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February 25, 2006
NYU Workshop on Spyware March 16-17
By Eric Goldman
NYU's Information Law Institute and Princeton's Center for Information Technology Policy are putting on "A Workshop on Spyware," March 16-17, 2006 at NYU Law School. This looks like an interesting event that is worth checking out. Unfortunately, I won't be there, but I'm looking forward to reports from the event.
Posted by Eric at 07:29 AM | Adware/Spyware
February 24, 2006
Barrett on Internet Trademark Use
By Eric Goldman
Margreth Barrett, a law professor at UC Hastings, has published Internet Trademark Suits and the Demise of "Trademark Use," 39 U.C. Davis L. Rev. 371 (2006). The article makes a persuasive argument that the trademark use doctrine on the Internet has gone too far.
The abstract:
"The Internet has provided countless new ways for ingenious businesses and individuals to refer to a plaintiff’s mark in a manner that impacts the plaintiff’s business. These new methods may not directly associate the mark with goods or services that the defendant is offering for sale and may be completely hidden from consumers’ view. In evaluating the numerous trademark infringement and dilution suits that these unauthorized references have generated, courts have often failed to focus on the appropriate role of the “trademark use” requirement, which has traditionally limited the scope of the trademark infringement (and more recently, trademark dilution) cause of action. Some courts appear to have completely ignored the trademark use limitation, while others have acknowledged the limitation but construed it in a manner that undercuts or distorts it. This has given rise to a number of splits in the Circuit Courts of Appeals. This Article undertakes to bring some focus and coherence to the trademark use issue in the Internet context. It provides an in-depth examination of the history and purpose of the limitation and proposes a modern, general definition of “trademark use” in light of that history and purpose. It then demonstrates how this definition should apply in several important contexts on the Internet."
You might consider reading this article in conjunction with Dogan/Lemley's Houston article, Uli Widmaier's Hofstra article and Jennifer Rothman's Cardozo article (and, of course, my own!). This wave of articles over the past 18 months represents an uncoordinated but distinct academic reaction to judicial excesses in Internet trademark law.
Posted by Eric at 09:54 AM | Derivative Liability , Domain Names , Search Engines , Trademark | Comments (1)
February 23, 2006
More on Perfect 10 v. Google
Eric will undoubtedly have more to say, but here are my immediate thoughts on this case.
Leave it to the porn industry to make copyright law on the Internet. Perfect 10 alleges that Google (and, in a separate suit, Amazon.com) has directly, vicariously and contributorily infringed Perfect 10's copyrights in 1000's of pictures of models that third parties illegally downloaded and posted to the Internet. Perfect 10 went after Google because one can easily find these images if one types in the name of a model in Google's "image search," and, presumably, because going after Google is easier than chasing thousands of individual infringers around the world.
This decision is on Perfect 10's motion for a preliminary injunction, and is decided on the "likelihood of success" standard, so there is a possibility that the analysis may change as the case proceeds in this court or on appeal.
Getting to the highlights, the Court (District Judge A. Howard Matz) held:
1. Google's practice of framing and "in-line linking" to an image when one conducts an image search does not constitute a "display" of the image within the meaning of the Copyright Act, and therefore does not infringe Perfect 10's exclusive "display" right under the Copyright Act. THe court's rationale is that Google does not "display" the image because Google only links to the image on a third party website and does not serve or store the image. Google's practice of framing and "in-line linking" to an image when one conducts an image search does not constitute a "distribution" of Perfect 10's pictures in violation of Perfect 10's copyrights because no file is transferred by Google from one computer to another when Google links to the image on the third party website.
2. Websites that steal Perfect 10's images and post them on the Internet are direct infringers because they violate the display right, and they also violate the distribution right because the websites transfer the images to searcher's computers.
3. Google's practice of creating and storing "thumbnail" versions of Perfect 10's pictures and displaying the thumbnails in response to an image search query does constitute a "display" of those pictures within the meaning of the Copyright Act. Because Google is liable on this theory, Court did not address whether Google also "distributes" the thumbnails, but the court indicated that even if Google did "distribute" the thumbnails, this automatic "distribution" likely constitutes fair use.
4. Google's fair use defense fails because Google offers and derives commercial benefit from third party websites that carry Google sponsored advertising at the same time hosting infringing content. "Google's thumbnails lead users to sites that directly benefit Google's bottom line." THe court distinguished the Kelly v. Aribasoft case (336 F.3d 811 (9th Cir. 2003)) case on this basis. Also important to the Court's analysis is the fact that Perfect 10 has a licensing deal with a UK distributor to push thumbnail images to cell phones for subscription fees.
5. Google is not contributorily for copyright infringement because Google does not "materially contribute" to the infringement in the way Napster did. Google is not vicariously liable for copyright infringement because Google does not exercise control over the environment in which it operates. ("Google cannot shut down infringing websites or prevent them from continuing to provide infringing content to the world.")
It seems like the court took reasonable and defensible positions here in applying 1970's copyright law to Google's 21st Century Internet practices. Also, Google is not Napster, but once again we see the risks of basing one's business, or part of one's business, on the "fair use" defense.
Posted by John Ottaviani at 10:59 AM | Copyright , Derivative Liability , Search Engines
February 21, 2006
Perfect 10 Wins Injunction Against Google
By Eric Goldman
Perfect 10 v. Google, Inc., CV 04-9484 AMH (C.D. Cal. Feb. 17, 2006)
A major new ruling in the running battle over search engines and copyrights--this time concluding that Google's creation and display of thumbnail images may constitute direct infringement. I'm working under a deadline, so I don't have time to digest the opinion immediately. However, I have three immediate thoughts:
1) I wonder how this opinion can be reconciled with the recent Field v. Google opinion upholding Google's "cache" feature?
2) I assume this ruling will put significant pressure on Google's position regarding Google book search.
3) I assume that Google will appeal this, so we may get an interesting Ninth Circuit ruling.
More to come later...
Posted by Eric at 08:14 PM | Copyright , Derivative Liability , Search Engines
Top Cyberspace IP Cases of 2005
By John Ottaviani (with help from Eric)
Cyberspace continues to present fascinating and novel intellectual property issues. What follows is our attempt at identifying some of the more significant “Cyberspace Intellectual Property” decisions of 2005. Once again, it was quite a year, with the Supreme Court’s decision in the Grokster case heading the list. (The Grokster case is the only one to make our “Top 10” list in each of 2003, 2004 and 2005!) Cyberspace intellectual property law is maturing, as evidenced by the fact that among our top ten cases are one U.S. Supreme Court and five U.S. Circuit Court of Appeals cases. And we are also seeing the courts struggling with the boundaries of trademark law, as they recognize that not every use of someone else’s trademark in Cyberspace provides a basis for an infringement claim.
Here are our “top ten” cases (thirteen, actually), followed by other cases which we felt are significant enough to mention. This list is not meant to be exhaustive, nor are the cases presented in any particular order of importance.
1. Supreme Court Finds Grokster Liable For Inducing Copyright Infringement “On A Gigantic Scale”
• Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., ___ U.S. ___, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005). Leave it to the U.S. Supreme Court to figure out a way to find Grokster liable for inducing copyright infringement “on a gigantic scale” without overturning or affirming the 1984 Sony decision. The Supreme Court’s unanimous holding is pretty succinct: “We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” The Court also limited the Sony decision to situations where a claim of liability is based solely on distributing a product with alternative infringing and non-infringing uses, with knowledge that some users would follow the unlawful course. The concurring opinions analyze the case in terms of Sony, with Justice Ginsberg concluding that ten percent non-infringing use probably would not be enough to avoid liability, while Justice Breyer concludes that ten percent probably would qualify as substantial non-infringing use.
2. Not Seeing Eye-to-Eye – Use of Trademark in Directory That Triggers Pop-Up Ads Is Not Trademark Infringement
• 1-800 Contacts, Inc. v. WhenU. Com, Inc., 414 F.3d 400 (2d Cir.), cert. denied, 126 S.Ct. 749 (2005). The owner of a website and the mark “1-800 Contacts” sued a competitor and WhenU.com, to enjoin them from delivering to computer users competitive “pop-up” Internet advertisements, in violation of federal and state copyright, trademark, and unfair competition laws. As reported in our list of Selected 2003 Cyberspace Intellectual Property Cases, the District Court held that: (1) 1-800 Contacts failed to establish a likelihood of success on its copyright claims, but (2) 1-800 Contacts established a likelihood of success on its trademark infringement claims.
On appeal, the Second Circuit threw out the trademark claims: “We hold that as a matter of law, WhenU does not “use” 1-800’s trademarks within the meaning of the Lanham Act, 15 U.S.C. §1127, when it: (1) includes 1-800’s website address, which is almost identical to 1-800’s trademark, in an unpublished directory of terms that trigger delivery of WhenU’s contextually relevant advertising to [computer users]; or (2) causes separate, branded pop-up ads to appear on a [computer user’s] computer screen either above, below or along the bottom edge of the 1-800 website window.” This brings the Second Circuit law in line with that of other federal courts that have found that WhenU’s use of the trademarks in a database that is not seen by the computer user is not a “trademark use.” See U-Haul International, Inc. v. WhenU.com, Inc., 279 F. Supp. 2d 723 (E.D. Va. 2003); Wells Fargo & Co., Inc. v. WhenU.com, Inc., 293 F. Supp. 2d 734 (E.D. Mich. 2003), (both of which appeared in our list of Selected 2003 Cyberspace Intellectual Property Cases).
