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July 28, 2006
Doe v. MySpace.com --- Continued
By John Ottaviani
I was finally able to read the complaint. It raises some very interesting issues concerning the obligations of website hosts and Internet service providers to institute and enforce appropriate security measures to decrease the likelihood of harm to users. These harms could occur on line (such as defamation), or in the physical world, as unfortunately occurred here.
The complaint names MySpace, Inc., News Corporation, the parent company of MySpace, Inc. and the man who allegedly committed the sexual assault on the 14-year-old girl.
From the complaint, we see that the predator initially contacted the plaintiff through MySpace.com, but then she gave him her cell phone number. It appears that subsequent communications were by cell phone, including the arrangements for an after-school meeting, during which she was sexually assaulted.
The complaint alleges causes of action against MySpace and its parent, News Corporation, for negligence, gross negligence, fraud, fraud by non-disclosure and negligent misrepresentation. The complaint also alleges assault and intentional infliction of emotional distress claims against the attacker.
The negligence claim is interesting because it raises what I believe is an issue of first impression: does MySpace.com have a duty to institute and enforce appropriate security measures and policies to withstand and substantially decrease the likelihood of danger and harm in the physical world that MySpace posed to the plaintiff? I have been debating this with David Fish, who feels that an Internet site that targets young children and (allegedly) knows of assault problems against these children, certainly has a duty to protect because there is a foreseeable risk of harm. I find it difficult to imagine that, given the enormous policy and economic repercussions for all Internet content providers, a court would impose such a duty, which would expose Internet content providers to liability for the wrongful acts of potentially millions of unknown bad people committed against millions of unknown potential victims. A similar claim was rejected in the early days of the Internet in Lunney v. Prodigy Services Company when the New York Court of Appeals held that there is “no justification” to impose a duty on ISP’s to “employ a process for verification of the bona fides” of all applicants and any credit cards they offer so as to protect against defamatory acts. The Lunney case may serve as an analogous precedent. But remember, the complaint in the MySpace.com lawsuit was filed by a Texas plaintiff in a Texas state court, and Section 230 does not necessarily give a defendant the right to remove to a federal court, so MySpace may be in for a fight on this issue.
The negligence count further alleges that this breach of duty was the proximate cause of the sexual assault of the plaintiff. I have a hard time seeing proximate cause here, where the initial e-mail communications were followed up with cell phone conversations.
Eric and I differ as to whether or not MySpace will be able to successfully assert a Section 230 defense. The relevant portion of Section 230 states: “No provider or user of the interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Here, however, the plaintiff is alleging that she was injured as a result of actions of her attacker in the physical world, which were caused either by MySpace’s “failure to take action and to protect her” or MySpace’s “misrepresentations about the safety of its site.” None of the claims are based on information posted by the predator or any other third party. Eric still feels there is room for a Section 230 defense, however.
There may be enough muck in the complaint for some of the other causes of action to survive a Motion to Dismiss. MySpace may have better luck going straight to summary judgment.
Posted by John Ottaviani at 11:07 AM | Privacy/Security
July 27, 2006
Google Click Fraud Settlement Approved
By Eric Goldman
The Arkansas judge approved the settlement in the Lane's Gifts and Collectibles v. Google case. Ruling here. Google's announcement here.
For reasons I've explained before, this is a Big Win for Google (and, not a bad payday for plaintiffs' counsel, either). However, according to the ruling, 556 advertisers opted out of the class, which is not a trivial number of remaining plaintiffs. It will be interesting to see if any of these advertisers bring their own standalone suits. If so, Google still could be facing a lot of chicken-scratch litigation. Despite this, overall, I have to imagine that the champagne corks are popping this morning at the Googleplex.
Posted by Eric at 11:38 AM | Licensing/Contracts , Search Engines
Send in the Clowns' (Lawyers)
By Eric Goldman
In response to parental demands, some clowns wear (without permission) costumes that imitate Barney the dinosaur, Bob the Builder, Thomas the Tank Engine, Clifford the Big Red Dog and other cartoon characters as part of their birthday party packages. The owners of those brands don't like it, so they sent nasty C&Ds demanding, among other things, immediate cessation, possession of the imitative costumes and a $100,000 settlement fee.
I don't know how lucrative the clowning business is, but I suspect that many clowns will not make a total of $100,000 over the course of their entire clowning career. I understand why the brand owners don't want people running around portraying their characters--especially clowns, who can be downright scary (e.g,, see this photo from the SJ Mercury News article)--because the clown's behavior can shape the kids' perception of the character. Plus, it's very possible that the law is squarely on the brand owner's side. However, surely there has to be a better solution. Maybe the brand owners are missing a good market opportunity?
In any case, the clowns may not be rolling over. A local lawyer, James McManis, has stepped up and may offer to defend the clowns pro bono (or, is that pro bozo?). Word is that instead of sending a written response to the C&Ds, he's planning to respond with some banana cream pies... (just kidding).
San Jose Mercury News coverage:
* Clowns get C&Ds
* Lawyer launches clown law defense practice
Gratuitous asides:
* The song.
* Bill Gates' encounter with a cream pie.
* Barney the dinosaur's questionable legal demands from the past recounted here, as part of a Wikipedia entry called "anti-Barney humor."
UPDATE: Now comedians are getting in the act (HT: EFF)
Posted by Eric at 10:34 AM | Copyright , Trademark | Comments (2)
July 26, 2006
Stay at Home Mom K's Johnny Damon's Right of Publicity Claim
By John Ottaviani
Last week, ESPN.com reported yet another unsuccessful and ridiculous attempt to use trademark law to stifle negative commentary.
According to the article, Ann Sylvia, a Massachusetts mother of two children, has operated an on-line store on eBay since 2001 so she can spend more time at home with her children. The on-line store "Owen & Emma's Place," is named after her children. Among other items, the on-line store sells baby and children's clothing and maternity clothes.
Among the "Daddy's Girl" and "My Mom is Hot" baby bibs and onesies are several items that reveal Ms. Sylvia's baseball affections. The problem in this case was not the "Yucky Yankees" or "Yankees Suck" bibs. Ms. Sylvia also offers bibs and onesies with the phrase "Damon Sucks." Last month, eBay pulled the listing after The Scott Boras Corp. (the entity which acts as agent for the New York Yankee baseball player Johnny Damon) complained that these items violated Mr. Damon's right of publicity. The complaint went so far as to threaten to blemish Ms. Sylvia's eBay rating and jeopardize her "Power Seller" status.
Rather than backing down, Ms. Sylvia swung for the fence. She hit a home run when she pointed out that there were other baseball players named Damon in the major leagues, so that her bibs might not be referring to Mr. Damon at all. Ms. Sylvia eventually reached a compromise by agreeing not to use "Johnny," "Boston," "Red Sox," "New York," or "Yankees" in the listing for that particular bib.
For those who are not baseball fans, the background to this story is that Mr. Damon played baseball for the Boston Red Sox team from 2002-2005, and played a key role in Boston's 2004 World Series Championship. After the 2005 season, however, Mr. Damon elected to leave the Red Sox and signed a four year contract for a higher salary with the New York Yankees, the arch rival of the Red Sox. Many Boston fans (including my daughter) now feel that Mr. Damon is a traitor.
