Over The Counter Culture

There is a mortifying Frontline documentary out at the moment, produced by the USA’s answer to the BBC (PBS). Called College, Inc, it takes it as granted that US education is increasingly commoditised, and a fundamental commodity to future employment. A degree is considered invaluable to the productivity of the member of a workforce. And it’s rare to see that view challenged by the media these days, so no surprises there.

It then delivers a fairly devastating exposé of the booming for-profit model in higher ed, which is worth discussing in depth. This is part 1 of 3; I’ll save my personal interest in the issue for last.

It’s crucial to understand what the for profit model offers. It operates in the following way: “underperforming” (for which read: financially troubled, not: delivering crap education) US schools/colleges are bought, and the ‘Three M’ are brought in: Money, Management and Marketing. Tenured professors are thrown out, class sizes boosted, and a big emphasis is placed on online courses, which scale incredibly well – they’re convenient to the thousands of students that can now follow a class, and incredibly capital-efficient for the investors. The keyword is leverage.

Intermediaries broker these investment opportunities, linking rich investors to the underperforming colleges. The Frontline documentary focuses on a broker named Michael Clifford (here’s his company’s website, ignore the sinister background music and videos of people without eyes reading cringeworthy scripts; and here’s his page on it – he is titled the ‘Man To See’), who is a ‘passionate believer in education’ though he himself doesn’t have any higher education (as you could guess from his LinkedIn profile (live at time of writing), which describes him as an ‘Education entreprenaur’ [sic]) – this even though he does have a ‘Dr’ title before his name, two honorific degrees from institutions he has turned around. Clifford was flung out from the overheating West Coast music biz, and became a born again Jack Welsh-worshipping entrepreneur.

The financing for these deals is mostly unexceptional Wall Street stuff. As I’ll discuss later, we even see the notorious Carlyle Group (a Michael Moore favourite) getting involved.

The financing occasionally gets a little more kooky than that, all involved parties tending to be quite  agnostic as to where the money comes from. The documentary gets an inside peek into the purchase of a failing college by the Dream Centre.

The Dream Centre is an arm of a Los Angeles megachurch complete with neon-backlit, full-production stage with synth-driven electro-pop bands with toyboy haircuts, even its own music label. It’s housed in an old hospital providing both religion and rehab to LA’s myriad ex-convicts, prostitutes and drug addicts. It forms part of the wider International Church of the Foursquare Gospel, which apparently has 8,000,000 members and 60,000 churches worldwide. The Dream Centre was looking to purchase the college so as to provide educational courses to both its rehab-ees, and the social workers, and gain more presence out in the community served by the college. The deal on the table was ‘keep it nonprofit (i.e. tax efficient) unless we can’t find enough financial backing in which case we let outside for-profit investors in’.

The Dream Centre was interested in this college, in particular, because it had Regional Accreditation. Everything turns on that status, and it alone is estimated as being worth $10,000,000 to a deal. In reality, to investors, it’s worth a lot more. Why?

Well one aspect is evident: marketing. To be Regionally Accredited is to have something in common with Harvard and the rest of the Ivy League schools.

But it also means that people enrolling to the school can get federal student loans. Big, easy loans that are largely blind to your credit history or even to whether you’re suitable to the education that the loan is about to fund. The loans are real bastards once it comes to paying the back though – NOTHING, not even bankruptcy, will wipe them out, you’ll be dragged in front of courts, interest is considerable, and you’re banned from taking a job funded with public money.

But they put paid-for bums on seats; the fall-out post-graduation is the graduate and government’s mess to sort out, not the businesses’. It’s a fantastic scam on the public purse and the private individuals involved; according to PBS:

Though they enroll 10 percent of all post-secondary students, for-profit schools receive almost a quarter of federal financial aid. But Department of Education figures for 2009 show that 44 percent of the students who defaulted within three years of graduation were from for-profit schools

(I’ll cut off here and deal with other subjects – like quality of education, future prospects, and close with personal comments and an explanation of my connection to this story – in later posts)

A US Court of Appeal judge has crafted a judgement in a very major US intellectual property case that is outstanding, both in its sharpness and its elegant application of basic principles of equity to intellectual property. That’s something which modern IP law seems to have really struggled to get right in recent years – no doubt a strong factor in the mushrooming of movements for IP practice reform. It has the benefit of being very readable and instructive, and I wouldn’t be surprised if non-lawyers took pleasure in reading it.

