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August 31, 2005
Illinois Court Enforces Dell’s Website Terms and Conditions of Sale
Dell Computers has contributed to the growing body of cases finding that “browse-wrap” contracts (terms and conditions posted on a website that do not necessarily require one to click on an “I agree” or “I accept” button) can be enforceable in certain circumstances.
In Hubbard v. Dell Corporation, No. 5-03-0643, 2005 WL 1968774 (Ill. App., Aug. 12, 2005), an Illinois appeals court held that buyers who purchased computers via Dell’s website were bound by an arbitration clause contained in the “Terms and Conditions of Sale,” even though buyers were not required to click on an “I agree” or “I accept” button specifically accepting those terms of sale.
A few thoughts about this case:
· The court properly used traditional contract analysis to evaluate whether or not the arbitration clause was enforceable. Like in the recent McDonald’s case in the Seventh Circuit, it’s nice to see the courts getting the analysis right.
· A few other cases have discussed the enforceability of “browse-wrap” terms. But this may be the first reported case where a court has held that a first time or infrequent visitor to a website could be bound by “browse-wrap” terms if they are conspicuous. In other cases, the parties were repeat visitors (generally for an improper purpose, such as stealing competitive data or screen scrapers).
· The court also considered the sophistication of the buyers. (“Common sense dictates that because the plaintiffs were purchasing computers on line, they were not novices when using computers. A person using a computer quickly learns that more information is available by clicking on a blue hyperlink.”).
· Several colleagues and I wrote a paper a few years ago entitled “Browse-wrap Agreements: Validity of Implied Assent in Electronic Form Agreements” (59 Business Lawyer 279 (2003)), in which we set forth a four-part test for courts to use in determining whether a user has validly assented to the terms of a browse-wrap agreement: (1) the user is provided with adequate notice of the existence of the proposed terms; (2) the user has a meaningful opportunity to review the terms; (3) the user is provided with adequate notice that the taking of a specified action manifests assent to the terms; and (4) the user takes the action specified in the notice.
While the Illinois court did not cite our article or explicitly use our test in the Hubbert decision, it was satisfied in this situation.
Adequate Notice of Terms. What constitutes adequate notice of the existence of terms should be judged both in terms of the physical presentation of the notice and the content of the notice. Here, each of the five pages of forms that the buyer had to fill out to make the purchase contained a blue hyperlink to the “Terms and Conditions Of Sale”. The terms and conditions of sale were also included on the printed invoice that came with the computer. In addition, on three of Dell’s five web pages that the buyers completed to make purchases, the following statement appeared: “All sales are subject to Dell’s Terms and Conditions Of Sale.” The court felt (properly, I think) that this statement would place a reasonable person on notice that there were terms and conditions attached to the purchase and it would be wise to find out what the terms and conditions were before making the purchase. Is this any different than signing an invoice or sales receipt with “See terms and conditions on reverse” printed at the bottom?
Opportunity to Review the Terms. The second factor of our test requires that the user of the website have a meaningful opportunity to review the browse-wrap terms before the deal becomes final. Here, the terms were linked to each of five pages that the buyer needed to complete before purchasing. The terms were available before the purchasing decision needed to be made. Moreover, the buyers had all the time that they wanted or needed to review the terms (unlike cases refusing to enforce terms on the back of ferry tickets where the ticket was taken immediately after purchase).
Adequate Notice of Action. Another element in our test is that the user must receive adequate notice that the taking of certain actions manifests assent to the terms. Here, the notice was not as clear as it could have been, but was adequate (according to the Court, and I agree) to put the buyer on notice that his or her purchase was subject to the terms. I would have preferred if the notice were more explicit such as “By completing this form or purchasing the computer, you agree to the ‘Terms and Conditions Of Sale’” (with a link to the terms and conditions). In other cases, courts have enforced terms that stated that by submitting a query, the user would be bound by the terms, or that use of the website is subject to express terms of use, and by continuing past the page, one agrees to abide by the terms. This case would seem to be closer to the latter.
User Takes the Action Specified. Here, the users purchased the computers, thereby taking the action specified in he notice.
· In the end, using a click-through procedure provides more certainty and reliability when one needs to enforce a contract. This approach should be used whenever possible.
Discussion at ContractsProf Blog.
Posted by John Ottaviani at 02:47 PM | Licensing/Contracts | Comments (1)
Alaska Governor Signs Anti-Adware Law
No surprise, but Gov. Murkowski signed SB 140 into law yesterday, enacting the most problematic anti-adware law to date. In signing the law, the governor said: "By signing this bill, I am sending a strong message that we will not tolerate those who would use the Internet to dupe vulnerable Alaskans." Given that the law takes power away from consumers to pick their own software and instead empowers trademark owners to squelch competition, there may be multiple parties who are duping Alaskans in this context. Still no word yet on if there's going to be a challenge to the law and, if so, who will lead it.
Posted by Eric at 02:16 PM | Adware/Spyware
August 30, 2005
LA County Busts Warez Trader
Internet News reports that Jed Frederick Kobles, a Los Angeles warez trader, pleaded guilty to a single count of grand theft after being busted by Los Angeles County High Tech Crimes Unit.
I am having a hard time understanding this news report--the feds have exclusive jurisdiction over copyright infringement, and I can't understand how a prosecution for grand theft for warez trading survives copyright preemption. If you have any insights in this, please let me know.
Posted by Eric at 09:19 PM | Copyright
August 29, 2005
White Buffalo - the 5th Circuit hits on LonghornSingles.com
or "What happens when the Internet service provider IS the state?"
White Buffalo v. U.Texas, Austin, No. 04-50362-CV0 (5th Circuit, August 2nd, 2005)
This two-part post it going to take a rather detailed look at the 5th Circuit's opinion in this unique case, discussing in Part One (below) the CAN-SPAM Act and how the court applies it in this case. Part Two (post coming soon) will discuss additional complications when a government agency or entity (in this case the University of Texas) adopts a filtering policy or blocks email.
The 5th Circuit won the race to be the first federal Appeals Court to construe the CAN-SPAM Act's state law preemption clause. Too bad it didn't really need to...
Background
White Buffalo is the operator of several online dating sites, including LonghornSingles.com - targeted at the apparently lucrative dating scene for university students. White Buffalo sued the University after it filtered White Buffalo's bulk email advertising LonghornSingles.com and blocked incoming mail from White Buffalo's IP addresses. After White Buffalo got a temporary injunction against the University, the District Court subsequently granted the University's motion for summary judgment, finding that UT's spam policy wasn't preempted by CAN-SPAM and didn't run afoul of the 1st Amendment. The 5th Circuit affirmed, but took the opportunity to clarify as well.
White Buffalo's Argument
White Buffalo claimed CAN-SPAM's labeling, anti-fraud, and opt-out requirements for sending spam, combined with its state law preemptions, comprehensively regulated spam. White Buffalo alleged that U.Texas's spam filtering policy was a state law or rule trying to regulate spam, and therefore preempted under CAN-SPAM. In effect, White Buffalo argued, CAN-SPAM required U.Texas to drop its now-preempted filtering rules and let White Buffalo's CAN-SPAM-compliant mail through.
U.Texas apparently acknowledged that White Buffalo's email was CAN-SPAM-compliant, but responded with a kitchen sink of arguments; CAN-SPAM regulated only 'sending' spam and U.Texas's policy only filtered 'received' emails, so CAN-SPAM didn't apply; U.Texas wasn't really part of the state of Texas, so its filtering rules weren't really preempted; and that CAN-SPAM had an ISP filtering exception that let the University filter.
Thoughts
The opinion is most interesting because of the unique situation U.Texas is in - it is an ISP AND an arm of the state of Texas, subject to CAN-SPAM's state preemption provisions and all the additional protections and laws state government entities are subject to, including the 1st Amendment. It is also an Internet service provider for (quite a few) faculty, staff, students and alumni. This means that if U.Texas meets the definition of an Internet service provider in the Act, the Act's exceptions dealing with ISP filtering apply as well.
Unfortunately, this seems to have been too confusing for the Court to comfortably handle, as the opinion goes through a considerable amount of preemption doctrine analysis, finds "textual ambiguity" and "default presumptions against preemption," resorts to drawing Venn diagrams, and generally makes long work out of what should be a simple construction of another part of the CAN-SPAM statute. At the end of it all, the 5th Circuit holds that since it finds conflict in the terms of the statute, the strong presumption against preemption should apply, and therefore U.Texas's filtering rules are not preempted.
