June 29, 2007
Person v. Google Dismissed (Again)--This Time With Prejudice
By Eric Goldman
Person v. Google, Inc., 2007 WL 1831111 (N.D. Cal. June 25, 2007)
You may recall my previous coverage on this case. Person is a lawyer and a former candidate for NY Attorney General. He sued Google for antitrust violations based on its AdWords practices. The first court rejected his suit for improper venue. Person tried again in Google's home court, and Judge Fogel dismissed the lawsuit a second time (with leave to amend) in March. Person didn't give up, but this time Judge Fogel closed the door for good, dismissing the lawsuit a third time--this time with prejudice--because Person didn't cure the defects with his allegations of the relevant market. So this lawsuit should be over unless Person decides to take it to the Ninth Circuit.
While this particular lawsuit was misguided from inception, I doubt this is the last time Google will face antitrust challenges--especially given its ever-growing share of the search market.
June 28, 2007
Another Court in 2d Cir. Says Buying Keyword Ads Isn't TM Use in Commerce--FragranceNet.com v. FragranceX.com
By Eric Goldman
FragranceNet.com, Inc. v. FragranceX.com, Inc., 2007 WL 1821153 (E.D.N.Y. June 12, 2007)
This case shows the deepening split between the Second Circuit and other circuits on keyword triggering as TM use in commerce. This is now the fourth court in a Second Circuit jurisdiction voting that buying keyword ads isn't a trademark use in commerce (the others: Merck, Hamzik wrt keyword triggering only and Site Pro-1). (As an added bonus, this case, like the Site Pro-1 case, says that keyword metatags aren't a trademark use in commerce either). In contrast, the courts outside the Second Circuit opining on keyword ad buying (Edina Realty, Buying for the Home and JG Wentworth) have all gone the other way; along with the non-2d Circuit courts opining on search engine sales of keywords (GEICO, American Blinds, 800-JR-Cigar). (This court takes a nasty swipe at several of these cases, correctly pointing out that many of them conflate their "use in commerce" analysis with a "likelihood of confusion" analysis). Unless the 2nd Circuit reverses the Rescuecom case, it looks like plaintiffs are wasting their time bringing keyword lawsuits in a Second Circuit-controlled court.
Knowing that it faced an uphill battle, the plaintiff tried a few tricks to get around the precedent. First, it argues that NY state trademark law doesn't have a "use in commerce" requirement. This is an interesting area because so many courts glibly treat federal and state trademark law as equivalent without any analysis--even though many state statutes are worded differently from the federal statute. This court doesn't do deep analysis either (the matter gets handled in a long footnote--FN4), but the court explains why NY state trademark law requires a use in commerce even though those words don't appear in the NY statute.
Second, the plaintiff argues that its complaint is about "passing off" instead of standard trademark infringement. The court correctly thumps this argument, saying "Plaintiff does not allege that defendant is selling its product under plaintiff's name, nor does plaintiff allege that defendant is substituting its website in response to a request for plaintiff's website."
In support of its conclusion, the court discusses two of the typical analogies use to dissect keyword triggering. First, the court analogizes search results to a restaurant menu:
the allegations in the instant case are comparable to a situation where an individual requests Coca-Cola and, rather than being handed a Coca-Cola (or a Pepsi, as would occur in a situation of “passing off”), the individual is presented with a menu of choices that includes not just Coca-Cola as requested, but also soft drinks made by Coca-Cola's competitors. Contrary to plaintiff's assertion, such a scenario does not constitute “passing-off.” The competing products are not being sold under Coca-Cola's name, nor is the individual being handed a non-Coca-Cola product under the guise that it is Coca-Cola; rather, the individual is simply being shown alternatives. Thus, no goods are being sold under “false pretenses.”
