My sabbatical from blogging this year was quite busy (unfortunately, vacations from blogging usually result from too much activity, rather than a desire to “get away from it all”).   Specifically, I found myself at three different trials (ranging in subject matter from girl’s dolls to rivet cassettes).  It has been a hectic year, indeed, for IP and advertising attorneys.

But in addition to my normal activities as a lawyer (as though that were not enough!), I have spent my spare time over the past several years writing a novel.  All lawyers, as you may be aware, are required at some point in their career to write a novel.   Or at least threaten to write one.   To the relief of my family, mine is done (it is called The Secret Root, and trust me, you’ll be hearing all about it later on….)

But in any event, in the course of writing this novel I have been forced to act like a futurist, imagining what the world would be like 25 years from now, and then 25 years after that.  How would our interactions be sculpted by social media in the years to come.  Would Facebook (now with a $100 billion valuation) still be a player 25 years from now?  What about Google, or Twitter or any number of other significant brands that shape our world today?  How would we live our lives?

Recent books have tried to tackle this subject with a variety of different conclusions.  The acclaimed Super Sad True Love Story imagines a media saturated world where the lowest common denominator renders us helpless, pathetic wretches in thrall to pointless and worthless technology.  Neal Stephenson’s bestseller REAMDEsuggests that the videogames of today will morph into the new economy of tomorrow — that world-building for fun and world-building for profit are largely the same, and that as our ability to interact with electronic worlds improves we will begin to substitute our “real” life for a simulation.  Other works imagine transhumanism, dystopia and crime.

But while speculation is fun, it is also important.  The rules we set today will inevitably shape the technologies we get 20 years from now, and the attitudes we adopt will direct our actions.   It really will matter whether Protect IP and/or the Stop Online Piracy Act are passed into law — whether you support them or not.  It really will matter whether cybercrimecontinues to be a focus of law enforcement.  Will geolocation and couponing and rebates and environmental marketing all merge into some amorphous repository of your personally identifiable information?

Actually, my suspicion is exactly that — as advertising becomes more sophisticated, and consumer marketing is fed more data, more and more things will be free in exchange for data about you.  More and more marketing practices will be focused on customization and personalization, and more of that will be tied to your online persona.  While we have a few years before you live your life as an avatar, you only need look at how 12 year-0lds communicate today to realize that in-person interaction is diminishing rapidly as an attractive choice for the next generation.   As massive as Facebook may be today, the potential for synthetic currencies (the logical end-point for Facebook Credits and Linden Dollars, and other “payment systems” that are simply stalking horses for “real money”) and synthetic identities bodes well for the future of social media — even if it will also make it a far more slippery place.

When I look back at where technology was in the early 1990s, and how far it has come in the two short decades that have intervened, I cannot help but think that we are grossly underestimating how much we have changed, and how much we will change once again.  Like the hipster narrator of an LCD Soundsystem song, we were there when things began to change, but we will soon be left behind by “the kids” and things that we cannot even imagine today.

One of the greatest frustrations that online entrepreneurs face each day is the cascade of new patent suits.  Social media as a sector has not escaped this fate, and rarely does a month go by without new lawsuits directed towards social media companies.  Some of these actions are brought by competitors, while others are brought by so-called “patent holding companies” — single purpose entities with one goal: licensing revenue. 

We will have much more to talk about regarding patents in the future, but to give you a flavor for the type of suit currently in favor, the following lawsuit was filed in the infamous U.S. District Court for the Eastern District of Texas last year:

STRAGENT, LLC and SEESAW

FOUNDATION,

Plaintiffs,

v.

CLASSMATES ONLINE, INC.,

CLASSMATES MEDIA CORPORATION,

UNITED ONLINE, INC., GANNETT CO.,

INC., LINDEN RESEARCH, INC.,

MEEBO, INC., MTV NETWORKS,

VIACOM INC., MYLIFE.COM, INC.,

MYSPACE, INC., NOVELL, INC.,

PLAXO, INC., and TWITTER, INC.,

Defendants.

