Jury nullification and Santangelo

First published here.

With the upcoming Patti Santangelo case looming, the subject of jury nullification provides interesting food for thought.

As virtually everybody who knows anything about it knows, virtually nobody knows anything about jury nullification. So what the hell is it? (And try saying it three times fast as a mental warm up too.)

Wikipedia gives a good summary: Jury nullification is a jury's refusal to render a verdict according to the law, as instructed by the court, regardless of the weight of evidence presented. Instead, a jury bases its verdict on other grounds. Historically, examples include the unjustness of the law, injustice of its application, the race of a party, or the jury's own common sense.

WTF?

Okay, there's actually some logic behind the idea that a bunch of ordinary people can just decide the fate of their fellow citizens. There is also Article Three of the US Constitution behind the idea as well but I like the logic, so we'll run with that for the moment.

You get to vote for someone to represent you in your country's government. That representative has a hand in deciding what the law is. That representative is just as likely as anyone else to go completly bonkers and pass a law punishing people for holding a banana in an unauthorized manner (and there a weirder laws than that out there!).

Some cop, who's just doing his job, arrests you for holding a banana in an unauthorized manner. You go before the court. The judge informs everyone that there's a statutory sentence for illegal banana holders and you're looking at ten years in the slammer if found guilty...and you're guilty as hell. They've got video footage of you holding the banana in a manner that's clearly against the law. They've got two dozen witnesses who saw your criminal banana-clutching activities with their own eyes. They even have a forensic expert who can demonstrate how the markings on the banana could only be made by someone gripping it in a way that the law says is illegal.

You opt for a trial by jury and they acquit you because that law is just fucking dumb. That's jury nullification in practice: the last defense of the citizenry against an unjust (or insane) government.

But they don't tell you that you can do it.

In Sparf v US, the court decided that the judge has no responsibility to inform the jury of their ability to nullify a case...and there's actually some logic behind that as well.

The government works for you. Right? It's your servant. Right? It exists solely for the benefit of you and your fellow citizens. Got it?

Now, isn't it a bit strange that your servant should be the one to tell you everything you're allowed to do? You're the master, here, so you should know what your rights are, dammit! The court simply rattles through the legal procedure, part of which is something along the lines of, "...you should find the defendant guilty or not guilty". That's it. They don't tell you what you can do because you're supposed to know that already. It's a de facto power that you have, akin to taking your ball and going home if you don't feel like playing any more.

Sure, the score may be tied with ten minutes of game time remaining, but you can still just walk away if you feel like it.

If you think this all sound a bit screwed up, maybe ask yourself, "why bother being judged by a jury of your peers if the court judge is simply going to force them to find you guilty?" I mean, it's only the 6th Amendement. Why do we need the Constitution when we have all these other great laws like the Federal Rules of Criminal Procedure? Or that Alaskan law that makes it illegal to feed alcoholic beverages to a moose?

Could it be that it's 'cause the US Constitution is pretty damned important? You know, guaranteeing certain things like the government not depriving any person of life, liberty, or property without due process of law? That kind of thing.

As John Adams put it: "It is not only his right but his duty...to find the verdict according to his own best understanding, judgment, and conscience, though in direct opposition to the direction of the court." Now that's coming from the guy who helped write the Delclaration of Independence, became president of the United States and saw his efforts later expressed in the US Constitution.

His resume suggests that we shouldn't simply ignore his views on citizens' involvement with the law.

Then again, John Adams spent most of his life fighting for freedom, justice and independence from ghastly laws, so what does he know about modern America?

Oh, wait...

It's interesting to consider the idea of jury nullification in light of some of the lawsuits being flung around at the moment, especially the case of Patti Santangelo, who's opted for a trial by jury in her case against the RIAA.

Who knows? Maybe the citizens of New York state serving on her jury will finally tell the record companies that they're not prepared to choose corporate profits over ordinary people.

Maybe some of Santangelo's jurors were unlucky enough to have bought a rootkitted CD from Sony.

Maybe the damages the RIAA is asking for are just so ridiculously high that the jury will acquit her out of sheer bloody-mindedness. The concience of the individual is a fickle beast, but somehow I get the feeling that the RIAA is really scared of people thinking for themselves.