After Eric's commentary on the case where trademark law was used by a restaurant to try to stop a non-profit group from handing out leaflets about the restaurant's labor practices, I hope this isn't a trend. Will the entire crowd be enjoined from chanting epithets at Mr. Damon the next time he appears in Fenway Park? Outside the stadium, will all the vendors of merchandise that uses the names or likeness of Mr. Damon and his teammates in uncomplimentary ways be confiscated? There are significant First Amendment issues here. It also seems that Mr. Damon and his agent might spend their time more efficiently chasing counterfeiters, rather than those clearly commenting on his playing ability, business dealings or loyalty.
Posted by John Ottaviani at 09:21 PM | Publicity/Privacy Rights , Trademark
Blog Law Recap
By Eric Goldman
Spring was a busy time for blog law! This post recap some blog law resources:
* My talk on blogs and intellectual property at the Milwaukee Bar Association (newly posted)
* Notes from my talk on blog law and my experiences as a blogger (newly posted)
* My paper on the law of co-blogging (joint blogging, group blogging and guest blogging)
* EFF's Legal Guide for Bloggers
* Recap from blog law conference at Univ.of North Carolina
* Recap from Bloggership conference at Harvard
* Blog post on risks of employee blogging
Some blog posts about the mechanics of blogging:
* How to decide which blogs to read
* Should you become a blogger?
* How to get started as a blogger
* Vanity monitoring tools (ways to track who's talking about you or your blog)
Finally, if you're interested, my blogroll. Note I add and drop blogs pretty frequently.
Posted by Eric at 11:20 AM | General
July 25, 2006
Yahoo Click Fraud Settlement Preliminary Approval
By Eric Goldman
Checkmate Strategic Group, Inc. v. Yahoo, Inc., No. 2:05-CV-04588-CAS-FMO (C.D. Cal. preliminary settlement approved June 28, 2006)
I'm a little late blogging this, but Yahoo has gotten preliminary approval to settle its click fraud lawsuits. The basic deal is that Yahoo pays the lawyers $4.95M and gives 100% credits to advertisers for any click fraud they can find back through Jan. 2004. According to Yahoo's press release, the other settlement terms include:
* hiring a Dedicated Traffic Quality Advocate "dedicated entirely to addressing advertiser concerns about click fraud and traffic quality issues."
* an annual meeting at Yahoo's facilities with some advertisers to discuss click fraud
* an effort to coordinate an industry-wide response to click fraud
* some additional web disclosures and tools to help advertisers monitor traffic quality
This seems like a very good deal for Yahoo--even compared to Google's sweet deal to settle its lawsuits. Yahoo is paying 1/6 the out-of-pocket legal fees that Google will pay, and I'm pretty sure Yahoo hasn't made only 1/6 of Google's revenue. Admittedly, Yahoo hasn't capped its credit liability (which Google capped at $60M), but I don't think it's a big "give" to credit advertisers for actual click fraud whenever it's discovered (even years later). Yahoo should credit away click fraud as a matter of good advertiser relations and corporate ethics regardless of the settlement.
In any case, it remains to be seen what happens to the Google and Yahoo click fraud settlements given the rising advertiser furor over the settlements. The Google settlement hearings are continuing today, so we may know more very soon.
Posted by Eric at 10:11 AM | Licensing/Contracts , Search Engines
July 21, 2006
Google Click Fraud Report
By Eric Goldman
In preparation for the court's final approval of the settlement in the Lane's Gifts v. Google click fraud case, the parties hired an expert to assess Google's click fraud control mechanisms. The report can be found here. The report is a good but dryly written primer on CPC advertising, click fraud and the operational challenges detecting and correcting for it. The money line: "I conclude that Google’s efforts to combat click fraud are reasonable." A few observations:
The Report Reached the Only Conclusion It Could Reach
This report's finding is hardly surprising. Both the plaintiff's counsel and Google wanted/needed this report to bless Google's practices. The report's principal audience is the judge who is approving the settlement. If this report said that Google was doing a lousy job, then the report might derail the settlement. But plaintiff's counsel wants its $30M payoff, and Google wants to wipe the click fraud liability off its books for $90M (or less). Plus, if the report said that Google's practices were unreasonable, the advertiser response would be deafening. So this report had to come out in support of Google's practices--there really wasn't any other option. I want to be 100% clear--I'm not saying the expert was biased or that plaintiff's counsel or Google distorted the process. But I'm sure the expert was selected with this outcome in mind, and I would not ignore this document's role as a sales document.
The Expert's Engineer-Centric Bias
The expert makes a big point about how he thinks that only engineers should decide how to set the parameters for the click fraud detection algorithms, free from any influence of the finance or business departments (presumably, such as marketing).
Obviously, this is a very engineer-centric view of the world. From my perspective, I think this engineer-centric priority is misguided for three reasons. First, all of the employees are in the same boat. Engineers are not dumb; they know that their decisions can increase or decrease the value of their stock options. There's no reason why engineers are less susceptible to this financial pressure than anyone else in the company.
Second, insulating the decision from marketing or finance does reduce the influence of their biases, but engineers have their own biases. In a sense, insulating the parameter-setting decision substitutes engineer biases for company-wide biases. Only another engineer would think this is a good idea (or not even recognize these latent biases in the first place).
Finally, other company constituents may have expertise that isn't available to the engineering department. There may be revenue recognition implications from the parameter setting. Or, there may be legal implications of how the parameters are set. For example, a contract may promise an advertiser a certain level of protection, and if the engineers are unilaterally tinkering with the parameters, that contract may not be fulfilled. Or, the executives may have obligations under Sarbanes-Oxley to ensure the vitality of the algorithms, but if these decisions are being made without their influence, the executives can't fulfill their legal duties.
Indeed, one of my biggest frustrations as in-house counsel occurred when I realized that engineers were constantly taking legally significant actions with every coding decision they made. I realized the only way for me to properly perform my job was to clone myself, look over the shoulder of each and every engineer, and ask them with every keystroke--"what are you doing? what assumptions are you making? are those good assumptions? and how do those assumptions comport with commitments we have elsewhere?"
This expert seems to assume that engineers will make all of those decisions correctly so long as they remain free from influence from the rest of the company. I can assure him and you, based on first hand experience--they don't.
The Doubleclick Problem
The report criticizes Google for counting doubleclicks (two clicks on the same ad by the same person in a short period of time) but praises Google for filtering those out starting March 2005, even though that decision hit Google's bottom line hard. I'm glad Google fixed the problem then, but what about the pre-March 2005 doubleclicks? There's no way for advertisers to identify those clicks based on the reports from Google, so the chances of these clicks being fixed through the settlement process are low. As a result, in my opinion, Google should recheck its logs (to the extent it still has them) to identify impermissible doubleclicks and immediately and unilaterally offer credits to affected advertisers outside of the $90M settlement. I think doing anything less is unethically profiting on clicks that its own expert has declared to be invalid.
Where Did They All Go?
The report says that only 1 person from the initial click detection effort in 2002 is still at Google, and that person was on "extended leave." Where did everyone go? I don't think this is just the typical Silicon Valley turnover. All of these people are pre-IPOers, so my guess is that they are now in Barbados, the French Riviera, Tahiti, sailing around the world in their luxury yacht, etc.