The suit concerns U.S. Patent 6,665,722, entitled “Store and Forward Packet Radio System and Method.”  Are all of these social media companies infringing?  I have no idea — without an analysis of the patent and a comparison with the technology in use by the defendants it is impossible to say.  Is the patent valid?  Without an exhaustive search of the prior art, who knows.  The claims could be indefinite.  The claims could be obvious, or anticipated.  There may have been inequitable conduct, or strange assignment/inventorship issues.  There are a million questions and no superficial answers when looking at a complaint like this. 

In other words, when hit with a patent suit, even a sophisticated company on top of its technology may not know whether or not the suit has merit, or is frivolous just by reading it.  It must spend time, effort and (yes) money to even get to a point where it can think intelligently about its options.  For companies in this space, suits of this kind are becoming a cost of doing business.

But what about companies who have their own social networks, on their own networks — do they have the same patent risks?  Of course! Everyone who steps into the world of online commerce must deal with this threat, and develop a strategy for how they want to handle the risk going foward.   Someone (okay, me!) wrote an article about this issue a few years back, and while the patent holding company we discussed in the end decided to follow a different path, much of the analysis still holds true today.

In other words, patent risk is something that you must take into account while stepping into the land of social media.   While the plan may differ from company to company, you need to have one.  Now.

One of the more intriguing elements of the social media revolution has to be the growth of “virtual communities” — simulated environments where people “live” and interact with others.  Some of these worlds are developed in the context of gaming (such as World of Warcraft) while others (like Second Life) simply seek to replicate physical interaction through animation.

Of course, like any other community — virtual or otherwise — quite rapidly people conclude that they need, in George Carlin’s immortal phrasing,  ”stuff.”  In virtual worlds, of course, you need to purchase virtual products.  And this is where things get interesting. 

Last year, Americans (and yes, this figure only deals with purchases by Americans) spent $1.6 billion in fake stuff virtual goods.  Think about that for a moment.  They spent real money on things that have no real existence except as viewed on a computer screen.  And that ‘s with the limited technology of today — can you imagine how much money will be spent when we can jack our consciousness into a physical space and live inside our avatars?

In any event, the issues that suddenly begin to arise are both fascinating and bizarre.  If you take something from someone else in a virtual world, is it theft?  How can you control your brands in a virtual world?  If you create an “outfit” for yourself in a virtual world that incorporates what would be the proprietary rights of a third party were it done in the “real” world, is that still actionable?  Who actually even owns the content created by members of virtual communities?

There are already lawsuits arising out of these type of concerns.   In Pennsylvania, a class action was filed against Second Life alleging that the ownership rights promised by Second Life’s operator, Linden Research Inc., were undermined by unilateral changes in the terms of service.  This follows another case that held elements of the terms of service to be a contract of adhesion, and thus unenforceable.  The rights of “property” owners within these virtual worlds may be stronger than the creators of those worlds ever imagined.

And even social media games used on traditional platforms are beginning to feel for the limits of the envelope.  Zynga, the folks behind Facebook’s well-known Farmville game, sued Playerauctions.com earlier this year, alleging unauthorized sale of virtual currency and virtual goods without the permission of Zynga.  Courts will soon have to rule on who, really, is in control in these worlds, and what property really means when it is constructed out of bits and bytes (is it any different than property constructed out of carbon, after all?)

These may seem like esoteric questions, but there is little doubt that the world of social media will gradually move towards the creation of ever more sophisticated simulated worlds, and that means that these problems will eventually be your problems.  So think about whether your “communities’ are moving in that direction, and whether the terms of service you are using (or are subject to) address the realities of modern virtual commerce.

As always, there have been a variety of new stories swirling around social media and its discontents over the past week.  This week, the big stories have been all about security:

1. Firesheep: A software developer created a Firefox extension that allows users to easily abscond with cookie information over Wi-Fi networks.  The creator claims that his invention is harmless.  Others argue that it violates wiretapping statutes.  Everyone agrees that it is a dramatic development, especially because half a million people downloaded it in the first week.  Perhaps that open Wi-Fi network doesn’t look so appealing anymore…
2. A report circulatedthat Twitter, Facebook and others in the industry are not doing enough to combat security threats like, um, Firesheep.
3. Sensing a theme, another developer announced “Idiocy” designed to hijack the computers of “unsafe” Twitter users and tell them that they’re…well…idiots.
4. Random journalists and bloggers are now hijacking accounts, just to show that they can.  Now that waterboarding yourself has become passe, journalists have been forced to actually become tech savvy, apparently.  I will predict that we can look forward to Katie Couric using Firesheep to look at the Facebook account of Glenn Beck sometime during sweeps week.