It undermines their whole business model.

Buying into corporate PR

First published here.

I first heard about Download Legal on p2pnet. The entire Download Legal site is a joke (well I was laughing anyway) and deserves to be ripped to shreds, so I'll start with their "testimonial":

"Sometime around age 14 I downloaded my first mp3. If I think about it I can remember hesitating...I was paying, trading away moral clarity - the ability to say without reservation I am a moral person, someone who weighs the consequences of his actions, a good person."

That's as ar as I'm prepared to quote from it. The rest of it reads like a the story of a heroin junkie who found Jesus and the Almighty. Next is the "Why Legal" page which lists "The Effects of Piracy on Younger Individuals". According to these guys, downloading:

"Threatens entry level jobs - Reducing software piracy by just 10 percentage points worldwide would generate 1.5 million jobs and add $400 billion to the world economy, according to a study released by the Business and Software Alliance and IDC."

Ah! This would be the widely discredited fluff piece by the BSA and IDC. So that we're clear, the study they cite is the one described as "presented in an exaggerated way...They [BSA and IDC] dubiously presume that each piece of software pirated equals a direct loss of revenue to software firms."

Who would have thought that an industry trade organization would be economical with the truth in furthering their own aims? Shock! Horror! There's also the fact that some of that pirated software is being used by people in poorer countries who could never afford it to begin with and who are now using it to earn a living for themselves, rather than starving to death or working for three cents an hour in a Nike sweatshop (or worse).

According to Download Legal, though, it's the billion dollar multi-national software companies who are really, really hurting!

"Many unknowingly engage in illegal acts and face the consequences - The online infringement of copyrighted music can be punished by up to 3 years in prison and $250,000 in fines. Repeat offenders can be imprisoned up to 6 years. Individuals also may be held civilly liable, regardless of whether the activity is for profit, for actual damages or lost profits, or for statutory damages up to $150,000 per infringed copyright."

This claim is just too weird to refute properly. I'm guessing those punishments are meeted out by some jurisdiction in the United States, but it would be nice to see which laws they're talking about (so that I can remind myself why I will never live in the US). I was particularly taken by the muddled last sentence where "actual damages or lost profits" are inferred to be one and the same. They're entirely different things: actual damages are found where someone is out of pocket in real dollar terms. Lost profit is where someone could have had a pocket with more cash in it than they actually do.

Drugs Are Bad. Downloading Is Stealing. Mission Accomplished. Dressing up empty slogans with empty figures only results in empty slogans with empty figures...and I still live in Australia so none of those "crimes" apply to me. Well, it won't be an American judge passing sentence at least.

"Cost of legitimate copies increase - The street price will rise if most consumers switch to illegal copies. The resulting demand in the market for legal copies will decrease, thereby causing the manufacturer's price to increase in order to partially offset the reduction in sales attributable to piracy."

This section is a brilliant display of "logical fallacy": all cats have four legs. My dog has four legs, therefor my dog is a cat. Err...

Now does anyone here think manufacturers who increase their prices during a glut in the market will stay in business for long? What actually happens in the scenario put forward by Download Legal is that the manufacturer lowers its prices to compete with the other sources of the product and sells shit-loads at a lower price to make up for the limited premium market. If there was a dramatic drop in the prices of DVDs, would you buy more of them? I would. My house would be filled with perfectly legal $2 DVDs.

What might also happen is that Hollywood will have to cut down on their stupendously big budget movies. Well, cut the costs anyway. This cost cutting may affect the poor, starving $20-million-per-movie stars. It may affect the five course on-set catering. It may even go as far as paying executives less than $15 million dollar a year or selling off the spare Lear jets. Hey, times are hard!

"Stifle opportunities for aspiring artists - Successful projects pay for the ones that may not recover their costs. For instance, Usher and Coldplay are paying for the newer bands the label is gambling on. This situation exists for both music and movies. If this ability to finance riskier projects is lost, the diversity and choice of projects presented to consumers will decrease, with only projects that appear to be 'sure things' receiving support."

Yeah, we're really head-over-heels for plastic, made-for-Top-Of-The-Pops "sure things". These guys seem to forget that p2p takes all the packaging/handling/distribution cost and takes them down to ZERO.