Interestingly enough, it seems that after all these contortions, the end result is the same as a simple reading of the statute - CAN-SPAM doesn't regulate or preempt U.Texas's filtering policies.
CAN-SPAM and state law preemption.
The CAN-SPAM Act is like many other pieces of federal legislation, cobbled together from several bills and amendments, in this case over several years, and heavily negotiated between the House of Representatives and the Senate. The Act has specialized definitions, some borrowed from other Acts, and has provisions preempting most state laws regulating spam. A quick peek at the Act's legislative status history reveals 6 versions in its final year alone, not counting amendments. Complex histories like this often means definitions don't track well and provisions aren't clear, but in U.Texas' case, the language in the Act holds up pretty well.
CAN-SPAM was passed in part to provide uniformity to US spam laws that differed from state to state - the portion of the official Senate Committee Report discussing state law preemption refers to "this bill's creation of one national standard..." to prevent a sender's possible confusion of having "...to determine with which State law to comply."
To that end, CAN-SPAM preempts almost all state law regulating spam, unless the law only "prohibits falsity or deception," or isn't specific to email. The preemption provisions of the act are all helpfully set out in Section 8. Section 8 also has an important statement on ISP filtering...
CAN-SPAM's categorical inapplicability to ISP filtering
As the sponsors and supporters of CAN-SPAM pointed out rather frequently, the Act was supposed to be a legal compliment to, not a replacement for, technological measures used to control spam. To that end, almost from the beginning the Act had an exception removing spam filtering from the scope of the Act. This exception shows up as Section 8c of the law as finally passed. It says "Nothing in this Act shall be construed to have any effect on the lawfulness or unlawfulness, under any other provision of law, of a provider of Internet access service['s]" adoption of a filtering policy.
The official Senate Committee Report again seems to reinforce the plain meaning, stating, "Section 8(c) would clarify that this legislation would have no impact on the lawfulness of ISPs' efforts to filter or block e-mails traversing their systems."
Housekeeping details: An ISP, or not?
Covering all the bases, the 5th Circuit also parses CAN-SPAM's definition of an ISP, called an Internet Access Provider in the statute, to make sure that the filtering provision does apply to U.Texas, and finds that the University is clearly within the definition in the Act.
Conclusion
So then that's it, hands off, sink or swim on your own, CAN-SPAM doesn't address ISP filtering - which means it definitely doesn't prohibit it like White Buffalo claims.
What's left?
If U.Texas's filtering is outside of the scope of CAN-SPAM, what's left? White Buffalo possibly has several 1st Amendment claims (which I'll talk about soon.)
Posted by Ethan Ackerman at 10:00 PM | Spam
Guest Blogger Ethan Ackerman
I'm pleased to introduce Ethan Ackerman as a guest blogger. Ethan Ackerman is an attorney in Washington DC and previously has been a legislative and technology counsel in the US Senate. He wrote portions of the CAN-SPAM Act and was an amicus attorhey in Wahington v. Heckel, one of the early landmarks in spam law. I expect that he will have a lot to say about spam issues, but I welcome his contributions on all fronts.
Posted by Eric at 09:31 PM | General
August 26, 2005
Blog Content Aggregation, RSS Feeds and Copyright Law
At Search Engine Strategies, we discussed the problem of aggregators and spammers taking blog content and using it to build aggregation pages (with AdSense links, naturally) that compete with the source blog for traffic. In some cases, these aggregation pages present tightly focused content about high-value keywords.
In a perfect world of search, the search engines would be able to determine that these aggregation sites are spammers and block them accordingly. However, because the aggregation sites use legitimate content, the search engines can't recognize them for what they are.
Indeed, a smart SEO can find a way to get these aggregation pages ranked pretty highly, even if they have no original content of their own. (At SES, there were some anecdotal stories that these aggregation sites were ranking higher than the source blog, definitely "diverting" traffic and presumably costing the source blog some money). While these aggregation sites may have limited in-bound links, and thus lower PageRank, PageRank is not the sole determinant of search engine placement. Indeed, the highly focused aggregation sites overcome the lower PageRank for certain keywords by having the keyword in the title, good keyword density, smartly controlled anchor text (through a website controlled by the aggregator), etc.
With the search engines fairly powerless to automatically detect and accurately grade these aggregation sites, bloggers need to do their own enforcement work. Many bloggers never check if their content is being recycled/stolen, so many aggregators can get away without any consequence.
If the bloggers do choose to pursue the aggregators, their principal tool will be copyright law. There's no question that bloggers have copyright protection for most of their posts, and copyright is a powerful tool. For example, bloggers should be able to get the aggregators kicked out of the search engines or taken down by web hosts through 512(c)(3) notices.
However, there's an underlying problem. Many bloggers make feeds of their blog content available for all comers through RSS (a/k/a "Really Simple Stealing"--a phrase generally attributed to Jason Calacanis). This raises a question that has become the buzz among lawyers and SEM--if a blogger makes a feed of his/her blog available, what can others do with that content?
In my mind, there's no question that a blogger grants an implied license to the content in an RSS feed. However, because it's implied, I'm just not sure of the license terms. So, in theory, it could be an implied license to permit aggregators to do whatever they want.
This may not be as ridiculous as it sounds. For example, I have no problem with Bloglines aggregating my feeds. Indeed, I think I have several dozen regular readers through Bloglines, so if I cut Bloglines off, I would lose a non-trivial number of my readers.
But if making an RSS feed available gives Bloglines an implied license to repurpose my blog content, how do I distinguish other aggregators? In other words, in aggregating my content into a web page, the spammer/aggregator is doing about the same thing as Bloglines. The only difference I can see is that Bloglines generally doesn't make my blog content indexable to the search engines on its servers--although they might find other ways to make money off my content, such as serving ads.
The ads-on-third-party-blog-content issue was raised when Marty Schwimmer complained to Bloglines about having ads displayed on his content, and that led Bloglines to (I believe) block him and then take down the ads. (See a recap here). Fortunately, Marty's blog is back in Bloglines, and I trust everyone reading my blog also reads his regularly.
It is trivial to destroy an implied license, so bloggers can overcome any aggregator use simply by saying so. I'm not sure WHERE the blogger would need to say this (by the "syndicate" link? in the xml feed itself?). Perhaps any disclosure in any reasonable place would be sufficient to destroy the implied license. I don't think many bloggers are trying to destroy those implied licenses today, but that may be coming.
Meanwhile, if there truly is an implied license for aggregators, then technically sending DMCA takedown notices to the search engines would not be proper--at least, the blogger would need to notify the aggregator to destroy the implied license before a DMCA takedown notice would be proper.
The bloggers' other main recourse would be copyright litigation. However, this is generally not a great option for bloggers for 2 reasons. First, it's a hassle. Second, bloggers rarely if ever register their copyrights--at least, not early enough to obtain statutory damages and attorneys' fees. (FWIW, I've never registered a copyright in my blog).
This led to an interesting suggestion from Jeffrey Rohrs. It would be a pain for very active bloggers to constantly register their copyrights in their blog, so it would be advantageous to them to make it easier to register. Fortunately, there's a technological solution--bloggers already put out an RSS feed with all of the blog's content. Maybe the Copyright Office could allow submissions of blog content for registration by reading an RSS feed.
In other words, the blogger would register the feed, and the Copyright Office could automatically pick it up regularly. This would be cheap solution for the Copyright Office and would allow bloggers to regularly register their content. With regular registration, bloggers would be eligible for statutory damages and attorneys' fees and would get a huge club to go after the aggregators.
I think the Schwimmer/Bloglines fracas was a very minor skirmish in a much bigger battle against aggregators that will be played out. First, Bloglines backed down, and second, Bloglines is not as pernicious as the spammer/aggregators.
I'm pretty sure we're going to see some big/high-stakes battles over the scope of any implied licenses in RSS feeds, and I honestly can't predict where the lines will be drawn. In the interim, I suggest to bloggers who care that they put some restrictions near their "syndicate" link, add some restrictions to the RSS feed, register their copyrights and use the DMCA notice-and-takedown procedures when appropriate.
Posted by Eric at 10:27 AM | Copyright , Licensing/Contracts | Comments (3)
Steinbuch v. Cutler Update--Cutler's Motion to Dismiss
You may recall Steinbuch v. Cutler, where a Washington staffer blogged about her modestly-scandalous sexual experiences with a Senator's counsel. For the voyeurs, I've uploaded Cutler's motion to dismiss the lawsuit filed last month.