Posted by Eric at 10:38 PM | Licensing/Contracts , Search Engines | Comments (2)
July 19, 2006
Search Engine Liability for Selling Keywords Redux--800-JR Cigar v. GoTo.com
By Eric Goldman
800-JR Cigar, Inc. v. GoTo.com, Inc., 2006 WL 1971659 (D. N.J. July 13, 2006)
This is a confusing but important case about search engine liability for selling trademarked keywords. Because of the opinion’s convoluted nature, there's no clear winner. However, the plaintiffs have to be happy with this opinion, and if I were Yahoo/Overture, I'd be looking to settle this case rather than continue before this judge.
Overview
JR Cigars is apparently a well-known discount seller of cigars. GoTo.com (now Overture, now part of the Yahoo empire) sold keywords including "JR Cigar," "J R Cigar," "J & R Cigar," "J-R Cigar," "JRCigars.com," and "800 JR Cigar" to various JR competitors. JR sued the competitors and GoTo in 2000 (6 years ago!). Subsequently, the competitors all settled, leaving GoTo as the sole remaining defendant. In this ruling, JR Cigars seeks summary judgment on the trademark infringement and dilution claims, and GoTo seeks summary judgment on that and two ancillary claims.
The outcome is a little complicated, but here's the high level overview. The judge denies JR's motions, saying that some factual issues require a trial. Further (and this is part of the weirdness), the court says that because the various competitors have dropped out, JR should proceed only under a contributory infringement theory—not the direct infringement theory litigated in this ruling. Meanwhile, the court grants GoTo's summary judgment on the ancillary claims, but surprisingly rejects a 230 defense as the rationale.
Superficially, GoTo won this ruling by defeating JR's SJ motions and winning some of its SJ motions. However, I think this case is a net loss for GoTo because GoTo lost on some key issues and because the court appears very sympathetic to JR's claims. In particular, the judge appears to have accepted the plaintiff’s argument that displaying keyword-triggered ads can "divert" searchers (a point I vehemently disagree with in my big paper, where I argue that courts cannot determine “diversion” without, at minimum, reviewing the ad text that consumers responded to). As a result, if I were GoTo, I'd settle this case before it gets worse.
To better understand the nuances of this complex decision, let's look at some details.
Trademark Infringement
Closely following the GEICO v. Google precedent, the court says that GoTo's sale of keywords constituted a trademark use in commerce. Specifically, the court says:
GoTo makes trademark use of the JR marks in three ways. First, by accepting bids from those competitors of JR desiring to pay for prominence in search results, GoTo trades on the value of the marks. Second, by ranking its paid advertisers before any "natural" listings in a search results list, GoTo has injected itself into the marketplace, acting as a conduit to steer potential customers away from JR to JR's competitors. Finally, through the Search Term Suggestion Tool, GoTo identifies those of JR's marks which are effective search terms and markets them to JR's competitors. Presumably, the more money advertisers bid and the more frequently advertisers include JR's trademarks among their selected search terms, the more advertising income GoTo is likely to gain.
I could take serious issue with a number of aspects of this analysis, but ignoring the details, the court is just following the GEICO precedent (and the uncited American Blinds precedent). However, it is noteworthy that the court specifically called out GoTo's keyword suggestion tool—this is not the first time courts have not looked at this tool favorably. In response to GoTo's argument that the tool operates automatically, the court's response is cutting: "the Search Term Suggestion Tool permits GoTo to channel advertisers directly to JR's trademarks by demonstrating quantitatively the potential for successful advertising, thereby implicitly recommending those terms to advertisers." From my perspective, these tools just seem like huge liability traps. As a result, if I ran a search engine, I would reevaluate the cost-benefit equation of the keyword suggestion tool.
Having found the predicate trademark use in commerce, the court next tries to apply the standard multi-factor test to determine if the use creates a likelihood of consumer confusion. I say "tries" because GoTo isn't advertising its goods and services using JR's trademarks (one of the reasons why the court got the use in commerce analysis wrong), so the factors don't really fit. The court frequently has to say "I know that GoTo sells search advertising and JR sells cigars, but they are really in the same business." It doesn't work.
As part of the analysis, the court considers the initial interest confusion doctrine. I can't say enough bad things about this doctrine and how it leads courts astray. (I've already said plenty--about 37,000 words--deconstructing the initial interest confusion doctrine in my big paper). In the Third Circuit (which covers New Jersey), the leading IIC case is Checkpoint. As IIC cases go, the Checkpoint case was comparatively restrained because it clearly limits IIC to competitive situations. Nevertheless, the court has no problem extending Checkpoint to GoTo, who does not compete with JR in any way, because it treats GoTo as the proxy of JR's competitors buying the ads. As further “evidence” of initial interest confusion, the court is also impressed with some evidence of diversion marshaled by JR, such as claims by JR that there were 1,000 diverted customers and a 24% diversion rate.
Ultimately, out of the multi-factor likelihood of confusion test, the court finds that four factors favor JR (mark similarity; mark strength; overlap in targeted customers; product relatedness), none favor GoTo, and four require a trial (evidence of actual confusion; length of time without confusion; intent, and various aspects of the initial interest confusion doctrine). (A couple of Third Circuit factors were irrelevant/indeterminate).
Due to these open factual issues, the court defers consideration of GoTo's fair use defense, saying it too requires a trial on the facts. However, in passing, it offers GoTo some hope, saying that fair use probably applies "where GoTo permits bids on JR marks for purposes of comparative advertising, resale of JR's products, or the provision of information about JR or its products.” This appears to implicitly endorse much of GoTo’s trademark policy, which requires some ad relevance to the keyword. However, the court continued that “fairness would dissipate, and protection under a fair use defense would be lost, if GoTo wrongfully participated in someone else's infringing use." I suspect the latter reference supports the court's preference to analyze these claims under a contributory theory, not a direct theory.
Dilution
The court finds that JR Cigars is a famous mark. The court rejects out of hand GoTo's argument that it has not made a commercial use in commerce. Then, the court says that there are factual issues about whether actual dilution has occurred because "confusion, actual or likely, is one factor bearing on the dilution analysis," so the court punts on this issue pending the trial on the likelihood of consumer confusion issue. Equating actual dilution with likelihood of consumer confusion is, at best, unorthodox.
Other Claims
JR also sued GoTo for violating the federal Telemarketing and Consumer Fraud and Abuse Prevention Act and state consumer anti-fraud law. GoTo defends on 47 USC 230. The court rejects that defense because it doesn't think GoTo qualifies as an interactive computer service. This conclusion is completely inconsistent with the extensive precedent that the court missed—most recently in the DiMeo v. Max case, but there have been plenty of others. The court also says that 230 doesn't protect against the "fraud" of using trademarks in the bidding process. Because I don't understand how GoTo's acts meet a prima facie claim of these acts, I don't understand where the fraud is. And, if the objectionable conduct is based on advertiser-supplied keywords and search listings, 230 should apply to any non-IP claim.
Nevertheless, the court dismisses both claims because (1) JR lacks standing to enforce the consumer anti-fraud statute and (2) the Internet should not be governed by a telemarketing statute just because telephone wires are used to make connections.
Why is JR Cigars Still Litigating this Case?
