September 30, 2005
1-800 Contacts Appeals 2nd Circuit WhenU Decision to the Supreme Court
By Eric Goldman
As the brief states, the question presented is: "Does 'use' of a trademark under the Lanham Act require that the trademark be displayed or visible to consumers?"
This is a great question, and it would be fantastic to have the Supreme Court give us a definitive answer. However, I'm very much hoping that the Supreme Court does not grant the petition, both because the 2nd Circuit got it right and because the narrow issues presented by the WhenU software may not give the court enough reason to opine on the question we all REALLY care about--does search engine keyword triggering constitute a trademark use?
Frankly, I'm a little surprised 1-800 Contacts is pouring more money into this litigation. They have already bought themselves an anti-WhenU law in Utah (although, bizarrely, the law does not directly overwrite the 2nd Circuit case because trademark infringement is a required element). Alaska has piled on with its own anti-adware law that appears even more favorable to 1-800 Contacts' interests than the Utah law. So why keep fighting in the courts when legislators appear eager to limit competition for them?
I'm not very good at predicting Supreme Court cert grants, so I'm adopting a wait-and-see attitude. However, I think there are good reasons why the court won't take this case. First, the cert petition is well-written from a technical standpoint but it's a bit of a dull read. From my perspective, it lacks the personality/"pizazz" that would grab a clerk's attention.
Second, the attempt to manufacture a circuit split isn't that compelling. The main cases the petition cites as holding that "covert use of marks" is a use in commerce (Playboy v. Netscape, Brookfield, Promatek) don't expressly address the "use in commerce" issue. Ultimately, the petition tries to graft together various domain name, metatag and keyword-triggered ad cases in a generalized effort to show that courts have been tough on trademark uses on the Internet. In shifting the grounds, the petition strays from its own "question presented" and becomes a catch-all rant against various types of trademark uses on the Internet. If the clerk catches this loss of focus, that will hurt its chances as well.
One final interesting point: there appears to be a change of counsel on 1-800 Contacts' side. 1-800 Contacts' lead counsel used to be Terence Ross of Gibson Dunn's DC office; the attorney on this appeal is Terry Rader of Rader Fishman and Grauer in Detroit. I'm not sure what's behind this change. If I wanted the Supreme Court to take a case and I was willing to change counsel, I would hire one of the Supreme Court "specialists" in DC who have enough repeat business with the Supreme Court that the court will recognize their brand. In this case, switching from a DC powerhouse like Gibson Dunn to a Detroit-based IP firm seems like an odd move.
UPDATE: To be clear, all of the rulings cited in the petition had to resolve the question of trademark "use" to find for the plaintiff. My point is that only a few of them did so explicitly. Most of the cited cases did not discuss "trademark use" at all--presuming that the defendant made such a use or forgetting that this is a required element in the plaintiff's prima facie case. On further reflection, when reviewing all of this precedent, the clerk may be shocked at the truly abysmal state of Internet trademark jurisprudence when the clerk realizes just how many times plaintiffs win when the courts do not explicitly consider the trademark "use" threshold question.
You Can't Always Get What You Want
Not getting what you want as a consumer is bad news (of course, sometimes you get what you need), but failing to supply what consumers really want is a big mistake for marketers. Sometimes it's hard to figure out what consumers are thinking, but sometimes it seems even harder to figure out marketers. Case in point: The new Rolling Stones album will be marketed as a $40 flash memory card as well as an ordinary priced CD The music industry has been down on its luck, and I know you all sympathize, but what are they thinking? For the extra $25, the press release tells us (along with a lot of other useless information supposed to fire my imagination) that you also get (1) copy protection and (2) bonus material. The bonus material is . . . drum roll please . . . previews of other songs in the Stones catalog. Wow. They're going to sell dozens of these. (By the way, SanDisk has chosen a truly hideous trademark for its new format: GRUVI. The "u" has a gratuitous umlaut to make it all the more shudder inducing.)
I understand that the music industry needs to minimize its plight, but this is not a useful compromise solution. Kids are different these days; they don't want to buy music that is locked onto a tangible medium. If the industry wants to keep content under its thumb with DRM, it needs to come up with a value proposition that gives me a reason to switch to new media. I'm no schoolboy, but I know what I like. My current CD player suits me just fine. My computer on which I've stored 100s of CDs and live concert recordings and hooked into my receiver via a digital optical cable is also satisfying.
Lame Stones lyric references aside, if the music industry wants consumers to switch to a new format in order to allow it to have DRM, then the music industry needs to give consumers something in return. The upgrade needs to be at least as compelling as the difference between video tapes and DVDs. In that instance, the copy protection went along for the ride with a great new product, rather than driving the new product.
In a big picture sense, it is interesting to watch the music industry struggle to find the right business model. I remember that as an undergraduate I perceived capitalism as a system of ruthlessly efficient competition. An education in economics did little to dispel that perception. A few years in the business world cured me of that idea. I came to realize that winning in the marketplace rarely requires heroism worthy of an Ayn Rand novel; rather, one usualy need merely be less incompetent than everyone else. Actors do not have perfect information. Moreover, within a corporation, individuals often are just as (or more) worried about satisfying internal constituencies rather than consumers or shareholders. Thus, an album is issued on a $40 "gruvi" (a deceptively misdescriptive trademark if I ever heard one).
The music industry will probably eventually get it right, but it may take an accident first. Economist Stan Liebowitz discussed this problem a few years ago in a Salon interview regarding filesharing. As Liebowitz points out, for years the movie industry priced videotapes too high--around $100. They thought that there was no market for consumer purchases. Then one year, they did a holiday promotion where E.T. was priced affordably. People shocked the industry by snapping them up. Thus was born one of the movie industry's most important revenue streams, but it took the movie industry a while to figure this out.
Liebowitz notes that while we are going through these changes, they seem to take a long time. Historically, however, they appear to happen fairly quickly. Liebowitz hazarded that it might take the music industry a decade to find its footing (that was three years ago). It remains to be seen whether filesharing will allow the luxury of trial and error.
Still, you can't say they never tried.
September 29, 2005
IP Blogs (and Other Blogs) Worth Considering
By Eric Goldman
Yesterday at a CLE conference in Minnesota, I spoke on a panel about IP blogging with Marty Schwimmer and John Welch. Collectively, we combined our blogrolls to create a master list of the blogs that the three of us read. If you want to check out our collective "wisdom," you can find the list (annoyingly, in Word format) here.
My Very Own Search Engine Spam Page
By Eric Goldman
I know that aggressive marketers develop what's commonly referred to as "spam pages"--low-value-added web pages that are intended to be indexed by the search engines and receive a low amount of traffic. Even with a low amount of traffic, if the web page creation is automated, spam pages may still be profitable. Google does a pretty good job keeping spam pages off the first SERP page, but I've found plenty of spam pages in their index.
Acknowledging all this, nevertheless I'm totally scratching my head at this page (check out the title bar, the third level domain, and the content snippets 2/3 of the way down the page). Clearly, someone has aggregated up content from lots of websites (presumably by automatically cutting 'n' pasting search results)...but I cannot imagine that there are enough searchers searching for these keywords to justify the creation of this page.
Women and Law School
By Mark McKenna
If I told you that a famous professor from a well-known law school was arguing on his/her blog that law schools should consider discounting their tuition by 1% for each year a graduate stayed in the work force (with the purpose of encouraging attendance by those to whom the law school education would add the most value), what school would you guess that professor was from? It's an easy question for me - University of Chicago, where everything can be reduced to dollars and cents. And that's precisely right - it's Judge Posner, responding to an article in the New York Times a couple of weeks ago about how some female Yale undergrads expect to leave the workforce at some point after having children [The article was not empirical, and it has been very controversial].
I think Posner is greatly oversimplifying the economics involved here. The evidence pretty clearly suggests that fewer and fewer people are advancing to partnership at big firms (where the big money is), as firms create ever more heirarchical structures. Thus, going to law school with the expectation of making a lot of money down the road is becoming more and more like a lottery, with lots of people buying tickets and few hitting the jackpot. [I realize that, in the big scheme of things, first year associates making $135,000 is hardly peanuts. But I take it that Posner is talking about people who stay in the workforce for a long time, and you can't stay an associate forever]. But people's willingness to pay huge amounts of money to go to law school is based in large part (and, according to Posner, should be based entirely) on that person's expected lifetime return. Lifetime return, of course, is determined by the supply and demand in the market for attorneys - and that market presumes that a certain percentage of lawyers will drop out, whether to raise children, become a high school english teacher, or whatever. If we adopted Posner's system, it seems to me that the expected return would have to go down, since supply of attorneys would rise without any reason to believe demand would rise at the same time. Thus, students' willingness to spend exorbitantly on law school may well go down.
I don't know whether that would happen or not, but it seems to me an equally plausible scenario as Judge Posner's, and determining which one is more likely requires a lot more data. This is one of the reasons I have a hard time with law and economists sometimes - you can make a lot of assumptions that greatly oversimplify reality and then smuggle in normative goals under the guise of "neutral" economics. And it seems to me that is precisely what Posner is doing.
On its face, that point has little to do with marketing. Dig a little deeper though, and you'll see that a great deal of the economic assumptions made in the context of trademark law are just the type of assumption Posner made. They assume that consumers will behave in certain ways and make little attempt to empirically demonstrate that behavior. Those assumptions are normatively loaded, but they are often expressed as though they were neutral descriptions of the way the market works. It doesn't have to be that way; we can learn a lot about consumer behavior if we only learn to ask the right questions.
As a final, and to some extent unrelated point, let me loop back to the beginning of my post. I asked at the outset which school you would associate Judge Posner's position with. If it was an easy answer for you as it was for me, it is because the University of Chicago has done a good job of branding itself. What we make of that brand is a different, and more interesting, question.
September 28, 2005
Stealing Mickey's Mojo
Sooner or later, a blog on marketing and technology should link to Grant McCracken's blog, which is called This Blog Sits at the Intersection of Anthropology and Economics. McCracken is a very interesting and provocative anthropologist who studies popular culture and marketing. His work is uniquely insightful. He takes pop culture and marketing seriously, patiently seeking to understand it on its own terms, rather than jamming it into some ready-made theoretical box.
His most recent post, Disney and Other Mysteries of the Brand, talks about the special power of the Disney brand. McCracken thinks that Disney's new CEO, Robert Iger, is mistaken in his plans to allow downloads of Disney movies. McCracken believes that there is something special and unique about the Disney brand that makes people want to collect and own tangible embodiments of it. As McCracken puts it: "There is something about the thing itself that we, in marketing and in anthropology, do not fully understand. There is something about having your hands on the movie, even when this comes to you in the form of a cheesy plastic package. Parents and kids want their homes stocked with Disney favorites and they want them in a material form. We're not sure why." As is often the case with McCracken's work, this post inspires several different interesting lines of thought.
The thought I'm most interested in for the moment is the notion that Disney is a uniquely magical brand. Disney is one of those brands that is so infused with powerful positive associations that people really want to "possess" it--t-shirts, dresses, mugs, DVDs, etc. Lots of companies slap their trademarks on promotional junk, but people go out of their way to buy Disney stuff. There are a handful of other brands with that kind of power--for example, Coke and Harley Davidson.
If protection against trademark dilution is at all justified, it is justified for "magical" brands like Disney, Coke, and Harley Davidson. But I'm not sure the law has really figured out how to define that special "magic" or how to protect it. The concepts of “fame” and "distinctiveness" are poor stand ins for the special magic that Disney possesses, and the cause of action of “dilution” takes imprecise aim at the harm that special brands seek to prevent.
I have to confess: I love Disney. Other IP profs may see me as having an "Anakin" moment here, since Disney has emerged as symbolic public enemy number one for scholars concerned with the erosion of the public domain. I'm sorry, but Disney is special. I have a Mickey Mouse print in my office. Sure, in a nod to obligatory Gen X irony, it is a reproduction of the famous Air Pirates parody, so Mickey is depicted as a drug running airplane pilot. But it's still Mickey. Like so many other people, Disney has special associations for me. DISNEY—I’m a little kid, plunked down in a movie seat between my parents, and utterly entranced. DISNEY--It's 1976, I'm on a vacation to Disneyworld for which my family saved for three years. It’s worth every penny. DISNEY--It's now, and every time I share a new Disney DVD with my little girls, they light up with innocent joy. These kinds of associations are incredibly powerful. I suspect they help to explain why companies like Disney feel so inclined to seek especially strong protection for their creations, and why legislators and judges are often inclined to grant it.
