January 31, 2007
Advertisers Settle NY Anti-Adware Action
By Eric Goldman
Earlier this week, the New York Attorney General's (NYAG) office issued a press release with the blazing all caps headline:
GROUNDBREAKING SETTLEMENTS HOLD ONLINE ADVERTISERS RESPONSIBLE FOR DISPLAYING ADS THROUGH DECEPTIVELY INSTALLED “ADWARE” PROGRAMS
Groundbreaking...or groundless? After all, as I've posited before, the argument that advertisers can be liable for the actions of their advertising venues has almost no legal support. So this settlement may be groundbreaking, but a cynic could argue that the settlement is also legally groundless.
So why settle if the advertisers didn't break the law? Arguably, the settlements merely represent the logical decision by innocent parties under pressure by out-of-control prosecutors who impose massive costs on their targets just by initiating an investigation. I think the specific settlement terms provide some perspective on this. Each of the three advertisers (Priceline, Travelocity, and Cingular Wireless) agreed to three basic operative terms:
* checks in an amount ranging between $30-$35k--an amount vastly dwarfed by the cost of litigating an NYAG enforcement action. Basically, these checks are a small fraction of the nuisance value of the lawsuits.
* a promise to include certain covenants in downstream ad agency or advertising partner agreements restricting the placement of ads into impermissible adware. This is a little bit of a pain because the advertisers may get some pushback from their business partners on the specific terms, but for the most part, this is a meaningless provision. It's easy for the settling advertisers to put the required language into their standard ad buy agreements (or some rider) and satisfy this burden.
* Knowing that talk is cheap, the NYAG added some bite to the previous obligation. Not only must the advertisers include language in their contract, but they must do quarterly audits to confirm that their ads aren't showing up on adware. THAT sounds like a fun job for an employee. Not only does this obligation burn some employee time every quarter, but they will need to buy that employee a disposable computer!
So, what do we learn from this settlement? Not much. We learned a long time ago that if Spitzer's office called with a baseless demand, generally the cheapest and most expeditious course of action is to strike a deal even if it makes your skin crawl. In this case, the decision was easy: settling cost a check that's less than the cost of litigating the defense, plus the loss of a few hours of an employee's time each quarter. Sounds like a pretty cheap way of getting out of prosecutorial cross-hairs.
But what should the advertising industry do in the wake of this enforcement action and settlement? One obvious solution is that every advertiser could contractually require that their ad agencies blacklist adware. This would be a nuisance, especially because it would impose extra burdens on advertisers who have never even used adware, and the value of proactively blacklisting depends in part on advertisers' risk tolerances and predictions of how Cuomo will run the NYAG office now that Spitzer has moved on. (It remains to be seen if Cuomo has the same appetite for bringing dubious enforcement actions as Spitzer.)
Alternatively, advertisers may gravitate towards a standard like the Trusted Download program. Requiring that downstream ad partners adhere to the Trusted Download standards will give advertisers significant legal cover the next time prosecutors get frisky.
Meanwhile, from an academic standpoint, I'm troubled that the advertising industry might change its practices based on a legal theory that the NYAG didn't prove in court and could be legally baseless. Therefore, I renew my call for anyone to articulate the legal doctrine on which advertisers should be liable for the behavior of their advertising venues (excluding spam, which is statutory), preferably with supporting caselaw precedent. I'm all ears.
January 27, 2007
Google Goes After Stoller
By Eric Goldman
Google v. Central Mfg Inc., No. 07CV 385 (N.D. Ill. complaint filed Jan. 19, 2007)
Leo Stoller is a notorious figure in the trademark community, especially among the hundreds (thousands?) of trademark owners he's targeted with demands for cash based on alleged infringement of his rights. As the Wikipedia entry relates, Stoller has been labeled by a court as a "vexatious litigant," repeatedly has been ordered to pay his targets' attorneys' fees, and filed so many time extension requests in the TTAB that the board limited his ability to file additional extension requests. I think many of his targets might consider him the #1 example of a "trademark troll." (See the 12,000+ Google hits for "leo stoller" and "trademark troll"). See also the NY Times profile from 2005.
There have been many attempts to curb Stoller's activities, but this lawsuit may be the most serious. Google has sued Stoller for false advertising, unfair competition and RICO violations for claiming that Stoller owns the Google trademark (and that Google doesn't). Rebecca and John Welch have the rundown. Google has the cash and mettle to challenge Stoller, they are sympathetic litigants, and they unquestionably know what it means to fight Stoller but chose to do so anyway. Should they succeed in their efforts, I think it's likely that other trademark owners who are targeted by Stoller will follow suit.
January 24, 2007
Anti-Spammer Wins 230 Defense--Pallorium v. Jared
By Eric Goldman
Pallorium v. Jared, G036124 (Cal. Ct. App. Jan. 11, 2007)
This case is another 230 defense win (using the rarely used 230(c)(2) provision) protecting anti-spammers for their efforts to combat spam.
Jared published a list of IP addresses for open relays so that others could use this as a blocklist. Pallorium's IP addresses got added to the list, and Jared allegedly refused a request to remove the IP addresses. So Pallorium sued Jared.
Jared defended on 47 USC 230(c)(2)(B), which says "No provider or user of an interactive computer service shall be held liable on account of...any action taken to enable or make available to information content providers or others the technical means to restrict access to material [that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable]." This rarely used provision suggests that filtering software vendors should not be liable for their filtering judgments, so on its face it looks like a useful defense here.
Pallorium attacked the 230 defense on 3 grounds:
1) Jared wasn't an ICS provider/user. Following the rationale of a long string of courts, the court rejects this by saying that publishing content via a web server accessible to multiple users makes him an ICS provider.
2) The statute does not protect blocking decisions based on a server's status as an open relay. The court rejects this by saying that so long as Jared deemed the content subjectively objectionable, his judgments were protected even if they were overinclusive.
3) Jared didn't provide "technical means to restrict access." The court says that Jared's system of automatically checking if a server was an open relay qualified as a technical means.
I wouldn't say that I was persuaded by the judge's explication on these three points, but the judges reached the right result. I think it's pretty clear that 230(c)(2) protects filtering judgments, and Jared was squarely in that sweet spot as a filtering database provider.
HT: Declan at News.com.