In my recent talk on web marketing issues, I made the possibly controversial statement that most keyword purchase cases aren't worth litigating on a cost-benefit basis. My thinking is that companies can spend their money on marketing or on lawyers, and it's far more likely that they will get better value (more new customers, better ROI) from marketing than from litigating.
This case seems like a textbook example of this argument. In the 2 years when GoTo was selling the applicable keywords, GoTo made total revenues of $345 from them. $345!!! And some of that was for non-cigar advertisers on the "JR" term and clicks to a site operated by plaintiff's lawyers. Take those away, and there were not a lot of diverted customers that JR Cigars is litigating over. (JR offered some evidence that it lost 1,000 diverted customers in the 2 year period, but I'm fairly confident that this number is overstated because there’s no way to measure diversion without seeing ad copy). Further, with GoTo's (lack of) revenues, JR will have difficulty winning big damages (and only a modest chance of the court granting attorney’s fees). Meanwhile, JR has been litigating this case for 6 years. I'm 100% confident that JR would have made a lot more profit pouring its litigation expenses and managerial time into marketing, not litigating.
Conclusion
I hate Internet cases like this where the case has been growing mold for years. Usually the law has completely changed between the initial pleadings and the ruling (and sometimes between the motions for summary judgment and the ruling), creating the possibility of very anachronistic rulings. Especially with respect to the 230 discussion and some of the factual discussion about GoTo's business practices, this case really shows its age.
As for the trademark issues, up to this point, this case resembles the GEICO v. Google case--selling trademarked keywords is a trademark use in commerce, but it may not create a likelihood of consumer confusion. It will be interesting to see where this case goes next (if it doesn't settle), especially if the parties really explore the contributory infringement angle.
With respect to the contributory infringement claim, it will be interesting to see if this court considers the Merck precedent (another case not cited), which held that advertisers were not making a trademark use in commerce in buying the keywords. If so, GoTo can’t commit contributory infringement because there’s no predicate direct infringer.
Meanwhile, this case reinforces the completely unsettled nature of keyword purchases and trademark law. Combined with the other two search keyword cases this year that reached directly opposite results to each other (Edina Realty and Merck v. Mediplan), there really is no way of predicting how the next case is going to come out. In some ways, the law applicable to search engines selling keywords has not advanced in any meaningful way from 2000 when this case was first filed.
Posted by Eric at 11:36 AM | Derivative Liability , Search Engines , Trademark | Comments (2)
July 17, 2006
Web Marketing Legal Issues Talk
By Eric Goldman
I gave a talk today to in-house counsel on the topic of common marketing mistakes by e-commerce websites. My slides.
Posted by Eric at 05:16 PM | Marketing
July 14, 2006
Another Day, Another Lawsuit Over Search Engine Placement--Datner v. Yahoo
By Eric Goldman
Datner v. Yahoo! Inc, Case No. BC355217 (Cal. Superior Court complaint filed July 11, 2006)
Websites dropped from search engine databases may not be getting rich, but maybe their lawyers are. This is the latest entry in the derby to get a search engine placement case past the search engines' motion to dismiss. The case claims Intentional and Negligent Interference with Prospective Economic Advantage and a California B&P 17200 violation. My recommendation: don't bet on this horse to win the derby. It's DOA.
(Hat tip: Phillip Winn at Blogcritics)
Posted by Eric at 09:36 AM | Search Engines | Comments (1)
July 13, 2006
KinderStart Lawsuit Dismissed (With Leave to Amend)
By Eric Goldman
KinderStart v. Google, Case 5:06-cv-02057-JF (N.D. Cal. motion to dismiss granted July 13, 2006)
The judge granted Google's motion to dismiss in the KinderStart lawsuit. Given the weakness of the lawsuit and the tenor of the judge's comments at the June 30 hearing, this is hardly surprising. However, the judge gave KinderStart the ability to amend its complaint, so this lawsuit is hardly over yet.
Frankly, there are very few novel or surprising aspects of this ruling. For example, the judge rejected the claim that Google was a state actor, but this ruling is entirely consistent with the dozen or so precedents involving private Internet companies. The other rulings seemed very sensible and fairly predictable from the complaint. It's pretty clear that the judge thinks that some of KinderStart's claims have no chance even with repleading, but the judge apparently has decided to give KinderStart that chance rather than just shutting the door.
[One side note: it's unclear from the opinion if all of the claims are amendable, or only those where the judge expressly said that KinderStart could amend--the Sherman Act claim, the common carrier claim, the 17045 claim, the good faith and fair dealing claim, the defamation claim and the negligent interference with prospective economic advantage claim. My reading is that KinderStart can amend all of its claims, but the opinion is ambiguous on that point.]
Despite the relatively unremarkable nature of Google's win, one area of the opinion definitely caught my attention. The judge's reactions to the defamation claim were not wholly favorable to Google and could signal some risk to Google. The judge says:
whether Kinderstart can maintain a claim for defamation may turn on facts outside the pleadings. Google’s statement as to whether a particular website is “worth your time” necessarily reflects its subjective judgment as to what factors make a website important. Viewed in this way, a PageRank reflects Google’s opinion. However, it is possible a PageRank reasonably could be interpreted as a factual statement insofar as it purports to tell a user “how Google’s algorithms assess the importance of the page you’re viewing.” This interpretation would be bolstered by evidence supporting Google’s alleged representations that PageRank is “objective,” and that a reasonable person thus might understand Google’s display of a ‘0’ PageRank for Kinderstart.com to be a statement that ‘0’ is the (unmodified) output of Google’s algorithm. If it could be shown, as Kinderstart alleges, that Google is changing that output by manual intervention, then such a statement might be provably false.
Reading between the lines, I think the judge may be saying it he doesn't like Google's apparent duplicity on its PageRank descriptions. Google claims PageRank is objective in its public statements, yet in court Google claims that PageRank is its subjective opinion. This duplicity just doesn't look good for Google. It doesn't mean that such duplicity is legally actionable, but it may take some skillful advocacy to swing the judge around on the defamation claim. Ultimately, I suspect Google will easily prevail, but in part I base that assessment on the skill of Google's counsel.
The judge also deferred consideration of Google's anti-SLAPP motions to strike. I think doing so raises the stakes on KinderStart's repleading. The implicit threat is that the judge will not pursue the anti-SLAPP sanctions if KinderStart drops those claims, but the sanctions will be back on the table if KinderStart continues to pursue those claims and ultimately loses. So KinderStart will have to do some hard thinking about whether it wants to risk reviving the claims subject to anti-SLAPP.
Despite the possible hiccup on the defamation claim, this is still a strong opinion for Google. On the other hand, given the judge's relatively weak conclusions based on the early procedural posture of this case, it's not the kind of door-slamming precedent that I'm sure Google would love to have right now.
UPDATE: As usual, Danny Sullivan weighs in with a thoughtful and thorough critique. He makes a lot of great points, but one of his points really stood out. Why doesn't Google just drop all public references/displays to specific pages' PageRank scores? They are confusing, cause lots of silly angst, and are now creating legal headaches.
UPDATE 2: If you want more reading on this topic, my article on search engine bias documents some of the ways that search engines (including Google) manually manipulate search results. I then offer my normative explanation for why manual manipulation is both necessary and beneficial.