The principal grounds for dismissal include the statute of limitations, the facts weren't private, Cutler had run a "private" blog, and the First Amendment. I'm not an expert in calculating the statute of limitations, but on its face this struck me as a pretty potent defense against most of the lawsuit.
As predicted, the lawsuit has some racy facts (I counted 7 references in the motion to dismiss to "spanking"), and the motion to dismiss names even more names. The various factual disclosures/reiterations in the motion to dismiss shows exactly there is a major downside to plaintiffs bringing invasion of privacy or defamation lawsuits. Talk about a relationship ending badly!
UPDATE: Wonkette rightly points out the weakness of the "I didn't understand how to use Blogger" defense.
Posted by Eric at 09:46 AM | Publicity/Privacy Rights | Comments (3)
August 25, 2005
Gripers 1, Initial Interest Confusion 0--Lamparello v. Falwell
Lamparello v. Falwell, No. 04-2011 (4th Cir. Aug. 24, 2005).
Following on the Ninth Circuit Bosley opinion from earlier this year, gripe sites won another important victory yesterday in the Fourth Circuit. This ruling is significant not only because it vindicates gripe sites, but also because it squarely confronts the Initial Interest Confusion doctrine (which so many other courts have ducked recently).
The Facts
Lamparello built a site at fallwell.com that criticized Jerry Falwell's views. The home page contained a disclaimer and a link to Falwell's site; at some point Lamparello had commercial outlinks. The parties agreed that Lamparello had very little traffic (200 hits/day) and no diversionary effect.
No Likelihood of Confusion
The court discusses, and then sidesteps, the argument that Lamparello's site was non-commercial and therefore outside the scope of the Lanham Act. Instead, the court says it does not need to resolve that question because there was no likelihood of confusion.
In support of this, the court does a very efficient multi-factor analysis. There is not sufficient similarity between the "products" because the websites look totally different and offer opposing, not similar, views. Further, there is no evidence that consumers were actually confused; instead, the anecdotal evidence showed that misdirected searchers quickly realized they were at the wrong site.
While I don't disagree with this conclusion, this type of analytically efficient multi-factor analysis shows exactly why trademark law should not apply to non-commercial gripe sites at all. The factors really don't make sense because Lamparello was not marketing goods or services in commerce. Thus the court has to resort to analytical tricks like comparing the source of the "content" rather than the source of "goods or services." So, from my view, the court should have disposed of the case because there was not sufficient "use in commerce" to meet the threshold standards for trademark infringement.
Initial Interest Confusion
Having concluded that there was no likelihood of confusion under the multi-factor test, the court then addressed the initial interest confusion (IIC) doctrine. Plaintiffs have routinely attempted to use the IIC doctrine as a bypass to the multi-factor test, and in some cases the courts have let this go to absurd results.
In this case, the court had to address IIC because of the Fourth Circuit PETA v. Doughney precedent. In that case, a parody website called "People Eating Tasty Animals" operated at peta.org was deemed to infringe the trademark of People for the Ethical Treatment of Animals. Although the Doughney case never used the phrase "initial interest confusion," the case was entirely consistent with an IIC analysis.
The court trashes the IIC doctrine in a variety of ways. It calls the doctrine "relatively new and sporadically applied," even though there have been at least 100 cases referencing the doctrine over more than 3 decades.
It then takes the position that the Fourth Circuit has never adopted the IIC doctrine. While this is technically true, this is a very generous characterization of Asia Apparel, LLC v. Cunneen, 118 Fed. Appx. 782 (4th Cir. Jan. 11, 2005) (which affirmed without comment a lower court opinion predicated on IIC) and the Doughney case (which was an IIC case in every respect except that it didn't use the words "initial interest confusion"). The court then severely limits the Doughney precedent, saying that the case merely evaluated whether Doughney's peta.org was a good enough parody. In any case, the court says that IIC is not a bypass to the multi-factor test; instead, the entire context must be considered.
One would think the court had said enough at this point. The court sidestepped the "use in commerce" inquiry. The court said there was no likelihood of confusion. The court said that the Fourth Circuit does not recognize an IIC bypass to the multi-factor test. What's left to say?
Too much! The court then spends 3 more pages in a surprisingly academic discourse trashing the IIC doctrine, articulating a completely confusing definition of IIC, and generally going where no dicta should ever go.
Having concluded that IIC was not recognized in the Fourth Circuit, the court then says that even if it was, there was no IIC in this case because all prior appellate courts applying IIC to the Internet have done so when the mark was being used for financial gain.
While I think this is technically true, this is a confusing statement. Almost all trademark infringement cases take place in the context of one party using a trademark for financial gain because of the "use in commerce" requirement. If the trademark is not being used for financial gain, usually there isn't use in commerce, which means the plaintiff's case should fail before even reaching the question of likelihood of confusion/IIC.
So the court's delineation (no financial gain, no IIC) should apply to a null set of cases (or a very small number of cases). So this statement, while seemingly important to this case, has very little predictive consequence for most other cases (besides the fact that it's dicta).
In any case, the court then uses this definition of IIC to conclude that the "critical element--use of another firm's mark to capture the markholder's customers and profits--simply does not exist when the alleged infringer establishes a gripe site that criticizes the markholder." Of course, these factual conditions are not opposites; one could imagine a gripe site that also is for-profit (see, e.g., badbusinessbureau.com). Nevertheless, the court says that giving the trademark owner too much power here would allow the owner to insulate itself from criticism, and that's not permissible.
In a footnote, the court specifically attacks two early IIC-style cases--Planned Parenthood v. Bucci and Jews for Jesus v. Brodsky--both of which held gripe sites liable for infringement. The court said that these cases failed to consider the site's content in considering if the domain name was infringing.
To recap, the court reaches the following key points in its dicta:
* the Fourth Circuit may not recognize the IIC doctrine
* the IIC doctrine requires that the alleged infringer make a financial gain using the trademark
* to assess IIC, the domain name and the website associated with it must be reviewed together
* thus, a gripe site does not commit IIC
I am no fan of the initial interest confusion doctrine, a point I've explained in great detail elsewhere. So I'm certainly not going to complain about any ruling that takes swipes at the IIC doctrine. However, this opinion is deficient in at least two key respects.
First, as discussed earlier, the limitation of IIC to "financial gain" situations does very little to constrain the doctrine.
Second, the court says that IIC cannot be evaluated without looking at the underlying website--this is fine, but why call that initial interest confusion? The court could have said--and should have said--that it was simply refusing to recognize IIC at all. Instead, its implicit standard--look at both the domain name and the website to determine IIC--sounds less like IIC and more like standard likelihood of confusion. So why didn't the court skip the IIC charade and just say that the standard likelihood of confusion test should be applied to the domain name + website combination?
After the dangerous dicta digression, the court concludes that there is no likelihood of confusion, so the court grants summary judgment to Lamparello.
ACPA
The court also rejected Falwell's ACPA claim. In this respect, this case is even better for gripe sites than the Bosley case, which left the ACPA claim open. The court says there is no way for Falwell to show that Lamparello had a bad faith intent to profit from the domain name and does a fairly efficient application of the multi-factor bad faith test in ACPA.
More interesting is how the court distinguishes Doughney. The court notes that Doughney had a portfolio of 50-60 domain names and had told PETA to "make him an offer" suggesting a desire to get paid. Through these distinctions, I think the court again severely limits the precedential impact of Doughney.
Conclusion
This has been a good year for trademark defendants--two major victories for gripe sites (Bosley and Lamparello) and major win for adware vendors (1-800 Contacts). This trend suggests that the courts are correcting the silly doctrines that were an overreaction to the dot com speculative bubble, and we should applaud this development. In particular, this court does serious violence to Doughney as a precedent and undercuts the Bucci and Brodsky cases as well--all welcome corrections from my perspective.
However, the combination of the three cases still leave far more questions than answers. Exactly what constitutes a "use in commerce" in the online context? Exactly what constitutes IIC? These major opinions continue to sidestep these important issues rather than resolving them, leaving us with continued uncertainty about the scope of these doctrines. I trust eventually we'll get cases that make clear and strong pronouncements, but for now we're left waiting.
On that front, the press reports indicate that Falwell is seeking an en banc rehearing. So we may not have heard the last of this case.
UPDATE: In April 2006, the Supreme Court denied cert, so the case is over.