So what does all of this mean?  It means that users of social media and — quite frankly — any non-encrypted website through public Wi-Fi networks need to strongly consider either using VPNs (virtual private networks) or encrypted connection programs like HTTPS Everywhere. 

This should hardly be a surprise, of course.  The earliest cyberspace sagas (like Neuromancer) were focused on hackers breaking into secured computer networks.  At this point, the hacker is a cultural archetype.  Now that everyone is on a computer network (social media has sped the trend to an almost surreal extent), it only makes sense that these efforts would be further democratized.  Now everyone can be a hacker.

This is not one of those stories that has a simple, happy ending.  Everyone needs to be aware, and everyone needs to be cognizant of the risks.  The sophistication of security measures increases no faster than the sophistication of folks who want to look at or steal your information.  As Prof. Moody would tell us, “constant vigilance” is the only recommended course of action — for all of us.

Sen. Jay Rockefeller (D. WV), current Chairman of the Senate Commerce Committee, has sent a note to Mark Zuckerberg.  It was not, as you might imagine, a friend request, or a request to play Mob Wars.  Instead, Sen. Rockefeller had a few questions for the reluctant star of The Social Networkregarding Facebook’s privacy enforcement efforts.  As you might guess, this missive was spurned on by the recent Wall Street Journalexpose on the widespread sharing of data by Facebook Apps.  In part, Sen. Rockefeller’s note included the following:

The Journal’s report raises serious questions about Facebook’s commitment and ability to enforce its own explicit privacy policies on behalf of consumers. One quoted Facebook official asserts that, “[o]ur technical systems have always been complemented by strong policy enforcement, and we will continue to rely on both to keep people in control of their information.” However, given the scope of the reported privacy breach and the fact that Facebook’s most popular apps are not abiding by your company’s rules, this assertion appears to be strained. Consequently, I request that you provide answers – with specificity – to the following questions:

1) How does Facebook enforce its Privacy Policy relating to affiliated application operators and websites? What logistical protocols are in place to promote maximum compliance? What resources, including the number of personnel, does Facebook dedicate to monitoring and enforcing application operators’ compliance with its Privacy Policy?

2) What penalties does Facebook impose on application operators and websites that violate the company’s Privacy Policy? Are offending application operators allowed to continue to do business with Facebook?

3) Does Facebook take steps to retrieve information from application operators found in violation of the company’s Privacy Policy?

4) The Journal article quotes a Facebook official that asserts the company has “taken steps… to significantly limit RapLeaf’s ability to use any Facebook-related data.” What exactly does this mean?

5) According to the Journal article, there appears to be a pattern of privacy infractions involving Facebook applications. Specifically, what other past problems has Facebook encountered with regard to applications, and what steps did Facebook take to rectify them? Are these applications still available on Facebook’s platform?

6) To the extent that personal data has been shared in violation of Facebook’s Privacy Policy, what steps has Facebook taken to notify individual users as to the specific information that has been mishandled, and who has had access to that information?

Now, here at Legally Social we are on record as being somewhat nonplussed by the “scandal,” but these are legitimate questions.  More critically, they underline an important fact about the world of social media and privacy: what you are obligated to do under the law at any given moment may have very little relevance as to whether you get into trouble. 

Let’s repeat that, because it is a dramatic change: just because something is “legal” in the world of social media doesn’t mean that it won’t still be a problem.  Because technology is evolving so quickly, and the law has not even remotely caught up (heck, there are legitimate arguments that copyright law hasn’t really ever caught up to the invention of the computer) there is a significant gap between the expectations of consumers and legislators and the laws and regulations as actually written.   When the gap between expectations and “reality” is big enough, there is a tendency for regulators and legislators to simply look for creative ways to fit square pegs into round holes — to find some way to punish “wrongdoers” regardless of whether or not the law actually was meant to address the issue at hand.