January 22, 2007
Ochoa on Unabomber Papers
By Eric Goldman
There was some press today about the government's efforts to resell papers of Ted Kaczynski (a/k/a the Unabomber). While the government makes those papers available in unmodified form to researchers, the proposal was to publicly sell some of the papers in sanitized form and turn the proceeds over to the victims' families. This has raised some complex issues about copyright, ownership of papers, the First Amendment, moral rights (including the government's right to modify the documents) and victim restitution. My colleague Tyler Ochoa has cut through some of the rhetoric to tell the legal story. He writes:
The factual background of this case is reported in U.S. v. Kaczynski, 306 F. Supp. 2d 952 (E.D. Cal. 2004), vacated and remanded, 416 F.3d 971 (9th Cir. 2005), on remand 446 F. Supp. 2d 1146 (E.D. Cal. 2006). It is the latter order that is being appealed by Kaczynski.
Kaczynski entered into a plea bargain, which included the following clause:
"The defendant agrees that he shall disgorge any monies paid in whole or in part to him or on his behalf, in return for writings, interviews, or other information disclosed by the defendant, including but not limited to access to the defendant, photographs or drawings of or by the defendant or any other type of artifact or memorabilia to the United States Probation Office for restitution or other distribution to the victims of the Unabom[b] events."
His sentence included an order of restitution to the victims of some $15 million. Under the Victim and Witness Protection Act, entry of judgment created a lien against his property until the restitution debt is satisfied.
After the trial, Kaczynski moved for return of his property, including his writings (but not including bomb-making materials and other contraband). The district court denied the motion, holding that the judgment lien gave the government a claim of ownership in the property. [It also denied his alternative motion that he be given photocopies of the documents.] On appeal, the Ninth Circuit vacated the order and remanded for further proceedings. It noted that the government's position that the property was of negligible value (because it should be valued without regard to his celebrity) was inconsistent with its position that the judgment lien gave it a possessory interest. It held that the government had a right to possession only if the property was necessary to satisfy the judgment lien. If the property had value, it had to be disposed of in a way that would maximize compensation to the victims; if it did not, it had to be returned. It remanded the case for the U.S. Attorney to come up with a restitution plan that met those requirements.
On remand, "the government proposed auctioning all of the writings except those containing 'diagrams and 'recipes' for making bombs.' Further, the government, on behalf of the Named Victims, requested that certain information be redacted from the writings prior to the auction, specifically, the names of 'all victims, regardless of whether they filed a restitution claim or not,' 'the names of their families,' all 'recognizable descriptions of the victims and their injuries,' and the names of 'intended victims.' " Kaczynski "asserted his original writings should be returned to him because an auction of the originals would violate the First Amendment. Kaczynski alternatively asserted that if the auction included his original writings, the First Amendment prohibits redactions of the originals, and he should receive unredacted copies."
On remand, the district court approved the restitution plan. It addressed the First Amendment issue as follows:
"Kaczynski contends the sale of his original documents would violate the First Amendment, even though he already has or will receive copies of all of his writings, because an 'original is always better than a copy' and has 'intrinsic historical and scholarly value that photocopies lack.' However, Kaczynski has not demonstrated what protected speech is contained in the originals that is not contained in the copies, or how a sale of the originals, when he possesses copies, implicates the First Amendment....
Kaczynski alternatively argues that if the original writings are included in the auction, the First Amendment prohibits the government from redacting any information from the documents. Again, Kaczynski fails to explain how alterations of the original physical documents, when he possesses exact copies, impairs his ability to communicate his ideas or otherwise violates the First Amendment."
Footnote 12 states:
"Although the government states it has provided Kaczynski with copies of all of his writings, Kaczynski asserts that he is missing some pages and that others are illegible. The government shall provide Kaczynski, though his designated recipient, with any page Kaczynski has not already received in readable form."
Footnote 13 states:
"Kaczynski also argues 'regardless of whether the government may sell Kaczynski's original papers, the restitution lien does not take away [his] literary rights to his papers.' The July 31 Plan only addresses the sale of the physical documents."
The district court's opinion makes it clear that the case involves possession and redaction of the tangible originals of the writings, and not the copyrights per se. The purchaser of the tangible originals will not possess the right to reproduce them; that remains with Kaczynski. So long as the redaction does not deprive Kaczynski of his ability to reproduce the documents, I fail to see how the redaction violates the First Amendment. It does not prevent Kaczynski from speaking or from publishing the unredacted writings (although the proceeds would have to go the victims under the plea bargain, which was voluntary, thus not implicating the Son of Sam decision). The purchaser knows the documents are redacted, so s/he is not mislead; and if the purchaser makes the documents available to the public for inspection, I would think a disclaimer noting they had been redacted would be sufficient to avoid any argument of compelled speech.
On the other hand, the order may not satisfy the Ninth Circuit's parameters. The reason the government has a possessory interest is the restitution lien, which is purely an economic interest; but the reason for redacting any reference to the victims is a privacy interest. An interesting question is whether the judgment lien gives the victims (who requested the redaction) the right to order modification or destruction of his physical property, when doing so will not further the purpose of the government's claim of possession, which is to accomplish restitution. In other words, should we consider only the victims' economic interest, or should we consider their privacy and emotional interests as well? I'm not sure the judgment lien is broad enough to take the latter into account, especially since Kaczynski could still publish the unredacted versions if he wanted to, which would be much more violative of the privacy interest than simply selling the tangible original. With regard to other (non-contraband) physical property, the government can't simply destroy the property; it has to either sell it or return it to Kaczynski. I don't see why the same shouldn't be true of the tangible original manuscripts. In other words, the modification may be improper under the statutory scheme, without regard to the First Amendment.
January 18, 2007
Delfino v. Agilent Cert Petition
Delfino v. Agilent, No. H028993 (petition for certiorari to California Supreme Court filed January 17, 2007)
I previously blogged about Delfino v. Agilent, which held that 47 USC 230 insulated Agilent from liability for an employee's use of its network to engage in tortious acts. As previously mentioned, the plaintiffs have appealed the case to the California Supreme Court. The petition for certiorari (warning: 2.2MB file). The odds against the court taking the case may be long; as far as I can remember, the California Supreme Court has taken only three Internet cases (Intel v. Hamidi, Barrett v. Rosenthal and Grace v. eBay--the latter of which they resolved without an opinion). In particular, given the recent pronouncement on 47 USC 230 in the Barrett case, I could see the court deciding to take a longer breather between revisiting that statute. But let's see what happens.