Posted by Eric at 05:56 PM | Domain Names , Trademark
August 24, 2005
Alaska Anti-Adware Law Finally Sent to Governor
BNA reports (BNA subscription required) that the anti-adware law passed by the Alaska legislature back in May was sent to the governor August 19. The article intimates that the hold-up was due to some behind-the-scenes lobbying by Google, Yahoo and others.
The governor has until September 20 to act on it, but the BNA report indicates that the governor intends to sign the law. If signed, I assume a lawsuit challenging the law will follow unless (a) everyone waits to see how it is enforced, or (b) Congress preempts the legislation.
Posted by Eric at 01:30 PM | Adware/Spyware , Trademark
What 50 Cent Really Said--Use the Term "50" and You'll Hear From My Lawyer
Jackson v. Gary Barbera Enterprises, Inc. (E.D. Pa. complaint filed Aug. 2005).
A car dealer in Philadelphia runs an advertisement for Dodge Magnums. Included is a picture of the popular rapper 50 Cent and the phrase "Just Like 50 Says." 50 Cent has a federal trademark registration in "50 Cent" for various categories but alleges that he is "commonly known...informally as '50.'"
On the surface, this seems like a garden-variety right of publicity violation (a cause of action apparently alleged but omitted from the Smoking Gun's papers). If this use was without permission, then I don't see much room for a strong defense.
Note, however, that the dealer is claiming that 50 Cent recorded two sound bite radio promotions for the dealer, in which case perhaps the newspaper ad really is just like 50 Cent said. If so, this may end up as a simple interpretation of the scope of the publicity consent/endorsement contract from the radio promotion, or it could turn into an extremely complicated case about the scope of "fair use" of a celebrity's personality. Consider the analogy--Oprah raves about a product on her TV show; to what extent can that product manufacturer use Oprah's quotes (attributed to Oprah) in their marketing?
However, I'm more interested in the trademark violation on a stand-alone basis. From my perspective, using the photo isn't a trademark violation. And I think it's pretty hard to extend the trademark registration in "50 Cent" to cover "50." It's possible that 50 Cent has developed common law trademark rights in the term "50," but that would require having developed secondary meaning. I know 50 Cent had some popular albums, so I'm pretty skeptical about that! I'd love to see how many people, seeing the phrase "Just Like 50 Says" without the photo, would think that the phrase referenced 50 Cent. Although I'm not the target audience, I strongly suspect the vast majority of readers would find that opaque.
In any case, I always find it interesting when trademark owners try to pluck individual letters or numbers out of the social lexicon and convert them into proprietary assets (this is hardly the first time). You might want to think twice the next time you punch in "50" into your calculator or spreadsheet.
Finally, in a partially-ironic twist, it seems like every newspaper covering this story has used it as an excuse to show more pictures of 50 Cent. Newspaper use of photo to sell newspapers = OK, car dealers use of photo to sell cars = not.
Posted by Eric at 07:32 AM | Publicity/Privacy Rights , Trademark | Comments (4)
August 23, 2005
Jill, Meet Best Buy's Friendly Human Shopbot/Profiler
I'm a little surprised this article hasn't generated more discussion. Last week, the Washington Post ran an article about Best Buy's efforts to segment and target its customer base. They have developed a set of consumer profiles that they describe with friendly personal names (presumably, to put a human face on the profiles), like Barry (the wealthy professional man), Ray (the family man), Buzz (the young tech enthusiast), and most prominently, Jill.
Jill is a soccer mom who is the family's main shopper. She is well-educated and confident but intimidated by technology.
To help serve Jill better, Best Buy has organized a Jill SWAT team. When a woman enters the store who looks like a Jill, a dedicated sales assistant (dressed in pastels) approaches her and asks "Is there anything special you're looking for today?" The sales assistant then hand-holds the Jill through the store and even has special hard-to-find express checkout lanes that are intended for Jills.
On the plus side, these efforts to sort and treat customers differently improves the experience for the affected customers. The Jills find what they are looking for faster. Best Buy benefits too, extracting 30% more sales from Jills. In aggregate, this seems like this improves consumer welfare, producer welfare and social welfare.
On the minus side, the programs mean that customers get differential treatment. Given my advancing age, I'm probably more of a Ray than a Buzz, and I'm guessing the Ray-schmucks get stuck in the long lines instead of being queued up to the express lanes. This isn't the first time that Best Buy has expressly distinguished between customers, and of course many businesses try to sort and segment customers. I don't have a problem with making distinctions between customers--in fact, I strongly favor it as a way to improve social welfare--but I know many people do.
Perhaps more troubling is the seeming racial profiling of customers. It's possible that Jill-assistants don't make racial/ethnic distinctions, but I doubt it. I wouldn't be a bit surprised if Jills are de facto white, even if there's no corporate policy to that effect (or even if there is a corporate policy against such judgments). This visual profiling definitely makes me nervous and uncomfortable about impermissibly discriminatory treatment.
The imprecise nature of visual targeting (predicated on stereotyped definitions, no less) shows a huge advantage of the Internet. The Internet permits much more accurate behavioral targeting that should lead to consumer, producer and social welfare improvements. Still, Best Buy is showing that offline efforts to segment and target can be effective, so I suspect we'll see more of this in the future.
Posted by Eric at 04:31 PM | E-Commerce , Marketing , Privacy/Security | Comments (2)
August 20, 2005
2004 Case on Advertiser Liability for Spam
Fenn v. Redmond Venture, Inc., 2004 UT App 355 (Utah Ct. App. Oct. 15, 2004).
I was digging through my stack and stumbled across this case from last year. It seems apropos to a running theme on this blog about advertiser liability for adware, so I thought it was worth blogging about even at this late date.
Plaintiff sued for violating Utah's anti-spam law, which applies to a person who "sends or causes to be sent" a spam. Sec. 13-26-103. Given the statute's wording, the state (as it has the right to do) has made it clear that advertisers could be liable for spam sent by others.
However, the defendants win summary judgment. Why? The court points to the advertiser's "Anti-Spam Agreement," which clearly prohibits the marketer from sending spam. Because of the restrictions in the Anti-Spam Agreement, the court accepts the defendant's argument that this agreement means that the advertiser did not "cause" the marketer to spam. In other words, by prohibiting spam in the advertising contract, the advertiser gets let off the hook under the anti-spam statute.
Can this result be correct? The court notes that the plaintiffs did not introduce any evidence that the defendants "encouraged or required" its marketer to send spam or that the anti-spam agreement was otherwise a "sham." So perhaps the plaintiffs could have avoided summary judgment if they could have adduced evicence of some willful blindness.
Otherwise, this case--if followed by other courts--seems to suggest that anti-spam/anti-adware advocates who want to hold advertisers liable for the spam/adware face an uphill battle. Even if a statute expressly creates advertiser liability, a simple (and perhaps rarely-enforced) restriction in the contract would cut off liability for the downstream activity.
Frankly, this seems like an all-too-simple way for advertisers to avoid liability and defeat the statutory intent, so I'm skeptical that every court will reach the same result. But I'm not aware of any contrary case law, so for now this is the leading precedent on the topic.
Finally, it should go without saying that, if I were advising advertisers, I would strongly recommend that they include non-negotiable anti-spam and anti-illegal-adware provisions in their advertising contracts.
Posted by Eric at 01:19 PM | Adware/Spyware , Derivative Liability , Marketing , Spam
August 19, 2005
Wired on IP Infringement and Organized Crime
Wired runs a story about the connection between organized crime and IP infringement. The story questions how much these connections are real vs. industry hype/scare tactics to make the case for stronger enforcement tools.
The article notes that a few recent IP busts have gang or organized crime ties. The article also notes that Russian and Chinese organized crime groups play a large role in piracy in their respective countries.
However, otherwise, the article suggests that the connections are far more hype than substance. In particular, in the US, a significant percentage of criminal copyright busts are now warez traders, not commercial profiteers. In turn, by promulgating this linkage between infringement and mob families, there seems to be an effort (not clear if it's coordinated among industry players) to try to portray warez trading groups as just another form of organized crime.
The problem is that this linkage is confusing at best. We typically think of mobs and gangs as in the crime business for money, but warez traders have no financial interest. Instead, they get in the scene to build a reputation and stroke their egos, and money is completely irrelevant to that scorecard.
So equating warez trading groups with criminal mobs or gangs masks critical differences in motivation and behavior. As a result, we should be suspicious of these types of PR efforts on the part of the copyright industries.