When a client like Disney comes to a lawyer and complains that somebody is misusing their trademark, they likely don’t have concepts like trademark dilution in mind (unless they are in-house counsel). Since lawyers are problem-solvers rather than psychologists or philosophers, we simply use the tools that are most likely to get the job done. We construct a complaint that asserts our client’s trademark is “famous” and that the competing use will “cause dilution of the distinctive quality of the mark.” If it results in the offending party stopping, we are happy and so is the client.
Outside of the hubbub of litigation, however, it is worthwhile to pause to consider whether dilution really addresses the harm the client feels in such a case. More important, it is interesting to consider why legislators and judges are willing to give extra protection to strong brands. I suspect that trademark holders and policymakers are motivated by something a bit deeper than protecting the “distinctive quality” of a famous mark. Economic interests certainly figure into the explanation, but they hardly account for the vehemence with which some assert the need for such protection.
Certain brands have a special hold on our imagination. It likely takes an anthropologist like McCracken to explain why. If one takes brands seriously as a cultural phenomenon, one can see that some have acquired a talismanic significance. Their owners and others (like legislators) object to their defilement like an earlier culture might object to the mishandling of a ceremonial object. Sometimes we lawyers describe such a strong trademark as having “commercial magnetism.” That term is better than some alternatives, but I have often suspected that the term “mojo” might be far more apt. Like Austin Powers complaining that Dr. Evil has stolen his mojo”, the trademark owner complains that a diluting use is a theft of his trademark's mojo.
Yes, this may take us far a field of typical legal analysis and me way out of my area of expertise. Nevertheless, I think it explains some of the impulses underlying support for dilution. We ought to ask ourselves, however, whether our courts really ought to be in the mojo protection business. Disney and its employees are emotionally (and, of course, economically) invested in Disney’s marks. Many of us are also emotionally invested. That is why even a non-confusing, non-tarnishing use of a powerful brand may seem like a transgression worth addressing. As for a tarnishing use—one that associates a beloved brand with something scandalous—that seems even more necessary to redress. These impulses are understandable, but do we need to vindicate them legally? Because I perceive dilution as having irrational roots, I have always found its justification to be dubious. At the very least, perhaps we should restrict dilution not to marks that are just famous, but also require that they have “mojo.”
I'll leave the development of my multi-factor test for determining mojo to a future law review article.
You Don't Know Jack
By Mark McKenna
The Seattle Post-Intelligencer has a story about SparkNet's attempts to enforce trademark rights in the name of a radio show format (SparkNet refers to the format of a mishmash of musical artists and styles as "Jack"). SparkNet also summarizes this style as "playing what we want" and apparently doesn't like when other people "play what they want." The "playing what we want" phrase seems like quite a weak mark, if it qualifies as a trademark at all. Fortunately, at least one court has injected some sanity into this story, when a magistrate judge in my former home district (the Northern District of Illinois) rejected SparkNet's claim against Bonneville International's use of the slogans "whatever we feel like" and "whatever we want" for one of its radio shows. Quite sensibly, the court said that this was a dispute better dealt with in the marketplace.
The more interesting aspect of this story, I think, is SparkNet's attempt to claim the mark "Jack." In the abstract, "Jack" has a much better chance of qualifying as a trademark since it is at least suggestive if not arbitrary as applied to radio shows. But the way I read the story, SparkNet uses "Jack" to refer to the format of its show. If that's true, then it seems to me that "Jack" runs a real risk of being generic. If SparkNet can't protect the format itself (and I doubt it can), and if the format can't be easily described in some other way, then it's very likely that "Jack" will become the common way of referring to the format.
This is a risk that anyone who creates a new paradigm has to deal with. The marketing folks want a particular term to become synonomous with that product or service, but trademark law cautions against creating true convergence between term and genre. This kind of issue comes up most often with respect to marks for products that were once subject to patent protection (think shredded wheat, or certain pharmaceuticals), and trademark lawyers have a whole bunch of rules for their clients to protect against it. But, at the end of the day, there isn't that much that creators of new things can do about this - it's sort of an occupational hazard.
The other interesting thing about this article is that it quotes someone from SparkNet saying, incredulously, that people in radio just don't care about trademarks. Anecdotally, it seems to me that people choose radio stations based on the type of music they play and the personalities the station employs. Because they operate on uniqe frequencies (at least within markets), it strikes me that it's probably true that branding really doesn't matter much for radio stations. But when I think about it, there are probably other examples like this, and trademark law really doesn't take account of that reality.
Hat tip, Mark Partridge
September 26, 2005
Schultz on Copyright, Social Norms and "Jam Bands"
By Eric Goldman
Mark Schultz, a guest blogger here, has loaded his new paper Fear and Norms and Rock & Roll: What Jambands Can Teach Us about Persuading People to Obey Copyright Law onto SSRN.
The paper looks at "jam band" communities like the Grateful Dead. Jam bands encourage fans to engage in some copying, and community members have strong and community-enforced norms against exceeding the permissions given by the bands. Mark uses a rich law-and-social-norms analysis to isolate some lessons we might learn from the jam bands community that can apply to copyright infringement generally. The paper is tightly written and very accessible. If you're interested in a fresh look at the file-sharing debate (or copyright "piracy" generally), you should read Mark's paper.
"Conventional wisdom says, with ample justification, that we cannot persuade the average individual to comply voluntarily with copyright restrictions on works like popular music. This Article challenges that conventional wisdom with the example of a community of music fans centered on artists known as “jambands.” The jamband community has developed social norms that reinforce and respect artists’ copyrights. The experience of the jamband community provides a model for the development of pro-copyright social norms in a world where compliance with copyright laws is increasingly a matter of individual choice.
This Article examines the problem of filesharing in light of research regarding what motivates people to obey laws. Studies indicate that people are motivated at least as much by their belief that a law is moral as they are by fear of the consequences of violating it. In fact, attempting to enforce laws that contradict social norms too greatly may be counterproductive. Nevertheless, copyright owners have focused almost exclusively on deterrence rather than fostering social norms that support compliance. They would do well to try to persuade people that obeying copyright law is the right thing to do, rather than merely prudent.
This Article presents a case study, based on extensive first-hand observation, of the social norms of a community that respects copyright. The jamband community is a vital and growing movement in popular music that includes some of the top-grossing touring bands in the country. The original jamband was the Grateful Dead, but the label now applies to bands from many genres. What defines a jamband more than anything else is its policy regarding intellectual property: Jambands allow their fans to record live shows and to copy and distribute the recordings freely. Jambands have developed a unique bond of trust with their fan community, which has developed social norms against copying musical works that jambands have designated as “off limits.” These restricted works are typically studio recordings or live releases sold commercially. The community enforces these norms, sometimes even reporting violations to the bands’ attorneys.
The social norms of the jamband community might be a mere curiosity but for the fact that they appear to be based on a deeply rooted human behavioral trait known as reciprocity. Reciprocity motivates people to repay the actions of others with like actions—value received with value given, kindness with kindness, cooperation with cooperation, and non-cooperation with retaliation. Under the right circumstances, reciprocity can foster and sustain pro-social, cooperative social norms. This Article examines the latest laboratory and theoretical research on reciprocity from behavioral and experimental economics and applies it to the social norms of the jamband community.
Since the social norms of the jamband community are rooted in this universal behavioral trait, we can draw several potential lessons for the mainstream music community. The example of the jamband community may offer a “carrot” to accompany (or supplant) the “stick” of lawsuits. It also offers an alternative to proposals for ever-escalating regulation, more restrictive technology, or radical changes to copyright law. The Article concludes with several concrete proposals for changing business models and enforcement strategies to promote pro-copyright social norms."
September 25, 2005
Crawford on Spyware Regulation
By Eric Goldman
Susan Crawford has posted her paper First do no Harm: The Problem of Spyware to SSRN. This is the paper associated with her talk at the Boalt conference on spyware in April. I read a draft of the paper at that time and I thought it was an intelligent and efficiently-expressed recap of the spyware "problem" with some worthwhile policy proposals (mostly, a call not to overreact).
Over the last few years, there has been enormous U.S. interest in legislating rules governing spyware. This Article provides a comprehensive overview of the bills that have been proposed (and passed) in the states and on the federal level. It argues that because spyware is impossible to define, these legislative efforts may do harm to the extent they either are focused on design mandates or are attempts to require notice for electronic interactions. Only a technical approach-and only a particular kind of technical approach at that-will work in addressing spyware. Technical actors need to take an immune system approach to spyware, dividing their efforts and experimenting in the field the same way immunity networks do. If we think of the legal system as a medical expert operating on this difficult disease, our first priority must be to wait to allow these already-emerging immunity networks to take effect, and to do no harm in the interim. This is a time for patience, not for the knife.
September 23, 2005
My Famous Blog Post (R)
By Mark McKenna
A couple of days ago I received an email from Restoration Hardware advertising its Famous Fall Lighting Sale(R). On top of my mild annoyance at yet another piece of spam, I couldn't help but ask: "Are you serious?"
Are they seriously claiming that they've registered "Famous Fall Lighting Sale" as a trademark? Well, they have. And I'm almost speechless.
It's not so much that I can't believe they were able to register this laudatory/descriptive phrase - I rarely can work up much indignation about the things that the PTO will register these days. I'm speechless because I cannot figure out what value claiming this mark possibly could add to Restoration Hardware's business. Seriously, the scope of protection for this phrase has to be incredibly narrow. They can't stop other companies from advertising their "fall lighting sales" and I doubt they could even stop someone from saying that have a "famous fall lighting sale," if in fact they do. But even if they could, do they really think that this mark matters to consumers whatsoever? Ooh, another retailer claiming that their sale is "famous" - that'll really pack 'em in!
It strikes me that some lawyer convinced them that they needed to register this thing, so they did. But it probably also reflects how branding has gone completely haywire. I hope they don't sue me for the title of this post.
Why I hope Google loses
By Mark McKenna
The blogosphere is abuzz with discussion of the Authors Guild's lawsuit against Google. See here, here, and here, in addition to Eric's post here. UPDATE: this post collects the reaction of a number of commentators.
I don't have that much to add to the doctrinal discussion - I think there's a reasonable fair use defense here, though I think I'm less certain than Larry Lessig is that it would prevail. I think Larry's probably suggesting that it should be fair use more than arguing that it is, and on that score I think he has a lot of allies. But several people, including Eric, have been very skeptical that the fair use defense would work here.
The more interesting aspect of the discussion, I think, is the observation that a loss by Google has much more significant implications than just those for Google Print, since the basic concept is indistinguishable from what search engines do. I think that's right, and that's why I hope Google loses.
Let me be clear - I think Google Print could be a tremendously valuable resource and that copyright owners are foolish to challenge this product, which will make huge numbers of otherwise obscure books available to general audiences. And I think that it's crazy that copyright law would get in the way of this type of venture. But I think it would take a threat to something like Google's core search engine business - which is widely seen as legitimate and hugely valuable - for Congress to create any meaningful restrictions on the scope of copyright protection. And that's ultimately what we need - not some disingenuous attempt by a court to distinguish Google Print from search engines in order to avoid a disastrous result.
Maybe I'll regret having said this in 10 years of Congress doesn't do its job, but in the meantime, I'm rooting for the Authors Guild. Call me crazy.
UPDATE: One of the comments below suggested that Congress was too much in the pocket of the content industry and would force search engines and the like to adopt some type of filtering mechanism if there was a statutory response. I'm skeptical of that, partially because I think there's a constituency supporting Google, but also because I don't think it's that easy to differentiate the search engines from the content providers anymore. Case in point: I understand that Yahoo! is among the big proponents of the US signing onto a broadcasting/webcasting right that has been operational in Europe for a while. So Yahoo! would have to decide which part of its business it would spite on any legislation related to filtering.