Separate 47 USC 230 topic: I've weighed in on the newest lawsuit against MySpace for facilitating sexual assaults at Concurring Opinions (where I am guest-blogging this month).
January 17, 2007
Rescuecom v. Google Appellant Brief
By Eric Goldman
Rescuecom v. Google, 06-4881-CV (2nd Circuit appellant brief filed January 12, 2007)
You may recall Rescuecom v. Google, which held that Google was not making a trademark use in commerce by selling trademarked keywords. This ruling resulted in a quick and decisive win for Google.
Rescuecom has appealed the case to the Second Circuit, the same court that decided 1-800 Contacts v. WhenU, which held that an adware vendor (WhenU) wasn't making a trademark use in commerce by selling trademarked keywords. You can find the appellant's brief here.
Disclosure note: I am planning to help write and file an amicus brief in this case on behalf of Google. Sorry, those of you eagerly anticipating my deconstruction of this brief will have to be patient.
January 16, 2007
Haifa University Search Engine Conference Recap
Haifa Conference Recap
On December 21, Haifa University Faculty of Law conducted an interesting cross-disciplinary and international inquiry into the law of search engines, with a whirlwind tour of about two dozen 10-minute presentations over a long 11 hour day.
In my opinion, our inquiry was hindered by a lack of a clear definition of “search engines.” One speaker told us to give up the pretense that we were discussing search engines generally and instead admit that Google was the real subject of the conference. While Google may dominate international markets even more than it dominates the US market, focusing the discussion on just Google does not advance the discussion much. With the portalization of Google, it was never clear if speakers were focusing on the paradigmatic keyword searches of a robotically generated content database or the broader portalized services.
This raises a fundamental question that never got adequately answered at the conference: can there ever be a specialized law of search engines if we can’t define search engines? Consistent with my usual skepticism, I wonder if search engine exceptionalism helps or hinders the discussion.
Speakers were allowed to select their own topics under extremely broad headings, and this left a number of topics virtually unaddressed: the words click fraud, trespass to chattels, GEICO, Rescuecom or 1-800 Contacts were mentioned only in passing or not at all. The fact that we could go almost 11 hours without reaching these topics shows the richness of search engine law.
Keep reading for my notes about each speaker (see also Stefan Bechtold’s recap of the conference):
(Note: if these squibs seem, at times, brief and general, recall the format of 10 minute presentations).
Niva Elkin-Koren (Haifa University Faculty of Law), How Search Engines Design the Public Sphere. She argued that search engines resemble other mass media players in their impact on public discourse.
Karine Barzilai-Nahon (University of Washington Information Sciences Department). She talked about how search engines act as gatekeepers, but their gatekeeping role constantly changes. She also argued that search engines do not have a monolithic approach to dealing with stakeholders.
Sheizaf Rafaeli (Haifa University Graduate School of Business). He noted six trends (1) we are moving from one-way communications to two-way communications, (2) interactive communications v. reactive communications, (3) broadcasting v. narrowcasting and the rise of the Long Tail, (4) linear communications v. non-linear communications, and disintermediation v. reintermediation. He drew 3 conclusions: (1) reintermediation creates a target for regulators, (2) advertising business models signal the end of a “free lunch,” and (3) concern about SEOs tricking search engines.
Judit Bar-Ilan (Bar-Ilan University Information Sciences Department), PageRank v. PeopleRank. She discussed the phenomenon of Googlebombing. Her conclusion is that individual actors can’t manipulate rankings much, but coordinated groups can. She thinks search engines should give lower weight to blog links accordingly.
Nico van Eijk (University of Amsterdam Institute for Information Law), Search Engines and Freedom of Expression. He discussed the difficulty of classifying search engines because of their common attributes with both telecommunications services and information services. Because they fit between these two regulatory classifications, he said that they are “lost in law.”
Einat Amitay (IBM Research Center, Haifa), Queries as Anchors. She discussed her efforts to optimize IBM’s intranet search function. Her approach was to look at query reformulations (she said 30% of the intranet’s searches are reformulations) and treat the final selected link as the “right” result and the rejected searches as the wrong ones. Thus, if a later searcher submitted one of the reformulated queries, the search results could also contain the “right” result as evidenced by the prior searcher’s behavior. She said that this approach improved the delivery of the right result the first time from 50% to 71%.
Bracha Shapiro (Ben-Gurion University Information Science Department), Social Search Engines. She discussed their experimental search engine “MarCol” that attempts to take advantage of crowd wisdom and that varies results based on people we trust. [Eric’s note: this sounds very much like how we sorted reviews at Epinions!]
Shulamit Almog (Haifa University Faculty of Law). She discussed whether search engines change the way we write as lawyers.
Helen Nissenbaum (NYU Culture and Communications Department), TrackMeNot. Easily the most contentious talk of the day! Helen discussed the software application that she developed with an NYU graduate student called TrackMeNot. The software automatically sends random queries to search engines so that any search engine tracking the user would have a mix of legitimate and bogus search results. She said that it has been downloaded 140,000 times, but this reflects multiple downloads by the same user getting new releases. She explained how the software reflected “Values in Design”:
1) the software was completely under the user’s control
2) Usability. The program is lightweight, easy to use, and configurable.
3) Privacy by obfuscation. Rather than trying to hide searches, everything is in plain view. Thus, the software works so long as the search engines can’t tell who is using it.
Does it work? Helen doesn’t know. She doesn’t think it will protect a user from a targeted investigation, but it might help prevent search engines from building customized profiles and from piecing together search results and deducing identity.
Helen’s talk exposed a divide between the IR people and the privacy advocates. Privacy advocates view the software as a great way to restore user control over their information. Meanwhile, the IR people believe in the power of databases, and thus junk data in the databases hurts their ability to accomplish their goals. (Nimrod called it “pollution,” which sparked some rebukes for his value-loaded choice of terms, and Daphne said that it creates a tragedy of the commons). Einat suggested that just like websites can use a robots.txt file, searchers should be able to use a users.txt file to tell search engines if they don’t want to be tracked. [Eric’s comment: I think this is just a variation on P3P, which was a huge failure, but at least Einat’s suggestion would allow users to opt-out without destroying the server logs for everyone else.]