The case was part of the ongoing Bratz versus Barbie legal saga – where Mattel is trying to effectively take control of the Bratz dolls empire, developed in a rogue Mattel employee’s spare time. Mattel got first blood in a very significant 2008 victory. To quote the judge (p7): “In effect, Barbie captured the Bratz”.

At the heart of the issue was the rogue’s contract, in which he agreed to Mattel owning all his ‘inventions’ developed at any time during his employment with Mattel. The term

‘includes, but is not limited to, all discoveries, improvements, processes, developments, designs, know-how, data computer programs and formulae, whether patentable or unpatentable’

– and the lower court concluded that this included his ideas for Bratz dolls. Ideas are commercial property, even if not copyrightable, patentable or otherwise protectable.

Justice Kozinski held that the wording didn’t include ideas. The legal reasoning he uses to fall the other side of what is a rather fine line, playing on ambiguity and opting for narrow interpretation, is not wholly convincing (even if tenable), and arguably speaks more to his general views – see p9 of the judgement. But it’s sensible and equitable adjudication. But it isn’t crucial, because he then turns his guns on the remedy imposed by the lower court even if he were wrong.

He later undoes the work of previous courts that concluded that “at any time during his employment” included evenings, weekends and time off, deciding that it was so ambiguous, it should go to a jury, not be decided by judges.

To impose a constructive trust on the Bratz trademark portfolio (effectively, to say that Mattel’s ownership effectively reaches through the entirety of all parties’ efforts, investment and inventiveness in developing the Bratz brand) is grossly inequitable. It’s not wrong for the property subject constructive trusts to be handed back to the victor plus what rise in value has occurred naturally – you prevent a fraudster/thief from getting unjustly enriched using an asset that’s yours. But the line should be drawn, says Kozinski, at value added to the constructive trust assets by the hard labour of the loser. You avoid taking the defendant’s clothes along with the pound of flesh.

Further, after displaying an admirable if slightly bizarre familiarity with dolls and cartoon characters* (covering Japanese anime to Betty Boop), and discussing the utility of dolls clothes (“Dolls don’t feel cold or worry about modesty. The fashions they wear have no utilitarian function”) he finds that Mattel is only entitled to a limited standard of protection, that of virtual identity, since there is a limited range of expression of the idea:

‘Mattel [is not] entitled to broad protection because there are many ways one can depict an exaggerated human figure. It’s true that there’s a broad range of expression for bodies with exaggerated features: One could make a fashion doll with a large nose instead of a small one, or a potbelly instead of a narrow waist. But there’s not a big market for fashion dolls that look like Patty and Selma Bouvier. Little girls buy fashion dolls with idealized proportions—which means slightly larger heads, eyes and lips; slightly smaller noses and waists; and slightly longer limbs than those that appear routinely in nature. But these features can be exaggerated only so much: Make the head too large or the waist too small and the doll becomes freakish, not idealized.’

And so to the third and final, and possibly most instructive, part of the judgement, addressing the question are the Bratz dolls substantially similar to the mock-up dolls which the rogue made during his Mattel employment? If yes, the after-hours mock-ups (which would hypothetically be owned by Mattel) would have been copyrighted works infringed by the dolls. Kozinski says: no. The reason, he explains, is that an idea (for bratty dolls) is not copyrightable. Only the unique expression of the bratty doll concept is copyrightable. Once you strip away all obviously un-copyrightable features: nose, hair, eyes, etc, the sole remaining ground for the lower court’s finding of copyright infringement withers under Kozinski’s gaze – because of the idea/expression dichotomy so crucial to copyright law:

Mattel can’t claim a monopoly over fashion dolls with a bratty look or attitude, or dolls sporting trendy clothing—these are all unprotectable ideas.

Nice to know that a pernicious and bratty lawsuit over pernicious and bratty dolls can have intelligent, informative high brow dividends. It’s a victory for common sense and good, equitable justice, founded on a solid grasp of IP law and policy; the title of this piece is taken verbatim from the final words of the judgement.