September 22, 2005
Second Anti-Adware Class Action Filed--Simios v. 180Solutions
By Eric Goldman
This is the second anti-spyware class action lawsuit initiated by David Fish of Collins Law Firm. The first target was DirectRevenue; this time it's 180Solutions. I've critiqued the merits of many of the claims in my review of the judge's first substantive ruling in Sotelo v. DirectRevenue. In this post, I'm going to principally critique some of the differences between that lawsuit and this one.
In the Sotelo case, the plaintiffs sued in state court. To avoid the Class Action Fairness Act, which mandates that most class action lawsuits are heard in federal court, the plaintiffs tried two techniques: (1) the proposed class covered only Illinois residents who had DirectRevenue's software on their machines, and (2) the complaint named some Illinois-based defendants in an attempt to destroy diversity.
Those techniques failed, and the Sotelo case is in federal court. This time, the plaintiffs didn't even try any of the venue-manipulation techniques and instead originated the lawsuit in federal district court. I'm not entirely clear why being in Illinois state court was desirable, but skipping ahead to federal court seemed like a smart move to me. Among other things, it creates the opportunity to plead some new causes of action.
In the DirectRevenue case, the plaintiffs sued DirectRevenue, its holding company, an advertiser and an ad serving network. The diversity of defendants created some complexity and increased the paperwork, as each of the defendants are in different legal positions.
This time, the plaintiffs are suing just 180Solutions. However, it's possible that additional defendants will be added. In particular, I expected the plaintiffs to name some of 180Solutions' advertisers because the DirectRevenue advertiser was not able to get out of the lawsuit on the first try.
New Cause of Action--Computer Fraud & Abuse Act
Because the Sotelo plaintiffs tried to keep their lawsuit in state court, they did not plead any federal claims. Now, freed from that restriction, the plaintiffs bring a Computer Fraud & Abuse Act claim for the first time. The CFAA is a complex law, and I'm not entirely sure that the plaintiffs can establish a prima facie violation. However, I teach my Cyberlaw students that they should always plead common law trespass to chattels and CFAA together (if they can do so within ethical constraints), so adding the CFAA claim made complete sense here.
New Cause of Action--Electronic Communication Privacy Act
Another new federal claim, this time under the ECPA. I'm pretty skeptical about the ECPA claim. The lawsuit alleges that the 180 software "intercepts" communications and "discloses" the contents to third parties. These are the appropriate words under the statute, but I'll be interested to see if the plaintiffs can marshal the right facts to support the claim.
Trespass to Chattels
The complaint has cleaned up some of the damage allegations in support of the trespass to chattels claim (see, in particular, Para. 27), so the claim has an even better chance of surviving a motion to dismiss.
The plaintiffs, however, continue to plead some damages (such as user "frustration") that a court following Intel v. Hamidi simply will ignore. The plaintiffs also kept in some of their silly damages allegations (the software "utilizes pixels and screen-space on monitors"; the software slows performance, which causes the computer to stay on longer, which results in additional electrical consumption). I think the plaintiffs do themselves a disservice by mixing some legitimate and substantive allegations with some trivial and de minimis "harms."
New Cause of Action--Invasion of Privacy
The plaintiffs allege that the software invades their privacy under the common law. I think the plaintiffs intend to fit under the "intrusion to seclusion" tort. While this appears to have been appropriately pled, it's a stretch and, I think, has a low likelihood of success.
I understand that some plaintiffs' lawyers like to use rhetorical tricks, but I thought calling 180Solutions' software a "virus" and referring to computers as "infected" undermined the plaintiffs' credibility. Aside from that (and some other gratuitous allegations that have zero legal significance but were apparently made simply to smear 180Solutions), this complaint is noticeably more tightly drafted than the Sotelo complaint. I expect this tighter drafting gives it even better odds of surviving a motion to dismiss. Whether the lawsuit can survive summary judgment, however, is a much different story!
September 21, 2005
Cellphone Spam Violates TCPA--Joffe v. Acacia Mortgage
Joffe v. Acacia Mortgage Corp., No. 1 CA-CV 02-0701 (Ariz. Ct. App. Sept. 20, 2005).
When is an email a telephone call? The Arizona Court of Appeals says that an email is a telephone call when the receiver gets a text message on a cell phone.
Acacia sent a spam to XYZ@att.net (where XYZ was Joffe's phone number), which was delivered as an SMS. Joffe sues for violation of the Telephone Consumer Protection Act, specifically under the provision limiting the use of “any automatic dialing system” to make “any call” to “any telephone number assigned to a . . . cellular telephone service.” 47 U.S.C. § 227(b)(1)(A)(iii).
So, the obvious question is: when can an email message constitute a "call"? Or, stated alternatively, if a person sends an email at one end, and the receiver gets an email at the other end, can we label the process (or any intermediate step) a "call"?
The Arizona Court of Appeals seems to think so. The court says "The TCPA’s provisions at issue here apply to any type of call, voice or text."
I had to read that sentence a few times. I've never heard of a text "call"...what is that?
This, of course, is the guts of the case. If the word "call" is intended to mean "telephone call"--as certainly Congress meant--how can there be a text telephone call?
The answer is simple. Regulatory efforts to carve up marketing on a per-technology basis have failed. We can't separate telephone from email from faxes technologically, so efforts to do so legislatively are bound to lead to weird results like an anti-telemarketing law restricting sending email to a person who will receive it as email.
A ruling like this also illustrates the fundamental policy weakness of our various efforts to regulate unsolicited media. To assess the First Amendment challenge, the court has to consider why telemarketing objectionable. We know it is--the survey results are overwhelming--but we don't know why, and the court illustrates this lack of understanding. The court bounces around from saying that privacy in the home is important (but cellphone SMS might be received outside of the home--indeed, in public places) to saying that the "telephone commands our instant attention" (true--is this the problem Congress was attempting to combat?) to a general catch-all statement that the TCPA protects "privacy" (whatever that means). Without a firm understanding of why telemarketing is objectionable, we can't figure out if an unsolicited email causes the same harms as an unsolicited telephone call. I have a lot more to say about this in my next big paper.
In any case, having found that the text message constitutes a call, Acacia loses under the TCPA. Acacia's First Amendment challenge loses as well (as, I believe, every First Amendment challenge to the TCPA). Plaintiff is attempting to form a class, and Acacia is in trouble. If other plaintiffs can get other courts to find that the TCPA regulates "text calls," let the litigation bonanza commence!
Anti-Phishing Warning Protected by 47 USC 230
By Eric Goldman
Associated Bank Corp. v. EarthLink, Inc., No. 05-C-0233-S (W.D. Wis. Sept. 13, 2005). [BNA subscription required]
EarthLink's "ScamBlocker" incorrectly identified Associated Bank's website as a phishing site, so users trying to access the website saw a huge and scary warning that surely caused some users to freak out. Associated Bank sued EarhtLink for tortious interference, negligent/fraudulent representations and Lanham Act 1125(a) injury to business reputation.
EarthLink moved for summary judgment based on 47 USC 230. In support of 230, it submitted an affadavit that it uses a third party vendor to identify phishing sites, so its display of the huge and scary warning was triggered by third party content. Because EarthLink points to the third party, the court grants the summary judgment motion, and Associated Bank's lawsuit is dismissed.
This situation is more nuanced that the court treated it. If EarthLink merely relayed the opinion of its third party vendor, then no question in my mind that 230 protects EarthLink. See OptInRealBig.com, LLC v. Ironport Sys., Inc., 323 F. Supp. 2d 1037 (N.D. Cal. June 25, 2004) (third parties characterized email as spam).
However, EarthLink did more than that here. While the third party vendor provided the underlying opinion that Associated Bank's website was a phishing site, it's unclear who drafted the actual content displayed to users (the anti-phishing warning). To the extent that the language was drafted by EarthLink, EarthLink is the sole provider of that language, even if the triggering event is someone else's opinion. It seems like we need to know who drafted the warning language.
In that respect, I would distinguish this case from Carafano (where the users parrotted language written by the service provider) because the huge and scary warning included a set of instructions like "Please do not continue to this potentially risky site"--which goes beyond merely communicating the opinion that the site is a phishing site.
In the end, I still think this is a good outcome. Phishing is a real problem, and I think we should encourage intermediaries like EarthLink to help consumers combat the problem even if some misgradings are made. Nevertheless, EarthLink would have been in a clearer legal position if it had merely disseminated the site-is-phishing opinion of the third party vendor rather than possibly using its own words to explain that the site was a phishing site.
A few other questions/observations:
* Associated Bank could try to sue EarthLink's vendor who graded the site as a phishing site. However, this may be a protected opinion or otherwise excused for lack of scienter.
* Although I'm confident that a claim for "injury to business reputation" should be preempted by 230, the court doesn't appear to acknowledge that IP claims are not covered by 230. It would be interesting to see how the court distinguished that claim from an IP claim.
* On the top of page 8, there's some garbled language that begins "Further, had Defendant edited the list of phisher sites it received from the third-party vendor...." I'd like to know how the court intended to finish that sentence. I would finish it "...it would have made no difference" to the legal outcome, but I suspect that's not where the court was going!
September 18, 2005
My Comments on Google Print
By Eric Goldman
I have been thinking a lot about Google Print, Google's plan to scan in and index all of the books of some of the largest libraries in the world. This program has some obvious benefits to society; so much good content is "invisible" to the world because it's locked in a dead trees delivery mechanism, and the search costs of finding that information overwhelm the value of doing so. With Google Print, a lot of the world's knowledge will become newly discoverable by a large part of society.
At the same time, there's a small little problem--copyright law. Google Print requires lots of copies to be made, and those copies may have legal significance under copyright law. Google Print displays only a small portion of text in each search result, but this small portion could still be copyright-protected, and certainly lots of copies of copyrighted works are made prior to the display of that small portion.
If Google restricted itself just to works in the public domain, then there would be no copyright problem; but Google has much more ambitious plans to get every book it can find, copyright protected or not. To "allay" publisher concerns, Google has made a public offer to publishers that they can opt-out of Google Print--instead of limiting themselves to publishers who opt-in or otherwise going through the cumbersome steps of getting publisher permission. Needless to say, publishers have not been thrilled by the offer that they can "opt-out" when they are still wondering what permits Google to launch this program at all.
My thoughts on this subject are a little jumbled, in part because my normative biases are in conflict with my dispassionate legal assessment. My heart says Google Print is great and therefore we should interpret copyright law in a way to permit it. Unfortunately, my head says that this is highly suspicious under most readings of copyright law.
While I've been working through my internal struggles and deferring a blog post until I resolved my thoughts, William Patry posted on the subject. His post is brilliant, and it says everything I was thinking in a far better way than I could say myself. He says sharply:
"The chutzpadik manner in which Google has gone about this is breathtaking, and indeed what they have done so far is, in my opinion, already infringing, that is the copying of the books even without making them available."
Meanwhile, Patry takes a position directly contrary to Jonathan Band's recent analysis/advocacy document, where Jonathan writes:
"The Print Library Project is similar to the everyday activities of Internet search engines....As a practical matter, each of the major search engine companies copies a large (and increasing) percentage of the entire World Wide Web every few weeks to keep the database current and comprehensive....Significantly, the search engines conduct this vast amount of copying without the express permission of the website authors. Rather, the search engine firms believe that
the fair use doctrine permits their activities. In other words, the billions of dollars of market capital represented by the search engine companies are based primarily on the fair use doctrine."
Band's response is problematic, isn't it? One way of interpreting Jonathan's response is: hey, the search engines steal daily, so what's a little more stealing?
More problematically, this passage reveals the underlying weakness of the current search engine model. It contravenes my first rule of business ventures--NEVER BUILD A BUSINESS ON FAIR USE--and exposes that we do not have very good legal precedent validating the practice. Indeed, consider the case law validating the search engine practices:
* Kelly v. Arriba. The Ninth Circuit found that displaying thumbnail versions of photographs was fair use. The Ninth Circuit also originally found that displaying the full-size versions of the photos would not be fair use, although the Ninth Circuit (18 months later) realized that it had ruled on a question that neither party had litigated, and it withdrew that part of the opinion. The resulting mess of the case is so confusing and questionable as precedent that I don't teach the case in Cyberlaw.