Personally, I am not a fan of TrackMeNot. I called it a spambot because the software basically sends spam to the search engine databases (a later commenter said that my calling Helen a spammer was like calling her a terrorist--I was sure we were going to fulfill Godwin’s Law at that point). I believe TrackMeNot creates at least 2 negative externalities: (1) it consumes bandwidth and server resources, thus imposing costs on a variety of IAPs and the search engines, and (2) by preventing the search engines from being able to create profiles for anyone, it hurts those searchers who would derive value from search engines’ ability to rely on their server logs to improve the service.
However, even if the software creates negative externalities, that doesn’t mean that it’s a bad idea. Helen would respond that search engines impose costs on searchers by undercutting their privacy. I don’t agree with this critique, and I know search engines wouldn’t agree either. For example, Google would point out that users can opt-in to Google’s personalized search, and if they don’t, Google’s ability to profile them is very limited. However, my main beef is that I’m not clear how the Values in Design theory justifies correcting one set of perceived costs (the perceived degradation of privacy) by creating new costs (wasted packet processing and degradation of server logs as a reliable dataset for those searchers who want search engines to improve the service for them).
Nimrod Kozlovski (University of Tel Aviv), Proactive Policing—A New (Legal) Role for Search Engines. He discussed changes in how behavior is policed. Policing used to be reactive, but now it’s becoming proactive through online techniques like entrapment, traffic analysis for crime control, prediction of abnormal behavior and criminal monitoring. Search engines are well-positioned to aid policing—they can block websites, block terms, provide security alerts of risky sites, and monitor searches. He wonders about the implications of turning search engines into private police.
Itai Levitan (Easynet) gave a brief tutorial on SEM/SEO.
Daphne Raban (Haifa University Graduate School of Business), Social and Economic Incentive: the Google Answers Information Market. She was conducting an interesting analysis of profit-maximizing behavior in Google Answers before Google pulled the plug on the service.
Ariel Katz (University of Toronto Faculty of Law), Search Engines, Copyright and the Limits of Fair Use. He discussed the possibility that collective rights organizations could reduce the negotiation costs between search engines and rights owners. If search engines predicate their infringement defenses on high negotiation costs, CROs could eliminate that defense. However, he thinks fair use is better policy approach than CROs because of the social value that search engines generate by reducing “information overload externalities” as discussed by Frank Pasquale.
Irit Haviv-Segal (University of Tel Aviv Faculty of Law). She discussed the history of Lexis and Westlaw and the future of legal information databases. This talk sparked a lot of conversation. IR folks love to talk about the merits/demerits of structured search databases like Lexis/Westlaw vs. loosely structured databases like Google.
Joris van Hoboken (University of Amsterdam Institute for Information Law), Search Engine Neutrality. He sketched out both sides of the debate about search engines’ roles as media: their role in providing access to harmful content, their possible biases in sorting content, the possible “winner take all” effect of search results placement, and whether there are enough checks and balances (law, technology, market forces) to hold search engines accountable for their decisions.
Ziv Bar-Yossef (Technion Electrical Engineering Department and Google Israel Research Labs), External Evaluation of Search Engines via Random Sampling. He discussed research (before he joined Google) into the database size wars. Size matters because it indicates comprehensiveness, the ability to serve narrow topic queries, and prestige. But, size isn’t the only measure of quality; others include freshness, topical bias, presence of spam results and inclusion of unsafe results (i.e., clicking on them takes users to viruses). However, there is no widely accepted benchmark for measuring search quality.
According to his study from last year, if Google’s database size = 1, Yahoo’s was a 1.28 and MSN was (if I recall correctly) 0.78. Further, Google linked to approximately 2% dead pages, while Yahoo and MSN linked to about 0.5% dead pages. Based on these numbers, a possible inference is that Google’s database is smaller and more junky than Yahoo’s. However, Ziv did not attempt to exclude spam pages from the study, so another inference is that Yahoo does a poorer job screening out spam pages.
Tal Zarsky (Haifa University Faculty of Law), Search Engines and Media Concentration Policy. He asked two interrelated questions: do search engines moot media regulation, and should media regulation policy apply to search engines? This led to a series of interesting questions, including:
• do search engine promote diversity, competition and localism?
• do people really substitute the Internet for other media?
• Even if they do, is there concentration within the Internet itself?
• What other information retrieval methods do online searchers use?
Avishalom Tor (Haifa University Faculty of Law). Search engines accomplish pro-competitive objectives: they increase the flow of information and expand advertising options. But is there only good news? From an antitrust perspective, they raise a number of issues. What is the relevant market--End users? Information publishers? Advertisers? Search engines also pose a regulatory challenge because the markets change so rapidly. For example, will search engines blur into the browser market? He asked a really interesting and provocative question: if Google and Microsoft wanted to merge, would this be a problem, and if so, in what market?
Charlotte Waelde (University of Edinburgh School of Law), Search Engines and Litigation Strategies. She asked whether it’s more accurate to think of search engines as free riders or fair innovators. Her two paradigmatic examples were Google Book Search and keyword ad triggering. She raised concerns about the implications of transborder search engines and differences in legal rights. For example, assume that displaying book snippets in Scotland is not an infringement, and the book scanning takes place in the US and is deemed fair use. In that case, would Google be free from liability in Scotland, even if the book scanning wouldn’t be fair use/fair dealing if performed in Scotland? [Eric’s note: I just picked Scotland as an example] She wonders if this will lead to regulatory competition and forum shopping by search engines.
I’ve given up tracking international keyword cases (too many of them, and too confusing), but she mentioned two interesting points on this front. First, she said that defense and plainitff wins in keyword cases are running 50/50 in Germany; it appears that courts just can’t seem to agree anywhere in the world. She also indicated that a French court apparently has issued an order that expects Google will proactively inform AdWords advertisers which keywords are protected by trademark law. This would be an interesting development—right now, Google’s Sandbox (at least, in the US) already prompts advertisers to buy competitors’ trademarks without any warning. Yet, in theory, Google could integrate the registered trademark database into its ad placement tools.