Posted by Eric at 04:55 PM | Search Engines | Comments (4)
Trademark Travesty of the Month--SMJ Group v. 417 Lafayette Restaurant
By Eric Goldman
SMJ Group, Inc. v. 417 Lafayette Restaurant LLC, 2006 WL 1881768 (S.D.N.Y July 6, 2006)
I've read so many horrible trademark decisions that I barely notice the garden-variety judicial screw-up. But this case is so exceptional and outrageous that it made my jaw drop.
The Facts
The plaintiff is a restaurateur. The defendant is a non-profit organization that promotes restaurant workers' rights. The defendant created a pamphlet that it distributed in front of the plaintiff's restaurants. On the front, the pamphlet displayed the plaintiff's logos and the words "SPECIAL FOR YOU." Inside the pamphlet, the left side said "DO YOU REALLY WANT TO EAT HERE?" and the right side read:
Workers from this restaurant company have sued the company in Federal Court for misappropriated tips and unpaid overtime hours worked. More than 50 current and former workers from the restaurant company approached the Restaurant Opportunities Center of New York, complaining of misappropriated tips, unpaid overtime wages, racial and gender discrimination, sexual harassment, harsh working conditions in the restaurant, and retaliation for speaking up for their rights. SUPPORT THE WORKERS IN THEIR STRUGGLE FOR DECENT WORKING CONDITIONS! FOR MORE INFORMATION, PLEASE CALL ROC-NY (THE RESTAURANT OPPORTUNITIES CENTER OF NEW YORK) AT 212-343-1771.
The back read:
The Restaurant Opportunities Center of New York (ROC-NY) is a non-profit organization that seeks improved working conditions for restaurant workers citywide. ROC-NY assists restaurant workers seeking legal redress against employers who violate their employment rights. ROC-NY seeks to provide customers and the public with information about the litigation in this restaurant through these handbills, not to picket or interfere with deliveries. ROC-NY is not a labor organization and does not seek to represent the workers or be recognized as a collective bargaining agent of the workers at this restaurant.
You can see a copy of the leaflet as the exhibit to this affadavit.
So, we have a classic griper situation. The griper wants to communicate information to interested consumers to help them make informed marketplace decisions. Rather than set up a gripe website that would reach a small fraction of the restaurants’ consumers, the griper stands in front of the targeted businesses and hands relevant literature directly to potential consumers. Sure, the griper could have avoided using the plaintiff's logos on the brochure (or, for that matter, any reference to the restaurants by name). Nevertheless, there’s no mistaking the leaflet’s griping purpose, and I believe the marketplace mechanism depends on the robust flow of this unflattering information.
To squelch the griper, the plaintiff sues for trademark infringement and dilution. But the defendant engaged in non-commercial griping, so this seems like an easy case for the defense, right? Read on...
Trademark Infringement
Use in Commerce
The court takes its first wrong turn by equating trademark “use in commerce” with the scope of Congress' commerce clause powers. First, this is just a misreading of the Lanham Act but one that, unfortunately, has built a decent pedigree of similarly misguided precedent. See Uli Widmaier's deconstruction of this issue. Second, there is the lurking question of whether non-chain restaurants really engage in interstate commerce (I’m reminded of the old Blue Note Internet jurisdiction case of the mid-1990s).
Third, how did the dissemination of griping literature meet the inappropriately broad definition of trademark use in commerce? Here, the court's opinion is just bizarre--it concludes that distributing griping leaflets is the defendant's "service":
Plaintiffs' marks are clearly displayed on the front of the pamphlets distributed by defendants, and the distribution of those educational leaflets is a service under the Lanham Act. Accordingly, defendants' use of plaintiffs' marks is in connection with services as defined by the Act.
This can’t be right. Otherwise, tautologically, every griper is engaged in the “service” of griping. As a result, this court’s illogic would mean that every griper uses the target’s trademark in commerce when the griper references the targeted trademark as part of its griping literature.
Likelihood of Confusion
Even though the court muffs the "use in commerce” analysis, there's no way that the court can find a likelihood of consumer confusion…right?
Both parties agreed that, because of the logo on the front, readers initially will think that the leaflet was associated with the target restaurant. Both parties also agreed that all confusion is dispelled immediately when the reader opens the leaflet. As a result, the court bypasses the traditional multi-factor test because it says "the parties essentially agree that there is confusion." Instead, the court turns to the initial interest confusion doctrine to evaluate the legal significance of that initial confusion.
Superficially, this is a logical jump. The only “harm” here is the momentary confusion where the reader tries to figure out determine the “special” associated with the logo. Presumably, the reader may think that there’s a coupon or other special savings inside, and in that sense the consumer has been “duped.” On the other hand, the court could (and, I believe, should) look at the leaflet in total—evaluating the leaflet piecemeal is like considering only the first five seconds of a 30 second broadcast commercial.
In any case, once the court applies to the initial interest confusion doctrine, the defendant’s chances of success went down substantially, The IIC doctrine is very pro-plaintiff. First, it finds consumers were harmed without any rigorous evidence that consumers were affected in any way. Second, the doctrine lacks a single well-accepted definition, so it’s easy for plaintiffs to find favorable definitions and hard for defendants to combat an amorphous doctrine.
Trying to avoid the application of the pro-plaintiff doctrine, the defendant argues that IIC requires competitive diversion, citing to the Lamparello case. However, the court says that IIC isn't so limited, saying that there is no textual support to limit the Lanham Act's application to activities that have a commercial advantage.
This conclusion is flawed on multiple grounds. First, it's ironic that the court concludes there is no textual requirement of commercial advantage, given that IIC doesn’t have any textual basis in the statute itself. Second, the Lanham Act does have textual requirements for commercial advantage--it's in the "use in commerce" analysis that the court flubbed earlier (a point completely understood by the Lamparello court). Third, the multi-factor LOC test makes the commercial activity requirement clear (see the Bally Fitness v. Faber case to see what happens when a court tries to fit a non-commercial actor into the multi-factor test), but the court conveniently bypassed that test.
Finally, the court rejects the defense argument that they were not diverting customers. Instead, the court says:
defendants are redirecting customers to their goods and services [which the court defined as "the distribution of leaflets to educate the public about plaintiffs' employment practices"]. That redirection occurs as a result of confusion, and therefore defendants' use of plaintiffs' marks causes confusion under the Lanham Act.
With such a broad and misguided definition of "use in commerce," many online gripers tautologically commit initial interest confusion when they use domain names or keyword metatags with the plaintiff’s trademark. In that respect, this case undoes a lot of progress in griper trademark law made through cases like Lamparello and Bosley.
The First Amendment
There is no blanket First Amendment defense to trademark infringement, so these defenses often fail—as it did here. The court says simply: "defendants use plaintiffs' marks as a source identifier, and therefore defendants' use is not protected by the First Amendment."
Dilution
The court rejects the dilution argument for a variety of reasons, including the lack of requisite fame and evidence of actual dilution. Ironically, the court also cites the defendant's lack of "commercial use in commerce," saying "plaintiffs present no evidence that defendants' use of the marks is commercial. Indeed, while plaintiffs argue that defendants' use satisfies the Lanham Act's "in commerce" and "goods and services" requirements, their briefing is void of any mention of § 1125(c)'s special "commercial use" requirement." The fact that the court distinguishes the dilution “commercial use in commerce” standard from the trademark infringement “use in commerce” standard shows how easy it is for courts to go astray!