Then, the court analogizes search results to store clustering where competitors locate their businesses next to each other to benefit from traffic overflow:
Though, as the Second Circuit noted, “there are many people who use a search engine before typing in a company plus.com,” Sporty's Farm LLC, 202 F.3d at 493 n. 4, this does not mean that companies must be prohibited from internally using trademarks so that a search of a trademark in a search engine only produces a single result. In the world outside the Internet, individuals in search of a company or product are not blinded to competitive products. In other words, it is not unlawful to strategically place billboards or even store locations next to billboards or store locations of competitors. For example, an individual in search of a McDonald's restaurant will often be confronted with a Burger King restaurant. As long as Burger King did not mislead the consumer under false pretenses to its location, the mere fact that it decided to place itself in close proximity to a McDonald's, in an effort to potentially draw customers in search of fast food, is not “passing off.” When these same marketing strategies are performed on the Internet, such strategies are not transformed into a “passing off” situation simply because the strategy is electronic.
Finally, the plaintiff tries to argue that the defendant should have negative matched its trademark. (See my discussion on this point in the Rhino Court case). I don't really understand the court's point in response (see FN9), but the court isn't impressed by this argument either.
All told, this is a terrific defense-side ruling! I don't know if it will help other courts recognize the errors in the existing pro-plaintiff precedent, but it's a persuasive and thoughtful opinion that future courts need to consider.
Commercial Referential Trademark Uses (Rescuecom v. Google Amicus Brief Outtakes)
By Eric Goldman
Earlier this year, I drafted the following as a proposed contribution to the law professors' amicus brief in Rescuecom v. Google. We ultimately decided to go in a different direction, but I'm posting the outtakes here for your consideration. I'm planning to explore this topic in future papers, so I would gratefully welcome your comments. For an example of exactly what I meant by a commercial referential use, see Universal Communication Systems, Inc. v. Lycos, Inc. (1st Cir. Feb. 23, 2007).
Commercial Referential Trademark Uses Facilitate Consumer Decision-Making
The Lanham Act does not govern every trademark “use.” Discussions and conversations about a trademarked good or service requires the communicating parties to use a common referent—the trademark. Thus, when trademark owners build a proprietary trademark asset, they simultaneously add a new word (or definition of that word) or other symbol to the social lexicon. We describe a trademark use for its lexical value as a “referential” trademark use, which is separate from a “source-identifying” use when a senior (or junior) user uses a trademark to distinguish the source of its own offerings.
Referential trademark uses pervade our society, such as in ordinary social discourse between individuals. For example, a wife may ask her husband to pick up a six-pack of “Coca-Cola” soda at the supermarket. These types of “private” referential trademark uses occur countless times every day, and Lanham Act does not purport to reach them.
The analysis does not change when a commercial enterprise referentially uses a third party trademark. For example, if a gossip magazine reports that a celebrity was spotted drinking Coca-Cola, the magazine is referentially using the Coca-Cola trademark. Like private referential uses, commercial referential uses are both ubiquitous in our society and outside the Lanham Act’s scope.
Commercial referential uses play a critical role in helping make smart and informed marketplace decisions. To make good choices, consumers must be informed about availability, specifications, strengths and weaknesses of marketplace options. Private word-of-mouth educates consumers somewhat, but the production and distribution of credible information often requires adequate financial incentives. Thus, consumers rely on an array of commercial publishers—including newspapers, magazines, broadcasters and emerging sources like online product review sites and bloggers—to provide the information needed to make good choices.
To perform this marketplace disciplining function, commercial publishers must use third party trademarks referentially. For example, a product review in a magazine necessarily must make extensive referential uses of a critiqued product’s trademark. Because these third party trademark references do not designate the magazine’s source, these uses do not satisfy the “use in commerce” requirement and thus remain outside of the Lanham Act’s scope—even if consumers buy the magazine, and even if the magazine sells advertising space adjacent to the product review.
The Internet has contributed to an explosion of credible information about trademark owners—from both private and commercial content providers—that has improved consumers’ ability to make smarter marketplace decisions. Congress recognized the importance of commercial entities’ contribution to these mechanisms by requiring that defendants make a “use in commerce” of the plaintiff’s trademark. This court should continue to provide breathing room for commercial referential uses.