Call me old fashioned, but I was always taught that reducing costs means things cost less. As in costs less to get an artist out there into the minds of the people with the cash. Less as in not having to ship a piece of plastic from Malaysia to the U.S. and drive it into the Walmart loading bay. That kind of less. Most musicians end up having to pay back the cost of their "development" to their record labels companies anyway, so the record company is essentially doing the same as the local bank does when it lends you half a million bucks to start a business like an ice cream parlour with six foot wide flat screen TVs.

This last point is complete rubbish, simply because it only gives the record company line. It mentions nothing about the independent artists who are now in direct competition with the incumbent record companies. Competition is good for the innovators, but bad for the incumbents. Real world economics suck if you're an incumbent. Sorry guys, market forces and all that.

I really can't remember reading anything that buys into the corporate PR line as much as Download Legal does. I mean, come on guys! You're young! You're supposed to be questioning the world around you, not simply accepting and promoting it! People tried doing that with organized religion and look where it ended up.

So in time honoured tradition, I blame the parents, while at the same time sending them my sympathies. And please also spare a thought for all the poor teachers out there thinking "I tried to help them discover the benefits of an independent mind. Where did I go wrong?"

Hey Download Legal, pass the Kool Aid.

Hollywood's Golden Goose

First published here.

Who would have guessed the taxpayers of Germany are actually among the biggest contributors to Hollywood's bottom line?

Investigative journalist Edward Jay Epstein recently exposed the enormous tax shelter that allows Hollywood studios (or any other movie maker, for that matter) to reap multi-million dollar tax windfalls through a series of clever on-paper transactions.

This is how it's done:

A section in the German tax law allows German corporations to get an immediate tax deduction on any cash they invest in films, including borrowed money. It doesn't have to be a German film either - no filming in Germany, no German actors or crew - just a film that's produced by a German company. The film doesn't even have to be in production, so long as the German company owns the copyright and is included as a recipient of the film's earnings (when it's actually released) it counts as "produced in Germany" for tax purposes.

Along comes a Hollywood studio which sells the copyright and production rights to the German company. The German company then leases those rights straight back to the Hollywood studio ('cause that stuff is "property" and if you can own it, you can lease it out). The German company also gives out a Production Service Agreement and a Distribution Service Agreement that allows the Hollywood studio to produce and distribute the film.

Now the tricky part: the Hollywood studio give the German corporation an "advance" on the film's earnings instead of any kind of percentage. As far as the German taxman is concerned, this meets the requirement of the German company to get some of the "profit" from the film. The Hollywood studio then buys back the rights to the film for less than what it sold them to the German corporation for, meaning the German corporation makes a tax deductible loss on the deal which can be defered to whenever it wants to claim it.

In selling the rights back to the Hollywood studio the German connection is severed, leaving the German taxpayer to make up for the German company's "loss".

Epstein gives a great example of this little scheme in action:

Consider the case of The Lord of the Rings: The Return of the King.

A Munich-based tax-shelter fund, Hannover Leasing, had a corporate shell pay $150 million to New Line Cinemas for the movie's copyright, which it simultaneously leased back to a New Line affiliate. It also entered into agreements for New Line to produce and distribute the movie.

At the end of filming, New Line Cinemas paid the German company the agreed-upon minimum advance (which approximately equaled the interest on the initial investment) to honour the pretence that the Germans had participated in the profits. For engaging in these strictly paper transactions, New Line "earned" $16 million, a tidy "money-for-nothing" sum.

One Paramount executive admitted that his studio made between $70 and $90 million from these tax shelters in 2003 - more than it actually made from the movies themselves!

Fortunately for the good people of Germany, their government is in the process of shutting down the huge hole that's allowed the American studios to get away with this, but only after years of hundreds of millions of dollars being pulled out of the German economy.

In some ways, it's comforting to know the film industry can screw an entire country as easily as it screws individuals. It's simply another demonstration of how a corporation is designed to care about one thing and one thing only - money. As far as the studios are concerned, it's just business.

So if you've ever wondered why there are so many crap movies out there (like anything that Uwe Boll has ever made), just remember the German government was paying people to make those movies suck.

Further reading on Uwe Boll's exploitation of the loophole can be found here.