We appear to be approaching such a moment right now, and it is thus a precarious time.  Rather than merely address the simple question of “what is legal,” lawyers and social media entrepreneurs need to consider other possibilities, including questions of “what is going to get me hauled in front of a congressional committee,” and “what is going to put me in a political advertisement in the Attorney General’s race in some random state.”  This does not mean that social media needs to be more conservative; rather, it means that social media needs to be more creative about disclosure, consent and enforcement.  In the end, being questioned by congress is not a big deal, so long as you have compelling answers to provide.  Right now, that’s the key takeaway from Facebook’s growing pains, and the meteoric rise of Web 2.0.

As I sit here at 35,000 feet inside a tube of steel moving at 500 miles per hour across the continent, I find myself thinking about the similarities between this moment in our social media-drenched existence, and the early 20th century, when my grandfather was a boy and no aircraft contrails besmirched the sky.

In the early years of the 20th century, the art world was awash with bizarre avant-garde “movements” — you could barely walk down a street in Paris, it would seem, without stepping on someone’s keening manifesto, or stubbing your toe on one of their unidentifiable (yet quaintly offensive) sculptures.

In other words, there was no Internet yet.

As detailed in Greil Marcus’ classic  Lipstick Traces: A Secret History of the 20th Century, we learn that the Dadaists sought to  shock our bourgeois understanding of art by engaging in what some at the time called “anti-art.”  They put out crazy manifestos demanding ridiculous things, engaged in large scale public demonstrations over nothing in particular, put on plays and then rioted during the performance, and broke every rule that had previously existed as a framework for “art.”

The Dadaists were a sensation at the time, but that isn’t why they are important.  Rather, I am interested in Dada because of what it means to understanding our moment today.   In the early 20th century, the Dadaists felt that they had to be completely over-the-top and outrageous in order to break through the rigid cultural guardians who claimed to speak for what was right and appropriate.  They didn’t merely push the envelope, they ripped it open in their quest to get noticed and to spread their message of revoluion. They tried to be as different as possible from everything else, and thus more efficiently and effectively conveyed their story to a flabbergasted populace.

Today, content providers have a similar problem.  There are still guardians at the entrance to tradtiional media outlets.  Just ask any author how difficult it is to get a book on Oprah.  And the social media vanguard is so diffuse that (even with every tool of search engine optimization you can imagine) it is difficult to stand out. With the increasing move to apps as a substitute for raw browsing, the potential to find your potential audience herded into pens under the control of yet another gatekeeper looms in the near future.

So what should you do to break through, and what does this have to do with the law?  Actually, the answer is pretty simple, and it has everything to do with the law.  The answer is in the phrase “ownable distinction.”  This phrase, first developed (I’ll pat myself on the back here) about a decade ago in an article by yours truly and brand consultant Mary Morgan, deals with a basic failure of the imagination — a failure that each of us is guilty of nearly every day: a failure to look at what we do, or what we are, from the perspective of our audience/customers, and to see that the distinctions between us and other choices are often more important than any intrinsic merit.

You see, the basic point of the article (and the concept itself) is that the only things that really matterin the end when thinking about your business, or any cultural production ranging from art to music to your social media presence, are (a) the things that distinguish you from other choices in the marketplace (either the real one or the marketplace of ideas), and (b) the extent to which those distinctive things are unique to you (in other words, are they “ownable” in any real sense).  Wait a minute, you might say, what about quality?  Of course, but as we all know many great products fail, and many mediocre products succeed.

What kind of things can provide ownable distinction?  A message associated with a brand is often most effective.  A portfolio of patents can do the trick, as can copyright, trade dress, look-and-feel, or any number of other legal concepts.  Even trade secrets associated with your logistics system, or internal processes that are only experienced by the customer through  unique purchasing option.  But the important thing is to think systematically about these things, both at the inception point and throughout the life of your engagement with market.   Think through what you do, and try to identity what it is that you do that is different from your competitors.  Take a lesson from the Dadists and try to make a break with the past, and create new ways to mark yourself as different.  Push the envelope until your outrageous distinction becomes your calling card.  And then consult with your lawyer and try to figure out whether any of these distinctions can be protected, and maintained as a point of difference through tools provided by the law.  If you don’t do it, your competitor may very well beat you to the punch, and then you’ll be left with little distinction, and nothing of your own.