Disclosure Note: In the Second Circuit appeal, Eric filed an amicus curiae brief on behalf of the Electronic Frontier Foundation urging reversal of the district court decision.
3. When Will It All End? – Maintaining An Index of Infringing Works, Without More, is Not Distribution of Infringing Works.
• In re Napster, Inc. Copyright Litigation, 377 F. Supp. 2d 796 (N.D. Cal. 2005). After the “old” Napster was shut down for infringing the record companies’ copyrights, the record companies have continued to pursue the entities that invested in Napster before it ceased operations. The record companies have alleged that, by investing in Napster and assuming control of the operation of the Napster file-sharing network, the investors contributorily and vicariously infringed the record companies’ copyrights.
In order to find the investors liable for contributory or vicarious infringement, the record companies first have to prove that there was an act of direct copyright infringement. The record companies have offered three theories of direct infringement as a basis for their secondary claims against the investors: (1) the Napster users who uploaded and made MP-3 files available on the Napster network engaged in the unauthorized distribution of the record companies’ copyrighted works in violation of Section 106(3) of the Copyright Act; (2) the downloading of MP-3 files by Napster users infringed the record companies exclusive rights to reproduce their copyrighted works under Section 106(1) of the Copyright Act; and (3) that Napster itself violated the record companies exclusive distribution rights under Section 106(3) by indexing MP-3 files that its users posted on the Napster network.
In this decision, Judge Patel shot down the third theory. The record companies relied primarily on the Fourth Circuit’s 1997 decision in Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199 (4th Cir. 1997), pointing to language that a copyrighted work is “distributed” within the meaning of Section 106(3) whenever it is “made available” to the public without authorization of the copyright owner. Judge Patel distinguished Hotaling, because the infringing works in this case never resided on the Napster system, while the library in that case had possession of the infringing copies in addition to listing them in its index. Interestingly, she went on to find that, to the extent that the Hotaling decision suggests that a mere offer to distribute a copyrighted work gives rise to liability under Section 106(3), that view is inconsistent with the text and legislative history of the Copyright Act. As a result, maintaining an index of infringing works, without more, is not “distributing” the infringing works. The case proceeds with further discovery on the “uploading” and “downloading” theories, however, so stay tuned next year for updates.
Editorial Note: John has never liked the Hotaling decision so he hopes Judge Patel’s decision stands.
• In re Napster Copyright Litigation, No. M:00-CY-61369-MHP, slip op. (N.D. Cal. May 11, 2005). Prior to deciding the summary judgment motion, Judge Patel denied the record companies’ leave to file a supplemental memorandum in opposition to Napster’s summary judgment motion, arguing that the recently passed Artists’ Rights and Theft Prevention Act of 2005 (“Art Act”) supported their argument that maintaining the index of downloadable files does infringe the distribution right under §106(3) of the Copyright Act. Judge Patel ruled that the record companies could not file the supplemental brief, because she found that the Art Act did not change anything as to how §106(3) should be interpreted.
4. Incredible Hulk Rescues Paragon City! Use Of Comic Book Character Names By Players For Video Game Characters Is Not Trademark Infringement.
• Marvel Enterprises Inc. v. NCSoft Corp., 74 U.S.P.Q. 2d 1303 (C.D. Cal. 2005). NCSoft creates, markets, distributes and hosts “City of Heroes”, a computer video game that allows players to play online and create characters that are virtually identical in name, appearance and characteristics to the comic book characters owned by Marvel. There are a number of procedural motions dealt with in this opinion, but the interesting discussion is the court’s dismissal of the contributory trademark infringement and vicarious trademark infringement claims. Although game users create character names that are the same as Marvel’s registered trademarks, the court concludes that the game users are not using these names in commerce in connection with any “sale or advertising of goods and services.” Thus, there is no “use in commerce” of the marks, so there is no direct trademark infringement on the part of the game users for which NCSoft could be contributorily or vicariously liable, and these claims were dismissed. Marvel was allowed to proceed on its contributory and vicarious copyright infringement claims theories.
• Marvel Enterprises Inc. v. NCSoft Corp., No. CV 04-9253-RGK (C.D. Cal. Aug. 22, 2005). In a later ruling, NCSoft’s claims that Marvel sent bogus takedown notices under the false DMCA notification provisions of 17 U.S.C. §512(f) survived a motion to dismiss. The court also rejected Marvel’s argument that a “service provider” under Section §512(f) has to be “passive” and “innocent.” Among other things, NCSoft alleged that Marvel employees created the infringing knock off characters that Marvel then demanded be removed from NCSoft’s network.
• The case settled in December 2005. The terms of the settlement have not been publicly reported.
5. Making a Mark – Patent Marking Statute Applies To Websites
A pair of patent cases illustrates how the traditional patent concept of “marking” should be applied in Cyberspace. Under 35 U.S.C. §287(a), one who owns a patent is entitled to recover damages from the time when it actually notifies the infringer of its infringement, or when it begins marking its products with a patent notice containing the number of the patent and otherwise complying with §287(a), whichever is earlier. This “marking statute” does not apply to patent claims that are addressed to a method of doing something (as opposed to a tangible article or apparatus), because ordinarily there is nothing to mark. When a patent contains both method and apparatus claims, the patent owner is required to mark “to the extent that there is a tangible item to mark by which notice of the asserted method claims can be given.” Am. Med. Sys., Inc. v. Med. Eng. Corp., 6 F.3d 1523, 1537 (Fed. Cir. 1993).
• Soverain Software LLC v. Amazon.com, Inc., 383 F. Supp. 2d 904 (E.D. Tex. 2005). In this case, Soverain alleged that Amazon.com infringed three patents owned by Soverain covering a network based sales system that included a buyer computer, a selling computer, a payment computer and virtual shopping cart. All of the patents contained both method and apparatus claims. Amazon moved for partial summary judgment to limit its damages, claiming that Amazon did not have notice of the alleged infringement until the suit was filed because Soverain did not comply with the marking statute. The court rejected Soverain’s argument that a website is an intangible object for which marking is not required. The court took notice of numerous websites that contain patent notices, and found in favor of Amazon on this issue.
• IMX, Inc. v. Lending Tree, LLC, No. Civ. 03-1067-SLR, 2005 WL 3465555 (D. Del. Dec. 15, 2005). IMX alleged patent infringement against Lending Tree for infringement of a patent owned by IMX for a method and system for trading loans in real time and placing loan applications up for bid by a plurality of potential lenders. The patent was implemented through software that was accessed through an Internet website, but the website itself was not part of the patent claims. Information on the website talked about “patented technology,” but one reached the patent number and a copy of the patent only after a number of obscure links. Lending Tree moved for partial summary judgment limiting damages, due to IMX’s failure to comply with the patent marking statute. IMX tried to distinguish Soverain by arguing that the website itself was not the patented invention, and did not practice the patent, but was just a means through which the public and the brokers accessed the patented technology. The court, however, found that the website is “intrinsic to the patented system and constitutes a tangible item to mark by which notice of the asserted method can be given,” and granted Lending Tree’s motion.
6. GripeSites I – Use of Expressive Domain Names That Are Unlikely to Cause Confusion Is Not Trademark Infringement
• Faegre & Benson, LLP v. Purdy, 367 F. Supp. 2d 1238 (D. Minn. 2005). Yet another chapter in the long-running saga between the Minnesota law firm and an anti-abortion activist, who is of the opinion that Faegre & Benson is supporting abortion and is attempting to silence his speech criticizing his alleged support of abortion. Purdy typically posted his opinions on a webpage that mimics Faegre’s webpage, generally with a disclaimer such as “Official Faegre Website Parody” or similar language. The source code of his counterfeit pages also contained metatags, including the trademarked term “Faegre & Benson” and some meta-descriptions taken from Faegre’s webpage. Faegre & Benson obtained a preliminary injunction in January 2004. After Mr. Purdy continued his behavior, Faegre & Benson filed a motion for contempt. After reviewing the situation, the court found: (1) there is no trade dress infringement because of the overall dissimilarity of the webpages and the clear disclaimer; (2) that Purdy has the right to use “expressive domain names that are unlikely to cause confusion” (such as faegre-law-love-democraticjudgemichaeldavis-judgeanmontgomery.com), even if they include the term “Faegre” or “Faegre & Benson,” because this constitutes a statement of Purdy’s opinion rather than a bad faith intent to profit from Faegre’s protected mark; and (3) that Purdy could legitimately use Faegre’s trademarks in the metatags for his webpages in order to refer to Faegre and to describe the content of his website (but not in order to divert Internet users from Faegre’s website).