* Ticketmaster v. Tickets.com. This case specifically validated the practice of using robots to collect content over the Internet and present some of that content as search results. However, the precedent is limited by the fact that Tickets.com presented only unprotectible facts in its "search results"--this may clearly distinguish search engines, especially with features like their "cache" where the search engines present 100% of the underlying content.
Consider UMG v. MP3.com, a case that Patry notes. There, MP3.com copied all of the contents of various copyrighted CDs and threw them onto servers. Customers could access songs only if they could establish that they owned the CDs. MP3.com styled this as a way of space-shifting. The resulting legal opinion isn't pretty for MP3.com. You know it's going to be bad when the opinion starts off:
"The complex marvels of cyberspatial communication may create difficult legal issues; but not in this case. Defendant's infringement of plaintiff's copyrights is clear."
Meanwhile, we have a number of lawsuits that attack search engine practices squarely, including Perfect 10 v. Google, Perfect 10 v. Amazon, and AFP v. Google. I remain nervous that these cases may very well expose the cracks in the search engines' legal foundation. If these cases don't, then I think some future plaintiffs eventually will, and the search engines will have to run to Congress to solidify their position. (Fortunately, Google now has the money to spend like a high roller in DC, and that goes a long way).
Like many other situations in copyright law, there's no question that I wish copyright law did not stand in the way of Google Print (or many of the other great services that Google offers, including Google Images, AutoLink and Google News, that I use daily but are also litigation-bait). But I remain very dubious of commentary about copyright law that is influenced by the commentator's normative views.
In particular, I remain very skeptical of anyone who prospectively declares a business venture to be well-protected under fair use. Even the smartest copyright lawyers in the world (and Patry and Band certainly are contenders for that status) simply have no way of predicting fair use in advance.
Therefore, given the shaky basis for its efforts, I think Google would be well-advised to adopt a more conciliatory approach to Google Print. Personally, I think Google would succeed if initially it simply limited itself to public domain works plus those of publishers who opt-in. After a few months of operation, Google will then have data to show how being included in Google Print can drive sales. At that point, I bet every publisher will line up at Google's door to opt-in (and, in fact, would gladly pay for inclusion). Because Google can get to exactly the same place with a velvet glove rather than guns ablazin', I'm surprised Google is still fighting the hard fight.
UPDATE: There have been a ton of articles on Google Print. Today's salvo is from Anick at AP. The story says: "Jim Gerber, Google's director of content partnerships, says the company would get no more than 15 percent of all books ever published if it relied solely on publisher submissions." I'd like to see some backup on this, and I further wonder how many of the unsubmitted books are going to be searched for--and how many of these books could be transacted in the marketplace.
UPDATE 2: CE Petit points out, correctly, that there may be circumstances where the publishers do not have the rights from the authors to opt-in to Google.
UPDATE 3: Like we couldn't see this coming. As anticipated, Google has been sued. The complaint. Plaintiffs' press release. Google's response. AP and Reuters stories. My advice to Google: stand down (for more on this, see Mike Madison's post and my comment to it).
UPDATE 4: IPTABlog does a good recap of the discussion.
September 16, 2005
City of Heroes Lawsuit--New Ruling on False DMCA Takedown Notices
By Eric Goldman
Marvel Enterprises v. NCSoft Corp., CV 04-9253-RGK (C.D. Cal. Aug. 23, 2005).
Given the interest in this case, I'm surprised that this ruling appears to have been overlooked (I found it through BNA [subscription required]). In late August, there was an interesting new ruling in the City of Heroes lawsuit, with another good win for NCSoft.
NCSoft, the game operator, sued Marvel under 17 USC 512(f) for sending bogus takedown notices. The takedown notices specified 2 character names, but did not specify what servers those characters resided in. Accordingly, NCSoft removed those characters across all of its servers, leading to some very bummed users whose characters were killed off. In response, NCSoft alleged the following facts:
* Marvel sent takedown notices on characters that Marvel itself created or that had already been removed
* Marvel knowingly sent notices to have NCSoft remove identically-named characters across multiple servers, even though some of those characters were legitimate
* the consequences were material because NCSoft added terms to its block list and deleted innocent players' characters
* these caused damages of lost goodwill, lost subscriptions and investigation expenses.
These facts were enough to survive a motion to dismiss. We'll see if the plaintiff can prove the requisite facts, but this ruling is a pretty significant development. Many of us have hoped for stronger consequences to inhibit copyright owners from sending poorly-conceived takedown notices, and this ruling gives extra teeth to the 512(f) cause of action.
One other odd argument re. 512(f)--Marvel claimed that to qualify as a 512 service provider (for purposes of bringing a 512(f) claim), the service provider must be "passive" and "innocent." This is just a specious argument, as the text of 512(k)(1) is entirely clear on this point (it defines a service provider as "a provider of online services"). Fortunately, the court emphatically rejected this arugment.
NCSoft has also gone on the offensive by claiming that Marvel infringed its trademark in "City of Heroes" based on Marvel's use of the term "City of Heroes" in some promotional copy on some comic books. The trademark claims survived a motion to dismiss. I'm a little worried about how far NCSoft is trying to stretch its trademark against a slogan use by Marvel, but I support the aggressive response by NCSoft generally. Marvel is quickly learning that there are potential unexpected costs of enforcing its IP rights, and those include counterclaims.
Finally, in an ironic twist, Marvel sought protection under California's anti-SLAPP laws. For reasons too complicated to explain here (as all anti-SLAPP rulings tend to be), the court rejected this effort.
Lane's Gifts Click Fraud Lawsuit Back to State Court
By Eric Goldman
Quick update on the Lane's Gifts class action lawsuit over click fraud. The Eighth Circuit refused to hear an appeal of the federal court determination that the lawsuit should be remanded back to state court, so the case is going back to the Miller County (Ark.) circuit court.
September 15, 2005
Branded products as ingredients
By Mark McKenna
Brett Frischmann tells a story about trying to buy his son a cookie with M&M's on it and having the person working at the cookie stand insist on calling the cookies "B&B" cookies, not M&M cookies. According to the store clerk, they are not allowed to call the cookies M&M cookies.
Brett seems to think that the cookie stand owner has instructed its employees not to call the cookies M&M cookies on its own. I sort of doubt that, given the pervasiveness of the use of brand names to inform customers about the ingredients of their products. I can think of a number of food examples off the top of my head, such as Oreo cookie ice cream and Jack Daniels BBQ sauce. And what about all those ice cream shops where you can have ingredients added into your ice cream (like Marble Slab Creamery and Cold Stone Creamery)? They have a whole array of branded products that you can incorporate into their ice cream.
While my instinct was to agree with Brett that this should be a slam dunk nominative fair use case (assuming of course that the "B&Bs" really were M&Ms and not some other small coated chocolate candies that looked an awful lot like M&Ms), I'll bet M&M Mars objected to their use. If I am wrong that the B&Bs really were M&Ms, then the objection might have been based on a legitimate concern about genericide - a concern that the cookie stand was calling all coated chocolate candies M&M's, regardless of their source. This is exactly what gets Coca-Cola all worked up when someone calls any dark soda a "coke," (which, my students remind me every semester, happens all the time).
But if the cookie stand really was using M&Ms on their cookies, then it's a much different story. I've been wondering for some time how long it would take before trademark owners started objecting to people using their marks to note that they in fact make products containing the branded product, so I did a little research.
When I was in Ben & Jerry's with my son the other day (Brett and I apparently have the same childcare priorities), I noticed that they don't use "oreo" in the name of their "Sweet Cream & Cookies" ice cream, which are of course made with "broken chocolate sandwich cookies." I also recalled that TGI Friday's has several food items that are made with Jack Daniel's bbq sauce, and I noticed that they say on their web page that they use "Jack Daniel's" under license.
So, if this anecdotal evidence means anything, I'll bet that the hapless cookie stand got a cease and desist letter from M&M Mars telling them they couldn't say they were selling M&M cookies, when in fact they were. As I said before, I've thought this was coming for some time. Despite some half-hearted attempts to protect users who employ a trademark to accurately describe their products, we've gotten so far down the road towards rights in gross, that the M&M argument probably doesn't seem far-fetched. M&M will argue that, when customers see "M&M cookies", they will assume that M&M Mars has given permission to the store to use their mark. The only basis on which consumers could draw that conclusion, of course, is that the cookie stand is saying the cookies have M&Ms on them. But that would hardly make the case unwinnable for M&M. As Brett points out (by reference to Stacey Dogan and Mark Lemley's article), we have other examples of areas where the only reason consumers might suspect some form of connection is the use of the mark by itself.
And the doctrine of exhaustion probably doesn't work to block liability here. Exhaustion usually applies when someone resells a product without change. Here, the downstream users are not merely reselling initial products without changing them - they are incorporating them into their own food products, which may or may not be any good.
Still, if we mean it at all when we say that trademark rights are not rights in gross, then it can't be trademark infringement to tell consumers that your product is made of ingredients that it is in fact made of. I certainly hope that nominative fair use would take care of this, because it if wouldn't, then trademark owners in a very real sense get to control the use of their products after they've made their way into commerce.
September 14, 2005
U.T. v. Longhornsingles.com Part 2 - state email filtering
White Buffalo v. U.Texas, Austin, No. 04-50362-CV0 (5th Circuit, August 2nd, 2005)
This second post of a two-part posting continues looking at the 5th Circuit's opinion in this unique case. The first post focused on the CAN-SPAM Act and how the court applied it in this case. This second post will talk about 1st Amendment complications when a government agency or entity (in this case the University of Texas) adopts a filtering policy or blocks email. Part One concluded that the 5th Circuit rather bungled the application of CAN-SPAM, even if eventually got to the correct conclusion. In contrast, in Part Two, the 5th Circuit seems quite aware of the more nuanced 1st Amendment issues and applies them quite well, with an eye to the unique concerns that email technology can raise. Oh, and the 5th Circuit couldn't resist dropping a slightly hidden filtering time bomb into the opinion as well...
Part One gives the details of the case, so we'll jump right on in to the 1st Amendment issues.
The 1st Amendment
White Buffalo asserted that the University of Texas was restricting its speech in violation of the First Amendment. We've heard about the 1st Amendment complications of regulating spam before, and even seen laws similar to CAN-SPAM survive 1st Amendment challenges, but a quick primer might help focus things.
The 1st Amendment says "Congress shall make no law...abridging the freedom of speech."
It is worth pausing to figure out whether the 1st Amendment even applies - the text does say "Congress," and U.T. is certainly not they. Originally, as the Supreme Court ruled in Barron v. Baltimore, the Bill of Rights restricted only the federal government. But we cannot go home just yet. In 1925, the Supreme Court, in Gitlow v. New York, recognized the 14th Amendment might have changed things and gave birth to the doctrine of incorporation, under which provisions of the Bill of Rights were deemed to restrict the states as well as Congress.
So the 1st Amendment applies to state actors and state actions.
Question #2 - is the spam filtering policy at U.T. state action? U.T. did try to say no, it wasn't a state actor, but the 5th circuit dismissed this argument as "meritless." It's beyond the scope of this post, but just when subdivisions of a state are or aren't state actors is a contentious question that often gets litigated, so U.T. was probably making a plausible, if weak, argument. CAN-SPAM, for instance, tries to avoid this considerable question by defining both states AND their subdivisions into the law.
Public or Private Fora? The 5th takes a pass.
1st Amendment jurisprudence distinguishes between 'public' and 'private' fora, and places different levels of scrutiny on government speech restrictions depending on whether they restrict speech in public or private. For example, government prohibitions on employees posting "for sale" ads on an agency's office bulletin board may be allowed with less scrutiny than government restrictions on street corner pamphleting. The 5th Circuit recognizes that email has elements of both, and rather than answer what it calls a "dicey but admittedly important" question, it takes a clever pass. Recognizing that the 'public forum' test is the more stringent of the two tests, it assumes without deciding that email filtering restricts public forum activity and analyzes it under that tougher test. Strategic opinion-writing perhaps, but you can almost hear the disappointment dripping from campus speech & 1st amendment organizations' pens as they report on the decision.