The Injunction
By contorting the law, the court concludes that the plaintiff has shown a likelihood of success on the trademark infringement claim. Normally, an injunction would follow as a matter of course. Yet, the court has one more contortion left--it concludes that this is the exceptional case where an injunction doesn't issue even though the plaintiff established a likelihood of success.
The court correctly notes that there's a presumption in favor of injunctions, but that injunctions aren't automatic (note the parallels to the MercExchange v. eBay Supreme Court case in the patent context). Here, the court says that the typical rationales supporting an injunction do not apply:
* because the defendant didn't gripe for profit, profit disgorgement calculations will not be speculative (there weren’t any profits)
* there is no risk that consumers will have lingering confusion from the leaflet
* "defendants' use of plaintiffs' marks is unlikely to cause plaintiffs to lose any sales due to defendants' infringement"--the message in the leaflet might cost sales, but the confusion that causes consumers to pick up the leaflet won't. As the court explains, this distinguishes the typical IIC case, where the unfair "foot in the door" advantage diverts consumers.
* on top of the foregoing, an injunction here would act as a prior restraint on speech (which would be germane to the First Amendment argument that the court summarily rejected earlier)
I've tried to do the best I can to summarize the court's reasoning about the injunction, but you have to read the whole thing yourself. In discussing the injunction, the court makes a variety of cogent arguments why this is not the typical case of initial interest confusion and why any harm to the plaintiff isn't appropriately actionable under the Lanham Act. However, the court only marshals up this cogency when discussing the injunction, when it would have been far more germane to the plaintiff’s prima facie case. Why the court did this Jekyll-and-Hyde routine-- contorting the law against the defendant on the substantive merits, only to fully grasp the sociopolitical consequences of the case when evaluating the injunction--remains a mystery.
Even though the court eventually recognizes that the defendant’s conduct doesn't fit the typical trademark infringement standards, the court's final outcome is bizarre. The defendant technically won this case by avoiding the preliminary injunction, but because the court determined that the plaintiff has a substantial likelihood of winning the trademark infringement claim, the defendant potentially could be liable for damages due to the infringement. It may be that the court won't award damages in any event (the injunction discussion suggests that the court doesn't think any damages occurred). However, if the court really wanted to stiff the plaintiff, there would have been far easier ways to rule for the defendant.
Conclusion
This case reinforces that the Lanham Act requires two immediate fixes. First, the statute’s multiple definitions of "use in commerce" needs to be harmonized/fixed to make it clear that defendants actually must be engaged in commercial activity. Second, the abominable initial interest confusion doctrine needs to be eliminated. It adds nothing to trademark infringement analysis, it confuses too many judges, and it allows judges to reach wacky results like this one.
Here, between the court's multiple errors and the socially beneficial speech jeopardized by the ruling, I rank this case as one of the five worst initial interest confusion cases of all time. As a result, I plan to contact defense counsel to see if further proceedings are likely and if I can marshal any helpful resources in those proceedings. If you're interested in being part of that effort, please email me (egoldman@gmail.com).
UPDATE: On Aug. 30, there was a follow-on ruling where the court dealt with various motions to dismiss. The court granted the motion to dismiss the TM dilution and deceptive business practices claims but denied the motion with respect to the TM infringement, injurious falsehood, unfair competition and tortious interference claims.
Posted by Eric at 12:05 PM | Domain Names , Trademark
July 11, 2006
Court Nix Clean Flicks
By John Ottaviani
Clean Flicks of Colorado, LLC vs. Soderbergh, No. 02-CV-01662-RPM (D. Colo., July 6, 2006).
The entertainment world has given us yet another example as to why one should be very wary of creating or investing in a business model built on the foundation that its activities are legitimate under the "fair use" exception to the U.S. copyright laws.
Here four companies were copying, editing and/or distributing copies of movies by deleting "sex, nudity, profanity and gory plots." The editing techniques used included redaction of audio content, replacement and redaction with ambient noise, "blending" of audio and visual content to provide transition of edited scenes, cropping, fogging, or the use of a black bar to obscure visual content. The companies would purchase an authorized copy of each movie for each edited copy that they sold or rented.
Various motion picture studios and directors of the movies moved for summary judgment on copyright infringement claims, arguing that these practices infringed their exclusive rights to reproduce the copyrighted movies under Section 106(1); their right to create derivative works under Section 106(2); and the exclusive right of distribution of copies under Section 106(3).
Despite extensive submissions from the companies and from viewers expressing their appreciation for the opportunity to view movies without concern for horrible effects on the children, Judge Richard P. Matsch found the argument "inconsequential to copyright law and is addressed to the wrong forum." The court cited the Family Movie Act of 2005 as an example where Congress had the opportunity to make the policy choice urged by the defendants but did not do so.
The Court then undertook a fairly straight-forward "fair use" analysis of the four (4) factors set out in Section 107 of the Copyright Act. The Court found that the edited films were not "transformative" because they added nothing new to the movies, simply deleting scenes and dialogue from them. The Court went on to contrast the situation from the decision in Bill Graham Archives v. Dorling Kindersley Ltd., 498 F.3d 605 (2d. Cir. 2006), where the publisher of a coffee table book about the Grateful Dead made fair use of that music group's event posters and tickets. The Court also found that the creative expressions in the movies and the fact that the movies were copied in almost their entirety for non-transformative use also weighed in favor of the movie studios.
Finally, although the companies argued that there was no adverse effect from their use of the movies and the value of the copyrighted work to the studios because they purchased an original copy each time they edited a copy, the Court found that this argument ignored the intrinsic value of the right to control the content of the copyright work which is the essence of the law of copyright. Score one for the content owners.
Curiously, the studios did not assert a claim that the copying of the movies by the companies for purpose of editing is a violation of the Digital Millennium Copyright Act. Whether this was for litigation strategic purposes, or an oversight, we will leave to speculation.
I found the judge's holding, that because the edited films were not transformative, they were not "derivative works" for purposes of Section 106(2), a bit bewildering. A finding that the works are not "transformative" does not equate to a finding that they are not derivative works. While I cannot come up with examples right now, it would seem that a work could be a "derivative work" without being "transformative." In any event, the holding was totally unnecessary, as the decision found that the 106(1) and 106(3) rights had been violated.
Whether the decision will have an effect on various websites such as Youtube.com, which host parodies, "mash-ups" and other edited versions of videos, remains to be seen. The movie studios and directors will have a more difficult case to win. The websites generally will be immune from liability under Section 230 of the Communications Decency Act or under Section 512 of the Digital Millennium Copyright Act, so long as they do not "induce" copyright infringement a la Grokster. It may not be worth the expenditure of time and money for the studios and directors to chase the individual creators of these videos. But then again, we said that in the music context, too.
Posted by John Ottaviani at 07:32 PM | Copyright | Comments (1)
Wikipedia and 230, and a Great 230 Case Law Resource
Ken Myers, a recent Harvard Law School graduate and soon-to-be attorney at Sullivan & Cromwell, has posted an article, Wikimmunity, to SSRN. The article concludes that Wikipedia will be squarely immunized from liability by 47 USC 230. While this conclusion should be relatively non-controversial (at least, it made perfect sense to me!), the article lays out the mechanical detail of how the statutory immunity applies to the somewhat novel operations of Wikipedia.