Stefan Bechtold (Max Planck Institute of Common Goods) discussed search engines and opt-out. He said that one could style the opt-out approach as a weakening of property rights, but it’s unclear if this is good or bad. With respect to Google Book Search, he asked whether the best option is for a private intermediary to offer it, or maybe it should be offered by the government or by the copyright owners themselves. He observed that copyright law struggles with emerging intermediaries that use unusual revenue streams. He also observed that search could become more decentralized through search models like P2P file-sharing. This would increase the transaction costs of rights negotiations because there are more players.
Michael Geist (University of Ottawa Faculty of Law) discussed how search engines promote access, and how legal doctrines can protect search engines for doing so (230, 512, cases like Kelly v. Arriba and Field v. Google). However, increased access has unintended consequences. First, search engines increase the transparent society, and second, search engines capture search queries, which are the “database of intentions.” He raised three concerns about the limits of legal regulation. (1) a privacy protection regime focused on protecting just personal information may not go far enough because otherwise-anonymous data bits can be strung together. (2) In an opt-in/opt-out approach, consent may not be clear enough. (3) In some cases, simply creating liability may not go far enough.
David Gilat (practicing lawyer at Reinhold Cohn Group), Trademark Protection and Keyword-Triggered Advertising. He discussed Matim Li v. Crazy Line Ltd., a July 2006 Israel district court opinion holding that Google Israel isn’t liable for keyword triggering. He thinks that even though we can develop tools to enable searching, it doesn’t mean we should use them. He also was concerned that liberalized trademark rules in cyberspace may migrate back to liberalize trademark rules in physical space. [Eric’s comment: I kept my mouth shut on all of this. I’ve never found much upside from trying to correct the multitude of erroneous assumptions made by plaintiff-oriented trademark lawyers.]
Eric Goldman (Santa Clara University School of Law), Search Engines and Transaction Costs. As regular readers of this blog know, there are so many interesting angles of search engine law that it was hard to pick just one. I could have done a recap of my Deregulating Relevancy article to explain what we know about searcher behavior and how this undercuts the emerging trademark doctrines in cyberspace. Or, I could have done a more practitioner-oriented analysis of the latest in keyword law. (It turns out that my audience was comprised heavily of students, so they may have actually preferred that). Or, given that click fraud rarely got discussed at the event, I could have presented a click fraud recap.
Instead, I decided to do a topic that was a little out of my normal schtick because of the general theme of search engines and IP law. I thought it would be worth reconsidering search engines’ general approach that they can do whatever they want so long as they provide an opt-out. I find this argument fascinating because it’s difficult to identify other IP doctrines where a secondary user can mitigate liability by providing an ex post cessation of activity.
So this raises a basic question: if there aren’t good precedents, is there some reason that we should create search engine exceptionalism? To consider this, I ran through a typical but irresolute Coasean analysis to show that we might conclude that search engines must live in an opt-in regime across all of their IP usage—even if this means that search engines ultimately cannot be profitable, in which case there really wouldn’t be an economically viable niche for search engines after all costs are considered. Everything in my gut tells me this isn’t the right outcome because of the positive spillovers that search engines have on consumer search costs. However, unless search engines are truly unique in this respect, maybe the conclusion that secondary users should be allowed to mitigate liability through an opt-out regime should not be limited just to search engines, but might apply more broadly to other secondary users as well.
Tal correctly pointed out that property boundaries are inherently elastic, so even if there is a lack of precedent for opt-out regimes, that doesn’t mean much. Eli Salzberger (Dean of the Haifa University Faculty of Law) also noted his article with Niva that says the Coase Theorem doesn’t adequately account for the change in respective avoidance costs that will occur in the future as technology changes (also correct).
Conclusion. The conference website has more details about the event, including PDFs of a number of the presentations.
January 12, 2007
INTA Roundtable: Legal Issues in Marketing and Advertising
By Eric Goldman
I plan to participate in INTA's Roundtable on Legal Issues in Marketing and Advertising in Palo Alto January 30. I'm not quite sure what to expect from the roundtable (this will be my first INTA Roundtable event), but I'm trusting it will be fun.
January 11, 2007
Barrett v. Rosenthal Battle Spills Over to Wikipedia
By Eric Goldman
The Barrett v. Rosenthal lawsuit may have been decided decisively in Rosenthal's favor, but that doesn't mean the litigants are done shooting at each other. On the contrary, Polevoy and Rosenthal are still going at it, this time on the Wikipedia talk page for the Barrett v. Rosenthal Wikipedia entry. If you want to see the exchange between two people who clearly don't like each other, check it out.
January 10, 2007
December 2006 Quick Links
By Eric Goldman
* JP Enterprises, Inc. v. HDVE, LLC, 1:06-cv-01046-REB-PAC (D. Colo.). In June 2006, JP Enterprises sued Yahoo for selling its trademarks for keyword-triggered ads. In December, JP Enterprises and Yahoo stipulated a dismissal of the case against Yahoo (the remaining defendants weren't affected), presumably based on a settlement.
* Domain name valuations continue to rise. The latest overvalued domain name? Vodka.com, selling for $3M. This totally perplexes me. Can you imagine what $3M of well-spent PPC advertising would do?
* Amidst the TLD proliferation, ICANN is thinking about retiring some TLDs, such as .su for the (extinct) Soviet Union.
* According to ClickTales, "76% of the page-views with a scroll-bar, were scrolled to some extent[, and] 22% of the page-views with a scroll-bar, were scrolled all the way to the bottom." From a legal standpoint, currently we assume that content “below the fold” usually is legally irrelevant. However, if users routinely scroll down on pages, this may require rethinking.
* Forbes' special report: "Books." Especially interesting stories:
- The Secret Life Of An Online Book Reviewer
- Cory Doctorow, Giving It Away
- Stop Worrying About Copyrights
- Publish And Perish (about picking storage media to archive human knowledge)
- The Networked Book (about using blogs as a complement to the book authoring process)
* How about this manipulative practice? Yelp, the local consumer review guide, pays "marketing assistants" to leave positive comments for review authors to "help make Yelp appear to be a vibrant and outgoing community in hopes that it will actually become one." As the BusinessWeek article says, "Some reviewers may be turned off by the notion that an ostensibly disinterested fellow user is getting paid to compliment their writing." Ya think? Hiring professional back-patters crosses my line.
