Wal-Mart DMCAs Consumer-Rights Blog

On March 6th, The Consumerist, a consumer-rights blog, posted an internal Wal-Mart PowerPoint presentation on its “3 Customer” plan. Yesterday, Gawker Media, which owns the blog, received a DMCA notice claiming that the post was infringing and demanding removal of the work.

As of this writing, the slides have been removed from the site. However, the blog continues to link to mirrors where the slides can be downloaded and it continues to use at least two of the slides on various blog posts.

No matter what the outcome though, this case will likely have implications both for Webmasters seeking to protect their content and Webmasters wanting to use copyrighted material, especially for the purpose of investigative reporting.

Infringing or Not?

The big question most people have is whether or not the posting of the presentation is infringing. It’s a difficult question with no easy answers.

First off, the presentation is almost certainly protected by copyright law. It is an original work of authorship and it is fixed in a tangible medium of expression. Even if the actual statistics are not protected, the layout, images and copy almost certainly are.

With that in mind, the question becomes a matter of whether the use was fair, an issue that would have to be decided by a judge and, possibly, a jury. However, there are many strikes against the Consumerist including the commercial nature of the use (the Consumerist is a for-profit blog), the fact the entire presentation was posted, not just the minimum required to make the point, and comments posted on the post itself including the following:

If you’re interested in this material, be sure to download it and save it elsewhere, as there’s a pretty good chance someone may want us to take it down.

Working in the favor of the Consumerist is the fact that the blog post was designed to criticize Wal-Mart and that their use did not damage the potential market for the presentation as there was none to begin with.

Still, it seems unlikely that a judge would let The Consumerist walk on the grounds of a fair use claim. The use was not transformative, the whole intent of the post was to distribute the presentation and the commentary was relatively minor compared to the actual slides. Worse still, as the Wal-Mart letter pointed out, The Consumerist, and thus Gawker, may be liable for secondary copyright infringement, meaning they might bear some responsibility for infringement by others, for their encouragement of visitors to download and distribute the file.

Given the legal climate after Grokster v. MGM

and the “inducement test” it created, there is definitely a danger, even if the Grokster case does not directly apply (Grokster v. MGM dealt with new technologies, not Web sites).

The bottom line is that, though the determination of infringement would have to be made by a judge, there is a lot of reason to believe that the work was infringing and it was probably a good idea for The Consumerist to take the steps it did.

The Strangest DMCA Notice

One of the things that really stands out in this case is Wal-Mart’s unorthodox DMCA notice.

Most DMCA notices follow a very rigid pattern and read more like a bulleted list than an actual letter. They cover the basics of what is required by the law and nothing more.

However, Wal-Mart’s notice is more of a hybrid, combining elements of a cease-and-desist letter with a traditional notice. All of the required DMCA elements are included, but so are several items usually only seen in a cease and desist letter including a threat of further legal action and a time frame for removal.

In the letter, the attorney working for Wal-Mart even went out of the way to clarify that they are not admitting Gawker is protected under the DMCA, saying in part:

Assuming without admitting that your company qualifies for the safe harbor provided by the Digital Millennium Copyright Act… we are providing you statutory notice of infringement occurring on your website and requesting that you disable access to or remove all infringing materials at this site.

In Wal-Mart’s defense, The Consumerist does present an interesting DMCA challenge since Gawker Media is both the host and the owner of the site. Since Gawker has editorial control over the Consumerist and profits directly from any infringement it commits, it is unlikely that they would qualify for safe harbor. However, if Wal-Mart believes that Gawker does not qualify, a traditional cease-and-desist would seem to be in order, not a hybrid DMCA notice.

More than likely, this was simply a case of Wal-Mart trying to cover all of their bases and responding to unknown variables regarding Gawker’s exact relationship with The Consumerist and how that relationship applies to the DMCA.

Double Fault

A different, and perhaps even more important, question regarding this incident is whether or not Wal-Mart was wise to file such a notice. Though the original article had drawn a great deal of attention, including appearing on Digg, most people had already forgotten about it. By filing the notice, story is fresh again and is now spreading even farther.

If the goal of Wal-Mart was to bury this story and save face, they’ve failed miserably. They’ve created more publicity for it, thrown additional ill will onto the fire and made a lot of new enemies.

Though Wal-Mart is most likely within its legal rights, it was still a poor move for many other reasons.

However, The Consumerist is not without fault either. Though it’s goal of protecting and informing consumers is noble, it does not free it from obeying copyright law. By posting the entire presentation when only a few slides, at the most, were really necessary and encouraging others to do the same, they were being reckless with fair use.

If they had posted only what was necessary and made the use more transformative, fair use would have likely covered them from copyright complaints. Corporate secrets torts, however, are a different matter and well out of my areas of knowledge.

Still, it is unlikely that Wal-Mart would have pursued The Consumerist on those grounds. It would have been much more complicated and costly for them to do so.

Conclusions

Personally, as someone with a marketing background, I don’t see anything wrong with the actual presentation. It, to me, is what all corporations do, study their market in an attempt to segment it and improve sales. Every major company does that to some degree and presentations such as this exist in nearly every large business.

What I do find worrisome, however, is Wal-Mart’s questionable judgment in requesting removal. The damage had been done and there was nothing to be gained by moving forward with this. To many, this shows a lack of appreciation for free speech and some will view it as an attempt to silence a critic.

Where market segmentation might be offensive to some members of the public unfamiliar with it, a perceived assault on free speech is far more egregious. Even if it was not Wal-Mart’s intent to silence The Consumerist, many will, undoubtedly, interpret it that way.

My hope is that both sides will learn from this incident and do better in future situations. There is a lot of danger for both parties and neither, up until The Consumerist’s removal of the work, seemed to be making very wise decisions.

Hopefully, now that both sides have seen their plans blow up, a more reasonable outcome can be achieved.

Update: Right before this posting, The Consumerist added a header to its article about the DMCA saying that “Walmart Wins Because We Fumbled”. The header links back to itself.

Update 2: The Consumerist has updated the header link. It now points to this articleyzxzuzbwtafwvuxswuxdayqzuvbvzb where they say that their lawyer advised them to take down the content due to the comments quoted earlier in this article. According to their attorney, those comments were an implied admission of guilt and would have hindered any defense they could have raised.

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