7. Yes, Virginia, Unauthorized Downloading Of Copyrighted Music Does Constitute Copyright Infringement
• BMG Music v. Gonzalez, 430 F.3d 888 (7th Cir. 2005). Ms. Gonzalez downloaded more than 1,370 copyrighted songs during a few weeks and kept them on her computer until she was caught. She tried to argue that, despite the assumption in Grokster and Aimster that people who download music are primary infringers, her activities were protected by the “fair use” defense under the terms of 17 U.S.C. §107. With respect to 30 songs in question in this lawsuit that she downloaded, played and retained on her hard drive (and which she did not previously own), the court rejected her fair use argument. In doing so, the court noted that there are various alternative ways for Ms. Gonzalez to have sampled songs for purchase on an authorized basis, including radio, streaming Internet radio, iTunes, and other Internet licensing intermediaries such as Yahoo!, Real Rhapsody and SNOCAP.
8. Avalanche! Software Developers Contracted Away Their Right To Reverse Engineer Blizzard’s Games
• Davidson & Associates d/b/a Blizzard Entertainment, Inc. v Jung, 422 F.3d 630 (8th Cir. 2005). Blizzard creates and sells software games for personal computers, and operates “battle.net”, a 24-hour online gaming service available exclusively for purchasers of its computer games via the Internet or local area networks. In order to play the game contained on a CD-ROM, a user must first install the game onto a computer and agree to the terms of an end-user license agreement and terms of use, both of which prohibit reverse engineering, by clicking on an “I agree” button during the installation process. First time users of battle.net are also shown terms of use which, among other things, prohibit reverse engineering. The outside of the package for the game contains a statement that use of the game is subject to the end user license agreement and that use of battle.net is subject to the terms of use. The defendants are lead developers for a volunteer project that developed a service that emulates the battle.net service and permits users to play on line without use of battle.net. The developers attempted to mirror all of the user visible features of battle.net. In order to make its service compatible with battle.net and Blizzard’s game software, defendants used reversed engineering to learn Blizzard’s protocol language and to make sure the new service worked with Blizzard games.
After the parties settled a number of claims, the district court granted summary judgment for Blizzard and determined that: (1) Blizzard’s software end-user license and terms of usage agreements were enforceable contracts; (2) the defendants waived any “fair use” defense; (3) the agreements did not constitute misuse of copyright; and (4) the defendants violated the anti-circumvention and anti-trafficking provisions of the Digital Millennium Copyright Act.
On appeal, the Seventh Circuit rejected the defendants’ argument, relying upon Vault v. Quaid Software Ltd. 847 F. 2d 255 (5th Cir. 1988), that the state breach of contract claims were preempted by federal copyright law, The Seventh Circuit distinguished the Vault decision because the state contract law in Blizzard neither conflicted with the interoperability exception of the DMCA (17 U.S.C. §1201(f)), nor restricts rights given under federal law. Citing Bowers v. Bay State Technologies, Inc., 320 F. 3d 1317 Fed. Cir. 2003), the Seventh Circuit stated that private parties are free to contractually forego the limited ability to reverse engineer a software product under the exemptions of the Copyright Act. By agreeing to the terms of use under the end user license agreements, the court concluded that the defendants expressly relinquished their rights to reverse engineer.
The Seventh Circuit also affirmed that the defendants’ reverse engineering violated the anti-circumvention and anti-trafficking prohibitions of the DMCA, and were not protected by the “interoperability” exception because the circumvention in this case constitutes infringement.
9. GripeSites II – Another Gripe Site’s Prayers Are Answered
• Lamparello v. Falwell, 420 F.3d 309 (4th Cir. 2005). Lamparello registered the domain name www.fallwell.com after hearing Reverend Jerry Falwell give an interview in which he expressed opinions about gay people and homosexuality that Lamparello considered offensive. The site contained in depth criticism of Reverend Falwell’s views. The home page prominently stated “this website is not affiliated with Jerry Falwell or his ministry” and provided a hyperlink to Reverend Falwell’s website. Lamparello never sold goods or services on his website. After receiving cease and desist letters from Reverend Falwell, and losing a UDRP arbitration proceeding over the domain name, Lamparello filed an action seeking a declaratory judgment of non-infringement in order to avoid losing the domain name. The District Court granted summary judgment to Reverend Falwell on his claims of trademark infringement, false designation of origin, federal and state unfair competition and violations of the Anti-cybersquatting Act.
On appeal, the Fourth Circuit reversed. The Fourth Circuit found that Lamparello’s use of Reverend Farwell’s name was not likely to cause confusion as to the source of the website and found that www.fallwell.com did not infringe. Important factors in the court’s decision were: (1) the websites looked nothing alike; (2) Lamparello clearly created his website intending only to provide a forum to criticize Reverend Falwell’s ideas, not to steal customers; (3) Reverend Falwell and Lamparello offer opposing ideas and commentary, not similar goods and services; and (4) anecdotal evidence indicated that those searching for Reverend Falwell’s site and arriving at Lamparello’s site quickly realized that Reverend Falwell was not the source of the content.
In an interesting discussion, the Fourth Circuit expressly refused to adopt “the “initial interest confusion” doctrine and interpreted the use of that doctrine by the Ninth Circuit as applying only in cases involving one business’s use of another’s mark for its own financial gain, not in cases involving gripe sites. The Fourth Circuit also rejected the ACPA claim because Reverend Falwell could not demonstrate that Lamparello “had a bad faith intent to profit from using the www.fallwell.com domain name, citing TMI, Inc. v. Maxwell, 368 F.3d 433 (5th Cir. 2004) and Lucas Nursery and Landscaping, Inc. v. Grosse, 359 F3d 806 (6th Cir. 2004) [both of which appeared in our list of Selected 2004 Cyberspace Intellectual Property Cases].
10. GripeSites III – Bosley Medical Scalped By Ninth Circuit
• Bosley Medical Institute, Inc. v. Kremer, 403 F.3d 672 (9th Cir. 2005). Mr. Kremer was dissatisfied with the hair restoration services provided to him by Bosley Medical Institute. To get even, Mr. Kremer started a website at www.bosleymedical.com, which was uncomplimentary of Bosley. Shortly after registering the domain name, and before posting its content, Mr. Kremer went to Bosley’s office and offered Bosley an opportunity to discuss the issue but did not mention domain names or make any references to the Internet.
The Ninth Circuit held that Kremer’s use of “Bosley Medical” in the domain name was non-commercial and unlikely to cause confusion, and affirmed the dismissal of Bosley’s trademark infringement and dilution claims. “We hold today that the noncommercial use of a trademark as the domain name of a website---the subject of which is consumer commentary about the products and services represented by the mark---does not constitute infringement under the Lanham Act.” The court found that Congress intended that the Lanham Act and the Federal Trademark Dilution Act apply only to marks used “in connection with the sale, offering for sale, distribution, or advertising of any goods or services”. The court found that Kremer’s website contained no commercial links and at no time offered for sale any products or service, nor contained paid advertisements from any other commercial entity. The Ninth Circuit also rejected an argument that one could reach a discussion group site, which in turn contained advertising, by following links from Kremer’s website as being “too attenuated”. The Ninth Circuit also rejected Bosley’s claims that Kremer used the mark in connection with Bosley’s goods and services, because Kremer’s use of Bosley’s mark was in connection with the expression of his opinion about Bosley’s goods and services, not in connection with the sale or advertising of goods and services. The court also reversed the dismissal of the ACPA claims because the ACPA did not contain a commercial use requirement and remanded this claim to district court.
Here are several other cases that did not make the “top 10” but are also of interest:
American Girl, LLC. v. Nameview, Inc., 301 F. Supp. 2d 876 (E.D. Wis. 2005) (domain name registrar who simply accepts the registration of a domain name generally is not liable for trademark infringement or dilution, unfair competition or ACPA violations) (citing several other cases with consistent holdings).
Egilman v. Keller & Heckman, LLP, 401 F. Supp. 2d 105 (D.D.C. 2005) (accessing a computer system through unauthorized use of validly created user name and password does not “circumvent a technological measure” in violation of anti-circumvention provisions of DMCA).
Century 21 Real Estate Corp. v. Lending Tree, Inc., 425 F.3d 211 (3d Cir. 2005). Third Circuit joins Ninth Circuit in expressly adopting “nominative fair use” defense to trademark infringement claims. See New Kids on the Block v. News America Pub. Inc., 971 F.2d 302 (9th Cir. 1992). Third Circuit adopted a two-part test: (1) first, a plaintiff must prove that confusion is likely due to the defendant’s use of plaintiff’s mark; (2) then the burden shifts to the defendant to show that its use of the plaintiff’s mark is nonetheless “fair.” Relevant factors for the second step are: whether use of the plaintiff’s mark is necessary to describe plaintiff’s and defendant’s products and services; whether only so much of plaintiff’s mark was used as is necessary to describe plaintiff’s products and services; and whether defendant’s conduct or language reflect the true and accurate relationship between plaintiff’s and defendant’s products and services.