Keyword Triggering is a Commercial Referential Use
When a trademarked keyword expresses the consumer’s interest in that trademark, the trademark is being used referentially. This is similar to the situation where a wife asks her husband to pick up a six-pack of Coca-Cola soda, but in this case, the wife asks the search engine to provide information relevant to the term “Coca-Cola.”
Knowing that consumers are making these referential uses, search engines like Google provide advertisers with the opportunity to respond to those referential inquiries. In effect, search engines say to advertisers: “a group of consumers have expressed interest in [trademark]—if you have something relevant to say to this audience, we can provide you with a way of reaching them.” Thus, the trademarked keyword becomes the “lingua franca” between consumers, advertisers and the search engine; each of them uses the trademark referentially as the shared referent that enables them to communicate with each other.
As the conduit enabling consumers and advertisers to communicate with each other using the trademark, search engines like Google make a commercial referential use of the trademark. In this respect, search engines’ use of trademarks do not differ from the commercial magazine that publishes a product review. In each case, the trademark provides the essential referent for a successful dialogue. As such, using it remains outside the Lanham Act’s scope.
Further, enabling search engines to make these commercial referential uses advances the goals of trademark law. Trademarked keywords allow consumers to improve their decision-making and, including comparative advertising, advertising for complementary products, advertising by resellers of used goods, advertising by providers of competitive offerings that may be better or cheaper for the consumer, and in some cases, advertising by aggrieved consumers who want to highlight problems with the trademarked product. Trademark law seeks to help consumers find what they are looking for, and unrestricted referential trademark uses for advertising purposes fulfills that objective.
BONUS: An outtake on why cases should be disposed on use in commerce grounds, not other grounds:
Therefore, the “use in commerce” doctrine provides the necessary breathing room for commercial content generation that helps consumers improve their decision-making. In contrast, Congress did not intend to rely on the “likelihood of consumer confusion” doctrine to protect such commercial activities. The fact-intensive nature of inquiring into consumer confusion makes it difficult to resolve cases on summary judgment, leading to many trials. Further, likelihood of consumer confusion is often established by experts, leading to an expensive battle of the experts.
Congress also had good reasons not to rely on the nominative use doctrine to protect commercial referential uses. The Lanham Act does not codify a nominative use defense, nor is it recognized by all circuits. See, e.g., PACCAR, Inc. v. Telescan Technologies, L.L.C., 319 F. 3d 243 (6th Cir. 2003) (Sixth Circuit declines to adopt the nominative use defense). Further, as an affirmative defense, defendants bear the burden of proving the defense, increasing defense costs and inhibiting defendants from making legitimate commercial referential uses.
June 27, 2007
Google Sued in Domainer Lawsuit--Vulcan Golf v. Google
By Eric Goldman
Vulcan Golf, LLC v. Google, Inc., No. 07CV3371 (N.D. Ill. complaint filed June 15, 2007) [WARNING! the complaint is a 4.3MB PDF]
Domainer litigation is heating up, and this lawsuit may be the most ambitious anti-domainer lawsuit to date. First, it is a putative class action lawsuit. Second, in addition to naming four leading domainer firms, the plaintiffs provocatively go after Google for providing ads to domainer sites. I believe this is the first lawsuit against Google for its domainer relationships.
The complaint itself is a 121 page, 638 paragraph (with one paragraph enumerating 47 defined terms), 4.3MB behemoth alleging trademark infringement and dilution, ACPA violations, RICO and other claims.
Much of the lawsuit focuses on Google's "AdSense for Domains" program specifically catering to domainers and domain name parkers. Google's program is somewhat obscure and unusual. It is only available to domain names that don't have any content (other than the ads provided by Google), and Google effectively takes control of the pages itself. As the program’s FAQ says, "AdSense for domains customers redirect traffic from parked domains to the AdSense for domains service. When Google receives the request, it processes the domain name and returns formatted HTML that includes contextual ads and related searches. Customers can either display the full page HTML or include it in a frame." The plaintiffs argue that, as a result, Google is effectively the domain name licensee, which enables plaintiffs to assert an ACPA claim against Google.