*From a judge who got into hot water for ‘hacking’ into the judicial IT system to disable the ‘anti-porn’ web filter!

Yesterday, I covered the FIFA courts in South Africa: a commercial/politically-motivated streaming of Cup crime above all others, drawing particularly unfair punishments, all processed in record time. Constitutionally, that’s really quite troubling.

But commercial sport’s casts more shadows on the law than that. Let’s not forget the orange ladies that dared to wear minidresses. Part of a commercial conspiracy by Bavaria Beer to get ‘free’ advertising on the back of the World Cup, they faced charges  of "unauthorised commercial activities inside an exclusion zone" and "enter[ing] into a designated area while in unauthorised possession of a commercial object".

Under diplomatic pressure from the Dutch government, the charges were dropped. Yet somewhat incredibly, the UK government has also seen fit to make commercial use of certain words (like “Gold” or “2012”) a criminal offence once the Games roll into town – I shit you not).

Here’s a quick lesson in how commercial interests get to set criminal law in this country:

Corporations, if they really suffered damages, could potentially sue. But then, the poor sponsors are faced with the hassle of going after minidress wearers, in tort law, or the people the sponsors bought their ad exclusivity from (in London 2012’s case, the IOC and LOCOG), in contract law.

So the sponsors have a good ol’ moan (in SA, to FIFA; for the Games, to Seb Coe); these then bring their weight to bear on our governments, who then crack the whip over their legislature in order to pass draconian criminal laws.

How nice: I’ll have to remember that next time I go into commerce, I should just get the state to make some special criminal laws making it a special criminal offence for people to tread on my special business toes. Much better than having to get my own lawyers involved to sort out my own commercial problems – I can just send the cops in. And who knows; maybe we should even do what the South Africans do: fast-track it through a special system of steroid-addled courts, at huge financial outlay.

Even the Chinese government didn’t think it appropriate to go down this route for Beijing 2008. But clearly, the West is unwavering in its commitment to democracy and the rule of law and gets to repeatedly poke the Chinks in the eye with how bloomin awesome our constitutions are. Especially during their Olympics.

One can only hope they think to return the favour.

Little surprise than in the dull early stages of this year’s World Cup, journalists’ attention wandered. The journalists over at Bakchich had a little rubberneck at the judicial system of a country which sees 50 murders a day, and annual rates of burglary and carjacking of 18,000 and 15,000/yr, respectively.

And what they saw, for a country trying to ‘rebrand’ itself, was troubling. Anxious to ensure that crime didn’t spoil the marketing and festive spirit, a system of hardcore ‘FIFA courts’ was setup to deal with ‘World Cup-related crime’ in the rainbow nation, rapidly doling out harsh punishments for a wide variety of crimes. These ran the gamut from pissing off the sponsors, to mugging the tourists, even being used to seemingly ‘get one back’ at foreign journalists whose pen was not unquestioningly friendly to all that was going on.

Giving the SA justice system a booster shot is not, invariably,  a Very Bad Thing. But this is arbitrarily streaming  certain types of justice over others, to protect and further a political and economic motive. That goes against basic principles of the rule of law and the separation of powers.

Nor is it seemingly fair on the few fools who committed World Cup-related crime, given how tough the sentences are and how ridiculously expedient the sentencing was. It’s Judge Dredd-ish, and politically motivated. One would have thought that a country with South Africa’s history would have been reluctant to return to a system of inequality before justice…

Case(s) in point:

- a 15 year sentence to hard time for the robbers of two Portuguese journalists. Time from arrest to sentencing took just 48 hours.

- a full 3 year sentence for a Nigerian convicted of handling 30 stolen tickets in Pretoria: arrest to sentencing in 24 hours

- a full 2 year sentence for a 21 year old that pilfered a German tourist’s picnic blanket, 3 beers and guidebook; arrest to sentence in less than 24 hours

- a full 3 year sentence, delivered in just 20 minutes’ court time, to a 22 year old Jo’burg youth South African unarmed youth with no criminal priors that nicked an Argentine’s mobile

This in a country with 400,000 thefts each year…