SMC Promotions, Inc. v. SMC Promotions, 355 F. Supp. 2d 1127 (C.D. Cal. 2005). License agreement that allows a wholesaler’s retail customers to download wholesaler’s copyrighted product images and descriptions onto the retailers’ websites, was not broad enough to cover the retailers’ practice of engaging a third party vendor to download images on the retailers’ behalf as part of the process of creating websites for the retailers.
Posted by Eric at 07:07 AM | Copyright , Domain Names , Patents , Trademark
February 17, 2006
Blog Defamation Lawsuit Lacks Jurisdiction--TrafficPower.com v. Seobook.com
By Eric Goldman
Software Development and Investment of Nevada d/b/a Traffic-Power.com v. Wall d/b/a Seobook.com, No. 2:05-cv-01109-RLH-LRL (D. Nev. motion to dismiss granted Feb. 13, 2006)
I generally avoid blogging about Internet jurisdiction cases. They tend to be fact-specific, and as a result the case law in this area is especially inconsistent (even by Internet law standards). The courts are also hampered by a legacy 1997 case (the seminal Zippo case) that tends to find jurisdiction more often than it should. Because of its deficiencies, many courts have veered away from Zippo, but it still gets cited way too often.
Despite being just a jurisdictional case, this case is interesting because it's one of the few cases specifically about blogs, and as everyone knows, blog law is hot.
In this case, Aaron Wall (a Pennsylvania resident) runs a blog on SEO topics. The blog allows users to comment and to buy Wall's book. The complaint alleges that Wall and his users defamed the plaintiff's services on the blog and posted plaintiff's trade secrets. Obviously, to the extent Wall's users posted defamatory contents, Wall is insulated per 230. However, even in that case, Wall could be on the hook for any defamatory comments he posted, and 230 probably doesn't cover the trade secret claims.
The plaintiff sued in Nevada federal court. Wall moves to dismiss for lack of jurisdiction.
Under the Zippo precedent, the court considers if the combination of the book sales and the user comments makes Wall's website "interactive." Some courts would have deemed the blog an e-commerce site because it sold books, which would have supported jurisdiction in Nevada. This court wisely looks beyond that and notes that there was no evidence Wall ever sold his book in Nevada. Collectively, the book sales and user comments were enough to characterize the blog as "interactive," but not enough to warrant jurisdiction.
After rejecting the effects test, the court dismisses the case for lack of jurisdiction. However, the plaintiff can amend the complaint and try again, so the case isn't over yet.
This is a favorable ruling for bloggers. At minimum, it suggests that even if the blog enables user comments and thereby creates an interactive website under the Zippo test, jurisdiction will not automatically follow.
Posted by Eric at 05:47 AM | Content Regulation
February 16, 2006
Yahoo Not Civilly Liable for User-Disseminated Child Porn--Doe v. Bates
By Eric Goldman
Doe v. Bates, No. 5:05CV91 (E.D. Tex. Jan. 18, 2006)
Introduction
The facts of this case are virtually identical to the Doe v. AOL case from the late 1990s. In this case, Yahoo provided email and web hosting services to a child pornography ring called Candyland. Photos of the plaintiff were illegally distributed via this ring. The plaintiff sued Yahoo for negligence, emotional distress, invasion of privacy and civil conspiracy. Yahoo moved to dismiss the complaint per 47 USC 230. In this ruling, the magistrate grants Yahoo's motion with prejudice, ending the case.
The Plaintiff's Arguments
To get around the obvious 230 problems, the plaintiff tried a number of tricks. First, the plaintiff claimed that it needed discovery to see if there were facts that would allow allegations that survived Yahoo's 12(b)(6) motion. However, the magistrate rejects the request, saying that no set of discoverable facts would enable plaintiff to survive the 12(b)(6). Plus, 230 protects Yahoo not only from liability but also from burdensome litigation, so the court isn't willing to tolerate a fishing expedition.
Next, trying to get some play from some very unfortunate and gratuitous dicta in the 7th Circuit Doe v. GTE, the plaintiff argues that 230(c)(1) acts as a definitions section for the real statutory immunity contained in 230(c)(2). The magistrate rightly rejects this argument for a number of reasons--the most compelling of which is that dozens of courts, including at least 4 federal circuits, have found that 230(c)(1) is an operative immunity provision, while the Doe v. GTE language was just dicta.
The plaintiff then argued that Yahoo was responsible for the content because it formatted/organized the photos and put ads on the pages. However, to survive the motion to dismiss, the plaintiff had to allege that Yahoo contributed to the creation/development of the photos themselves. But the plaintiff alleged that Doe's neighbor took and uploaded the photo. Thus, the court says that it is irrelevant if Yahoo enlarged or modified the photos--the photos still would be provided by another information content provider (the neighbor). As the court says:
"The case law confirms that the immunity analysis turns on who was responsible for the specific harmful material at issue, not on whether the service provider was responsible for the general features and mechanisms of the service or other content (such as advertisements) that might also have appeared on the service."
The plaintiff also tried the tired argument that it just wants to hold Yahoo liable as a distributor, not a publisher. I hope the California Supreme Court buries this argument in Barrett v. Rosenthal so that courts won't have to repeatedly reject this argument in every single case. Ironically, here, the plaintiff's complaint specifically alleges that the photos were published and sought an injunction against publication. Note to plaintiffs: if you want to try the (likely futile) distributor theory to avoid 230, try to avoid using the word publication.
The plaintiff's final argument is that 230 doesn't apply because this lawsuit is an enforcement of a federal criminal law (in this case, the anti-child porn laws broken by the distribution of these photos). Per 230(e)(1), 230(c) does not apply to enforcements of federal criminal law. The magistrate says that this is the first time a plaintiff has argued that its civil claim can fit within that exclusion. I think this is correct; even the very similar Doe v. AOL case dealt with violations of state anti-child porn laws, not federal laws. Nevertheless, the magistrate rejects the argument based on the statute's use of the words "enforcement" and "criminal," both of which suggest that Congress was not trying to preserve civil claims.
Conclusion
This case is a nice win for Yahoo and for 230 defendants. In particular, I believe this is the first case to really grapple with a plaintiff's request to survive a 12(b)(6) motion by begging for a fishing expedition to find adverse facts. If plaintiffs could avoid a 12(b)(6), then they will have plenty of room to extort settlements as the price to avoid expensive discovery. This ruling gives some extra support to end the case at inception.
This case is also important because it shut down the possible hole that would allow civil claims to fit under 230(e)(1)'s exclusion for federal criminal law enforcement. I had assumed no such hole existed based on Doe v. AOL's application of 230 to the child porn-related claims, but it's nice to get confirmation.
Posted by Eric at 10:34 AM | Derivative Liability
February 15, 2006
Your License, Registration and DNA, Please?
Congress Passes, President Signs, Press ignores...
As broader nationwide DNA database becomes law, states rush to fill database with expanded collection laws of their own.
By Ethan Ackerman
The DNA Fingerprint Act of 2005, which I blogged about late last year, was signed by President Bush into law on January 5, 2006. The legislation expands federal DNA collection efforts to include some legal and illegal immigrants, and allows states to contribute DNA collected for any reason listed under state laws to the federal DNA database. The final language did not change since I first wrote about it. See also the summary here. Rather than rehashing the bill, this post will discuss (1) how the media missed this issue, (2) related state and international developments, (3) the large role individual states' policies will have on deciding just how 'invasive' this database is, and (4) some current 'DNA criminology' shortcomings that this bill may make even worse.
The Media Missed the Issue
While the initial legislative steps of the DNA Fingerprinting Act drew some attention, the media silence on its ultimate passage can be summed up in one phrase - 'buried in layers of legislation.' The DNA Fingerprinting Act was rolled into the 2005 Violence Against Women Act and 2005 DOJ Reauthorization Act, a 176 page mega-bill, which had the effect of obscuring its passage. It took several days for the press to even digest the DOJ bill's passage - its other provisions included Democrat-driven 'mail-order bride' protections and the extensively-blogged 'Cyberstalking prevention' provisions (and even that wasn’t covered in the press until a week later).
International & state developments
On the international scene, Ireland and Scotland, among others, are also expanding DNA collections. (Scotland has the unique wrinkle of being the only UK territory where evidence collected at arrest is held and destroyed if a conviction doesn't follow. Other UK regions already collect and retain DNA at the time of arrest; it is this higher threshold that is targeted for removal.) The UK DNA collection expansion is in tandem with its fingerprint collection expansion - UK police are also set to beging 'roadside' collection of fingerprints. Here again, the UK appears to be following US lead, as several jurisdictions, notably Phoenix, AZ, are already collecting 'roadside' fingerprints, initially voluntarily but now under penalty of jail, for traffic violations. The UK appears to be out in front of the US, however, with 'in the field' DNA collection, with even bus and train drivers collecting DNA of suspects - in this case 'spitting passengers.'
