DYAC’s most famous bloopers have become perennial Facebook favorites and the source of hilarious year end lists. Here is one well-publicized example:

Such fare is popular with anyone who has suffered an embarrassing auto-correct, helping the DYAC site become a well-known brand. The site has not been a hit, however, with its new owners, who claim they got stiffed after they bought it last February.

According to owner Break Media, which also owns a collection of college humor websites, the number of visitors to the site dropped off dramatically and the number of user submissions dropped from 150 a day to 100 shortly after it acquired the site. In court papers, the company accused the previous owners of inflating the site’s popularity by buying traffic and by publishing fake text messages.

In a late December court decision, a federal judge rejected the accusations. The judge concluded instead that the decline in popularity was more likely the result of poor editorial and site management decisions, and pointed to a Break Media admission that “the editor I put in charge of most of the tumblers (sic) had gone far off the rails, posting images that were neither fun nor funny.”

As a result, the judge ordered Break Media to hand over $1 million of the purchase price it had had been holding back. Under the contract, the company agreed to pay $2.5 million in total for Damn You Auto Correct and about a dozen other lesser known sites like “Really ghetto” and “Parent fails.”

Break Media’s SVP of Marketing, Andy Tu, explained in a phone interview this week that the parties have now resolved the lawsuit. He added that Break has doubled the social media popularity of DYAC and also started a “damn you” merchandising line with desk calendars and a board game.

Media and legal types who want more details — check out the great analysis of the case by social media lawyers Venkat Balasubramani and Eric Goldman who were first to report it on the Technology and Marketing Law blog.

In case you missed it, a San Diego law firm this week sought to run to the rescue of Instagram users who are upset that the site will change its terms of service in January. These new terms are meant to help Instagram introduce advertising practices akin to its new parent company, Facebook, which turn users into pitchmen for products.

The lawsuit, which came after weeks of uproar about the maladroit way in which Instagram rolled out the proposed changes, made for good headlines. Too bad, then, the case stands as much chance of success as that petition to deport CNN’s Piers Morgan.

Writing on Eric Goldman’s respected Technology and Marketing Law Blog, Seattle lawyer Venkat Balasubramani described the case as “flimsy,” “borderline frivolous” and “an example of lawsuits against social networks gone completely amok.”

Balasubramani, who tracks social media cases closely, points out that that the revised terms haven’t even gone into effect (meaning that users can simply leave) and that, in any case, Instagram has the right to change its terms of service if it darn well pleases. You can see the full take-down, including Goldman’s view, here.

So why are the good folks at Finkelstein & Krinsk law firm filing this case in the first place? My own hunch is that it’s a way for the firm to get on the radar as part of California’s growing cottage industry of privacy lawsuits. This involves law firms who wait for the latest privacy outrage, and then race each other up the courtroom steps to file a case. Next, they ask for Facebook (or whoever) to pay them as part of a “privacy settlement” which typically compensates lawyers and activists — but not the users whose privacy was breached. In this case, though, the only payout Finkelstein & Krinsk are likely to receive is a clobbering by Facebook’s veteran legal team.

Overall, the Instagram episode is just the latest example of the ritualistic cycle of complacency-outrage-resignation that occurs whenever users discover that websites like Facebook and Google are providing a free service in exchange for advertising data.

(Image by ollyy via Shutterstock)

Eric Goldman and Rebecca Tushnet are both trademark experts and popular bloggers. This week, they offered a new package of course work called “Advertising and Marketing Law: Cases and Material” for sale on Scribd for just $10. In a blog post, Goldman explains the economics behind the $10 price tag:

Compared to 99 cent or free eBooks, a $10 downloadable book may sound expensive. But, compared to the typical law school dead-trees casebook, $10 is a ridiculous bargain. Many print casebooks of comparable size cost $150 or more. … While we could easily justify a higher price than $10, we’re not exactly philanthropists. Here’s how I see the math: a $150 casebook may have a $110 price wholesale (or less). At 10% royalties to the authors, Rebecca and I would share $11. At the $10 download price, Scribd takes $2.25 a download, leaving us author royalties of $7.75. So discounting the retail price 93% perhaps reduces our royalties by less than 30%. Let’s hear it for disintermediation! Plus, just like any demand curve, the lower price point should lead to higher sales, which may, in fact, make our approach profit-maximizing.