Central Hudson and commercial speech
Diving into the mechanics of analyzing government restrictions on commercial speech, the 5th Circuit pulls out the relevant Supreme Court case on the subject, Central Hudson. This 1980 case not only recognized that commercial speech was different, and subject to lesser protections, than other types of expressive speech, but gave a detailed analytical framework for reviewing government restrictions on commercial speech.
Where the rubber meets the road: the 4 Central Hudson tests.
1) Is it misleading or speech about illegal acts? The Court whizzes through this - no one alleged misrepresentation, or that the ads were for illicit substances, etc. - they even comply with CAN-SPAM.
2) Does U.T. promote a substantial interest in adopting a filtering policy? The 5th circuit recognizes that U.T. has a legitimate interest in adopting a policy to benefit its users, especially after users have complained about the unsolicited emails. No one is alleging the filtering is pretextual or discriminatory. Sounds like a legitimate interest, not that hard of a question. U.T. also says it has an interest in not stressing or clogging its mail servers. The court correctly pauses a bit at this argument. Mail servers are designed to deliver mail, complaints about overloading shouldn't be rubber stamped, but require inspection, the court says, taking a shot at the opinions in eBay, Inc. v. Bidder’s Edge and other court cases that seem too ready to find wrongdoing in any undesired computer loads. The court follows up on this criticism in considerable detail under the final test.
3) Does filtering address the problem? Here the court basically says 'well, duh!', stating "One can hardly imagine a more direct
means of preventing commercial spam from appearing in account-holders’ inboxes and occupying server space than promulgating a
policy that excludes such material..." It is worth noting, although the court doesn't, that spam filters aren't perfect, they don't block all spam. The Central Hudson test doesn't require perfection, however, but only that the policy work.
4) Is the solution tailored to prevent or minimize collateral damage? Here's where the 5th Circuit spends the meat of its energy, finding that, by blocking email from a sender's IP address for known bulk spammers, U.T. is helping its users. More specifically, the court finds that by only blocking in response to user complaints or system volume triggers, U.T.'s filtering is sufficiently tailored to minimize collateral damage. Then the court throws in a parenthetical bombshell, reminding that the filtering must be content- and viewpoint-neutral...
The content-neutral gorilla - don't bring it out of the cage if you aren't willing to feed it.
This last half-sentence is easily the 800-pound gorilla in this case.
Granted, this case was not about filtering based on content, but about filtering based on mail volume. It is perhaps right that the 5th Circuit shouldn't spend much time on an issue not technically before the court, but content-based spam filtering is pervasive, and in all likelihood there are many state agencies that employ content-based email filtering, in part because it blocks a significant amount of spam. (Think about all those spam filters set up to screen out words like 'viagra,' 'porn,' 'free offer,' 'multi-level marketing,' or the like.) Should the 5th circuit have brought up such a potentially large problem so tangentially without addressing it squarely?
September 13, 2005
Specht v. Netscape--What Happened After the 2nd Circuit Remand?
By Eric Goldman (with help from Matt Goeden)
The Specht v. Netscape 2nd Circuit opinion is a modern classic. The case articulates a clean (and, in my opinion, sensible) rule about online contract formation. I think it's a great teaching case because of the clarity of its rule and because it illustrates the consequence of sloppy third party distribution practices. The case is also noteworthy as an early skirmish in the spyware battle. As a result of its significance, the case has become pretty popular in both Cyberlaw and Contracts courses.
I just taught the case in my Cyberlaw class, and it occurred to me that I could not recall hearing about any developments in the case since the 2002 2nd circuit ruling. A quick Google search was fruitless, so I asked Marquette 3L Matt Goeden (who runs his own blog, fscklaw.com) to research what happened.
Here is Matt's report on his findings:
R.I.P. -- Specht v. Netscape
While we weren't paying attention, Specht v. Netscape, an oft-cited click-through contract formation case, was settled in early 2005. Apparently, there was even a website outlining the settlement; the website doesn't exist anymore, but can found at archive.org. The official settlement notice could also be found on the website (but not any more; here is a copy).
[Eric's comment: some of the parties' posturing about the settlement is pretty amusing, such as the following:
"Netscape and AOL believe that the versions of SmartDownload at issue were entirely lawful, effective, and valuable software products that harmed no one and that made using the Internet and downloading files simpler, more convenient, and more reliable."
Tip to Netscape--a settlement notice over your software being spyware is generally not the best place to make a sales pitch for your software!]
As far as I can see, the plaintiffs received nothing but the satisfaction that Netscape will never allegedly "intercept" their (and others') electronic communication again.
Moreover, the district court denied awarding attorney's fees for the settlement because the ECPA "requires a violation to trigger relief" and the settlement expressly denies any violation. The attorneys were seeking a cool $1.5 million. See the ruling.
In 2003, New York fared slightly better when Attorney General Eliot Spitzer and Netscape settled for $100k and similar cease-and-desist promises.
So, for having allegedly been a spyware purveyor, the net consequences to Netscape were:
* $100,000 check to NY and no money to consumers
* paying their defense legal fees but none of the plaintiffs' attorneys fees
* flushing of the collected data
* issusing a new version of the software (which is still online; I use the screen shot of this page in class to show how Netscape converted the page to a mandatory non-leaky clickthrough agreement)
* a few other minor promises, like agreeing to some third party audits
All told, a pretty good outcome for Netscape. We'll have to see if all alleged spyware purveyors (like DirectRevenue) are so lucky!
More on Shortsightedness
By Mark McKenna
Guest blogger Brett Frischmann has a really good post over at madisonian.net. He argues that at least some of the problems New Orleans has experienced in the aftermath of Hurricane Katrina are consequences of shortsightedness. I've been thinking a lot about this lately, in very similar terms.
Brett notes that much of the destruction could have been avoided if we had only invested in infrastructure. We don't because the benefits of those investments are fuzzy and won't be realized until sometime in the distant future. The costs, on the other hand, must be incurred now. This certainly is true in the context of New Orleans, but there's a much broader point to be made here, which Brett hints at. Shortsightedness is pervasive in American public policy.
In his article, Brett mentions social security and the environment as examples of our failure to invest current funds to avoid much more expensive problems down the road. There are many other examples that could be added to the list. The budget deficit is an obvious place to start.
There are several less obvious examples too. We have very good information about the kinds of programs that work to reduce violent crime and keep young kids involved in productive activities. Nevertheless, our prisons are bursting at the seams. Because we refuse to make the necessary investments, we have a much more expensive problem on our hands down the road. A similar story could be told about early childhood education. Unfortunately, but predicatably, the costs of shortsightedness tend to fall disproportionately on those who can afford it least. There's another level on which class has everything to do with the hurricane.
So what in the world does this have to do with technology and marketing? Not very much, except that cognitive science has a lot to say about the natural tendency to be shortsighted. Maybe if we pay more attention to that tendency we can work to offset it.
September 12, 2005
Details on Marquette's Participation in BSA's "Define the Line" Program
By Eric Goldman
Back in May, I blogged about Marquette being the first participant in the Business Software Association's "Define the Line" campaign against on-campus copyright infringement. The details were sketchy, but the Marquette Tribune student paper ran an article giving an update on the program.
The article answers the most obvious question, which is why Marquette joined the program in the first place. The school was introduced to the BSA by USG, a software vendor that made a $30M+ donation of software to Marquette.
The article lists some of the activities that Marquette has undertaken in connection with the campaign, including:
* distributing brochures and handouts during Preview weekends and Orientation
* placing posters in high-traffic areas
* discussing copyright infringement at a Campus Safety seminar
This latter venue seems like an interesting place to bring up the matter. I can imagine the discussion: "Don't walk around alone at night...if someone strange is following you, pick up the blue phone...and don't copy that floppy!"
Marquette has also issued a press release update about the program. Not surprisingly, the release is long on pro-copyright owner statements and short on details. Among other missing details, I still have not heard which other schools have joined the Define the Line program. Here's the text of the release:
Marquette’s effort to “Define the Line” to stop illegal sharing, downloading continues this fall
Marquette’s participation in “Define the Line,” a national program aimed at discouraging illegal sharing and downloading of software, is continuing this fall. The program calls upon students, faculty and staff to ensure they are properly and legally sharing and downloading software and other digital copyrighted work including music and movies.
“Define the Line helps Marquette take a proactive stance on illegal downloading before it is becomes a problem,” says Kathy J. Lang, chief information officer. “It is especially important at a school like Marquette, where the computer system is an integral part of serving our students as well as employees. Define the Line will help our students as well as faculty and staff understand how illegal downloading has an impact on the lives of others. We feel it will set a standard.”
According to a study conducted by Ipsos Public Affairs, two-thirds of college and university students surveyed see nothing unethical about swapping or downloading digital copyrighted files (software, music and movies) without paying for them and more than half (52 percent) think it is also acceptable behavior in the workplace. The survey also reveals that 45 percent of students are using the campus networks for downloading activities, with 36 percent of them more likely to report increased downloading.
Marquette is one of the first universities in the country to implement this program. Define the Line is designed to educate students about using commercial software legally, respecting copyrighted works online, and understanding the impact of software theft. The Business Software Alliance (BSA), an organization dedicated to promoting a safe and legal digital world, sponsored the program to raise awareness about these important issues with university students, faculty and staff. Marquette will implement this program through a variety of outreach efforts.
“Education is critical in preparing a 21st century workforce, and we believe Define the Line to be a valuable educational resource in emphasizing to students the importance of being good cyber citizens,” says Diane Smiroldo, vice president, public affairs of BSA. “We believe Define the Line will help the Marquette University population realize the seriousness of illegal downloading and educate them about the importance of respecting creative works online.”
When a guitar is just a guitar
By Mark McKenna
The 6th Circuit today released an interesting decision restricting the application of initial interest and post sale confusion doctrines, at least in the context of product configuration.
Gibson Guitar Corp. has manufactured its Les Paul line of guitars more or less consistently since the the early 1950's. Gibson argues that the Les Paul guitar is distinctively shaped and serves as a trademark. In 2000, Paul Reed Smith began making a similarly shaped guitar, and Gibson sued. The court rejected Gibson's claim by finding no likelihood of confusion between the two companies' guitars.
There is a lot I could say about this case, but I will highlight a couple of mostly unrelated things I thought were interesting about the case.
1. I still can't figure out why Gibson sought leave to amend its complaint to limit its claim to infringement of its federally registered two dimensional depiction of the guitar. The court goes out of its way to say that, if the claim is based only on the two dimensional depiction, then the district court shouln't have considered other design features like color and knob placement. That seems right, but I couldn't figure out why it should matter, and it wouldn't have if they had kept their trade dress claim since it would have been a distinction without a difference.
2. There seems to be something of a minor movement afoot to cut back on initial interest confusion. This decision is the second in just a few weeks to refuse to apply the doctrine (see the 4th Circuit's decision in Lamparello v. Falwell). While I'm glad to see courts expressing greater skepticism about that potentially pernicious doctrine, I'm somewhat disappointed that both decisions did so by unpersuasively distinguishing prior cases rather than having the courage to simply say that initial interest confusion isn't actionable or is actionable only in limited circumstances.
2. It's really quite ironic that the 6th Circuit refuses Gibson's initial interest confusion claim and distinguishes its prior recognition of the doctrine on the ground that Paccar (its earlier case) was about initial interest confusion with respect to domain names. Falwell's claim was based on use of a misspelling of his name in an internet domain name, and yet the 4th Circuit rejected Falwell's claim and argued that you can't determine initial interest confusion without considering the context of the web page to which the domain name resolves. That's not initial interest confusion - the whole point of that doctrine is that the confusion is dispelled when further context is introduced - and the 4th Circuit should have just rejected the doctrine altogether. But the 6th Circuit seems to think that initial interest confusion is only applicable in the context of domain names (or, to read the decision more narrowly, at least doesn't apply in the context of product configuration - more on that below). I don't see any reason to treat domain names differently in terms of causing initial interest confusion, so I have to conclude that this was just an excuse for the court to restrict initial interest confusion without having to say Paccar was wrong.