Functionally, the complaint says that a "domain name is not a search query" (para. 312). However, from my perspective, Google in fact treats the domain name exactly like a search query; the domain name acts like a keyword to trigger ads, no different from the way Google treats a searcher's keywords as a trigger for ads on its website. (I explain my view of the interrelationship between domain names and keyword triggers in much more depth here).
Whether domaining is a good or bad thing policy-wise depends on your view:
Con: Trademark owners complain about the typosquatting nature of most domainer pages. Indeed, Google is uncharacteristically solicitous of trademark owners upset by parked domains--in contrast to Google's normal policy that it won't disable trademarked keywords, Google will completely disable ads on parked domain names at the trademark owner's request. This raises the lurking issue about whether search engines can impose opt-out obligations on IP owners. At the same time, it makes me wonder if the class could get its desired results simply from following the complaint procedures. (The complaint rejects this approach, calling the trademark complaint procedures "audacious" and "illusory.")
Pro: Google and the domainers could point out that consumers who access these domain names are either going to see a 404 or a page of putatively relevant paid links, and the latter is more useful to them. In fact, according to this study, ads on parked automotive-related domains convert at 2X ads on search engines. So, perhaps these ad pages are more helpful to consumers than 404 pages.
There is a lot of interesting detail in the complaint, but I’ll just point to one more tidbit. The complaint notes that Google has repeatedly gone after typosquatters on the Google mark. It says "Defendant Google...has engaged in precisely the same illegal conduct ... that Google itself complained of....In fact, Defendant Google has taken the illegal conduct to a new and more egregious level" because (among other things) it profits from hundreds of thousands of illegitimate domain names and uses a "sham" and "illusory" trademark complaint procedure.
It’s hard to tell if a complaint like this will have legs. The plaintiffs’ attorneys did extensive research and provide a lot of detail, so the complaint lacks some of the deficient elements we often see in lawsuits against search engines. At the same time, the lawsuit could be gutted if the judge rules that none of the parties engaged in a trademark use in commerce—an open legal question that has not been resolved in the domainer context. Further, the lawsuit could effectively fall apart if the judge rejects formation of a class. Trademark class action lawsuits are rare for good reason-- trademark owners must establish the validity of their marks, the famousness of their marks (for dilution) and the similarity between their marks and the defendants' usage. These are all intensely fact-specific questions; none of which seem susceptible to class adjudication.
June 26, 2007
New Cyberlaw Fad--Real Estate Developers v. Griping Homebuyers
By Eric Goldman
We appear to be seeing a mini-trend of homebuilders suing griping homebuyers. Overlawyered's Walter Olson succinctly aggregated some cases, including:
* RSA Enterprises v. Bad Business Bureau and Google, a lawsuit doomed to failure (at least in Google's case) due to 47 USC 230.
* WBG Builders v. ConsumerAffairs.com and Garlic. Depending on the facts, ConsumerAffairs.com may be protected by 47 USC 230, but the news report indicates that WBG is suing the posters as well.
* While not exactly a developer v. buyer lawsuit, a home contractor (Sieber/SCS Contracting) sued a number of defendants for defamation based on postings to Angie's List. According to the DC Superior Court website, Sieber v. Mattera (Case # 2007 CA 002063 B) and Sieber v. Hammock (Case # 2007 CA 001726 B) each settled a month after filing, although Hammock's lawsuit against Sieber for contract breach is still pending (see Case # 2006 CA 006940 B). Sieber also sued Angie's List and some other defendants for malicious interference. Sieber v. Brownstone Publishing, Case # 2007 CA 002549. I think this claim is clearly barred by 47 USC 230 if it's based on user postings. The lawsuit was dismissed May 31 but revived; then all of the individual defendants (but not the named defendant) were dismissed June 11.
