced by the percentage a jury would find the victim at fault though. Herzberg’s jaywalking might have cost her life, but it would only reduce the settlement her estate could recover.

Uber has struggled to teach the systems to adjust for unpredictable human behavior. This will cause more injuries in the future. In the long run though, computer drivers would safety than human drivers since the computers would actually follow all traffic laws and would not take any risks.

People might need to adjust to this new reality, but it will ultimately benefit everyone. There will always be speed bumps when testing new technology. For Uber’s sake, it had best avoid using human being as speed bumps in the future.

New California Law Requires Posting of Transgender Rights in the Workplace and More

The new year has seen quite a package of laws supporting transgender employment rights in the work place come into force in California. This is crucially important because the protected status of gender identity under Title VII has gone from a cause championed by the Equal Employment Opportunity Commission (EEOC) for nearly a decade, growing as a right within the courts, to seeing support for the protection from the White House and its executive agencies slip away.

The courts, and the EEOC as well to a degree, still show a trend towards supporting these rights. However, their protection at a federal level has slipped in certainty.

This slip in federal protection means that it has fallen on the states to codify the sort of protection offered based on gender identity and make it known that that protection is available in their state.

In California, the last year or so has seen a flurry of activity on this front–most recently seeing a package of laws take effect on January 1st of this year. Let’s look at the new protections California has extended to its transgender citizens.

transgenderSB 396–Ensuring Transgender People Know Their Rights

The first of the two substantial changes to take effect in January was SB 396–requiring employers to post transgender rights explanations in the workplace. It also requires employers with 50 or more employees to include an understanding of gender identity, gender expression, and sexual orientation in their pre-existing mandatory sexual harassment prevention training.

The poster, titled “Transgender Rights in the Workplace,” covers several topics including defining terms under the law and explaining the rights associated with gender identity. The poster itself can be viewed here.

The law requires all employers to put the posters up in prominent positions.  The poster itself covers some important legal elements to understanding both your rights as a transgender person and the type of actions that will get a coworker and/or employer in hot water. First, it makes it clear that gender identity and gender expression are protected characteristics under California law.

This means that any discrimination in hiring or employment actions (as well as housing offerings) is a violation of the law. This basically includes any adverse employment action–refusing to hire, refusing to promote, firing, or even intentionally giving less favorable duties–is illegal if it is done based on stereotypes about gender, gender identity, etc.

This even includes situations where an employer perceives somebody as transgender or gender nonconforming and acts on this belief, even if the person if not in fact transgender. Transgender is defined under California law as a person whose gender identity differs from the sex assigned to them at birth. Gender expression, on the other hand, is defined as gender related appearance and behavior not stereotypically associated with a person’s sex assigned at birth.

The poster also makes clear what is and isn’t allowed on the part of an employer. Interviewers and hiring employers can ask about the usual references and employment history that you would expect in the hiring process.

However, leading questions seeking gender identity are out. The includes but is not limited to “marital status, spouse’s name, or relation of household members to one another. They are also not allowed to ask about a person’s body or whether they have already or intend to get reassignment or other surgery related to gender identity.

There some additional considerations under the law for dress codes, bathrooms, showers, and locker room facilities. Under California law, employers can only enforce dress codes in a non-discriminatory manner. This means dress codes in general are allowed but restrictions on dress and grooming must be applied in a manner that allows transgender or gender non-conforming employees to dress “in accordance with their gender identity and gender expression.”

Any employer must allow transgender or gender non-conforming people to use the restroom or locker room associated with their gender identity or expression. Where possible, an employer must provide a unisex single stall bathroom.

However, they cannot force and employee to use such a bathroom as opposed to the bathroom of their gender identity. It is illegal to require or push a transgender employee to use such a bathroom either by policy or through harassment. In addition to this, California law requires that any single-user bathrooms be identified as unisex unless it has a special exemption from elsewhere in the law.

AB 1556–Changing the Language of Law

In addition to requiring employers to post these new legal protections for transgender and gender non-conforming employees, California has also updated the language of the Fair Employment and Housing Act (the law which contains California’s Title VII equivalent) to use gender non-binary language.

AB 1556 replaced all instances of “her,” “she,” and other similar terms from gender discrimination and other elements of FEHA. This was done to make it clear that gender identity and gender non-conformance is indeed protected under the Act.