The book will be available to read and mark-up on any electronic platform and can be printed as well. The authors are not applying any digital rights management to the book, but are relying instead on the low price and a moral appeal to limit unauthorized sharing.

The book is available on Scribd, a popular document-sharing platform, that has already attracted the interest of the publishing community. In 2009, Simon & Schuster signed a deal to use Scribd as a potential Kindle competitor, offering excerpts and complete works from Stephen King and others.

Interestingly, in his blog post, Goldman blasts Scribd as a “horribly limited platform” and complains that it requires users to provide their Facebook profile to complete the purchase. He adds that he and Tushnet intend to switch to an alternative eBook platform as soon as they can find a better one.

Goldman and Tushnet are part of a larger phenomenon of disruption in the textbook publishing business that is leveraging digital distribution possibilities and eliminating intermediaries. Other examples include sites like BenchPrep and Boundless Learning that offer personalized or open source content via mobile and the web.

A new report shows the sites’ traditional legal shield is still strong, but that some are trying to use intellectual property laws to crack it.

In “2011 State of the Law Regarding Website Owner Liability for User-Generated Content,” Internet lawyer Catherine Gellis offers a helpful update of websites’ ongoing effort to fight off lawsuits created by their users.

Gellis found that websites’ core legal shield (Section 230 of the Communications Decency Act) continued to gain traction as courts last year again confirmed that businesses like auctioneers and consumer review sites can’t be sued over what their users do.

The legal shield, created in 1996 to ensure that the fledgling Internet economy was not brought down by lawsuits, works by ensuring websites are not responsible for obscene, defamatory or criminal acts of their users. The shield stays up as long as the sites don’t take an active part in their users’ activity — if they do, they lose their immunity and become instead content creators who can sued like anyone else. Overall, Gellis notes the shield may even be getting stronger — recent cases show sites like Yelp and Roommates.com are protected even if they curate content.

While the ongoing strength of Section 512 is good news for Internet companies, the bad news is that plaintiffs are trying even harder to use intellectual property law as a backdoor around it.

What this means in practice is that aggrieved individuals are gussying up libel complaints as copyright or trademark cases. Doctors and dentists, for instance, have been trying to use copyright law to force websites to take down negative reviews.

Such attempts to short-circuit websites’ legal shields are hardly new, of course. In Australia, for instance, a man sued Twitter last week after a media personality reportedly defamed him in a tweet. The lawsuit, which is likely to fail, is part of a long-running effort by companies and individuals to make Internet companies responsible for what appears on their platforms. Here is Gellis’ conclusion:

Parties looking to hold someone accountable for content will always be tempted to “shoot the messenger”; future cases will necessarily continue to explore the bounds of just how bulletproof they are.

The Gellis report credits Professor Eric Goldman’s Technology and Marketing Blog.

In case anyone missed it, the fuss is about the Stop Online Piracy Act, a bill that would deputize search engines, advertisers and other internet players as part of a campaign to shut down rogue websites. These “rogues” are foreign sites that sell unauthorized versions of US products like movies, shoes or pills.

The issue isn’t that complicated. At its core, it’s about deciding the role of different industries in monitoring and enforcing intellectual property rights. Unfortunately, the debate so far has been all about hysterics and hyperbole. SOPA supporters are casting opponents as free-loading, unpatriotic criminals. Meanwhile, the bill’s detractors say that brand owners want to bring about Chinese-style censorship and the “end of the Internet.”

The problem with this rhetoric is not just that it’s inaccurate but that, after a point, it’s boring. The SOPA screaming attracts partisans but few people who want to discuss a balanced approach to the piracy problem.

SOPA critics, for instance, rarely concede that US companies have a reason to be upset about these websites. If you’re curious, here’s one where you can buy fake Tiffany stuff from China. And here’s one registered in Montenegro where you can download nearly any song, book or movie for free.

Many Americans feel intuitively there is something wrong with these sites. That’s why SOPA’s sponsors have had such an easy time getting bipartisan support for the bill –the public doesn’t like the idea of foreigners stealing intellectual property from US companies. SOPA critics don’t seem to get this. While they have produced numerous tirades about greed and censorship, they have said precious little about what to do about the offending websites.