At the state level, legislation expanding DNA collection to suspects is racing through legislatures - apparently regardless of the political party in control. The Democratic-controlled New Mexico House recently passed legislation authorizing collection from felony suspects. The Republican-controlled Kansas legislature is apparently ready to do the same. Indiana, where different parties control the two legislative chambers, is also several steps into the legislative process of passing a similar bill. Somewhat more liberal New York is running into difficulties over Republican Governor Pataki's version of expanded collection authority, which would apply to misdemeanors and felonies, but only after conviction. While the federal DNA bill allows states to collect DNA for any purpose, under any "applicable legal authority," states so far seem focused on expanding collection from just convicted felonies to felonies AND misdemeanors, and in many cases also to criminal suspects, for now.
The pressure for a state 'race to the bottom'
A notable aspect of the piecemeal expansions occurring at the state level is the "race to the bottom" between states that appears likely. States with heightened guilt or suspicion standards (such as 'felonies only' or 'after conviction, not just arrest' states) would benefit the least from their correlatively smaller databases. A database's utility increases exponentially, not just linearly, with the number of entries it contains. Pressed to obtain the maximum value from their systems, or even just a usefulness level comparable to states that collect more DNA, each state would feel a pressure to expand its database to match or exceed other states. Institutional, and often moneyed, motivators such as political platform-staking, a drive for increased governmental efficiency and pressures to lower crime also force states to compete in expanding these DNA databases. These concentrated pressures exert much more force than the diffuse pressures of individual desires for genetic privacy - a classic economic imbalance often seen in other policy-making scenarios.
States with laws already on the books
At the time the federal DNA Fingerprinting Act passed, Virginia, Louisiana, California, Florida and Texas already had laws requiring DNA collection at the time of arrest for some or all crimes. Yet almost all of these states also have had notable instances of erroneous forensic 'mis'matches, with wrongly convicted suspects serving time before their eventual release. In Virginia, a prisoner's life sentence was commuted and he received an eventual pardon after being exonerated by conflicting crime lab tests. In Louisiana, a man served 17 years before an eventual pardon. A minor was convicted of rape and served over four years before exoneration in Texas, and a prisoner served a 17-year term before it was overturned in Florida (search for Rudolf Holton on page), for example.
DNA Database Shortcomings
Just as with any other scientific endeavor, DNA screening is plagued by errors and fraud. What makes DNA screening different is that, unlike carbon-dating trees or replicating embryonic stem cells, fraudulent DNA evidence doesn't just cause media scandals but it is used to incarcerate or execute people.
Error
Like any other human endeavor, collecting, handling, and processing DNA evidence is an error-prone process. The same characteristic that makes DNA evidence so incredibly useful - an amazingly small fragment of as little as several human cells can be used to identify its genetic source - makes it incredibly prone to contamination. Stray chromosomes from a lab worker, housecat, other evidence sample or crime scene witnesses can be misattributed to a person, and this error can be multiplied by the chemical reaction that underlies modern DNA forensics. Worse, even if scientists get the chemistry right, their assistants and prosecutors still have to get the paperwork right and not mislabel or switch results or files.
Fraud
In many cases, a desire to cover up the errors discussed above apparently leads to false or misrepresented DNA results. In other cases, a lack of impartiality - the majority of official state and local crime labs are tied directly to the local police force - is the problem. For example, in Indiana (which is also contemplating an expansion of collections), allegations that prosecutors pressured crime lab workers to alter evidence have imploded the trial of an alleged murderer.
Showing just how far one crime lab employee's evidence-concealing can go, Michigan and Chicago have both investigated the alleged concealment of exonerating DNA evidence by a Chicago crime lab worker who subsequently went to work at the Michigan state crime lab. Chicago settled over $9 million in claims from the incident.
Similarly showing how far irregularities with DNA evidence can get, questionable testimony from a Virginia crime lab was a large part of the reason the US Supreme Court stayed execution (though ultimately declined cert.) on Robin Lovitt's Virginia death row petition in 2005. Lovitt's sentence was ultimately commuted as a result of the misrepresentations. Problems, however, are not limited to state labs. The US Army's lab, which operates roughly in parallel with the FBI's national lab as a crime and records lab for the US military, stands accused of evidence fraud as well.
DNA's mythical status as irrefutable evidence compounds these shortcomings
Criminal jurors, charged with deciding facts in a trial, tend to be irreversibly swayed by DNA evidence, rightly or wrongly. Call it the "CSI effect," but DNA evidence creates an irrefutable connection in the minds of most jurors. While this can be a two-edged sword when juries expect forensic evidence prosecutors just don't have, jury allegiance to DNA evidence tends to harm defendants it is introduced against much more than it exonerates them.
DNA's genetic nature means inclusion is 'inclusion by proxy' for all your relatives, and an 'open genetic book' about personal attributes and status.
DNA, like a fingerprint, is a useful personal identifier. Indeed, there is a scientific and mathematical basis for the uniqueness and correlation of an individual to his or her DNA that is largely absent for fingerprints. DNA, however, is much more than just an individualized identifier. Much like a family tree, bank statement, dental impression or medical history file may serve to identify an individual, these records (like DNA) also contain much personal information unrelated to authenticating a person’s identity. DNA may reveal private information such as legitimacy at birth or the presence of a gender-change operation or marrow transplant. Some research suggests there are also reliable genetic markers for such traits as aggression, substance addiction, criminal tendencies and sexual orientation.
*title with apologies to James F. Van Orden, who authored an excellent, and slightly variant-titled article I discovered after writing this post.
Posted by Ethan Ackerman at 10:12 AM | Privacy/Security , Publicity/Privacy Rights
February 14, 2006
Anti-Spyware Coalition Workshop Recap
By Eric Goldman
I attended the Anti-Spyware Coalition Public Workshop last week in Washington DC. This was a well-attended event (my guess is that 300+ people attended), with a good mix of anti-spyware vendors, anti-spyware activists, adware vendors, policy wonks/politicos and reporters. This post recaps some of my notes from the event.
A few consensus themes emerged from the talks:
1) No one really knows if the adware/spyware problem is getting better, worse or staying the same. There is conflicting statistical evidence addressing this problem, but no one is treating that evidence as dispositive. At the conference, there was some anecdotal evidence that the legitimate players are cleaning up their act while the cheats are using more egregious tactics, but there was contrary evidence on all sides. This metrics issue strikes me as critical; if things are improving already, there may be less justification for new spyware-specific regulations.
2) Consumers don't want to futz with different technologies for anti-spam, anti-virus, anti-spyware, anti-pop-up, etc. They just want their computers to work. Therefore, standalone anti-spyware products should be a short-term market opportunity. Over time, vendors necessarily will have to provide integrated services that give consumers what they want (a working computer).
3) A number of commentators expressed the view that, after a couple of decades of effort, we've solved the virus problem and are well underway with solving the spam problem. However, we are in an early stage fighting spyware, so it will take some time before anti-spyware technology turns the corner. Another way of viewing this is that regulators should be patient because industry hasn't had enough time to fix the problem.
4) The representatives of state AG offices seemed to agree that spyware-specific laws are nice but unnecessary. They feel that they have enough power under the catchall restriction on deceptive and unfair trade practices. The federal enforcers took a similar line that spyware-specific laws aren't needed.
Some comments about a few specific talks:
Justin Brooknan, from Spitzer's office, led the Intermix enforcement action. He described some of the background on that action. Justin had arrived at Spitzer's office 18 months earlier with a securities law background. Spitzer then told him to do something about spyware. They decided to focus on "mainstream" adware instead of malicious spyware because: (1) adware gets the most complaints from consumers, (2) they wanted to make the most impact, and (3) adware companies operate in a zone of "plausible deniability." He said the NYAG's office isn't anti-adware, but they think that consumers don't understand the value proposition. Justin thinks that the adware crowd is cleaning up their act since the Intermix action, so the NYAG's next action probably will be against malicious spyware.
FTC Commission Leibowitz spoke at lunch. He recited some basic FTC attitudes about adware/spyware, but then moved onto his hot button. He thinks advertising dollars fuel adware, so he wants the FTC to reduce demand for adware advertising. He then reiterated his proposal for "shaming" adware advertisers by publicly announcing whose ads run on adware (naming names).
Although some news reports treated Leibowitz's idea as a new proposal, Leibowitz has been championing this idea for at least a couple months--I blogged on it back in December. I did not have kind words for this idea in that post. To recap: If advertising via adware is illegal, bust the advertisers. If it's not illegal but the FTC thinks it should be, then lobby Congress to make it illegal. But if it's not illegal and Congress won't make it illegal, then on what grounds can the FTC delineate what it considers "shame-worthy"? Government manipulation of consumer perceptions (in this case, by communicating, under government authority, that advertisers have done something that the FTC thinks is legal but morally wrong) is called PROPAGANDA, and it's a terrible abuse of power. I recognize that Leibowitz's idea is appealingly simple, and it plays well with crowds, but I really hope that he rethinks his advocacy of it.
Following Leibowitz was Walt Mossberg of the WSJ. I don't normally read his column, so I wasn't well-prepared for his shtick. As a result, I was shocked at how error-riddled, uninformed and internally inconsistent his talk was.
Mossberg's basic point is that he owns his hard drive and no one should put stuff on it without robust notice and his consent. This point is fine so far as it goes, but converting this theoretical view into practical suggestions got Mossberg into a jam. For example, he argued that no one should place tracking cookies on his hard drive without permission, but then he struggled to explain why he didn't mind the nonconsensual placement of other cookies.