UPDATE: I got the following email from Jeremy Stoppelman, founder of Yelp:
The Businessweek article is misleading so I can understand how you got that impression. Our system breaks down as follows:
Community Managers - responsible for local marketing & pr, organizing yelp events (offline) and for welcoming people to the site. People who are active in the community generally know this person (and that they are an employee) since they are organizing local events and emailing users all the time.
Marketing Assistants - the first people in a new market (that has little-to-no community), they are paid to update our crappy yellow pages data and write some of the first reviews (e.g. make the site not empty). We initially suggested they get active (post on talk, compliment if someone shows up), but turned away from that quickly (for the same concerns you raised).
The only critique left is that these people aren't badged and I totally understand this issue (minor, but real). Therefore we decided before Christmas break we should badge all our marketing & community staff. This change should be out later tonight.
* The magazine Nature has ended its experiment with an open peer review process. Why? According to the AP, "The journal concluded that many researchers were either too busy or had no real incentive in evaluating their colleagues' work publicly. In addition, none of the editors found the posted comments influenced their decision whether a paper gets published." No point in manufacturing metadata if it's not going to change the decision anyway! But this raises a related question--what incentives are needed to produce useful metadata?
* As written up in the NYT, Sao Paulo has outlawed a wide variety of outdoor advertising, including billboards, leaflets, advertising on the sides of buses/taxis, and via airplanes and blimps, and has promulgated strict rules on commercial signage. This is a radical experiment in the effort to reduce visual clutter by squelching the availability of a major class of advertising. But Chris Hoofnagle (who pointed out the article to me) wonders, where are these ad dollars going to go? Presumably they will be redirected into different ad media, with uncertain consequences. For more on the effect of regulation in one advertising medium on advertising in other media, see my Coasean Analysis of Marketing article.
* In response to the Google/China flap, the State Department in February 2006 established the Global Internet Freedom Task Force (GIFT). On December 20, the GIFT issued a press statement outlining its "GIFT Strategy" consisting of 3 principal points:
- MONITORING Internet freedom in countries around the world
- RESPONDING to challenges to Internet freedom.
- ADVANCING Internet freedom by expanding access to the Internet.
I wonder if this effort will moot the need for the Global Online Freedom Act?
* BusinessWeek article on domain tasting (with the wildly hyperbolic title "The Great Internet Brand Rip-Off"--an editor ran amok!). Domain tasting always has struck me as a silly issue. Of course if you offer marketers a way to get exposure to consumers for free, some of them will abuse it! But I just have to believe that the legitimate utility of the 5 day refund period is low, if not zero. So the refund period should be killed, and consumers who make a typographical error when registering domain names should be SOL (much like it's almost impossible to fix an error if a consumer buys the wrong non-refundable airline tickets).
* Rick Skrenta: "RIP DMOZ: 1998-2006."
* Tom Smedinghoff wrote an excellent recap of last year's developments in the field of information security law: Where We're Headed — New Developments and Trends in the Law of Information Security.
* In December, Shuman (Google's click fraud czar) reportedly said that Google's click fraud rates were less than 2%, but then Google backpedaled and obfuscated about what Shuman had really said. In yet another terrific post, Danny sorts through the mess and tells us what we know and don't know about click fraud rates. Read the whole thing.
* Jeffrey Rohrs is one of the people I trust for expert opinions. I don't agree with his plaintiff-side orientation, but I respect his perspectives. He's written an analysis of the click fraud issue that he calls the Sausage Manifesto. A recap of Google's responses to the manifesto.
* Jennifer Granick predicts that EULAs and the law of mass surveillance will be the hot legal issues of 2007. Both seem good bets; I'd add to that list that this year we'll spend a lot of time irresolutely chasing our tail on the net neutrality issue.
January 09, 2007
Competitve Keyword Purchase Doesn't Contribute to Actual Dilution--Nautilus v. Icon
By Eric Goldman
Nautilus Group, Inc. v. Icon Health & Fitness, Inc., 2006 WL 3761367 (W.D. Wa. Dec. 21, 2006)
In a long-running dispute, BowFlex sued competitor CrossBow for trademark dilution. CrossBow moved for summary judgment, claiming (among other things) that it did not "actually dilute" BowFlex's trademark. (This standard has reverted back to the pre-Moseley standard based on the TDRA--see Rebecca's puzzlement about the use of pre-TDRA law here). In agreeing with CrossBow's argument, the court notes that CrossBow's purchase of search keywords containing BowFlex does not cause actual dilution:
Second, plaintiff has failed to evidence that defendant actually used the Bowflex trademark. Plaintiff points to the fact that defendant used the Bowflex mark to advertise its CrossBow products both through the purchase of internet keywords and by telling its customers that it was BowFlex. The Court rejects both of these arguments. It is clear from defendant's evidence that it purchased the keyword Bowflex only in the context of comparative advertising. Defendant's witness Amy Guymon, the person in charge of purchasing keywords, identified the single term in which it used the word Bowflex--"Bowflex information"--and testified that the term was purchased so that defendant could appear as a "sponsored link" on the search results page of a search engine. The title of that sponsor link was "Compare CrossBow to Bowflex." The description that followed the title asked users to compare the two machines, and summarized what the CrossBow machine had to offer. The URL was listed as www.crossbow.com. It is well-settled in the Ninth Circuit that such use of a trademark is excepted from the reach of the statute. Playboy Enters., 279 F.3d at 806 (explaining that such uses do not create an improper association between a mark and a new product, but merely identify the trademark holder's products).
We haven't seen too many dilution challenges against purchasing keywords. This case might suggest that such dilution claims not be favorably received. Then again, given that this case applied pre-TDRA law, a post-TDRA court could be more receptive. As usual, though, the exact words in the ad copy appear to make a difference.
January 08, 2007
Kremen Loses Challenge to ARIN's IP Address Allocation Policies--Kremen v. ARIN
By Eric Goldman
Kremen v. American Registry For Internet Numbers, Ltd., No. C 06-02554 JW (N.D. Cal. Dec. 20, 2006)
In a previous post about the Sex.com saga, I mentioned that Kremen had sued ARIN for its refusal to transfer over a block IP addresses assigned to Cohen without unwanted conditions. (ARIN was willing to transfer the IP addresses, but only on conditions that Kremen did not accept). I indicated that this case was potentially significant because ARIN's IP address allocation practices have not been judicially critiqued before, and such a review might lead to unexpected results.