What's going on here? First, homebuilders are wasting their time suing sites that republish buyer complaints; those lawsuits should be preempted by 47 USC 230. Second, developers appear to be a little touchy. People always complain about their homes; as readers, we know that and can evaluate others' complaints accordingly. So a developer's lawsuit may appear to offer moral vindication, but chances are it's a bad economic decision (assuming the developer has legitimate reason to complain in the first place).
The latest developer v. buyer case is Taylor Building Corp. v. Benfield, 2007 WL 1748694 (S.D. Ohio June 15, 2007). This lawsuit relates to a gripe site set up at the domain name "www.taylorhomes-ripoff.com" in 2003 that was taken offline in 2004. The developer sued for defamation, tortious interference and trade dress infringement. The court carefully rejects most of the defamation claim (for being substantially truthful) and the tortious interference claim for lacking the requisite scienter. The court also rejects the trade dress claim on several grounds, including the website’s nature as a gripe site:
Benfield clearly hoped to drive customers away from Taylor by posting his complaints about the home builder. Thus, it is arguable that he intended to cause Taylor economic harm. However, in keeping with the logic of Taubman and Lamparello, the Court concludes that, even if Benfield's use of the website was commercial, his website was a forum for criticizing the builder. Accordingly, there is no likelihood of confusion and, thus, no Lanham Act violation.
The court also rejects the initial interest confusion claim because the site didn't sell or promote any products, and no one would be confused by a domain name containing the word "ripoff."
Despite the significant good news for the defendant, two potentially defamatory statements survived the SJ motion. A reminder to gripers: you own your words, so pick them carefully.
Tying these cases together, it appears that developers are the latest industry to realize the power and danger that online word of mouth poses to their businesses. Coping with this revelation requires some care. Historically, publicity-enhancing lawsuits may not have been the best way to respond to negative reputational information, but in the networked era, they are almost guaranteed to be a poor choice. So developers will need to adapt their practices--and perhaps their expectations--to accommodate the modern information ecosystem.
June 25, 2007
Lead Fraud (A Cousin of Click Fraud)--NetQuote v. Byrd
By Eric Goldman
NetQuote, Inc. v. Byrd, 2007 WL 1725587 (D. Colo. June 13, 2007)
I know advertisers are fed up with click fraud, but let's be clear--every ad payment method will be gamed. This case nicely illustrates that challenge. NetQuote is an insurance lead-generation system. Users submit quote requests to NetQuote, which in turn sells the leads to its insurance customers. A competitor, MostChoice, had an employee (Byrd) submit hundreds of bogus quote requests through NetQuote's system (should we call this "lead fraud" or "request fraud"?). As result, NetQuote's insurance customers paid for these bogus leads, which reduced NetQuote's conversion rate for its customers and wasted its customers' time following up on the bum leads. Meanwhile, MostChoice pitched its insurance customers saying that (surprise!) it provided higher quality leads than its competitors.
NetQuote sued Byrd and MostChoice for a number of claims. This ruling dealt with MostChoice's attempt to dismiss the fraud claim. MostChoice argued that, at worst, bogus information was fed to NetQuote's computers, not to a human at NetQuote, and it's not possible for a computer to rely on false information. This argument is rich with ontological potential, but as a legal argument, it stinks. The court gently declines this argument and says that NetQuote may proceed with its fraud claim.
June 22, 2007
Tur v. YouTube SJ Motions Denied
By Eric Goldman
Tur v. YouTube, # cv-06-4436 (C.D. Cal. summary judgment motions denied June 20, 2007).
In the lawsuit by photojournalist Tur against YouTube, the judge has denied cross-motions for summary judgment based on 512(c). Tur's motion (that YouTube isn't eligible for 512(c)) was denied because he failed to present adequate evidence that YouTube has the right and ability to control the infringing activity.