He also argued that he doesn't want his anti-virus vendor to notify him every time when there are new updates; instead, they should just install it without bothering him. I agree with him, but I and many other audience members immediately noticed an obvious inconsistency with his basic "my hard drive is my property" attitude. When asked about this in the Q&A, he mumbled something about users giving advance consent when installing the anti-virus software, but I'm not sure many of us were satisfied with his answer.
So, Mossberg appears to subscribe to the more-info-is-better view (I had thought behavioral economists had destroyed this thinking by now, but maybe some people haven't heard). In Mossberg's world, consumers get lots of notices about their computers (like, every time someone tries to place a tracking cookie) so they can make choices. This sounds like a very noisy world to me. Recognizing that this world may be too noisy, Mossberg doesn't want notifications that he doesn't need (like from his anti-virus vendor). I'm not exactly clear how Mossberg plans to distinguish good from bad notices on an ex ante basis.
(I could point out more examples of Mossberg's inconsistencies and ill-informed opinions, but I think I've given his talk more airtime than it deserves).
After lunch, I participated in the "industry self-regulation" panel. Our moderator Tori Case asked us: what's the biggest problem facing the industry?
Fran Maier of TRUSTe said the biggest problem is loss of consumer trust. Bill Day of WhenU said the biggest problem was rogue installations. I said that the biggest problem was the "crisis of contracts"--the disclosures and consent that vendors need to form a legally binding contract may not be enough to believe that consumers are making good private ordering decisions. Eric Howes of Sunbelt Software said the biggest problem is that the responsible players aren't accepting their responsibility. Jules P of AOL said it was hard to set appropriate defaults for consumers.
The next panel discussed legislative developments, particularly in Congress. It appears that the Senate has a low likelihood of passing anti-spyware legislation this session; there are a limited number of legislative days left, and the bill would have to pass unanimously to get through.
The Senate logjam appears to be attributable to 2 main factors. First, the two competing bills (Burns v. Allen) take very different approaches to the problem, and those approaches haven't been reconciled. Second, there appears to be some contentiousness over an immunity for anti-spyware technology that removes identified spyware. Personally, I would strongly favor an immunity for categorizing software as "spyware" or "adware" or whatever--the vendors' demand letters over these classifications strike me as silly but problematic. But according to an industry lobbyist, there have been only 4 lawsuits over these classifications, so from one perspective, this hasn't emerged as a big problem yet.
However, giving technology vendors the absolute liability-free right to blast software off someone's desktop may be too much, even for a defense-side guy like me. Remember in 2001 when the RIAA wanted the right to hack downloaders' computers and not be liable for any damages? Bad, bad idea.
In the final panel, US Attorney Mitch Dembin (who prosecuted some users of Loverspy) said that he felt the laws were pretty good ("we don't need new statutes--we have enough!"). Nevertheless, he proposed a couple of minor tweaks to the CFAA. He'd like to see 18 1030(a)(2) a felony instead of a misdemeanor, and he would like 1030(a)(5) to apply if someone damages 50 computers. I'm not sure either change is all that necessary, but these suggestions might warrant further consideration.
At a lot of these conferences, industry participants just get up and repeat the corporate line they've outlined many times before. Personally, I find those talks really boring. While there were a few rehash-y talks, for the most part I thought most of the speakers had something new and valuable to add to the dialogue. Thanks to Ari Schwartz and CDT for organizing an interesting conference.
Posted by Eric at 09:50 AM | Adware/Spyware
February 13, 2006
10th Circuit Recognizes Initial Interest Confusion Doctrine--Australian Gold v. Hatfield
By Eric Goldman
Australian Gold, Inc. v. Hatfield, 2005 WL 3739862 (10th Cir. Feb. 7, 2006)
Following on a regressive initial interest confusion/metatags case from January, last week the 10th Circuit found initial interest confusion based on metatag usage and keyword purchases. I believe this is the first initial interest confusion case from the 10th Circuit, and the 10th Circuit now joins the ranks of many other circuits recognizing the doctrine. Unfortunately, the 10th Circuit is moving in the wrong direction given that several circuits carved back the initial interest confusion doctrine in 2005 (including the 4th Circuit and the 6th Circuit). Could the initial interest confusion doctrine strike back in 2006?
This particular case is a textbook example of how bad facts make bad laws. The product at issue is "indoor tanning lotion"--I don't know anything about this product, but I infer it's a skin dye to give the impression of a natural tan. The manufacturer tries to control its channel from unwanted direct-to-consumer Internet distribution. Plaintiffs distribute the product to distributors, who are authorized to redistribute only to tanning or beauty salons. The plaintiffs claim that this distribution channel is necessary because applying the product properly requires training, plus face-to-face distribution to end consumers creates upsell opportunities. (I'm always skeptical when channel control is justified as being in the consumer's benefit, but let's assume that is true for now).
The defendants obtained the product using false pretenses; they told intermediate distributors that they operated a tanning salon and they hid their true identity. The defendants then resold the products directly to consumers via websites that also sold competitive products. The defendants' initial acquisition from intermediate distributors, as well as the Internet direct-to-consumer resale, violated the intermediate distributors' agreements with the manufacturer.
To procure Internet traffic for their websites, the defendants put the plaintiffs' trademarks in metatags and bought the trademarks as Overture keywords. This behavior continued even during periods when the defendants were not actually selling the plaintiffs' products via the websites.
Unquestionably, the defendants engaged in bad behavior, such as lying to get the product and causing the intermediate distributors to breach their agreements. The defendants also don't look so good when they failed to produce documents responsive to a discovery request, which the plaintiffs discovered by dumpster diving the defendants' trash. But did the defendants commit trademark infringement by reselling the products over the Internet?
There are two separate trademark issues here: (1) the resale of an illegitimately-acquired but legitimate and authorized product, and (2) the marketing of a website using metatags and keywords when the product isn't sold there (or even when it is). Unfortunately the court bypasses all of the subtleties of both issues by relying on the initial interest confusion doctrine. The court says that the defendants committed initial interest confusion by using the manufacturer’s trademarks in metatags and keywords to drive consumers to a website where they could buy competitors’ products. The court also rejects that a disclaimer cures initial interest confusion.
Finally, the court rejects the defendants' first sale defense. The court says that the first sale doctrine does not apply when resellers convey the false impression that they are authorized, and the court says that the metatag usage and keyword purchases do just that.
Ultimately, the court upholds the jury finding in favor of plaintiffs and an aggregate damages award of $5M against the group of defendants (some of these damages are attributable to a tortious interference claim, not just the trademark infringement claim).
Consistent with a bad facts/bad law case, there are several structural problems with this opinion, of which I'll only touch on two. First, the court’s reliance on the initial interest confusion doctrine is lazy. Let’s put aside the question of whether there was trademark use in commerce when the trademarks were put in the metatags or used as keywords to trigger ads (a question the court simply ignores). To analyze whether consumers experienced (or could have experienced) initial interest confusion, we would need lots of facts—did search engines even index the metatags? What content did searchers see in search results triggered by metatags that were actually indexed? In the case of the keyword advertising, what did the ad copy say? Should there be a different standard when the defendants were actually selling the manufacturer’s goods from the website? The court does not consider any of these issues.
The first sale analysis is also problematic. Here, the reseller sold genuine unmodified goods. This wasn’t a gray-market goods case where the goods were designed for a different audience. So there is no obvious basis to find consumer confusion—the branding on the product accurately communicated the product’s source. The manufacturer may not like channel leakage, but the first sale doctrine applies despite the leakage. See Sebastian International, Inc. v. Longs Drug Stores Corp., 53 F.3d 1073 (9th Cir. 1995). The court acknowledges the Sebastian case but says Sebastian only applies when the reseller purchased the product legitimately. However, the Sebastian facts are inconsistent with this statement—according to that case’s facts, the reseller “presumably purchases Sebastian products from a salon or distributor who sells the products to [the reseller] in violation of its agreement with Sebastian.”
The Australian Gold court also says that resellers can't imply an authorization (the implied endorsement argument), which is consistent with the Sebastian case. However, the court treats the metatag usage and keyword purchases as per se evidence that consumers would assume an implied authorization. I would like someone to explain how either technique creates an impression from consumers that there is an implied authorization; this court doesn't (this is the same problem that the Seventh Circuit created in its infamous sua sponte amendment to Promatek).
As a result of the 10th Circuit's corner-cutting, I think the 10th Circuit will need to revisit its holding in future cases to clean up its doctrinal errors—much like other circuits that lazily adopted the initial interest confusion doctrine to resolve the dispute at hand (the 9th and 7th circuits come most immediately to mind) have had multiple opportunities to revisit/reconsider their errors.