Unfortunately, this case may not give us any greater insight into the legitimacy of ARIN's practices. Instead, the judge threw out Kremen's case on a technicality--expired statutes of limitations (SOLs). The judge, in a tersely worded opinion, concluded that the SOL commenced November 2001 when ARIN initially refused to assign the IP address blocks in response to Kremen's demands, and there were no new transgressions that reset the SOLs. All of Kremen's claims had 3 or 4 year SOLs (expiring no later than November 2005), and Kremen sued in April 2006, so the judge granted ARIN's motion to dismiss all of the claims.
However, Kremen's past litigation history suggests that he may very well appeal this ruling, so this case may not be over yet.
January 05, 2007
Keyword Ads and Metatags Don't Confuse Consumers--J.G. Wentworth v. Settlement Funding
By Eric Goldman
J.G. Wentworth SSC Ltd v. Settlement Funding LLC, No. 06-0597 (E.D. Pa. Jan. 4, 2007)
The keyword advertising legal roller-coaster continues. Last time I blogged on the matter in the Buying for the Home case, I indicated that plaintiffs and defendants traded wins in 2006. Consistent with the pattern, this time the defendant gets the win [see FN below]--although this time the win was based on (the lack of) likelihood of consumer confusion, not the use in commerce requirement as I predicted.
Even though this case didn't quite fit the pattern, this is a big win for advertisers. The court holds that, as a matter of law, the use of keyword-triggered ads and keyword metatags cannot confuse consumers if the resulting ads/search results don't display the plaintiff's trademarks. Given the inconsistencies of past rulings, I simply don't believe that this case will be the final word on the matter. However, if other courts follow this conclusion, we would see a reduction in the quantity of silly litigation over keyword advertising and keyword metatags.
The plaintiff claims to be the market leader in buying settlement funding (i.e., converting the promise of future settlement payments into an upfront cash payment). The defendant is allegedly the #2 competitor. The defendant bought the keywords "J.G. Wentworth" and "JG Wentworth" in Google AdWords and put the defendant's trademarks (it's not clear exactly which terms) into the keyword metatags of its websites.
However, the plaintiff did not allege that the ads or search results displayed the plaintiff's trademarks. As a result, this case is purely about "behind the scenes" uses of the trademarks as ad/content triggers.
(I'm intentionally overlooking the fact that most search engines, including Google, ignore keyword metatags, so they don't have any triggering power. When will courts get this message??? In this case, the plaintiff claims that the defendant's websites are in the top 10 search results for plaintiff's trademarks, although we know this has nothing to do with the keyword metatag usage.)
Trademark Use in Commerce
The court acknowledges the split of opinion about whether buying keyword ads constitutes a trademark use in commerce, citing on the defendant's behalf the Wells Fargo, U-Haul and 1-800 Contacts adware cases. However, the court is more persuaded by the Buying for the Home argument that triggering ads based on a trademark is a use in commerce in connection with goods or services. Thus, the court concludes, "By establishing an opportunity to reach consumers via alleged purchase and/or use of a protected trademark, defendant has crossed the line from internal use to use in commerce under the Lanham Act."
What does "establishing an opportunity to reach consumers" mean? This language is sufficiently opaque to defy easy analysis. If getting exposure to a competitor's customers is a trademark use in commerce, then I assume that creating shelf space adjacencies in retailing environments should also qualify. This would be a crazy result. Fortunately, the court doesn't stop the analysis there.
Likelihood of Consumer Confusion
Few of the precedent cases have reached summary judgment on the likelihood of consumer confusion issue. Usually the matter is reserved for a trial on the facts. But this court resolves this issue as a matter of law, with potentially significant implications. The court holds:
Even accepting plaintiff’s allegations as true – i.e., assuming that defendant did in fact use plaintiff’s marks through Google’s AdWords program or in the keyword meta tags for its website – as a matter of law defendant’s actions do not result in any actionable likelihood of confusion under the Lanham Act.
The court focuses on the plaintiff's claim of initial interest confusion and observes that the IIC doctrine had not been applied to keyword metatags by the Third Circuit. Then, the court takes issue with the 9th Circuit Brookfield case, rejecting that case's bald and unsupported assertion that consumers will simply settle on competitive offerings they chance upon. Instead, the court correctly notes that consumers choose among the search results/ads presented to them, and those results or ads didn't display the plaintiff's trademarks. Thus, "Due to the separate and distinct nature of the links created on any of the search results pages in question, potential consumers have no opportunity to confuse defendant’s services, goods, advertisements, links or websites for those of plaintiff."
Even though I'm thrilled with the result in this case, I think the court got the analysis wrong on two fronts. First, I think that neither buying competitive trademarks as keyword nor including trademarks in keyword metatags constitute a trademark use in commerce because neither activity is perceivable by the consumer. Second, I think that it's very difficult to make any determinations (even a pro-defendant determination) about likelihood of consumer confusion based on ad copy without reviewing the ad copy in question; this may necessitate the review of dozens or even hundreds of different ads. As a result, I think this court was being a little glib granting summary judgment on the likelihood of consumer confusion question, even if the ad copy never used the trademarks in question.
Nevertheless, this case stands for two clear legal propositions:
* if keyword-triggered ad copy doesn't display the plaintiff's trademarks, plaintiff loses
* if search results don't display the plaintiff's trademarks even though the trademarks were included in the keyword metatags, plaintiff loses
Now, let's see if future courts will follow these sensible conclusions!
I'm ignoring a case I just discovered called International Profit Associates v. Paisola, No. 06 C 6154 (N.D. Ill. Nov. 14, 2006), which was an ex parte application for a TRO against a griper/alleged extortionist (i.e., someone who allegedly said that he would stop saying bad things if he got some money). Because it was ex parte, the court didn't do a particularly careful job diligencing the plaintiff's arguments. In any case, the court said that the plaintiff established that the defendant used the plaintiff's trademarks in the text of Google Adwords advertisements and in the domain name "ipaopinion.com," and these activities supported a TRO. I don't think this case has any real precedential value, and the parties settled the dispute (presumably after they actually started talking to each other) in December. However, purists might count this as a plaintiff's win in between Buying for the Home and the JG Wentworth case, disrupting the pattern further.