3. The court claims that the implications of recognizing initial interest confusion claims are more serious/important in the context of product configurations because there are a limited number of ways in which a product can be made. But I think Judge Kennedy (concurring in part, dissenting in part) clearly has the better of this argument. If it's true that products can only be made in certain ways, and that lots of products look vaguely similar at least from a certain perspective, then the plaintiff should have difficulty establishing that the shape denotes source and/or that the mark has any real strength. That seems to me to affect the scope of rights in a product configuration and might suggest that a certain amount of initial interest confusion has to be tolerated by those mark owners, but I don't see why it means initial interest confusion shouldn't be applied at all. Incidentally, I think Judge Kennedy's proposed rule - that the issue of whether something inidcates source should be viewed from the same perspective at which the plaintiff claims confusion, is quite sensible.
4. I have similarly ambivalent feelings about the court's discussion of post-sale confusion. Its attempt to distinguish Esercizio (the Ferrari case) is rather pathetic - it claims that, unlike in the Ferrari case, there's no risk that PRS will affect Gibson's reputation because PRS makes high quality guitars. This is striking because courts generally don't let defendants off the hook on evidence of good quality, saying things like "it leaves the plaintiff's reputation in defendant's hands" and showing concern that the defendant might someday decide to make poor quality products. So whether or not PRS makes good guitars, it doesn't mean that consumers might not think Gibson makes the guitars, and it doesn't mean that PRS won't someday cut costs and make poor substitutes. This seems like another relatively bald attempt to reject the doctrine without saying it rejected the doctrine.
5. This case raises a question I've been thinking about for a long time - why do we recognize trade dress rights in product configuration? At least for any products that can effectively be labeled, product configuration operates at most as a secondary or tertiary source identifier. And if the labeling is actually done, it's almost inconceivable that anyone is really confused at the time of purchase (assuming the labeling itself is done clearly). In fact, Gibson's counsel admitted in oral argument that "you'd have to be an idiot not to know which guitar you're buying." Gibson's complaint seems to boil down to the complaint of every product configuration claimant I've ever seen - we developed an attractive product that consumers want, and we should be the only ones to exploit that design. But isn't that exactly what design patent protection is all about? What marginal value do we get out of trade dress protection of this stuff? (I mean we as in consumers - I know why Gibson wants it).
September 08, 2005
IP and Cognitive Psychology
By Mark McKenna
William Patry has an interesting post over at his blog about how courts go about determining substantial similarity in copyright infringement actions. The post resonated with me for a couple of reasons.
First, I always have great difficulty teaching substantial similarity to students. I've found that all you can really do is give lots of examples of things found substantially similar and things that were not. But devining any methodology in determining whether the allegedly infringing work is substantially similar to the plaintiff's work is an exercise in futility. Patry notes that right now, copyright law exists at the crude level of Potter Stewart's "I know it when I see it." There's a lot of truth in that, and it's not a particularly good thing. It puts a lot of power in the hands of a judge. Despite courts' protestations that substantial similarity should be judged from the standpoint of an ordinary consumer of the copyrighted works, usually the question is viewed from the standpoint of an ordinary federal judge and/or his clerks (I use "his" purposefully here, because although things are getting better, the federal judiciary is still predominantly populated with white men, most of them probably not that familiar with popular culture). Thus, this test probably tends to favor the types of works middle aged white men consume, and tends to disfavor the types of works with which they are not familiar. I don't want to overstate the disparate impact point, but it seems pretty real to me. There's a good paper to be written on this I suspect.
The other reason I really liked Patry's post is that it contemplates using modern research on cognition to aid the substantial similarity determination. I'm currently fascinated with cognitive psychology and am working on something with Dan Hunter trying to apply some of its lessons to trademark law. It seems like a no-brainer really. If we're trying to figure out how ordinary folks compare things and make decisions, why would we not look to research that seeks to understand how people in fact make decisions? There is an answer to that question, but it's a cynical one. At least in trademark law, if we really tried to figure out what people were thinking, we'd probably find a lot less infringement. When trademark law is written by INTA and pushed predominantly by companies with valuable trademarks, is it any wonder we haven't gone down the reality road?
Update: Mike Madison discusses Patry's post over at Madisonian.net. I should have mentioned this before, but Mike has a couple of interesting papers that deal to some extent with cognition. He links to them in his post - check them out.
Madison on Drafting Local Court Rules for Patent Cases
By Eric Goldman
Michael Madison gives an interesting account of his experiences drafting local court rules for patent cases.
While the idea of creating some incentives for parties to engage in forum-shopping may sound good in theory, I wonder how much local court rules can affect that decision--especially in patent cases where the where-to-sue decision is complex, high-stakes and potentially very costly. Michael ultimately suggests that concern by noting the limitations of how much local court rules can affect the case.
For me, the more interesting aspect of his post is his narrative of a rule-making process. Michael's post exposes the complex balancing act:
* how to implement a broad social goal (lure patent litigation into Pittsburgh, and help patent litigants resolve their disputes in a satisfactory manner)
* how to allocate policy benefits/detriments to the players (i.e., the local court rules might be plaintiff-favorable or defendant-favorable...who should we favor, and why?)
* who should participate in the rule-making process (in this case, not the public at large)
Deconstructed in this fashion, Michael's write up is a good narrative of the strengths--and dangers--of our current rule-making systems.
UPDATE: A former student sent Minnesota's effort to develop local patent rules.
September 07, 2005
GEICO and Google Settle
By Eric Goldman
The terms of the settlement are confidential, so we can only speculate what happened. My guess is that a small amount of money moved from Google to Geico and Google made some special promises about who can purchase the keyword "Geico" and what happens if they do. Unfortunately, I don't have any inside information, so this is true speculation.
So what do we learn from this case? We have 2 substantive rulings: (1) keyword triggering of text ads by search engines is a trademark "use" in commerce, and (2) the display of such text ads where the trademark isn't displayed in the ad copy wasn't proven to create consumer confusion. As an early data point, these holdings are helpful, but I don't think either of these conclusions are definitively resolved. As a sign of how weak I think this case is as precedent, I don't assign either ruling as reading in my Cyberlaw class.
Instead, I think we have plenty more litigation (and maybe some legislation) in front of us before we reach a doctrinal equilibrium. In particular, we have some heavy work ahead of us to reconcile the adware cases with the search engine cases regarding when keyword triggering constitutes a trademark use in commerce. So ultimately, I expect this case to be a forgotten footnote in the battle over keyword triggering, an early skirmish that, in retrospect, had little consequence.
The FCC Proclaims Itself the UDRP for 800 Numbers
By Eric Goldman
From Kevin Poulson's Wired story: An entrepreneur registers 800-RED-CROS[S]. He claims to have done so because it has the same number as 800-RED-ARMS, and he was running a business by that name at the time. When he realizes the fortuitous overlap, he sets up relationships with local Red Cross affiliates so that phone calls from local residents are routed (for a fee) to the local affiliate. The entrepreneur claims that half of Red Cross' local affiliates signed up to the program.
Trademark infringement? No. A useful business (in terms of making matches between interested donors and local affiliates)? Modestly. Problematic when everyone in the world is saying that the way to help Katrina victims is by donating to the Red Cross?
Apparently, the FCC thinks so. After negotiations between the entrepreneur and the Red Cross to redirect the phone number broke down, the FCC invoked its (otherwise unknown?) power to prevent the "warehousing, hoarding and brokering of toll-free numbers" and gave the phone number to the Red Cross for one year.
Am I the only person who thinks this is exactly what the Takings Clause was designed to prevent? (I think Lauren Gelman is uncomfortable too, but maybe not based on the takings doctrine). I recognize that we might feel uncomfortable treating the entrepreneur as having a property right in a telephone number (although we have a number of cases saying that registrants have a property right in domain names--see Kremer v. Cohen), but I'm even more uncomfortable with the FCC undercutting an entrepreneur's investment decisions when a non-profit can't work out an acceptable private ordering negotiation.
Roundup Not Ready
By Mark McKenna
In another example of trademark enforcement on steroids, we have
Monsanto's recent demand that the author of the Bitter Greens Journal blog stop using Roundup Ready as the header for a series of blog posts. See Overlawyered and The Trademark Blog.
I find it extremely hard to believe that Monsanto has any kind of claim here. But it's almost impossible anymore to know for sure that a trademark claim is specious. As I noted before, and as Eric lamented, trademark law is rapidly expanding to the point where any use of another's trademark is an infringement, regardless of how it's used.
What the Monsanto example demonstrates, I think, is that trademark owners think we're already at the point that they get to control any and all uses of their marks. Monsanto's first objection to the Bitter Green Journal's use of Roundup, ready was:
1) You are using our trademark without our consent. This use of the term could cause your readers to think that your journal is in some way sponsored by Monsanto or that Monsanto supports the positions set out in your journal.
Sure they wind up couching the objection in terms of confusion, but do they really think anyone will be confused? I doubt it. I suspect that the first sentence really captures their complaint - someone used their mark without their consent. Period. We need to figure out how to stop the momentum in this direction.
September 06, 2005
More on Rappers and Car Dealers
By Mark McKenna
In the name of not being left out of the interesting discussion about Snoop Dogg's trademark lawsuit against Gary Barbera (not to be confused with Hannah Barbara, of Flintstones fame), I thought I would put in my .02.
As I said in a comment to Eric's previous post regarding 50 Cent's complaint, I think Eric is looking too hard for a specific trademark of Snoop Dogg's that the dealership is using.
From what I can tell from the complaint on The Smoking Gun (it's not the whole complaint), the plaintiff appears to be alleging both trademark infringement under Section 32 and unfair competition under Section 43(a). I don't think the trademark infringement claim is worth discussing. Like Eric, I don't see any possible basis for a claim alleging use of the SNOOP DOGG. In fact, on its own, I think asserting that claim is borderline sanctionable.
But the 43(a) claim seems to me quite plausible. As John noted below, courts have found 43(a) violations in lots of situations where it was hard to identify what "mark" the defendant was using. That's because 43(a) doesn't require that the defendant be using any mark, or even that the plaintiff have a mark. All that is required is that the defendant use something, or some combination of things, that potentially suggests sponsorship or endorsement. I don't like that rule because it seems destined to result in individuals and companies being able to prevent anyone from referring to them at all (or, as Stacey Dogan says, in having the exclusive right to evoke). It is, nevertheless, pretty clear to me that it is the rule.
So it seems to me that there are only really 2 substantive questions in Snoop's case:
1. Does this ad, as a whole, suggest that Snoop Dogg sponsors or endorses the car dealership?
2. Does Snoop's contractual relationship with Chrysler anticipate uses by the dealers?
If the contract doesn't anticipate uses by dealers or at least give Chrysler the right to sublicense (and I'd be surprised if it does), then Snoop's relationship with Chrysler probably doesn't confer any benefits on the dealer. While the dealer can legitimately claim that the suggestion that Snoop sponsors or endorses Chrysler is accurate (i.e., that the ad contains no false designation of origin because Snoop really does endorse Chrysler), I doubt that runs to the dealer. That is an interesting question though, and I am not familiar with any case dealing with that issue. Is anyone else?
UPDATE: Apparently Barbera is claiming that the 50 Cent ad is based on a radio advertisement that 50 Cent did to promote a giveaway at the dealership [I haven't seen a similar claim relating to the Snoop Dogg ad]. That adds an interesting wrinkle to the case. On the one hand, this could be seen as a simple dispute over whether the agreement between 50 Cent and the dealership relating to the radio ad gives the dealership the right to make derivative advertisements. Assuming the contract is silent on the issue, does that impicitly limit the right to use 50 Cent's name/likeness/image to the radio ad? I don't know for sure, but I'd bet that's the way the contract would be interpreted.
On a more theoretical level, however, that doesn't altogether sit well with me. If the 43(a) claim [set aside the right of publicity claim for the moment] turns on the question of whether the dealership is falsely suggesting 50 Cent's sponsorship or endorsement of the dealership, then doesn't the dealer have a pretty good argument that there's nothing false about their suggestion? Isn't there some real sense in which 50 Cent did endorse the dealership? Is this really that different than when Good Housekeeping recommends a product and the product's manufacturers reference that recommendation in an ad? Or when Terri Welles continues to say that she was "Playmate of the Year," when in fact she was?