Posted by Eric at 05:15 PM | Trademark | Comments (1)
February 08, 2006
Craigslist Sued for Fair Housing Act Violation--Chicago Lawyers Committee v. Craigslist
By Eric Goldman
Chicago Lawyers' Committee for Civil Rights Under Law, Inc. v. Craigslist, Inc., Case No. 06C-0657 (N.D. Ill. complaint filed Feb. 3, 2006)
Craigslist, the free online classified site, has been sued by a group of lawyers for violating the Fair Housing Act based on user-submitted classified ads that indicate discriminatory housing preferences. If this sounds familiar, it's because Roommate.com was sued under the exact same law for exactly the same behavior and won an easy victory under 47 USC 230. The Roommate.com case is on appeal, so perhaps the appellate court will see things differently. Otherwise, I don't understand the thinking of plaintiffs--particularly a group of lawyers--who bring lawsuits like this in the face of a clear federal exculpatory statute and directly-on-point adverse precedent.
Posted by Eric at 05:12 PM | Derivative Liability | Comments (6)
BitTorrent to Enforce BITTORRENT Trademark
Mark Schultz
BitTorrent makes the news once again, this time as a trademark enforcer. ZDNet reports that the company formed by BitTorrent creator Bram Cohen, BitTorrent, Inc., will begin asserting trademark rights in BITTORRENT against software developers who make unauthorized use of the mark in their branding and marketing. Those who want to use the mark will need to gain approval, pay a nominal fee, and sign a license agreement.
Some see BitTorrent's actions as ironic. The Register subtitles its story on the news "MPAA stifles laugh" and leads with "BitTorrent - which usually finds itself reading lawyers' letters rather than writing them - is going to start taking legal action rather than just being its subject." It is indeed tempting to see this as yet another amusing attempt to build a mainstream business on the notoriety of filesharing, as Bertelsmann has done by turning Napster into a paragon of copyright compliance. Nevertheless, as I have noted before here and here, Bram Cohen and BitTorrent have always been a bit different from the Groksters and Napsters of the world. Cohen has always maintained a fairly convincing and consistent line that BitTorrent was intended and should be used for non-infringing uses only.
What is the story with this latest news regarding trademark enforcement? Most likely, this is an attempt to help bolster the legitimacy of the powerful BitTorrent brand. BitTorrent is well known, but also notorious. BitTorrent, Inc., is seeking to become a legitimate, commercial distributor of movies and other content, having raised $8.75 million in VC money to "to improve its infrastructure and make it more appealing to Hollywood." As BitTorrent's COO Ashwin Navin says, “The piracy business is not something anyone can make money on. We want to distribute paid and ad-supported content, using this technology.”
If BitTorrent wants to be attractive to Hollywood, it needs to makes its name something other than a synonym for piracy. Can a cool, cutting edge brand with outlaw mystique successfully transform itself into a Hollywood-friendly service? It will be interesting to see whether BitTorrent can pull off such a re-branding.
BitTorrent's official reason for policing its trademark is to prevent adware and spyware distributors from exploiting its popularity. As I said, I suspect legitimacy is a greater motivation than fear of adware, but quality control likely does play a role in this policy. In fact, trademark enforcement is nothing new in the open source community, as Linus Torvalds also polices the use of LINUX. The Linux Mark Institute licenses use of the LINUX mark. The terms are not onerous, but they certainly allow Torvalds to control the Linux "brand."
The use of trademarks in the open source community is quite fascinating. It had not occurred to me before (but I'm sure that it has to many others), but I see clearly now that the control of a trademark may be at least as important as licensing in coordinating development and maintaining the quality of an open source program. Any developer can take Linux or BitTorrent code and adapt it to their purposes. But if they are prevented from using the original name, then they are less likely to cause confusion, perceived interoperability problems, or hurt the reputation of the program.
I wonder, however, whether BitTorrent is a bit late to the game in enforcing its rights. At this point, "BitTorrent" may have become generic for filesharing programs that employ the type of distributed technology originated by Cohen.
Posted by Mark Schultz at 01:38 PM | Trademark | Comments (1)
February 07, 2006
Operation Site Down Fallout--19 RISCISO Participants Indicted for Warez Trading
By Eric Goldman
I previously blogged on Operation Site Down, one of the largest warez busts ever. In "Operation Jolly Roger," a component of the larger Operation Site Down, a cooperating witness gave the FBI access to the RISCISO warez trading group. RISCISO was a major warez group that allegedly moved 19 terabytes of infringing software, movies and games.
On February 1, the DOJ announced indictments of 19 RISCOISO participants. The profile of these 19 individuals is very typical for warez traders: they are older (the youngest indicted was 24 and the oldest 57; not the stereotyped teenage boys), mostly male, and mostly well-educated professionals (including a IT director for a law firm). Two defendants live outside the US, and the DOJ has already moved to get the purported leader, Sean Patrick O'Toole, extradited from Australia.
For better or worse, we know how most (or all) of these indictments will turn out--a plea agreement and a felony conviction. And, for some, jail time.
See my SSRN page for my academic articles about warez trading.
Posted by Eric at 05:50 PM | Copyright
February 06, 2006
Checking Your Spamming Burdens at the Dormant Commerce Clause/Juisdiction Doors?
An update on the disjointed state of state spam law cases
By Ethan Ackerman
Despite the passage of the federal CAN-SPAM Act in 2003, state spam laws continue to be enforced by states, and it appears private litigation under them continues unabated as well. State attorneys in Virginia and Washington, Maryland law students and Microsoft are just a few examples of recent plaintiffs using state spam laws. In covering these suits, mainstream press reporting seems to, for the most part, correctly explain that state anti-spam laws aren't entirely preempted by the federal CAN SPAM act. So with six (or in some cases, seven) years on the books and multiple court cases enforcing them, why are bloggers still asking, news outlets reporting, courts still ruling both ways on, and lawyers still not answering, the following questions: How and when do state anti-spam (and related state 'internet protection') laws violate the 'Dormant' Commerce Clause of the US Constitution, and when do state courts have jurisdiction over out of state spammers?
The Appeals March On...and off, and left, and right.
Recently, the US Supreme Court passed up its second (but certainly not last) opportunity to clarify the extent to which state laws may regulate an admittedly interstate problem - spam. State appellate courts (which generally must take appeals at the intermediate level) can't just 'decline certiorari,' and so they are turning out more and more opinions on the issue. But more doesn't look to be the same as 'clearer.' Maryland, for instance, has modeled its state spam laws after Washington state's laws, and its intermediate appellate court recently released an opinion vigorously supporting the reach and constitutionality of the state's law. This opinion, MaryCLE v First Choice Internet, stands in marked contrast to Beyond Systems v. Realtime Gaming, where Maryland's highest court, the Court of Appeals, came to the opposite result on very similar facts six months earlier. If appeals courts in the same state aren't going the same way, can we expect any different results nationwide?
Back in Washington state, the grandfather of dormant commerce clause cases, Washington v. Heckel, generated yet another opinion - this time by an intermediate court of appeals - further addressing the Dormant Commerce Clause and standards of proof under the Washington statute. Essentially fleshing out the conclusions the Washington state Supreme Court had earlier reached in the case, the intermediate court reaffirmed both the Dormant Commerce Clause soundness and the appropriateness of Washington court jurisdiction in the case.
These same two issues (Jurisdiction and the Dormant Commerce Clause) were the main entanglements in Maryland's MaryCLE and Beyond Systems, and while MaryCLE found that jurisdiction was OK and the statute survived the Commerce Clause, Maryland's highest court found it had no jurisdiction over the out-of-state defendant, and so did not even address the commerce clause issue. What make the Maryland cases significant are their different conclusions on what are very similar fact situations. In both cases, the defendant allegedly directed another company to do the actual emailing, but was sued as the person who directed or controlled the emailing. While admitting to ordering the sending of emails, and providing the lists of email addresses, the MaryCLE defendant company alleged it had no way of knowing they would go to Maryland residents. The MaryCLE court found this no barrier, and held that directing the sending of email to many commercial email addresses is itself sufficient to establish jurisdiction in Maryland, especially when the state statute imputed knowledge if state location is available from email domain registrars. Relying heavily on three similar cases (each helpfully explained on pages 20-22), the Maryland court found jurisdiction to be no problem either, even though there was a question as to whether any activity even took place in Maryland. In an effort to be comprehensive, the Court rejected four contrary (but not that different) opinions in footnote 21.
The Beyond Solutions court (Maryland's highest) was not so quick to find a connection between the defendant and the person who sent the email because, unlike MaryCLE, the defendant argued there was none. While the emails in question allegedly linked to a website controlled by the defendant, and the URLs included an 'affiliate ID' that allegedly corresponded to the actual sender - who stood to receive referral fees from the defendant - the defendant alleged it was not the sender and had no control over the emails sent. This strenuous denial, and the fact that the defendant had no other connections to Maryland sufficient to establish general jurisdiction, led the Maryland Court of Appeals to dismiss the case for lack of jurisdiction. A three-person minority of that court dissented, recognizing that the sublicensing agreements and shell-companies the defendant operated under, and the affiliate programs alleged, were similar to the types of liability-hiding and obfuscating spammers often engaged in. The dissenters would have at least allowed discovery sufficient to establish whether the defendant did have a relation to, or control over, the actual sender.