January 04, 2007
Cross-Border Legal Challenges in High Tech Law, January 26
By Eric Goldman
Our student-run Computer & High Tech Law Journal is putting on a conference, Cross-Border Legal Challenges in High Tech Law, January 26 at the San Jose Museum of Art. See the conference website. It would be great to see you there.
January 03, 2007
Court Reiterates 230 Dismissal--Doe v. Bates
By Eric Goldman
Doe v. Bates, 2006 WL 3813758 (E.D. Tex. Dec. 27, 2006)
I previously blogged about Doe v. Bates, which involved a plaintiff trying to hold Yahoo liable for child pornography disseminated by members of one of its egroups. At least one member of the egroup (the named defendant, Mark Bates) has gone to jail for his involvement in the child pornography distribution.
In January 2006, the magistrate dismissed the complaint per 230. In December 2006, the judge adopted the magistrate's opinion. In doing so, the judge reiterated that 230 preempts civil claims predicated on federal criminal statutes. In combination with the Voicenet v. Corbett case, which came out in August and reached the same conclusion, we're beginning to see the development of a body of case law confirming this legal principle.
January 02, 2007
Employer Not Liable for Employee's Threatening Emails Per 47 USC 230--Delfino v. Agilent
By Eric Goldman
Delfino v. Agilent Technologies, Inc., 2006 WL 3635399 (Cal. App. Ct. Dec. 14, 2006)
Prior to this case, my working theory was that 47 USC 230 would not insulate employers from liability for employee actions because companies can only act through their employees. Yet, this case holds exactly the opposite. As a result, this case may mark an important expansion of the 230 defense. At minimum, it signals that management-side employment lawyers may have a new defense tool at their disposal. At the same time, I don't think this case will be followed in many future cases, so its ultimate impact may be less significant than it initially appears.
In this case, an Agilent employee used Agilent's network to access the Internet and make cyberthreats that were unrelated to the employee's job. The people who were targets of the threats sued the employee as well as Agilent as his employer. The court rejected the claims against Agilent both on 47 USC 230 grounds as well as standard doctrines limiting employers' liability. The application of 230 in the employment context is, I believe, unprecedented, and the court acknowledged this. However, the voluminous and defense-favorable body of 47 USC 230 case law (including the recent Barrett v. Rosenthal Supreme Court opinion) appeared to encourage the judge to read the statute expansively.
Personally, I think this reading is unnecessarily broad. This case could have been easily resolved on the standard defense doctrines that excuse an employer from liability for an employee's behavior unrelated to the employment, so there was no need to reach the 47 USC 230 defense.
Further, if employers can claim that 47 USC 230 applies to their employee's conduct even if conducted within the scope of the agency, then 230 swallows up almost all of corporate tort law online, providing an airtight defense to every company for any online liability (because such tortious behavior is always carried out by some employee in the scope of the agency). This isn't what 47 USC 230 does or says. Due to the agency between employer and employee, a corporation cannot claim that its employee's content is the content of another information content provider, so the 47 USC 230 defense should fail for employees' actions.
As a result, at most, I think future courts will follow this holding only to the extent that the corporation is merely acting as the Internet access provider for an employee's conduct that is completely unrelated to the company's interests. In other claims against the employer for employees' actions, 47 USC 230 generally should not apply.
UPDATE: According to the local legal paper The Recorder, the plaintiffs plan to appeal this ruling. It wouldn't surprise me if this ruling gets reversed on appeal.
January 01, 2007
2006 Blog Year-in-Review
by Eric Goldman
Most Popular Blog Posts of the Year
1) O'Reilly and the "Web 2.0" Trademark
2) NYT on Fair Use and Documentaries (overflow from Slashdotting of #1)
3) GEICO v. Google Opinion (Finally) Issued
4) Competitor's Keyword Ad Purchase May Be Trademark Infringement--Edina Realty v. TheMLSonline
5) Lane's Gifts Click Fraud Lawsuit Near Settlement
6) Keyword Purchases Not a Trademark Use--Merck v. Mediplan Health Consulting
7) Griper Gets 47 USC 230 Defense for Reposted Article--D'Alonzo v. Truscello (I'm not sure why this post made the top 10 list. I think it may be fueled by comment/referral spam)
8) Downloading Music Isn't Fair Use--BMG v. Gonzalez
9) Search Engine Liability for Selling Keywords Redux--800-JR Cigar v. GoTo.com
10) KinderStart Second Amended Complaint
Overlooked Posts (some of my favorites that didn't get the traffic they might have)
* Unlawful Internet Gambling Enforcement Act of 2006
* Princess Bride and Jurisprudence
* Slinky Factory Tour
* Sexy Professors are Better Professors (?)
* Trademark Travesty of the Month--SMJ Group v. 417 Lafayette Restaurant
* Teenager Busted for Creating Fake "News" Story
* Piracy Loss Estimates as a Managed Number
* Your License, Registration and DNA, Please? (by Ethan Ackerman)
* The number of unique vistors in December 2006 was over double those in December 2005, and total visits and pageviews for the year were about 3X that from 2005. It's unclear how much of this was due to comment/referral spammers and other robotic activity.
* Google provided 88% of the referrals from search engines (last year it was 78%).
* Top 10 search phrases used by referrals to find the blog: geico, sex.com, barbri class action, 50.cent oprah, law professor salary, eric goldman blog, gifts for professors, law professor salaries, eric goldman, donotcall.gov
* The blogs have a total of about 860 posts, of which about 300 were made this year. Most commonly blogged categories include search engines (67 posts this year), derivative liability (47 posts), trademark (43 posts), copyright (37 posts) and adware/spyware (27 posts).
* As with last year, only about half of blog visitors used Windows Internet Explorer as their browser.
* Visitors came from over 150 countries, including Australia, Germany (#2 and #3), Malawi and Saint Vincent & Grenadines (with 8,000 Internet users in 2005 per the CIA factbook)
* Ad clickthrough rate of 0.38% with eCPM of $2.41. I'm not thrilled with these numbers.