Transgender Rights are Largely in the Hands of the States

The current administration and its agencies have, to put it lightly, not made transgender rights their priority. A more critical view would be that they have actively rolled back the clock on gender identity rights built up over the last decade.

While the courts and the EEOC generally support the notion of gender identity as protected under sexual discrimination laws, it is generally in the hands of the states to pass any genuine law on the issue given the positions of the White House and the current Congress on the issue. This is especially true when comes to classifying gender identity as its own protected characteristic as opposed to bundling it in with sex discrimination.

It’s incredibly important that states take steps like those California has taken here. Hate crimes against transgender persons have rose in numbers in both 2016 and 2017–many of these incidents ending in fatal violence. Gender identity is something deserving of its own protected class. For now, state laws like these are the most likely route to such protection.

Jonathan Lurie is a Founding Partner of The Law Offices of Lurie and Ferri (Contact Info). He primarily handles business law, employment law, and intellectual property issues, but works with all types of civil matters. He is a Vice-Chair of the Sports and Entertainment Interest Group of the California Intellectual Property Section and has won awards for his knowledge of intellectual property, start-up business issues, and California civil procedure. 

Pepe the Frog Meme Creator Suing Infowars Over Using His Character

When it comes to symbols of hate groups–the Nazi swastika and the like–it seems almost silly to bring a cartoon frog into the conversation. However, the cartoon Pepe the Frog has seen a sad development over the years into a common symbol of both White Nationalist movements and the “Alt-Right.” This change is much to the chagrin of Pepe’s creator, “Boy’s Club” cartoonist Matt Furie.

Furie has described Pepe as a character about “peace, togetherness, and fun.” However, the way Pepe has been used after being adopted by several online communities certainly hasn’t been in line with this. To put it in perspective, the Anti-Defamation League included it in its hate symbol database in 2016–although they did go out of their way to say that most of its uses were not hate speech.

The infamous interview where Richard Spencer–to be polite a controversial figure of the Alt-Right–was punched in the face had him explaining the meaning of his Pepe pin before a man clocked him and interrupted. Furie has repeatedly expressed frustration in the media over what had been done with his character, his publisher has also condemned these uses of the character–calling them illegal and repulsive. Furie’s frustrations even led him to publish a comic in 2017 in which he killed Pepe.

Recently, Furie has taken more substantial steps to take back his character–he’s started bringing lawsuits. Most recently, this has meant going after Alt-Right “entertainer” (he himself has made it clear that he isn’t actual news) Alex Jones and Infowars. However, this is only the most recent lawsuit he has brought. Let’s look at the actions Furie has taken and his chances in his case against Infowars.

Furie’s Earlier Lawsuit

Last year, Furie threatened a copyright infringement lawsuit against the self-published children’s book of an assistant principal by the name of Eric Hauser. This sounds bad, until you hear the content of fine Mr. Hauser’s book. Hauser published “The Adventures of Pepe and Pede,” a children’s book starring Pepe the Frog, his best friend a centipede, and quite a few bizarrely hyper-conservative themes as well as what is quite arguable outright racism and bigotry against Islam.

The lawsuit ended well before the end of 2017 and before it really even got started, ending in a favorable settlement for Furie before his lawyers even had time to file a complaint. This settlement required Hauser to withdraw “The Adventures of Pepe and Pede” from publication and donate the profits from the book–a whopping $1,521 and 54 cents–to the Council on American-Islam Relations. This is a win for Furie when it comes to reclaiming his character. However, it is small potatoes compared to what he can expect if he wins his lawsuit against Infowars.

infowarsThe Suit Against Infowars

Furie’s lawsuit against Infowars was filed just recently in a District Court in California. The central claim of the lawsuit accuses Alex Jones and Infowars of copyright infringement over the sale of a $29.95 “Make America Great Again” poster on their site which features Pepe the Frog alongside Alex Jones himself, Donald Trump, Milo Yiannopoulos, Ann Coulter, and other high-profile alt-right figures.

Neither Furie nor his publisher ever gave permission for the sale of this poster, they say that the unauthorized use infringes their copyright. Furie also makes it clear that he does not approve of the association of Pepe with the people listed above or their message.

For Infowars and Alex Jones part, they bemoan the lawsuit as frivolous and apparently yet another in a long string of attempts to victimize them. For the most part, Infowars argument–and the argument which has been discussed in the media–is that the poster is protected under the fair use rules in copyright law. They’ve still removed the poster from their store.