Of course, in the long run it probably doesn't matter that much if the dealer is able to make that argument effectively because parties with bargaining power (as we might assume celebrity endorsers generally are) will simply contract around the rule by explicitly forbidding additional uses of their name/likeness/image beyond the particular ads contemplated. And the current right of publicity, which is really broad (too broad, in my opinion), surely doesn't care whether 50 Cent really did ever endorse the dealership.
Rappers, Car Dealers and Trademarks --- John Weighs In
Eric and I have been debating the claims in the 50 Cent and Snoop Dogg cases, and whether there can be trademark like protection for "speech patterns." Not surprisingly, as one who likes "non-traditional" trademarks, I am coming down more strongly than he that there are potentially viable "trademark like" claims here.
I would argue that these claims are analogous to the "sound alike" body of cases, in which case this is not really a new legal frontier.
A voice is not copyrightable, because the sounds are not fixed. But courts have already recognized that speech patterns or voices acquire something like "secondary meaning" over time. The First Circuit recognized Burt Lahr's unfair competition claim when Lestoil aired a commercial using an imitation of Lahr's voice with a cartoon of a duck. (Lahr v. Adell Chemical Co., 300 F.2d 256 (1st Cir. 1962). More recently, Bette Midler successfuly argued that when her distinctive voice was deliberately imitated in a television commercial for Lincoln automobiles, it was an actionable tort under California common law for misappropriating part of her identity. Midler v. Ford Motor Company, 849 F.2d 460 (9th Cir. 1988). Tom Waits recovered $375,000 in compensatory damages and $2 million plus attorneys fees in punitive damages on theories of voice misappropriation under California common law (the same claim on which Ms. Midler was successful) and false endorsement under Section 43(a) of the Lanham Act, when Frito-Lay imitated his voice for a radio commercial. Waits v. Frito Lay, Inc., 978 F.2d 1093 (9th Cir. 1992).
So whether you call it "trademark infringement" or "unfair competition" or "voice misappropriation" or "right of publicity," the courts have recognized that there is something wrong with deliberately imitating the well-known, distinctive voice of a professional singer or actor to sell a product. It may be out there at the boundaries of "trademark" law or "unfair competition" law, but courts are using trademark-like concepts to protect the singer's or actor's right to control the placement of his/her voice. And the car dealer situation would seem to be a logical extension of radio and television advertisements to print advertisements.
Yes, in this case, the words are printed in the car dealer's advertisement rather than spoken like in a radio or television commercial. But the car dealer is using either the well-recognized exact quote (If the car is fly ...) or the well recognized speech pattern (..izzle ...) without permission to sell his cars.
The analysis in the car dealer case may be more factually intense, given that in that case there is some arguable relationship (express or implied) between the products and the spokesperson, when there was no authorization (authorization was denied, in fact) in the Waits and Midler cases.
In the end I agree with Eric on one thing ... whether or not Mr. Barbera has successful defenses, unless he likes to spend money on lawyers and spend time in depositions and court appearances, he should find other ways to promote his dealership.
September 05, 2005
Rappers, Car Dealer Ads, and Expansive Interpretations of Trademark Law
By Eric Goldman
Broadus v. Gary Barbera Enterprises, Inc. (E.D. Pa. complaint filed Aug. 2005).
Ten days ago I blogged about the rapper 50 Cent's lawsuit against the Gary Barbera dealership for running a car ad that showed a picture of 50 Cent with the phrase "Just Like 50 Says." Assuming the dealership ran the ad without permission, this use looked like a textbook misappropriation of publicity rights.
However, the trademark implications were more troubling: 50 Cent does not have a trademark in his likeness but has a registered trademark in "50 Cent." Could we combine the picture plus the trademark to cover the number "50"? Perhaps, although this takes trademark law pretty far.
We get to revisit this issue with the same dealership. On the heels of the 50 Cent fracas, the Gary Barbera dealer ran two ads:
* the first shows a picture of the rapper Snoop Dogg next to the phrase "Is Bar-Bizzle the Sh-izzle? Boy I Gu-izzle."
* the second again shows the picture and uses the phrase, but adds "If the car is fly...then you must buy."
In his complaint, Broadus/Snoop says that he has a registered trademark in the phrase "Snoop Dogg." However, the dealer never used this phrase. Instead, the complaint contends that the dealer used "the distinct speech pattern employed by Broadus and associated with his professional likeness and persona and the SNOOP DOGG trademark" (Para. 12). The complaint goes on further to say that the dealer misappropriated his "speech pattern" and "distinctive manner of speech."
Let's start with the right of publicity. If the dealer does not have permission, then they have misappropriated his right of publicity by using the photo. The problem is that Snoop Dogg made a commercial for Chrysler. Presumably he granted publicity rights to Chrysler as part of that deal. The question is--does the agreement between the dealer and Chrysler sublicense those rights? If yes, then Snoop Dogg has no lawsuit. If not, the dealer is in trouble.
While the right of publicity claims seem relatively straightforward, the trademark claims are far more problematic. Unlike the 50 Cent case, where the dealer at least part of the registered trademark ("50" of the trademark "50 Cent"), here the dealer did not use any part of the registered trademark ("Snoop Dogg").
So how did the dealer infringe Snoop Dogg's trademark rights? Snoop Dogg could have trademark rights in his identity, but the portion of the complaint on the Smoking Gun site made no such allegations, and I doubt that would stick.
The dealer allegedly took his distinctive speech style of using "-izzles," although I'm inferring that Snoop Dogg never actually said "Is Bar-Bizzle the Sh-izzle? Boy I Gu-izzle" (and even if he said it, there's a big gap between saying the phrase and having a trademark in the phrase). So how can he have a trademark in the speech pattern of using "-izzles" in nonsense phrases? I would vote that he simply cannot do so. Trademark law doesn't cover speech patterns, nor could it without reaching too deeply into human communication patterns.
Apparently, Snoop Dogg did say "If the car is fly...then you must buy" in the Chrysler ads. As a result, I don't see how Snoop Dogg can enforce any rights in that phrase; the trademark rights should accrue to Chrysler. In turn, the dealer's rights also depend on the contract between the dealer and Chrysler.
So where is the dealer's trademark use/infringement of a trademark right owned by Snoop Dogg? The photo + nonsense phrases of "-izzle" = trademark infringement of the trademark "Snoop Dogg"? I don't think this is enough to support a trademark infringement claim. Snoop Dogg should win only on the right of publicity claim (or not at all).
In any case, although trademark law may not apply to its behavior, I have a tip for the Gary Barbera dealership: lay off using photos of rappers in your ads for a while. They seem to get you into trouble...and into court!
Meanwhile, an update on an unrelated but also overreaching trademark dispute. The LA Times runs a good story about the "What happens here stays here"/"What happens in Vegas stays in Vegas" trademark dispute. While this particular phrase could conceivably infringe, in my previous blog post I reference how the trademark owner is trying to protect too many variations of that phrase.
September 02, 2005
Blizzard and Arizona Cartridge
By Mark McKenna
There are several thoughtful posts on other blogs criticizing 8th and 9th Circuits' recent decisions in Davidson & Associates (d/b/a Blizzard) v. Jung and Arizona Cartridge Remanufacturers Ass’n Inc. v. Lexmark International respectively. See here and here for two good examples.
From what I can tell, the IP community (at least those in academia) pretty much uniformly thinks the decisions were terrible. I don't have much of a beef with that point of view [full disclosure - I signed a law professors' amicus brief in the Blizzard case that argued for protection of reverse engineering done with the purpose of creating interoperability and that the EULA should be preempted by copyright law].
I want to make a related point about the markets for copyrightable products.
Most of the arguments against the enforceability of EULAs, particuarly when they eviscerate protections under copyright law, are based on the assumption that purchasers don't really assent to the EULA's provisions, and if they do, they don't have much choice but to agree to the terms. That's not a new objection to standard form contracts - it's been around for a long time. See Carnival Cruise Lines v. Shute. The argument now is routinely rejected in just about every context in which it arises. It's the "triumph" of law & economics.
But this argument against form contracts really has two components. The first is that consumers don't read/understand the terms and have no idea what they're agreeing to. The second is that, even if consumers understand precisely what they're agreeing to, they don't have a choice but to accept those terms.
Mike Madison focuses on the former when he suggests that it might be okay if customers' user rights were wiped out by contract if it was clear that the customers understood that before they bought the product and could change their behavior accordingly. That's precisely why Arizona Cartridge bothers him - the case seems to say that Lexmark can't offer "one use" products at lower prices even when they make clear to consumers that the product is for one use and consumers seem to want that.
While I think Mike's right that Lexmark's ability to contract for different numbers of uses of a product might enhance welfare, I think that may be a function of the particular market for Lexmark's product. I'm not sure I agree that, as a general rule, it would be okay to contract away all the protection of copyright law as long as consumers clearly understood that. In other words, I think we need to focus more on the second aspect of the objection to form contracts.
In many cases (software comes to mind) there's a good argument that consumers don't have that much choice about what products to use. I don't recall being given much choice about what software to use when I was at my firm. How many clients were willing to accept files in anything other than Word form? But I don't think that's even the most serious concern. The bigger problem is that sellers are likely to put terms in their EULA's that are good for them but not good for innovation. It is not in Blizzard's interest to allow anyone to reverse engineer their game so that they can create interoperable (and at least to some extent competitive) products.
But we have made a policy decision that reverse engineering is good in some circumstances for society generally. How will it ever happen if the sellers all prohibit it by contract? One possibility is that, if there really are people who want games that can be reverse engineered, someone will recognize that market opportunity and offer those types of games (a la the open source movement). I doubt that effect would be particularly significant as an empirical matter, at least for products directed at the general user population. [As an aside, that's why I doubt the open source movement will ever really affect the software industry much - I understand it will make some headway at the server level and in niche markets with very savvy computer users, but my mom (and there are lots of people like my mom) will never use an open source program.
But even if it were true that companies could offer software with the "feel free to reverse engineer me" term, should that make us doubt the potential value of allowing reverse engineering of the products whose owners lock them up? Aren't there strong reasons to allow interoperability with pieces of software where users experience path dependence?
Update: Mike Madison articulates well the reason why Lexmark's attempts to offer "one use" and "multiple use" cartridges probably is benign. I'll only highlight his caveat that the risk is low "so long as the cartridges are otherwise functionally indistinguishable." That, to me, is the key point of the case. Lexmark makes cartridges for printers. I'm not aware of any reason why consumers would be particularly tied to Lexmark cartridges, but I'm aware of lots of reasons why consumers are tied to Microsoft Word.
Student Sues Term Paper Website (and its Host)
Macellari v. Carroll, no. 4:05-CV-04161-JPG (S.D. Ill. complaint filed Aug. 31, 2005).
Blue Macellari, a student at Duke and Johns Hopkins, has sued a term paper vendor (Rusty Carroll/R2C2, Inc.) operating three websites (doingmyhomework.com, freeforessays.com and freefortermpapers.com) for copyright infringement, a Lanham Act violation, defamation, privacy invasion and unfair trade practices. The lawsuit also names the web host Digitalsmiths.
I'm not sure what the Lanham Act violation could be, and the defamation claim seems a little tough. The copyright infringement claim, however, seems potent. If, in fact, the term paper vendor didn't have permission, it doesn't have a lot of great defenses. I'm less clear about the web host's liability--did Blue send a 512(c)(3) notice? If not, the theory is that they shouldn't be liable, although a number of courts have bypassed that requirement.
Depending on the outcome, this case could create some real issues for Turnitin and similar services. I've never been fully clear that a court was going to bless their use of student papers for commercial benefit, and this lawsuit might expose weaknesses in their legal posture.
Another interesting angle: Blue's lawyers are doing this pro bono.