Unfortunately, the sins of the other side have been even worse. Brand owners and the content industry have used the rogue websites as a pretext to push for a legislative moon shot in the form of SOPA. SOPA supporters won’t admit that the bill, as drafted, is about much more than foreign websites and that it could have a series of harmful consequences for technology and free speech. Instead, they are doubling down on press releases about protecting America from crime.

Senator Ron Wyden has tried to break the impasse with a rival piece of legislation that would vest new enforcement power in the International Trade Commission. The proposal, however, only seems to have triggered yet more overwrought press releases from SOPA supporters. And in any case, the ITC scheme could prove feckless in practice (see Professor Eric Goldman’s thoughts here).

Any real progress in the piracy debates will ultimately require a shift not just in substance but in tone. This would mean SOPA opponents acknowledging the problem (or even the existence) of the foreign websites. In turn, brand owners and their allies, including the Chamber of Commerce, should stop using the websites as a pretext to ram a galaxy of questionable measures through Congress.

Alas, a rational public discussion on intellectual property enforcement for now seems about as possible as a calm chat about the Mexican border.

Trolls, Mafia or Privateers?

What should we call shell companies that buy up patents and file lawsuits even though they don’t make anything? “Non-practicing entity” is the preferred term for those who find “troll” too pejorative — but there are some other candidates too. Michael McCoy, who represents app developers, proposed “the mafia.” Tom Ewing, of patent licensing firm Avancept, has another idea. He likes to think of himself as a “privateer” because he is a good guy pirate like Sir Francis Drake who helped to build a new economic model for his country.

Speaking of rhetoric, Ewing is sick of the constant references to “battles” and “war” that pepper any patent discussion. Ewing says that audiences in other countries would “turn pale” at such language. He then offered the Silicon Valley gathering of patent boffins a $100 prize to the first who submitted a patent paper without military metaphors.

Mobile is Driving a New Era of Patent Wars

In the PC-era, according to consultant Lisa McFall, tech patent squabbles were a gentlemen’s game played by a few large companies that would enter cross-licensing arrangements rather than face mutually assured patent destruction. Now, the disruptive effects of mobile technology has brought the return of company-to-company litigation that is further fueled by the arrival of patent-holding companies.

Intel’s Jeff Draeger echoed that “mobile phones are disrupting books, magazines, MP3 players and cameras” and that the end of detente among tech companies means everyone, small and large, is in a mood to file lawsuits. But he added that the current patent acquisition spree is fueled by a speculative bubble and that “this mania about wireless patents is going to wane.”

Competitors Become Allies

Smart phone fights aside, big companies are tapping a new spirit of legal cooperation. Historically, the companies were reluctant to work together to defend patent suits because they did not want to disclose their strategies and they worried their rivals would settle the case behind their back. Now, though, patent lawsuits have become such a threat that lawyers from different firms are forming common legal fronts to strangle troublesome trolls in their crib. This cooperation, along with new joinder rules, may be turning the patent tide in favor of the tech companies.

Here Comes China

It is not just manufacturing jobs that the US is exporting to China — America has also sent over patent trolls. According to Xiang Wang, a Beijing-based lawyer for Orrick, China is rich ground for non-practicing entities because everyone, everywhere is making products that might infringe a patent. But Wang says the Chinese trolls have only had limited success so far due to inexperience and poorly drafted patents.

China is also going to be a big patent player because of a national policy that calls for obtaining thousands of patents in core industries, according to Joff Wild of IAM Magazine. The country is less likely to invent the patents than to buy them from American companies — which may touch off a new national security debate tied to patents.

In Quotes:

Use a very skeptical eye because most of this stuff is junk — Intel’s Jeff Draeger on buying patent portfolios.

If you have the next big app, they’ll find a way to get to you.. It’s a lot like the mafia — Michael McCoy, Appsterdam Legal Defense Fund.

This is something even our House of Representatives can understand — Karen Boyd of Turner Boyd, on how new joinder rules will make it easier to count patent lawsuits.

There are so many settlements because the average litigation cost is $5-10 million per judgment — Douglas Luftman, CBS (NYSE: CBS) Interactive.

Privateers are the good guy pirates — Avancept’s Tom Ewing on why he would rather be called a privateer than a troll.

Defense 2.0: New Strategies for Reducing Patent Risk is taking place at Santa Clara University and was kicked off by NPR’s Laura Sydell, whose American Life show “When Patents Attack” helped make patents a dinner table topic.