As part of doing his article research, Ken prepared an Excel spreadsheet categorizing the 230 precedent cases on a variety of dimensions (such as whether the court analyzed if the defendant was an ICS). See his Excel spreadsheet here (reposted with Ken's permission). This is a great resource for anyone researching 230 cases as part of a lawsuit or for a paper. I haven't gone through it line-by-line, but it looks like it includes most/all of the 230 cases I know about. Thanks to Ken for doing the legwork and sharing it with us.
The abstract on Ken's Wikimmunity article:
Wikipedia (www.wikipedia.org) is an amazing resource that resembles an online encyclopedia. Critical to its success is its process: it is editable by anyone with access to its content. As the project hurtles forward towards its humbling goal of providing the world with “free access to the sum of all human knowledge,” questions regarding its veracity and accountability become increasingly insistent and important. In the wake of the Seigenthaler biography controversy, many commentators suggested that Wikipedia should be able to escape liability for defamatory content pursuant to the immunity provided for in 47 U.S.C. § 230(c)(1), enacted by Congress as part of the Communications Decency Act of 1996. Unfortunately, those commentators do not provide a detailed roadmap to that conclusion. Additionally, courts interpreting § 230(c)(1) have not been self-conscious or precise with respect to their choice of several alternative approaches to the ambiguous statutory text of § 230(c)(1). This Article is an attempt to bridge those gaps by offering a taxonomy of those available analytical approaches while exploring ambiguities relevant to that application in light of Wikipedia's unique facts. Namely, the open contribution model and the accretion-based continuous “publication” system raise issues heretofore unexplored in § 230(c)(1) cases: (1) What is an “entity,” as it is used in the definition of the critical phrase, “information content provider”? and (2) What is the appropriate level of generality to apply to the term “information”? While this Article concludes that the Wikipedia will prevail on the basis of § 230(c)(1) immunity, it offers a few thoughts for shaping its code in the shadow of the law.
Posted by Eric at 11:05 AM | Derivative Liability
July 10, 2006
DMA Quietly Kills Telephone Preference Service
By Eric Goldman
In a move that's sure to disappoint no one, the Direct Marketing Association is going to end the Telephone Preference Service everywhere except for Maine, Pennsylvania and Wyoming (where the TPS is the statutory default do-not-call list). The DMA press release. There will be a transitional period before the TPS is turned off, and if you really care, you can still sign up for the TPS through Oct. 31. I wouldn't expect a rush of last-minute registrations.
Why did the TPS fail? The DMA cites the "competition" (my word, not theirs) from the federal Do-Not-Call registry, which basically superseded the TPS's function. The whole point of the TPS was to avoid federal regulation through effective industry self-regulation. The TPS, in a sense, failed when the federal Do-Not-Call registry was implemented. The DMA's killing of the TPS is just the inevitable denouement.
(Note also that the press release cites the expense to DMA members to comply with the TPS, so this move may be prompted more by reducing member expense than anything else).
But why did the TPS fail to prevent federal regulation? I can think of a variety of theories, including:
* the TPS was never comprehensive. Registration only applied to DMA members, which was a subset of all the marketers. So the TPS was, by its very architecture, an incomplete solution
* consumers hate telemarketing than just about any other form of marketing. So long as any telemarketing continued, it was inevitable that consumer antipathy would boil over and demand more stringent regulation.
* it was not easy to sign up for the TPS, and this barrier to entry reduced sign-ups, which in turn made the registry ineffective.
* the TPS was not adequately marketed/promoted to consumers to let them know of its availability.
* consumers never trusted the DMA--there was a little bit of a fox-guarding-the-henhouse problem with giving the King of Marketers some personal data that could be misused.
* there wasn't an effective-enough enforcement mechanism or sanction for DMA members who failed to honor the TPS
I don't really know exactly why the TPS failed. However, until we figure that out, it's possible that the replacement solution (the federal Do-Not-Call registry) doesn't really overcome those problems. I know the Do-Not-Call registry has been wildly popular, but I continue to be skeptical that it really solves "the" problem, and I continue to fear that it creates other problems for the flow of information that benefits consumers and society generally. I'll lay out my case against the Do-Not-Call registry in my next big paper.
Posted by Eric at 07:54 AM | Marketing
July 06, 2006
Merriam-Webster Defines "Spyware"
By Eric Goldman
A lot of attention has been directed to Merriam-Webster's addition of Google to its dictionary--as a verb, no less. I'm sure the Google trademark department isn't thrilled about the genericide implications of this.
Meanwhile, this announcement overshadowed another significant addition to the dictionary: Merriam-Webster also defined the term "spyware" as follows:
software that is installed in a computer without the user's knowledge and transmits information about the user's computer activities over the Internet
I thought this was a competent and pithy (22 words!) definition. It captures what I think are the three essential elements of spyware:
* the software watches user behavior
* the software reports this information somewhere other than the user's hard drive
* the software isn't consensual
Perhaps this definition will become the long-desired standard definition of spyware. Productive dialogue is only possible with standardized nomenclature, and the Anti-Spyware Coalition definitions, while competent, haven't really emerged as the standard.
Posted by Eric at 05:42 PM | Adware/Spyware | Comments (2)
July 05, 2006
Google Hits and Misses
By Eric Goldman
BusinessWeek ran an article on Google's new product launches entitled "So Much Fanfare, So Few Hits." The article's basic thesis: "after sparking substantial buzz, most of Google's nonsearch offerings quickly fade from view…[a]n analysis of some two dozen new ventures launched over the past four years shows that Google has yet to establish a single market leader outside its core search business…." The scorecard includes:
Hits
* Google Maps, #2 in its category behind Mapquest. I use Google Maps a lot; it's a terrific service. I especially love the ability to drag. I have found numerous mistakes in it, however, so I'm always wary of accuracy.
* Google News, the #2 news aggregation site. I also use Google News a lot, although I don't understand how Google decides which sources to index.
Misses (So Far)
* Google Blog Search, which has only 17% of Technorati’s traffic. I use Technorati over Google Blog Search in most (but not all) cases. I especially like Technorati's ability to see the quantity of a blog’s inlinks as part of its search results. This gives me a quick way to assess a blog's level of activity/visibility. In contrast, Google's relevancy algorithm for blogs yields goofy results. However, I am frustrated with Technorati's broad and deep errors, which is why I use Google Blog Search as a backup. However, it does take me extra clicks to get to Blog Search; that dampens my enthusiasm as well.
* Google Talk, with 2% of MSN Messenger's users. IM has high switching costs and strong network effects, so it may take a long time for Google to make inroads here. For now, I strictly use AIM, which is a competent product that most of my contacts use.
* Google Finance, which is the 40th most visited finance website. I really don't understand Google's value proposition here, so I have no idea why I would use this.
* Gmail, which has only 1/4 the number of users of Yahoo's and MSN's email offerings. I think BusinessWeek is being a little unfair here. Gmail launched just a couple of years ago and has restricted its enrollment. There's no question that Gmail is a superior product than Yahoo's email and Hotmail. I still rank Gmail as the best email service I've used.