UPDATE: A copy of the complaint (thanks to John O for pulling it from PACER)
September 01, 2005
Downloading Software onto Home Computer May Be Trespass to Chattels--Sotelo v. DirectRevenue
Sotelo v. DirectRevenue LLC, No. 05 C 2562 (N.D. Ill. Aug. 29, 2005).
It was pretty obvious when the complaint was filed in March that this lawsuit warranted careful scrutiny. This initial ruling reinforces that point. This ruling is interesting and important...but it is also frustrating due to its procedural limitations (as a motion to dismiss) and substantive mistakes. Nevertheless, this case could have some impact on other lawsuits. And should the court's plaintiff-friendly rulings gain more traction, this case could usher in a lawsuit extravaganza against adware companies and perhaps software vendors generally.
This lawsuit arises from users' frustration with unwanted adware. Although there have been a few attempts to bring private causes of action against adware vendors and their advertisers/distributors, none of these efforts have met with much success yet.
Procedurally, the case was initially filed in Illinois state court. However, because the plaintiffs are seeking to form a class, the defendants were able to remove the case from state court to federal court (N.D. Ill.).
The Arbitration Clause
DirectRevenue's EULA contained an arbitration clause, so DirectRevenue moved to dismiss this lawsuit in favor of arbitrating the claims. However, to decide if the claims are arbitrable, the court has to decide if the plaintiffs agreed to the EULA containing the arbitration clause. Thus, the court confronts the well-discussed topic of whether DirectRevenue properly formed a contract with its users.
This is an issue that has perplexed me for some time. Given the legal risks they face, I simply do not understand why adware vendors do not use mandatory non-leaky clickthrough agreements. I further do not understand why adware vendors rely upon third party distributors to form the requisite agreements with users. Instead, to ensure proper formation, adware vendors should display a mandatory bootscreen the first time their software tries to run (i.e., before serving any ads). This bootscreen should give users the choice to accept or reject the terms, and the adware vendor should control the text and the mechanical process of the bootscreen completely. If adware vendors did this, they wouldn't have to worry about (a) sloppy practices by distributors, (b) users saying they didn't know what they were doing, and (c) courts shredding their contract formation process.
In this case, it appears that DirectRevenue was trying to rely upon a browse-wrap style formation process (i.e., the agreement was on a page that users did not need to see to install the software). Although some courts will give effect to browse-wrap terms, the vast weight of precedent is against such formation processes. This court joins the majority line of cases (although, interestingly, without citing any precedent despite dozens of cases on point). The court's opinion is entirely opaque on its thinking, except that it seems to accept that the EULA process wasn't mandatory and the plaintiff didn't see the terms otherwise. (The court also rightly rejects a silly argument that the "?" in the top bar of advertisements (which, if clicked, would lead to the EULA), properly formed the contract.)
Finally, the court correctly distinguishes DirectRevenue's situation from that of ProCD in ProCD v. Zeidenberg because, in ProCD, the existence of terms was disclosed on the software box before the purchase was made. However, the court does not even mention Hill v. Gateway, where point-of-purchase disclosure was adamantly dismissed as immaterial, so it's frustrating that the court wouldn't even address the correct precedent.
As a result, the court does not give effect to the EULA's arbitration clause, and the case stays in federal court. However, the court's reasoning does put the plaintiff in a box for class certification. Because some members of the putative class may have gone through a process where the EULA was properly formed as a contract, these people would be governed by the arbitration clause and not eligible to participate in this lawsuit. As a result, the court does seem to signal that the class size may have shrunk.
Does Downloading Adware Onto a User's Computer Constitute "Trespass to Chattels?"
The plaintiffs allege that the installation and operation of DirectRevenue's adware constitutes a trespass of the user's computer. The defendants moved to dismiss this claim.
The court acknowledges the paucity of Illinois precedent on the doctrine, but it references other jurisdiction's cases--specifically CompuServe v. Cyber Promotions, AOL v. IMS, Hotmail v. Van$ Money Pie, AOL v. LCGM and AOL v. Prime Data.
Reading this list of cases is like a time warp--none of them are later than 1998! Where's the Hamidi case? (The court does cite the case later, but for a subsidiary proposition). Bidder's Edge? Register.com? Ticketmaster? It's pretty frustrating that the court overlooked 7 years of precedent development.
Working with a 7 year old conception of trespass to chattels, the court rejects the defense's argument that the trespass to chattels doctrine only protects service providers. Instead, the court says, "the cause of action may be asserted by an individual computer user who alleges unauthorized electronic contact with his computer system that causes harm, such as Spyware."
The court explains a little more about what constitutes "causing harm" by noting that the plaintiffs allege that spyware:
* causes significant and cumulative injury to computers
* interferes with the computer usage
* slows down the computer
* uses bandwidth
* increases "Internet use charges"
* depletes a computer's memory
* uses pixels/screen space on monitors [this one is pretty silly]
* requires more energy because slowed computers must be on longer [also pretty silly]
* reduces user productivity
* increases user frustration
Finally, the court gets to its bottom line: "Many companies and computer users consider pop-up advertisements and Spyware an Internet scourge." This does not bode well for the defense.
But many people think spam is a scourge too, yet in Intel v. Hamidi, all of the enumerated factors were true (although maybe not alleged by the plaintiffs) and Intel still lost its claim. It would have been nice for the court to discuss the Intel v. Hamidi precedent. I don't understand how it was overlooked.
As if the court's standards for trespass weren't troubling enough, the court then raises the specter of a new doctrine: contributory trespass to chattels. The advertiser and agency defendants move to dismiss on the basis that they are not liable for DirectRevenue's action. The court's responded by applying the motion-to-dismiss standard liberally. The court says:
"Plaintiff's allegations that aQauntive works 'in cooperation with' DirectRevenue to download advertisements, that AccuQuote utilitizes Spyware to send unwanted advertisements, and that both defendants have access through DirectRevenue to millions of computers for their targeted advertisements are sufficient to" clear the motion-to-dismiss standard.
These defendants also argue they lacked the requisite intent to commit trespass. The court says that they had intent to advertise, which is good enough to survive the motion to dismiss.
These defendants also argue that they caused no recognizable damage. The court finally acknowledges Intel v. Hamidi here, but says that the plaintiff alleged more damages than other precedent. The court specifically references the allegations of "wasted time, computer security breaches, lost productivity, and additional burdens on the computer's memory and display capabilities," although of course the wasted time and lost productivity arguments were specifically rejected in the Hamidi case, and the burdens on the display capabilities is just plain silly.
Negligence for Distributor's Actions
There are other claims and issues addressed in the ruling, but the final point for this post is the negligence claim. The plaintiffs make a general allegation of negligence, and the court says that there were sufficient allegations to avoid a motion to dismiss. DirectRevenue then argues that its distributors, not DirectRevenue, breached any duty.
The court notes the general legal principle that a hiring party is not liable for its independent contractors' negligence. However, the court refuses to dismiss on this ground, citing the plaintiff's allegation that "the Spyware distributors are controlled by DirectRevenue." However, if the plaintiffs cannot produce more facts to show that this control is beyond the typical control exercised by a hiring party in an independent contractor relationship, it seems like the negligence claim has to fail.
The defendants did win a few minor victories. DirectRevenue's holding company was dismissed from the lawsuit for want of jurisdiction, and the claim for unjust enrichment was dismissed. However, the principal claims--including trespass to chattels, unfair/deceptive trade practices and violations of the Illinois Computer Crime Prevention Act--all survived the motion to dismiss. As a result, I think this ruling was a big win for the plaintiffs.
Moreover, the judge signaled in a few places that he was sympathetic to the plaintiff's concerns. While there's plenty of litigation standing between the plaintiffs and a payday, this ruling dramatically increases the odds of the plaintiff's success.
From a precedent standpoint, this case is (as far as I can remember) the first case to say that individual users may have a valid cause of action for common law trespass to chattels claim based on software using their personal computers. While I think this is a logical extension of the trespass to chattels doctrine as articulated in cases like CompuServe v. Cyber Promotions (cited by the court) and eBay v. Bidder's Edge (not cited), the ruling is in tension with the Intel v. Hamidi case (barely cited), which many of us thought effectively wiped out the CompuServe/eBay cases as precedent.
I trust we all can appreciate the floodgates of litigation that may open if undisclosed downloading of software (not just adware) onto a user's computer can support a trespass to chattels claim (if you're having trouble visualizing, just think two words: Flash and Java). We'll have to see if the court puts any better parameters on its thinking at the summary judgment stage.
Suzi's take at ZDNet.
UPDATE: Alex at SunbeltBlog relays some of the plaintiff attorney's comments on the ruling.
Fair use and documentaries
By Mark McKenna
Thanks to Eric for inviting me to post here. It's my first real blogging experience, so I'm hoping it goes smoothly.
Most of the press related to copyright law these days has to do with filesharing. There is good reason for that - filesharing is a big economic concern for major studios, and there have have been a number of high profile cases on the subject (which seem to have had little effect on user norms).
But there are many ways in which copyright impacts consumption of much less glamorous (but likely more important) material. The status of the well-known documentary Eyes on the Prize is a great example.
As most of you probably know, Eyes on the Prize is one of the most famous accounts of the civil rights movement. It first aired on PBS in 1987, and according to Clayborne Carson, a Stanford University history professor and editor of Martin Luther King Jr.'s papers, remarked that "it is the principal film account of the most important American social justice movement of the 20th century." For more information about the film, go here.
Unfortunately, despite the film's importance, it has been unavailable on video or television for the last 10 years. Why? Expired copyright licenses. Apparently the film's creators secured licenses to use a variety of material, such as news footage, photographs, songs and lyrics, including Happy Birthday, which is included in some of the footage. Yes, Happy Birthday is under copyright. Congratulations, you all may be copyright infringers.
Well, at least some of the licenses expired in 1995, and the film's producers could not afford to pay the renewals. Thus, people who want to view the documentary (which in and of itself likely counts as fair use) have to search for old copies, largely in libraries and/or archives.
Lots of other people are really outraged at this story because it represents all that is terrible about copyright law - the way it locks up important pieces of our cultural heritage in the name of incentives to create new works. What it made me wonder is why the film's producers had to license the works they used in their documentary in the first place. The answer? The modern fair use test.
As the law currently stands, the fair use test turns almost entirely on the question effect of the use upon the potential market for or value of the copyrighted work [technically there are 4 factors, but the other factors tend not to do much work, as Barton Beebe seeks to confirm empirically). The problem with that test is that it imports futurity into the equation - the issue is not simply whether the use has an effect on the current for the copyrighted work, but whether it might have some effect on a hypothetical future market for the work. It's also somewhat circular - use of these materials in a documentary is likely to have an effect on the market for licensing works for use in a documentary if and only if the general rule requires documentary film makers to license the works. If there were a different rule, perhaps one that categorically exempted certain kinds of uses like this one, then there would be no market for licensing to documentary film makers and thus no effect on a potential market.
But of course we can say that about any sub-market, with the possible exception of parodies. So the end result is that, without creating categorical exemptions, the fair use test has the potential to swallow up just about all non-parody uses. That is particularly true in the digital age, when the costs of setting up niche markets continues to fall.
This concerns me quite a bit. If I were advising a documentary film maker, I think I would have to conclude that very little of what she did could be deemed fair use. Thus, she would have to pay to use any materials she included, even though the chances of her making any money on the documentary are very small (Farenheit 911 and March of the Penguins notwithstanding). This would seem to be a disincentive to create documentaries, despite their social value, and even though the creators of other works almost certainly didn't create on the hope they would be able to license to documentary film makers.
Guest Blogger Mark McKenna
I'm pleased to introduce Mark McKenna as a guest blogger. Mark is an Assistant Professor of Law at St. Louis University School of Law, where he teaches IP courses and civil procedure. Prior to becoming an academic, Mark was a trademark and copyright litigator at Pattishall, McAuliffe, Newbury, Hilliard & Geraldson in Chicago. Mark has been doing some interesting work on the trademark and right of publicity fronts, so I'm looking forward to his contributions.
The timing of Mark's and Ethan's stints as guest bloggers is directly related to a new addition to the Goldman household. I'm very grateful to all the guest bloggers for their contributions while my attention is stretched particularly thin.