What's worth watching next?
As the cases under these laws continue to be decided, clarity will hopefully develop. Where can we look for the next step in the mix? Washington and Utah may be good starts. A Washington federal court is currently deciding one of several suits filed by Washingtonian James Gordon under that state's spam laws, and several of his cases have survived defendants' motions to dismiss. Federal court opinions on state spam law constitutionality are still relatively rare, and may be somewhat less biased toward their own state law, making this an important area to watch.
While not strictly a spam law, Utah's Child Protection Registry Act creates a heavily criticized, age-restricted 'do-not-email-list.' Several free-speach groups have organized to challenge the law, which has also drawn amicus support from the EFF and marketing groups. This well-organized direct challenge has no esily-vilified defendant spammer and may lead to clearer standards because of this. Possibly most importantly, this case may clarify some of the strong questions over the constitutionality over 'check-before-you-send'-style email laws.
Posted by Ethan Ackerman at 06:59 PM | Derivative Liability , Spam
February 03, 2006
Metatags as Per Se Trademark Infringement--Tdata v. Aircraft Technical Publishers
By Eric Goldman
Good grief. Lawsuits over metatag usage are so 1999. Yet, we continue to get a steady stream of cases that treat inclusion of a competitor's trademark in a metatag as a per se trademark infringement. I've explained the many reasons why this is simply wrong in my Deregulating Relevancy article. I'll spare you the rants here.
The latest metatag-freakout case is Tdata Inc. v. Aircraft Technical Publishers, 2006 WL 181991 (S.D. Ohio Jan. 23, 2006). Parties are competitors (also embroiled in patent litigation). Tdata put the terms "ATP," "ATP Navigator," and "ATP Maintenance Director" into the metatags and title tags. ATP sues.
Most of us would say "big deal," especially after the recent 6th Circuit Gibson Guitar case appeared to scale back the initial interest confusion doctrine in that circuit. Instead, dredging up antiquated arguments from Brookfield and McCarthy, the court happily concludes that "use of the company's mark in metatags constitutes infringing use of the mark to pull consumers to Tdata's website and the products it features, even if the consumers later realize the confusion."
The court then says that metatag usage (1) supports a finding of bad intent ("the hidden-from-public-eye use of the mark lends itself to an inference disfavoring Tdata"), (2) is inconsistent with fair use ("Tdata's use of ATP's mark in metatags is...in a bad faith, bait-and-switch, create-initial-confusion sense"), and (3) is evidence of improper trading on goodwill ("use of "ATP" as a metatag suggests that Tdata's actions were, in the words of the Sixth Circuit, "nefarious").
As a result, based solely on the metatag usage, the trademark owner gets summary judgment on the trademark claims. (Admittedly, there may have been some spillover effects from the patent litigation, but I'm just looking at the facts cited by the court). Yes, this is a 2006 case. So, if anyone tries to claim that metatag usage is irrelevant for trademark purposes (which, from a policy standpoint, would be a good argument!), here's a hot-off-the-presses case showing that some courts never got the memo.
Posted by Eric at 07:12 AM | Trademark | Comments (3)
February 02, 2006
Congress, Search Engines and China
By Eric Goldman
OPEN LETTER TO THE MEMBERS OF THE CONGRESSIONAL HUMAN RIGHTS CAUCUS
Dear Caucus members,
Like you, I do not like the fact that search engines are helping China effectuate its repressive policies. However, I am confused why you are targeting the search engines. If you really think this is a big deal, shouldn't you be TAKING IT UP WITH CHINA?
Here's the way I see it. You, as members of Congress, are among the most powerful people in the world. You have a wide variety of very powerful tools in your toolkit. If you don't like a country's policies, you can:
* send envoys to the country and ask them to change;
* negotiate treaties where the country agrees to change; and
* even impose economic or other sanctions as punishment for failing to change.
Given those powers, you are uniquely positioned to get China to change if you think it needs to do so.
Admittedly, effectuating those changes in China is hard. First, there's always an uncomfortable subtext when we go around telling countries that they should adopt policies more like ours. But ignoring that (as we should do when it comes to human rights issues), there's a second and more practical problem. China is a major economic, political and military force that isn't going to do what we want just because we're the USA. I don't blame you for not wanting to tangle with them.
However, instead of pushing China yourself, it appears that you want the search engines to do your dirty work. But the search engines are a lot less powerful than you are, and they have fewer tools in their toolkit than you do. Do you really think search engines can affirmatively get China to unilaterally change its policies? Or that a voluntary boycott by search engines will matter in the least to China? The way I see it, you expect the search engines to undertake a doomed effort and then you're chastising them for wisely declining that challenge.
Don't get me wrong--I'm very unhappy when any company helps a repressive regime implement its censorship policies. But I'm even unhappier when my elected officials avoid doing the hard work necessary to make real change and, instead, hold a grandstanding publicity stunt as their way of making faux progress.
Signed,
An Unimpressed Constituent
Posted by Eric at 09:42 AM | Content Regulation , Search Engines
February 01, 2006
Orphan Works Report Released
By Eric Goldman
The Copyright Office released its report on orphan works. It concludes:
"* The orphan works problem is real.
* The orphan works problem is elusive to quantify and describe comprehensively.
* Some orphan works situations may be addressed by existing copyright law, but many are not.
* Legislation is necessary to provide a meaningful solution to the orphan works problem as we know it today."
The Copyright Office's resulting proposal is interesting. If the secondary user can't find the owner after a reasonably diligent search and provides attribution, then the damages for infringement would be limited to "reasonable compensation" (and if the secondary use is non-commercial, then no damages if the user stops quickly), and no injunction could block the continued exploitation of derivative works. If the secondary user identifies the owner, then this provision wouldn't apply even if the owner is unresponsive. I've attached the proposed amendment language below.
My initial reaction is that there is a lot to commend this proposal. It addresses one of the big problems of copyright law--the across-the-board strict liability standard--by providing a more robust defense for those trying to do the right thing. (The current defense of "innocent infringement" offers little comfort to secondary users--there's still a lot of money on the table in an infringement claim).
The proposal also helps protect the investment that secondary users make into derivative works from being subject to an injunction-driven hold-up game. In a sense, this proposal contemplates a court-determined licensing fee where the parties couldn't identify themselves to negotiate a fee directly.
However, the proposal doesn't go far enough in theory or practice. In theory, it still leaves secondary users on the hook for infringement and some damages even if they did everything they could to find the owner. Even under this relaxed damages standards, secondary users still can't accurately estimate the amount they might owe for their use; this uncertainty still inhibits investments.
In practice, the squishy standards of reasonable diligence and reasonable compensation leave plenty of room for judges to smack down secondary users. How much diligence will be enough? What will be reasonable compensation? The report contemplates that there will be many situations where reasonable compensation will be zero. However, based on the erratic applications of copyright law in the courts, I'm confident some copyright-maximalist judges will never see an infringement claim that doesn't warrant some compensation. And the "reasonable compensation" standard still leaves plenty of upside for judges to calculate large damages if they choose.
Despite these theoretical and practical gripes, I think this proposal would be far superior to our current standards. On that basis, I'd favor its implementation even if the theoretical and practical limits aren't corrected.
The proposed amendment:
SECTION 514: LIMITATIONS ON REMEDIES: ORPHAN WORKS
(a) Notwithstanding sections 502 through 505, where the infringer:
(1) prior to the commencement of the infringement, performed a good faith, reasonably diligent search to locate the owner of the infringed copyright and the infringer did not locate that owner, and
(2) throughout the course of the infringement, provided attribution to the author and copyright owner of the work, if possible and as appropriate under the circumstances, the remedies for the infringement shall be limited as set forth in subsection (b).
(b) LIMITATIONS ON REMEDIES
(1) MONETARY RELIEF
(A) no award for monetary damages (including actual damages, statutory damages, costs or attorney’s fees) shall be made other than an order requiring the infringer to pay reasonable compensation for the use of the infringed work; provided, however, that where the infringement is performed without any purpose of direct or indirect
commercial advantage, such as through the sale of copies or phonorecords of the infringed work, and the infringer ceases the infringement expeditiously after receiving notice of the claim for infringement, no award of monetary relief shall be made.
(2) INJUNCTIVE RELIEF
(A) in the case where the infringer has prepared or commenced preparation of a derivative work that recasts, transforms or adapts the infringed work with a significant amount of the infringer’s expression, any injunctive or equitable relief granted by the
court shall not restrain the infringer’s continued preparation and use of the derivative work, provided that the infringer makes payment of reasonable compensation to the copyright owner for such preparation and ongoing use and provides attribution to the author and copyright owner in a manner determined by the court as reasonable under the circumstances; and
(B) in all other cases, the court may impose injunctive relief to prevent or restrain the infringement in its entirety, but the relief shall to the extent practicable account for any harm that the relief would cause the infringer due to the infringer’s reliance on this section in making the infringing use.
(c) Nothing in this section shall affect rights, limitations or defenses to copyright infringement, including fair use, under this title.
(d) This section shall not apply to any infringement occurring after the date that is ten years from date of enactment of this Act.