Infowars Lawsuit: What are Furie’s Chances?

Right off the bat, this lawsuit is not frivolous in any sense of the word. A valid copyright provides a number of exclusive rights to its owner.  These rights include–among other things–the exclusive ability to reproduce, distribute, prepare derivative works.

Derivative works are works based on a copyrighted work. Copyright protection applies to any original creative work fixed in a tangible medium–such as when a cartoon is drawn on a page or as a file on a computer. The protection attaches immediately on fixation; however, registration is required to bring lawsuits for anything more than a basic injunction and actual damages.

There are some other types of limitations on what can receive copyright protection. For instance, characters generally need physical and conceptual qualities that are especially distinctive and recognizable wherever it appears to be protected outside the context of the work they come from. However the image itself of Pepe is certainly protected and that image has been exactly reproduced in Infowars’ poster–this verbatim copying is clear infringement.

From there, the question is just whether Infowars has any clear defenses they can bring–such as fair use. Alex Jones himself has said the lawsuit is frivolous because his posters are transformative and thus fair use. Unfortunately for him, this is a woefully under informed opinion on how fair use works–transformativeness is only one element of many in reaching a fair use decision.

Fair use provides a defense to certain limited, transformative uses of a copyrighted work. The defense is extremely fact specific, so much to make it nearly impossible to declare something fair use without knowing the exact circumstances of the use.

In making the determination, courts balance four quite complicated factors:

  1. The purpose and character of the use (was it commercial, educational, transformative?);
  2. The nature of the work (e.g. fictional v. non-fictional);
  3. How much of the work was used and how important was the part used; and
  4. How the use effects the market for the copyrighted work.

It is true that transformativeness has particularly heavy weight in the fair use analysis. In fact, courts have ruled that the more transformative a work the less weight the other factors carry. However, it is still the first factor among many. Whether a work is considered transformative, a fact that makes the first factor of a fair use analysis weigh particularly heavily in favor of fair use, look to several things.

First, where the changes add new expression or meaning they are more likely to be transformative.  Second, where the changes add new value by creating new information, aesthetics, insights or understandings—most notably through parody or criticism—this also weighs in favor of the use being transformative.

There is a non-trivial argument that using Pepe in the context of the Alt-Right, especially given how clear Furie has been that Pepe does not represent those values, provides a transformative understanding of the characters meaning. This would weigh in favor of part of the first element of fair use–the purpose of the use. This being said, no one factor is determinative, and every other factor here weighs against Infowars on a fair use defense or is a non-factor.

A commercial use weighs heavily against fair use, although it isn’t enough to definitively bar something from fair use or vice versa, and this poster was clearly made for commercial sale. The entire work, the cartoon image of Pepe, was taken wholesale with no modifications–another factor weighing against fair use.

The final element, how it effects the market for the work, is an interesting discussion. It is unlikely Furie would target the Alt-Right market, however his image becoming a symbol of this market–or a hate symbol for that matter–drastically undercuts the market for Pepe.

This means that the use by Infowars will need to be quite transformative to succeed in a fair use defense. However, it’s hard to see the use reaching that level. The context of the use is transformative to some extent in terms of interpretation.

The actual image is not transformative at all. There is no change, the extent of the transformativeness will to rely on verbatim copying the image into this new context. This seems like a weak argument because every other element weighs against them.

The Case is Far from Over

Fair use is an extremely complex bit of law, so much so that it is impossible to guarantee an outcome in these types of cases. This is true of law in general to some extent, there are no slam dunk cases. However, fair use is so fact specific that two different courts with the same case can easily and reasonably come to completely opposite decisions.

The facts look bad for Infowars here, but there’s a lot of case left to litigate. Furie will certainly be happy to start taking these steps to take back his character–especially considering his lawyers have taken his case on pro bono. For now, we’ll just have to keep an eye on this case to see whether Alex Jones’ claims of a “frivolous lawsuit” are just fake news.

Jonathan Lurie is a Founding Partner of The Law Offices of Lurie and Ferri (Contact Info). He primarily handles business law, employment law, and intellectual property issues, but works with all types of civil matters. He is a Vice-Chair of the Sports and Entertainment Interest Group of the California Intellectual Property Section and has won awards for his knowledge of intellectual property, start-up business issues, and California civil procedure.