YouTube's motion (that Tur's case is preempted by 512(c)) also was denied. The court said:
There is insufficient evidence regarding YouTube's knowledge and ability to exercise control over the infringing activity on its site. There is clearly a significant amount of maintenance and management that YouTube exerts over its Web site, but the nature and extent of that management is unclear. YouTube also asserts that while it is able to remove clips once they have been uploaded and flagged as infringing, its system does not have the technical capabilities needed to detect and prescreen allegedly infringing videotapes. However, there is insufficient evidence before the Court concerning the process undertaken by YouTube from the time a user submits a video clip to the point of display on the YouTube Web site.
June 21, 2007
Dumb Law of the Month--Public Diplomacy Resource Centers Act of 2007
By Eric Goldman
I'm announcing the 2007 Dumb Law Derby to proclaim the dumbest law proposed or enacted in 2007. I'm not looking for garden-variety dumb; legislators do that every day. Instead, I'm looking for the head-shaking, jaw-dropping, this-is-what-Thomas-Jefferson-meant-when-he-said-we-should-have-a-rebellion-every-20-years dumb. Let's take a look at some of the early nominees:
* New Mexico's proposal to declare Pluto a planet when it "passes overhead through New Mexico's excellent night skies." This alone wouldn't make the list, but when combined with the simultaneous proposal to declare the bolo tie the official tie of New Mexico, I start thinking I should move to New Mexico because clearly they don't have any real problems to preoccupy legislators.
* New York's proposal to ban domain name sales to terrorists.
* Utah's clueless attempt to ban keyword advertising.
Given the amount of vitriol I've directed at the Utah law, you might think Utah has already sewn up the prize. But the year is still young, and legislators are still busy. Consider HR 2553, proposed by Rep. Watson (D-CA). The main operative provision of this law requires our foreign embassies and consulate offices to "schedule public showings of American films that showcase American culture, society, values, and history." According to the Hollywood Reporter, Rep. Watson thinks that "wider worldwide exposure to classic Hollywood fare will help convince people that the American way is not evil."
Let's see if I understand the proposal:
1) Rep. Watson thinks that movie studios are producing movies that reflect positively on the US. Hmm...not sure I've seen many of those recently. But when she references "classic" movies, it makes more sense. To show the rest of the world how great we are, we should show old movies.
2) I'm sure people who think the US is evil will happily head down to their local US embassy to catch a flick. Of course, some of them probably know the way from the last time they protested there. It might actually make for a romantic date night:
* 6:30: pick up date
* 7:00: lob Molotov cocktails with date at the embassy
* 7:45: cuddle up to a fireside screening of Pirates of the Caribbean 3
3) I wonder how many people aren't already well-exposed to American movies. In fact, I wonder how many screened movies simultaneously can be picked up 4-for-$1 from many nearby sidewalk vendors.
4) I agree with Mike Masnick that I thought some people hate America because of our cultural influence/dominance. Boy, I'm glad this proposal doesn't exacerbate that!
As you can see, the derby for dumbest law of 2007 is wide-open, and we have 6 months left to go. I welcome your nominations!
June 20, 2007
The 4th Amendment in your inbox
By Ethan Ackerman
While the 4th Amendment gets litigated more often than, say, the 10th Amendment, it is still rare when a court finds federal law unconstitutional for inadequately protecting a 4th Amendment interest in email's privacy.
Earlier this week, the 6th Circuit in Warshak v. US did just that. Largely agreeing with amici briefs filed by law professors and the Electronic Frontier Foundation, the 6th Circuit ruled that "A [government] seizure of e-mails from an ISP, without either a warrant supported by probable cause, notice to the account holder to render the intrusion the functional equivalent of a subpoena, or a showing that the user maintained no expectation of privacy in the e-mail, amounts to" a 4th Amendment violation - notwithstanding the statutory language.
The case arose out of a wire/mail fraud investigation into Warshak's personal and business activities. Federal agents obtained an order issued under the Stored Communications Act (SCA) directing Warshak's ISP to produce account information and email contents. Importantly, the order found (as the SCA required) that there were "reasonable grounds to believe" the emails were "relevant to a criminal investigation." The order was not, however, a full "probable cause" warrant.