Posted by Eric at 10:13 AM | Copyright
August 16, 2005
Single Mom Preparing to Fight RIAA
Patricia Santangelo, a single mom of five kids from Wappingers Falls, NY, is fighting the RIAA over a file-sharing lawsuit. She rejected a $7,500 settlement offer and has filed a motion to dismiss the complaint.
Her defense appears to be that the file-trading taking place on her computer was done by a friend of her children. If true, this defense is potentially meritorious. She didn't commit the infringement, nor did her kids. I have a hard time constructing a theory of contributory or vicarious infringement that would hold her liable for the third party's actions, even if she owned the computer and paid for the Internet access account. If the case gets that far, the real question is: was the downloading really done by a friend, and will a finder of fact believe it?
She is hardly the first person to fight the RIAA. I previously wrote about a Racine man who was planning to fight. The article quotes a Beverly Hills lawyer who has handled 15 cases; in some cases, the RIAA dropped the lawsuit, and in other cases, the RIAA won on summary judgment. (For an example of that, recall BMG v. Gonzalez).
But the newsworthy aspect is that she might be the first who will end up taking the case to trial (if she can get that far). If so, we might get more insights into the propriety of the RIAA's one-size-fits-all approach to litigation thus far.
UPDATE: There is some pushback to the RIAA's tactics. One woman has brought counterclaims against the RIAA. Wired recaps some of the various stories.
Posted by Eric at 12:14 PM | Copyright
August 15, 2005
Interview at Astalavista.com
I was interviewed by Astalavista.com on copyright and adware/spyware issues for their newsletter. Check out some of my loosely-structured latest thoughts on those topics.
Posted by Eric at 09:45 PM | Adware/Spyware , Copyright
August 14, 2005
Fall 2005 Cyberlaw Syllabus
It's hard to believe that this is going to be my 11th year teaching Cyberlaw. I've posted my newest syllabus for Fall 2005. The material I've assigned for the first time this year:
Copyright
* BMG v. Gonzalez (confirming direct liability for file sharers)
* Grokster Supreme Court ruling
* 17 USC 506(a) (showing the additions from the ART Act)
* Corbis v. Amazon (an extremely lucid opinion applying the 512 safe harbors--this is an overlooked gem of a case from a pedagogical standpoint)
Trademark
* Bosley v. Kremer (the case nicely encapsulates several facets of a gripe site lawsuit, including infringement, ACPA and SLAPP)
Spam
* My article on the harms caused by spam
* 16 CFR 316 (the various regulations promulgated under CAN-SPAM)
* FTC v. Phoenix Avatar (the case describes in accessible terms the complex evidentiary and financial trail that anti-spam enforcers must unravel)
Adware/Spyware
* The Congressional Research Service report
* 1-800 Contacts v. WhenU 2nd Circuit ruling
* Utah Spyware Control Act (amended)
* My CNET editorial on adware advertiser liability
ALthough this may seem like a lot of changes, it's noticeably less than I've historically made. I think this lower rate-of-change reflects that we are slowly but undeniably developing a body of "classic" cyberlaw cases that are both important precedent and good teaching cases, such as Specht, Hamidi, Reno v. ACLU and Zeran. I also have my "hidden favorites" that aren't especially important cases but still fun to teach, like the Noah, Promatek and Pharmatrak cases.
I did struggle a little with organizing the trademark cases. I don't think there's a single definitive teaching case for trademarks yet that nicely illustrates infringement (and applicable defenses), dilution and ACPA. Instead, I have five trademark cases that each make important but limited points:
* Bosley--good illustration of a gripe site lawsuit, but holding is fairly limited (narrow illustration of what constitutes use in commerce)
* Promatek--great illustration of initial interest confusion (especially with the bell-ringing line), metatags, how the parties can lose sight of the big picture and how judges cut corners, but hardly a traditional trademark infringement analysis
* Lockheed v. NSI--best teaching case for contributory infringement, but effectively mooted by ACPA's safe harbor for registrars
* Playboy v. Netscape--important case on keyword usage and search engines, but the case is extremely disorganized and error-filled
* 1-800 Contacts--important discussion on use in commerce and user control over their software, but very fact-specific
Worse, these five cases are spread out over the sections on trademarks, search engines and adware/spyware. I'd welcome any suggestions on other ways to think about and organize the trademark materials.
Meanwhile, if you want a blast from the past, consider my syllabus from Spring 1996. I taught this course shortly following Netscape going public, before the Communications Decency Act (it passed during the semester) and the resulting litigation, before the Zs (Zippo, Zeran and Zuccarini), and before the DMCA. Back then, "spam" meant Canter & Siegel's inappropriate postings in USENET, "crypto" was one of the top items on EFF's agenda, and the words "adware" and "spyware" had not yet been coined.
As a sign of the changes since then, I continue to teach precisely ZERO of the materials I assigned. However, a small number of the materials would still be useful today; for example, I do still teach John Perry Barlow's essay in my copyright seminar. Of course, some things never change. I taught a Playboy case in 1996, and I teach a Playboy case today (surprisingly, only 1). I suspect some Playboy case will be part of every Cyberlaw packet forevermore.
Posted by Eric at 01:20 PM | General , Internet History
August 12, 2005
Copyright Office Struggles With Copyright Clearances
AP runs a story about "copyright oddities"--interesting historical materials on deposit with the Library of Congress. The oddities include items like a photo of a blood-stained program from Ford's Theater the night Lincoln was shot and a video of Henry Ford winning a car race in 1901. If this was the "oddest" material the researchers could find in the vaults, then (a) they didn't look very hard, or (b) the Patent Office appears to have more fun.
In any case, the Library of Congress (which operates the Copyright Office) would like to put on an exhibit of these historical oddities. The only problem--they may still be under copyright! The researchers held a private exhibition, trying to avoid a public display or exhibition. However, to disseminate the materials more broadly, the Library of Congress must obtain clearance--which, as the article points out, involves tracking down heirs and subsequent buyers and potentially paying royalties. Who better to do copyright clearances than the Copyright Office? Sadly, as they know, copyright clearances are a frustrating exercise in futility. Perhaps their frustration with doing copyright clearances will increase momentum for an orphan works exception.
Posted by Eric at 05:20 PM | Copyright
McDonald’s is Lovin’ It! — Contest Rules Upheld
James v. McDonald’s Corp., No. 04-2383 (7th Cir. 8/2/2005).
This is not a technology case per se, unless scratch-off game cards that accompany french fry orders are considered “technology.” However, the contract principles that underlie this case are the same ones that support the enforceability of the ubiquitous “click wrap” and “browse wrap” terms of use on Internet websites, and it’s nice to see a court applying them properly.
In 2001, McDonald’s was promoting sales of its food products by sponsoring a game called “Who Wants To Be A Millionaire?” Ms. James obtained a game card when she purchased an order of French fries at the drive-through window at a McDonald’s restaurant in Kentucky. She believed the game card to be a grand prize winner worth $1,000,000. McDonald’s notified her that she was mistaken and that her game card was for a low level prize ($5.00 in cash or less). After the news media reported a scheme where employees of a marketing company had allegedly stolen the winning game cards from the contest, Ms. James sued McDonald’s, alleging that McDonald’s knew that, due to the theft of the winning game cards, the odds of winning were less than represented, and that McDonald’s had used false pretenses to refuse to honor her winning game card.
The game rules contained an arbitration clause, so McDonald’s filed a Motion to Compel to Arbitrate. Ms. James claimed that the arbitration clause was not enforceable because: (1) she never saw or read the official rules; (2) McDonald’s had fraudulently induced her to participate in the game; and (3) the costs of arbitration were prohibitive. The District Court concluded that Ms. James could not avoid the arbitration clause and dismissed her complaint.
The Seventh Circuit agreed with the District Court. Ms. James argued that customers cannot be expected to read every container of food they purchase in order to know that they are entering a contract (in this case, an agreement to abide by the official rules). The Seventh Circuit relied in part on a basic principle of contract law that a party who had the opportunity to read a contract but did not is bound by the contract terms. The Seventh Circuit also looked to the practicalities of the situation: “To require McDonald’s’ cashiers to recite to each and every customer the 14 pages of the “Official Rules” and then have each customer sign an agreement to be bound by the rules would be unreasonable and unworkable. The Official Rules were identified to Ms. James part of the contest and that identification is sufficient in this case to apprise her of the contents of the rule.” Similar arguments have been raised to support the enforceability of click-through and browse-wrap agreements in the Internet context, which often are not read, and often are not set forth in full, but accessed through a hyperlink.