* Orkut, which has 1% of MySpace's traffic. I did check out Orkut when it launched and even invested some time in it, but ultimately I found the service was slow/unstable, and there really wasn't anything much I could do with it. I haven't been back to Orkut in a couple of years and I have no reason to return. Part of the problem is that I'm outside the core demographic. I still invest a little in LinkedIn, but I haven't really gotten much value out of that either.
I would add Froogle to this list of misses. It gets one of the five coveted tabs on the home page, but it certainly hasn't had much impact on online shopping, nor do I think it's had any appreciable drag on the success of sites like Shopping.com. I use Froogle occasionally; it works well for very esoteric shopping inquiries, but I can't imagine why I would use it regularly.
The article's explanations for these misses include Google's inability to do good house ads/cross-promotion due to its simple user interfaces, poor initial product quality, disenfranchised product managers, and Google’s “experiment early and often” philosophy with the expectation that a majority of experiments will fail.
Given this track record, the BusinessWeek article is 100% correct that it is typically premature to crown Google the marketplace winner before Google has actually successfully competed in the market.
This article spurs 2 other observations:
1) I've never been a huge fan of the "throw everything against the wall and see what sticks" approach to product innovation. I understand that it's not always easy to identify winners before launch, but there are a lot of hidden costs to this approach. Each product offering requires a certain amount of investment/support before launch, such as marketing, QA, legal support and compliance work. To keep the experiments cheap, companies often cut corners on this upfront work, but poor planning/diligence can undermines the probability of success and lay the seeds for future problems if the product does get some traction. Furthermore, when it's not clear if the company is planning to stick with the product, users have some disincentive to commit/invest in it, which reduces the probability of success as well.
Meanwhile, if the product fizzles, some users who liked the product will be bummed when it's killed. To the extent these core users are the company's most loyal customers, the company is alienating the wrong people.
As a result, I think companies should be a little choosy about what gets released and then invest adequate resources to give those offerings the best chance of success. This doesn’t seem to be Google’s modus operandi, and over time I think their high rate of product fizzles diminishes the Google brand and my willingness to rush out and embrace their latest offerings.
2) As the BusinessWeek article points out, Google biggest risk isn't new product flameouts, it's middling successes. Flameouts are easy--kill them quickly and mercilessly. The experiment still cost some upfront investment, but a quick exit avoids ongoing resource drains.
In contrast, middling successes require constant attention from many facets of the company--e.g., engineering (especially for bug fixes and code integration with new offerings), finance, legal, marketing--without necessarily producing the desired returns. Meanwhile, they consume a lot of managerial attention--someone is constantly deciding whether to invest, maintain or kill as well as dealing with all escalated issues.
So, in a diversified empire with lots of so-so marketplace successes, managers are constantly paying attention to maintaining the underperformers rather than investing in the next star. Ultimately, this makes an entire enterprise gummier--it gets harder for things to get done, slows down the pace of innovation, and gives an advantage to competitors who aren't worrying about maintenance. As a result, I think Google’s shotgun product “strategy” depresses its prospects.
Posted by Eric at 01:46 PM | Search Engines | Comments (2)
July 04, 2006
KinderStart Hearing and Source Documents
By Eric Goldman
There was a hearing in the KinderStart v. Google case last Friday. The CNET News.com report does a good job recapping the action. (Here's the recap from the Register). You should read the whole News.com article, but here's my take from the News.com report: KinderStart's First Amendment claim looks DOA (surprise!), but the antitrust-based claims may survive the motion to dismiss (or at least get another chance to be pled).
Personally, I think the antitrust-based claims will be tough to plead, let alone win. Although Google permeates our lives (and comprises about 85% of the search engine referrals to my blogs), most stats still indicate that Google has a less than 50% share of the search engine market. While this stat alone isn't dispositive to an antitrust claim, I just don't see how KinderStart can marshal up enough facts to show antitrust violations.
Meanwhile, some new source materials in this case:
* the First Amended Complaint
* KinderStart's opposition to the motion to dismiss
* Google's reply to that opposition
* Gregory Yu's page where he's soliciting potential plaintiffs for a class
I've previously posted other documents in this case, including
* the initially filed complaint
* Google's motion to dismiss
* Google's motion to strike (anti-SLAPP motion)
My previous coverage:
* My deconstruction of the initial complaint
* Commentary on Google's motion to dismiss and strike
And finally, some related coverage:
* Roberts v. Google (ranking lawsuit withdrawn for fear of an anti-SLAPP motion)
* Langdon v. Google (lawsuit seeking a "must carry" obligation for Google)
* my article on search engine bias, where I document the various ways that search engines skew their results but then explain why this bias is beneficial
UPDATE: A transcript of the June 30 hearing. I haven't had a chance to digest this, but it looks like there is lots of good stuff in here--much more color than the newspaper reports.
UPDATE 2: Rebecca Tushnet weighs in on the case. She thinks that the false advertising claim might have some traction (a point I agree with), although KinderStart might not be the right plaintiff, and she explains why Google's anti-SLAPP counterclaim should fail.
Posted by Eric at 05:56 PM | Search Engines | Comments (1)
July 03, 2006
Griper Gets 47 USC 230 Defense for Reposted Article--D'Alonzo v. Truscello
By Eric Goldman
D'Alonzo v. Truscello, 2006 Phila. Ct. Com. Pl. LEXIS 244 (Phila. Ct. Common Pleas May 31, 2006)
Another 230 case, another defense win. Yawn. However, this case is noteworthy because it addresses (albeit, glibly) a thorny 230 question: can a web operator claim 230 for third party content that the web operator made the affirmative and international decision to grab and post without the author's permission? This court answers yes.
The facts are a little unclear, but here's how I read them. A griper sets up a website (called dumpfumo.com) to bash a State Senator. The local paper (the Philadelphia Daily News) runs an article saying that some of the Senator's staff members, including the plaintiff, were being investigated. I believe the defendant then, on his/her own initiative, reposted the entire article to the gripe site. The Daily News retracted part of the story the next day, saying that in fact the plaintiff wasn't being investigated. This lawsuit ensued against the griper for republishing the erroneous Daily News story.
The judge sees this as a simple 47 USC 230 case. The griper's website was the interactive computer service. The Daily News was the information content provider. The lawsuit tries to hold the griper liable for the Daily News article. Described this way, this claim should be clearly governed by 230.
This issue may not be as simple as this judge treated it. An argument could be made that the defendant's decision to affirmatively grab and repost the content made the defendant into the content provider itself. This was the basic thrust of the Batzel case, which involved a private message sent to a blogger that the blogger reposted. The Ninth Circuit said that the sender's motivations mattered. If the sender submitted the content to the blogger for reposting, 230 applied. However, if the sender sent a private message not intended for public distribution, and the blogger made the independent choice to republish the message, then the blogger’s decisions cost 230 protection. Arguably, the defendant's choices in this case could be characterized the same way--the content was not intended for publication on the defendant's website, and the defendant presumably stretched copyright law to get it there.
Note that this issue is also part of the pending Barrett v. Rosenthal case, which involves a defamation claim against a person who made the autonomous decision to forward a third party's allegedly defamatory email. We're all eagerly waiting to see what the CA Supreme Court does with the Barrett case!
Posted by Eric at 03:39 PM | Derivative Liability | Comments (2)