Warshak learned of this surveillance one year later when he received the SCA-required notice letter (270 days after the SCA required it to be sent) saying his emails had been searched. Warshak promptly requested that the government stop searching his email without a warrant or notice, but the government declined to commit to stopping. As a result, Warshak sued, alleging that warrantless searches of email violated his 4th Amendment rights. The District Court and 6th Circuit largely agreed.
Having concluded that the government had mostly complied with the SCA in its searches, both the District Court and the Sixth Circuit nevertheless insisted on a 4th Amendment analysis. They had little trouble concluding that people "maintain a reasonable expectation of privacy in e-mails that are stored with, or sent or received through, a commercial ISP." This is a "well duh" conclusion to most Internet users, but interestingly, relatively few Courts of Appeal have made this Constitutional analysis. Why? It's not due to courts' laziness or aversion to Constitutional holdings, but it reflects that the federal statutes for the most part actually track Constitutional protections. So, arguably, this case reflects a rare circumstance where government searching complied with statutory law, but not the 4th Amendment.
Because the SCA protects some emails, most email cases never reach the 4th Amendment; a case can be decided based on the statute. (This is easier said than done in practice, as the SCA is a dense, detailed and specific statute.) For example, in a recent high-profile example, US v. Councilman, the 4th Amendment was effectively invisible. However, lurking in these cases is whether the 4th Amendment protection requires more than the statutory protections - especially as amendments (like the Patriot Act) have pared back the protections or standards in these statutes.
For more on the court's actual 4th Amendment analysis, read the opinion or this summary. In short, the court had to resolve whether the applicable data was (1) the type routinely disclosed to 3rd parties, in which case there was no 'reasonable expectation of privacy' and a subpoena was sufficient authorization, or (2) the contents of communications fully protected by the 4th Amendment, which requires the government to obtain a probable cause warrant. It concluded the data was the latter.
From this (wholly unbiased, disinterested, dispassionate - honest!) viewer's opinion, this case highlights the weakness of having statutory provisions attempt to protect Constitutional rights. Here, the relevant provisions were produced by political compromise, not an effort to implement the 4th Amendment. The Court of Appeals opinion subtly acknowledges this in its discussion of the Supreme Court's Berger case, pointing out that early wiretap statutes had the exact same inadequate "reasonable grounds to believe" standard that forced the Berger court to similarly overrule those statutes. It's always nice to see a rigorous analysis from an actual user's perspective.
ERIC'S ADDITIONAL COMMENT: Among other things, this case is a sobering reminder of how government actors sometimes zealously pursue their objectives without regard for appropriate safeguards. The Sixth Circuit's opinion is bristling with hostility towards the government's post hoc attempts to justify its behavior. In this respect, we're lucky that the judiciary "has our back," but it's still chilling--and sad--to consider the efforts Warshak had to go through to get very basic and rather obvious protections.
June 19, 2007
By Eric Goldman
As I'm sure you know, I am not a fan of the recent Ninth Circuit hairball opinion in the Roommates.com case. In discussions since the opinion was issued, most of my lawyers I've spoken with have no idea what the opinion means or how it impacts 47 USC 230 jurisprudence.
On Friday, the Ninth Circuit issued the following:
6/15/07 Filed order ( Alex KOZINSKI, Circuit Judge): Within 21 days, plaintiffs shall file a response to the petition for rehearing and petition for rehearing en banc. See 9th Cir. R. 40-1. [04-56916, 04-57173] (ru) [04-56916 04-57173]
I'm not an expert in such matters, but my understanding is that Roommates.com's request to clean up the hairball opinion has survived a first cut.
Roommates.com's motion for rehearing/en banc hearing.
June 15, 2007
Lawyer Rating Service Sued--Browne v. Avvo
By Eric Goldman
Browne v. Avvo, CV7 920 (W.D. Wash. complaint filed June 14, 2007)
You may have heard about Avvo, the latest entrant in the suddenly crowded field of lawyer ratings/rankings. Avvo pulls together a variety of third party data to spit out a numerical rating of lawyers.