While we are on the topic of enforceability of “click-through” and “browse-wrap” agreements, the American Bar Association’s Electronic Contracting Practices Working Group has published two seminal works on the topic: “Click-Through Agreements: Strategies For Avoiding Disputes on Validity of Assent” and “Browse-Wrap Agreements: Validity of Implied Assent in Electronic Form Agreements.” These are useful resources for anyone seeking to enforce (or to attack the enforceability of) click-wrap and browse-wrap agreements on the Internet.
Posted by John Ottaviani at 03:46 PM | Licensing/Contracts , Marketing
August 11, 2005
NYT on College Rebrandings
The NY Times runs an interesting article about colleges rebranding themselves--which, in some cases, has dramatically improved their applicant metrics or other success metrics. For example, Arcadia University (formerly Beaver College--good choice to change the name!) doubled its applications. And Trenton State College renamed itself the College of New Jersey; that, plus some other organizational changes, boosted average SATs from 1150 to 1310!
Although the article focuses on college names and not nicknames, I would be remiss not acknowledging Marquette's recent foray into rebranding. I wonder what our SATs would be like if we had stuck with the nickname "Gold"?
Posted by Eric at 09:54 PM | Trademark | Comments (1)
Can Congress Provide Copyright Protection to Software?
Aharonian v. Gonzales, No. 04-05190-MHP (N.D. Ca.).
This case got some press when it was first filed. The plaintiff's basic contention is that it is unconstitutional for Congress to provide copyright protection for software. This is a pretty wacky claim, and I doubt the plaintiff has a very good chance of success.
In any case, I'm resurfacing it because in June, the DOJ filed a motion to dismiss that lays out its basic defense. If you've ever wondered to yourself where Congress gets its authority to protect software under copyright law (I know, not the first thing I think of when I wake up in the morning either!), the DOJ brief lays it out for you.
Posted by Eric at 08:40 PM | Copyright , Patents
Algorithm for Analyzing Liability for Contributing to Copyright Infringement
Professor David Post has an interesting article (free subscription required) in the August 3, 2005 issue of the National Law Journal, in which he reviews the “Sony doctrine” of secondary liability for copyright infringement. In Sony, the United States Supreme Court found that the sale of video tape recording technology that was also used to infringe copyrights did not in and of itself constitute contributory copyright infringement if the product is “merely capable of substantial non-infringing uses.” The article goes on to review the 2001 Napster decision before reviewing the Supreme Court’s recent Grokster decision and integrating that decision into the existing body of precedent.
The interesting part of the article sets forth an “algorithm” for developers of peer-to-peer file sharing software to use to assess their risk of secondary liability:
Are you distributing a product that is used to infringe copyrights?
If no, stop - no contributory copyright liability.
If yes, are you – “by overt words and deeds [that] show a purpose to cause and profit from third-party acts of copyright infringement” – actively encouraging or promoting infringement(s) by users?
If yes, stop - you are liable as a contributory infringer. MGM v. Grokster.
If no, do you have “actual knowledge of specific infringements” and the capability to stop those infringements?
If yes, stop - you are liable as a contributory infringer. A&M v. Napster.
If no, is the product “capable of substantial non-infringing uses”?
If yes, stop - you are within the Sony safe harbor and shielded from liability.
If no, stop - you are liable as a contributory infringer, because courts will impute the requisite intent to encourage infringement to you.
Obviously, the algorithm oversimplifies the analysis, but it looks to be a useful tool for helping developers to get their arms around the potential for secondary liability and the ability to “design around” the law. I am going to see if I can work the “vicarious” copyright infringement theory into this algorithm, or build a similar one for that analysis.
Posted by John Ottaviani at 01:00 PM | Copyright , Derivative Liability
August 09, 2005
Google Sued (Again!) for Overcharging Advertisers
CLRB Hanson Industries LLC v. Google, Inc., Case No. 1-05-CV-046409 (Cal. Superior Ct. complaint filed August 3, 2005).
Advertisers, including radio personality Howard Stern, have filed a new class-action lawsuit against Google for overcharging in AdWords. This represents the third such lawsuit brought against Google, following on the lawsuits led by Lane's Gifts and Collectibles and Click Defense. While those two related to "click fraud" (where Google allegedly charged advertisers for insincere clicks), in this case the plaintiffs are alleging that Google did not honor daily spending limits set by the advertisers.
Specifically, the complaint alleges that Google ignores daily limits and, instead, creates a monthly limit based on the aggregate of the month's daily limits. If true, this would be problematic for Google because it promised that advertisers could set daily limits, and a monthly limit would not be the same thing. Google could simply give advertisers only the option of setting a monthly limit (instead of daily limits) if that's how Google codes its software.
Unfortunately, we don't have too much information about this lawsuit, so we'll be watching for more details.
Posted by Eric at 09:21 AM | Licensing/Contracts , Search Engines | Comments (1)
August 08, 2005
GEICO v. Google Opinion (Finally) Issued
Government Employees Insurance Co. v. Google, Inc., No. 1:04cv507 (E.D. Va. Aug. 8, 2005).
Overview
On December 15, 2004, Judge Brinkema made an oral ruling in this case and promised to produce a written opinion in "a brief amount of time, which given the holiday season might be two or three weeks, although we're going to try to do it sooner than that." Eight months later, we finally got the written opinion. Why so long?
Was it worth the wait? In a word, no. The opinion does very little to clarify or add to the court's oral ruling from December. So we really don't learn much from this opinion, and as a result, I can't see why this opinion will affect the parties' settlement negotiations.
What the Court Said
In an August 2004 opinion, Google lost its effort to dismiss the case because it does not use GEICO's trademarks in commerce. Therefore, this opinion only addresses the likelihood of confusion standards.
In determining the applicable standard, the court does some arm-waving. It appears to endorse GEICO's position (from Brookfield and other cases) that an "initial interest confusion" case moots the need to use the standard likelihood of confusion multi-factor test. However, the court merely describes GEICO's position without directly endorsing it.
Instead, after describing that position, the court summarizes by saying: "To prove likelihood or absence of confusion, initial or otherwise, parties commonly introduce the results of customer or potential customer surveys."
It's true that surveys are a standard method of proving likelihood of consumer confusion, and I'm glad the court required some empirical proof rather than mere intuition-driven arguments that pervade most initial interest confusion cases. However, what legal standard is the court using? If it is bypassing the multi-factor likelihood of confusion test, what test is it using? The court doesn't say.
One other odd thing about this statement. What's this about proving the absence of confusion? The burden is on the plaintiff, not the defense. Why would anyone need to prove the absence of confusion?
Having punted on describing the applicable standard except to say that surveys are important, the court spends almost all of the rest of the opinion analyzing the plaintiff's survey. The survey presented consumers with a screen shot showing the results from a search for "GEICO." 67.6% said they expected to reach GEICO if they clicked on the sponsored links, and 69.5% thought that the sponsored links were either for GEICO or affiliated with GEICO. Further, 20.1% said that to purchase insurance from GEICO, they would click first on one of the sponsored links.
However, the court then recounts the various reasons why the survey is not credible, including the poor construction of a control group, "demand effects" (when the survey suggests desired answers) and "order effects" (when answering a question affects subsequent Q&A), and distortions in the appearance of the screen shot.
All told the court has "serious doubts about the accuracy of the survey results' reflection of actual users' experiences with and reactions to the Sponsored Links." As a result of the survey's weaknesses, the court says that the plaintiff failed to establish likelihood of confusion about keyword triggering.
Indeed, in FN 15, the court notes that none of the control group was confused when Nike ads were displayed in response to a GEICO keyword. The court says, "This absence of confusion when faced with NIKE ads alongside organic listings for "GEICO" also refutes the allegation that the use of the trademark as a keyword, without more, causes a likelihood of confusion."
FN 15 is interesting because it suggests that the court needs to look at the ad copy to make a likelihood of confusion determination. I completely agree with this, but I would go one step further--each individual ad must be reviewed for confusion. This should mean that the court can't make any broad sweeping pronouncements about confusion based on the inclusion of a trademark in the ad copy; it should depend on consumer responses to specific ad copy.
The court doesn't embrace that level of nuance. Instead, the court continues, "Despite the many flaws in its design, the survey’s results were sufficient to establish a likelihood of confusion regarding those Sponsored Links in which the trademark GEICO appears either in the heading or text of the ad."
This is a non-sequitur. There's nothing in the court's opinion or the discussion of the survey that supports this finding. Unfortunately, the court does nothing to explain its thinking about this conclusion or how the survey supports it. The only thing that the court notes is "the extremely high percentages of respondents who experienced some degree of confusion when viewing [ads displaying GEICO in the text]." Further, Google did not introduce any rebutting evidence on that point.
As a result, the court rules for GEICO that "Google may be liable for trademark infringement for the time period before it began blocking such usage or for such ads that have slipped or continue to slip through Google’s system for blocking the appearance of GEICO’s mark in Sponsored Links."
Although the court has concluded that the ads create the requisite level of consumer confusion, Google has not lost this case. Open questions include whether Google is liable for its advertisers' use of GEICO's trademarks (i.e., if Google is contributorily liable for the confusion), the number of ads at issue (given some changes in Google's practices), and the remedies (including, I think, if Google can claim to be covered by the printer/publisher defense that would eliminate damages altogether and leave open only an injunction).
Conclusion
I'm sure both Google and GEICO are frustrated by this opinion, because it does very little to clarify the court's ruling from December. Indeed, although it provides support for its ruling, the opinion adds almost nothing new in terms of insights into the judge's view.
What I find interesting is that the court, like the 1-800 Contacts Second Circuit panel, knows that this is an important case and yet goes out of her way to avoid providing any broader principles to help future parties. She writes "the Court emphasizes that its ruling applies only to the specific facts of this case, which include the unique business model employed by plaintiff and the specific design of defendant’s advertising program and search results pages."
This may be a healthy reaction to the 1990s cases where judges, knowing very little about the technology, all too often wrote broad but ill-conceived opinions that took years to correct. Yet, we depend on our court system to help us understand the law, and narrowly-conceived and -written opinions really don't give us those widely-felt benefits.
In any case, I'll characterize this opinion as a win for Google for three reasons: (a) the opinion isn't much worse for Google than the oral ruling, (b) Google succeeded in knocking out the most significant part of the case in the oral ruling, and (c) Google still has some defenses that may allow it to win outright in further proceedings.
GEICO's press release, which GEICO uses for saber-rattling: "GEICO will continue to aggressively enforce its trademark rights against purchasers of its trademarks on search engines and against search engines that sell GEICO's trademarks to advertisers...We continue to believe that the sale of GEICO's trademarks to its competitors is wrong and a violation of federal and state law and look forward to litigating that issue in future cases."
UPDATE: Google has posted on its blog an explanation of why it thinks this ruling is a win for Google and how some of the (very few) popular news stories have mischaracterized the ruling as a loss. (Thanks to Cedric for catching this).
Posted by Eric at 03:54 PM | Derivative Liability , Search Engines , Trademark
Search Tidbits from ABA Annual Meeting
At the ABA Annual Meeting, I was on a panel with Rose Hagan of Google and Allison McDade of Dell. A couple of tidbits from the presentations that caught my attention:
1) Rose said that Google has now been sued 23 times in France over keyword advertising. These suits, of course, follow several Google losses in court. One can only imagine the feeding frenzy that would take place in the US if TM owners thought that they could win a TM case against Google.
2) In the Q&A, Mark Partridge of Pattishall had an interesting proposal. He pointed out that the UDRP had a substantial effect on cybersquatting, so could we put into place a similar expedited administrative process was put into place for keyword advertising disputes? Perhaps an administrative procedure where the major search engines would agree to honor the instructions of a neutral.
Two obvious questions with Mark's proposal. First, what substantive law would the neutrals apply? We would need to develop a common set of definitions of abusive advertising techniques, and I don't think we have this yet. Indeed, right now we have a major split between Google and Overture's policies about TM complaints (Google removes TM references from ad copy, while Overture looks at the relationship between the ad's TM use and the promoted URL). Further, I'm not 100% convinced yet that courts will bless either practice as absolving the search engine of liability as the policies are tested.
As a result, while I don't think it was easy to describe cybersquatting, I think there were clearer understandings about impermissible domain name registrations than there are clear understandings about impermissible advertising. Note, of course, that neither the UDRP or ACPA try to define and then eliminate all abusive domain name registrations; these solutions merely targeted the most egregious behaviors. So maybe we're not yet in consensus enough to give clear enough instructions to administrative neutrals to adjudicate claims.
Second, for the search engines to participate, they would need to have a safe harbor from liability (at least to the extent of their participation in the administrative procedure). I've become increasingly convinced that we need a statutory safe harbor to keyword liability lest we find ourselves in the French plaintiff feeding frenzy. However, perhaps a search engine safe harbor would be acceptable to TM owners if it was coupled with an expedited procedure to resolve their concerns.
3) Allison's slides contained the following bullet:
"Studies suggest that broader search terms that do not include a manufacturer name (such as “computer,” “computer memory”) account for a large majority of total search volume and conversions (turning searchers into actual buyers). Trademark-specific searches, meanwhile, account for a much lower percentage of all online searches."
I agree that TM keyword searches are a distinct minority of all searches (the number I recall seeing was 20%). However, in the talk, she clarified this point to mean that her understanding is that TMed keywords convert at a lower rate than generic terms. Is this true? This doesn't sound right to me, and I had thought I had seen empirical evidence to the contrary. I'd welcome any pointers regarding the relative conversion of TMs and generic terms.
Posted by Eric at 11:12 AM | Derivative Liability , Domain Names , E-Commerce , Search Engines , Trademark
Implications of Grokster Presentation
By John Ottaviani
Here are the slides from a presentation I gave Saturday on the "Implications of Grokster" at the American Bar Association meeting in Chicago.
The more interesting part of the presentation is toward the end, discussing "what we know" and "what we don't know" 39 days after the decision was handed down.
What we know: (1) Sony is still good law; (2) we have a new (or at least revitalized) inducement theory of liability for copyright infringement, borrowed from patent law; (3) peer to peer technology itself is not illegal; (4) the legal battles over file-sharing rage on; (5) new battlegrounds are forming (bittorrent, Slingbox, darknets); (6) and stealing is still wrong.
What we don't know: (1) why the illegal downloading conduct persists despite widespread knowledge that the conduct is illegal; (2) how much non-infringing use is "substantial"; (3) what does "right and ability to supervise" mean? and (4) how do we advise clients in advance what does and does not constitute "inducement."
Posted by John Ottaviani at 07:44 AM | Copyright , Derivative Liability | Comments (2)
August 07, 2005
How Would You Advertise a Strip Club?
The Century Lounge is a strip club located on Century Boulevard in LA right at the 405 freeway. Historically, it has advertised itself with a sign that says "Live Nude Nude Nudes" in earth toned psychedelia letters. Just about everyone who drives by the sign remembers it forever. And literally thousands of tourists a day drive by this sign on their way to or from LAX.
Apparently the current slogan is too subtle in its drawing power, so the proprietor installed a new sign: "Vaginas R Us." Needless to say, many community members are not thrilled with this change.
But how to combat it? A frontal assault on the sign's content would lead to a messy First Amendment claim. A back door assault based on city codes did get the sign temporarily removed as a fire hazard, but that didn't last long. Clearly, a more permanent solution is needed.
Fortunately, the local business association had a stroke of inspiration. Why try to invoke the machinery of the government when trademark law can do the heavy lifting easily? One quick call to Toys R Us, and the problem should be solved.
However, the enterprising proprietor has a backup plan if he hears from Toys R Us: "I'll just change 'us' to 'Vaginas is Us' or 'Vaginas Are Us.'" I would note that most grammarians would find the first recast version highly offensive, but not because it contains the word vagina!
UPDATE: Boing Boing has some photos and additional details.
Posted by Eric at 09:17 PM | Trademark
August 05, 2005
Keyword Disputes Presentation
Tomorrow I'm speaking at the ABA Annual Meeting about trademark law and keyword disputes. I've prepared slides discussing the latest state of the law regarding keyword-triggering of ads by both search engines and adware.
Posted by Eric at 12:06 PM | Adware/Spyware , Search Engines , Trademark
August 04, 2005
First Camcordering Arrest
As part of its Operation Copycat (a sub-action of Operation Site Down), the DOJ announced the arrest of Curtis Salisbury for two counts of camcordering movies in theaters ("The Perfect Man" on June 21, 2005, and "Bewitched" on June 28, 2005) and three counts of other warez trading-related activity.
This represents the first arrest for camcordering under the ART Act. However, it should be noted that camcordering was not essential to the arrest; his other activities (including the uploading of the camcordered movies) were already covered by existing criminal copyright infringement law prior to the ART Act.
Furthermore, the press release says that Salisbury "allegedly discussed receiving payment for the films that he would provide, indicating that he would like to be paid by money order at a post office box when the film is ready for release." If so, then, he's not a typical warez trader, who would never think of seeking money for providing copyrighted works to the warez scene. And if Salisbury is a commercial infringer, then he was covered by criminal copyright infringement even before the 1997 NET Act.
In any case, the DOJ still chose to use this case to show that it's tough on camcordering. That should keep Congress happy for a little while.
UPDATE: Salisbury has pleaded guilty.
Posted by Eric at 06:03 PM | Copyright
August 03, 2005
FTC Says No Undisclosed Adware? In the Matter of Advertising.com
In the Matter of Advertising.com, Inc., and John Ferber, Federal Trade Commission File No. 042-3196 (consent order announced Aug. 3, 2005).
The FTC is signaling that it is sending a "message" with this case. The only problem? I'm not sure what message the FTC is trying to send!
The Facts
Advertising.com distributed the SpyBlast software, which claimed to be security software that would protect users from hackers. SpyBlast included adware in a download bundle. The adware was not prominently announced in the advertising, but it was disclosed in the EULA and (inconspicuously) on the SpyBlast home page. The FTC brought the enforcement action against Advertising.com (and its principal) for deceptive trade practices for failing to adequately disclose the adware component of the download bundle.
On first blush, this action makes sense. SpyBlast promised security and privacy, and many users would think that undisclosed adware is exactly the kind of thing that security software would prevent--not contain. So it would be easy to connect the dots and say that if you're a security software vendor, undisclosed adware contravenes user expectations so greatly that they deserve to be unambiguously aware of the adware in the bundle.
The "Message"
However, the FTC went out of its way to make sure that we got some greater message from this enforcement action. In a separate analysis of the proposed consent order, the FTC says:
"However, the limitation in the proposed order to respondents’ software programs whose principal function is to enhance security or privacy should not be read more broadly to suggest that the requirement for clear and prominent disclosure is necessarily limited to those situations."
Huh? There's an implicit double-negative in this sentence (the limit...should not be read...to suggest a limitation), so (as usual) the FTC is trying to say something without saying it.
Helpfully, the paragraph continues:
"Moreover, the problem here was not the security software that Advertising.com disseminated with its adware. Instead, it was the
respondents’ practice of downloading software onto users’ computers, without adequate notice and consent, that generated repeated pop-up ads as the computer users surfed the Web."
Putting this paragraph together, the FTC seems to be saying that if you distribute adware in a bundle, you have to give users adequate notice and consent of the adware.
What Did Advertising.com Do Wrong?
So the question is--why wasn't Advertising.com's disclosure adequate? They made the disclosures in the EULA and on their website. The problem was that users had no reason to read either.
The EULA was not presented with meaningfully strong call-to-action encouraging the reading of the EULA such as "By clicking the 'Yes' Button, you agree to all the terms of this EULA." Instead, the anchor text for the EULA read "Personal Computer Security and Protection Software from unauthorized users" (complaint, paragraph 6). This language was presented in a Microsoft software download alert box (what some would call a "drive-by download," although I think that term covers other situations). The language does continue "once you agree to the License Terms and Privacy Policy...click YES to continue" (see Exhibit B) but the grammar in the sentence still does not create a mandatory clickthrough. Like the gentle language in Specht v. Netscape, the language is more like "you should consider Y" than "if you do X, you're binding yourself to Y." (Plus, apparently the words "License Agreement and Privacy Policy" were not hyperlinked to the EULA, which is odd).
So although the document was styled as a EULA, it was presented more like a browsewrap than a clickthrough. Many Cyberlaw lawyers would think that it wasn't a binding contract at all.
Similarly, there was no call-to-action that would have encouraged the user to visit the SpyBlast web page to be exposed to a significant disclosure--and even if the user did, the disclosure was pretty hard to see.
The "Message" Redux
Based on this, I can read the FTC enforcement action one of two ways:
(1) Every software bundle containing adware must clearly and conspicuously disclose the presence of the adware as an integral part of the ad copy, or
(2) If a vendor wants to distribute adware as part of a bundle, then the disclosures don't need to be in the ad copy but do need to be integrated into some legally binding EULA or otherwise preceded by a sufficiently strong call-to-action.
The only thing the FTC does to tip its hand further is to say that the behavior did not comport with its Dot Com Disclosures document. Unfortunately, the Dot Com Disclosure document is far from clear--it rarely tells the reader yes or no, but instead it casts most behaviors as shades of grey. So pointing to the Dot Com Disclosures document without a little more guidance still leaves me scratching my head.
Sending a Message via a Defendant Who Couldn't Care Less
One other thing about sending a message through this enforcement action really bothers me. The FTC is going after a group of defendants who presumably are incredibly unmotivated to care about their requests. Advertising.com has already sold to AOL, who has no interest in messing with the FTC...plus, they have no reason, as AOL is not bound by the agreement. Further, the settlement does not involve any cash, and Advertising.com claims to be long out of the SpyBlast business, so the agreement's restrictions will be particularly easy to comply with (i.e., they don't have to change their behavior at all). So Advertising.com has virtually zero skin in the game, and they have absolutely ZERO incentive to push back on any FTC request. It's a little hard to fully get the message in an enforcement where the defendants are going to instantly roll over and play dead.
This is not to say that hard negotiations didn't proceed this announcement. Maybe the FTC initially demanded cash and Advertising.com/AOL avoided that only through skillful negotiation. But as the consent agreement now reads, there's no meaningful consequence to Advertising.com to signing the document, so why wouldn't they happily do so?
Conclusion
In its analysis memo, the FTC seems to be going out of its way to solicit comments on this enforcement action. I might take it up on that request. If I do, my principal comment will be simple--tell us if you meant reading #1 or #2! More specifically, if the FTC is trying to take position #1--that every download bundle containing adware must prominently annouce the presence of adware in the ad copy--I think we deserve a clear pronouncement to that effect and perhaps even some explanation for why the presence of adware must be elevated above many other product attributes that consumers might care about.
Without further clarification from the FTC, I think many lawyers will cautiously interpret this enforcement as a signal that disclosures about adware need to be an integral part of the marketing. My hunch is that the FTC would be happy with that outcome even if they are unwilling to issue an edict directly.
UPDATE: Suzi weighs in with her assessment: "The FTC is now on the record that companies must specifically disclose adware functionality in a clear and conspicuous manner OUTSIDE OF THE EULA."
UODATE 2: Cracker of an Issue weighs in with a thoughtful analysis. I agree that companies generally should consider the FTC's standards as minimum baselines that they frequently exceed, but I'm not sure that the FTC has picked the right standard here or has even made the standard clear.
In the end, we can't tell consumers EVERYTHING about the software on the hopes that some of it might be useful to some of the consumers. Overdisclosure is costly to producers, but more importantly, it's costly to consumers to wade through lots of disclosures that they do not consider relevant.
It might be that virtually all consumers consider a prominent notification of "adware-inside" to be relevant, so on that basis, this issue may be worth elevating. But if the FTC is trying to say that disclosure in the EULA isn't enough, the FTC ought to articulate its reasons why this topic is elevated over the dozens or hundreds of other disclosures that a company must make or wants to make in its EULA.
Posted by Eric at 09:36 PM | Adware/Spyware , Licensing/Contracts , Marketing
August 02, 2005
Are Adware Advertisers Responsible for Adware?
The topic of "who is responsible for what?" in the adware industry keeps coming up. I've repeatedly blogged on this topic in somewhat piecemeal fashion, but I finally organized my thoughts into an editorial that ran this morning in News.com. It will not surprise regular readers of this blog that I argue that the anti-spyware advocates have gone too far.
Posted by Eric at 08:42 AM | Adware/Spyware , Derivative Liability , Marketing
August 01, 2005
New Case Law Lists
Sorry for the catch-all posting, but I have uploaded several new resources to my website:
A list of online contracts cases (emphasizing, in particular, online contract formation).
A list of online service provider liability cases (copyright, trademark, 47 USC 230).
A list of initial interest confusion cases.
None of these lists are intended to be comprehensive, but I use them as databases for their respective topics. I hope you find them helpful.
Posted by Eric at 04:42 PM | Derivative Liability , General , Licensing/Contracts , Trademark