Let's start with the good news. It is very difficult for the average consumer to find and select a lawyer intelligently. There are many ways that consumers find lawyers, but two prominent methods:
1) word-of-mouth. A recommendation from a trusted source is better than nothing, but it doesn't lend itself to easy comparison shopping, especially when consumers don't get multiple referrals. Plus, these recommendations don't any capture reputational information outside the referral source's purview.
2) lawyer advertising, especially Yellow pages. In theory, the Yellow pages could encourage comparison shopping, but investigating multiple lawyers is time-consuming and possibly expensive, and the number of ads for certain services are so voluminous that it's not even clear where to start. As a result, consumers often look at the internal credibility factors within the ad (ad size, testimonials, professional looking models, etc.) to navigate the mass of ads. Among other downsides, this selection process effectively bypasses any neutral sources of reputational information.
The process of helping consumers find lawyers would benefit greatly from reengineering. Consumers need more help making choices, and attorneys need more reputational accountability. To the extent that Avvo can improve consumer decision-making when selecting lawyers, Avvo is a very welcome entrant into the market.
Unfortunately, the first generation of Avvo isn't very confidence-inspiring. The distillation of attorneys into a single numerical rating is inherently fraught with peril, and the media has picked up on numerous examples where the ratings are out of sync with common sense. There could be a number of reasons for this, including insufficient data to make accurate ratings or miscalibrated components of the rating algorithm. Either way, the numerical ratings look much more like a work-in-progress than a finished product, and I sure hope consumers aren't actually relying on the numerical ratings. Regardless of any legal proceedings, I'm sure Avvo will be working hard to improve its tool by refining its algorithm, fixing any data errors and gathering more trustworthy data to rely on.
Naturally, where egos and money are on the line, lawyers aren't going to stand by idly. Instead, a mere nine days after Avvo's launch, we have the first class action lawsuit against Avvo. (I say first because it seems inevitable that more lawyers are going to want a piece of this action). The plaintiffs say (among other things) that "the Avvo Ratings are capricious and arbitrary, susceptible to manipulation by a number of sources that are neither objective nor mathematical nor indicative of a lawyer's professional competence." Based on the formula's perceived deficiencies and Avvo's wording choice in how it characterizes the factors and the data outputs, the plaintiffs allege violations of the Washington Consumer Protection Act.
Underneath the surface is a philosophical issue: what makes a good lawyer, and is there any way that lawyers can be objectively compared to each other?
There's also a transparency issue. Do consumers need to know what factors went into the ratings in order to appreciate their import, or is simply telling consumers that a lawyer has an "excellent" rating enough even if the consumer doesn't understand how the rating was produced? Obviously this raises parallel issues to search engine rankings, where consumers have no idea how search engines make their ordering decisions (both because the algorithms are secret and because consumers don't understand search engine operations generally) but yet they trust those rankings almost implicitly. Transparency might help consumers understand Avvo's ratings better, but I'm not sure transparency would actually improve consumer decision-making.
Let's put all of this aside and focus on the doctrinal issue that seems preeminent: 47 USC 230. To the extent that the plaintiffs seek to hold Avvo liable under state consumer protection laws for third party content, this lawsuit should be cleanly preempted by 47 USC 230. As an example, I'm reasonably confident that eBay would argue vociferously that its numerical feedback rating is protected by 230 (among other doctrines).
But it's hardly clear that Avvo gets the benefit of the statute. First, arguably, the lawsuit is based on the word choices that Avvo made in describing/characterizing the data and the output, not the underlying third party data. Second, this case goes straight to the doctrinal murkiness of the Roommates.com case. Recall Reinhardt's reformulation that Roommates.com lost 230 protection because "Roommate categorizes, channels and limits the distribution of information, thereby creating another layer of information." Isn't this exactly what Avvo does too? I sure hope the Ninth Circuit cleans up the Roommates.com hairball before cases like this test its limits.
UPDATE: Tim Stanley thinks Avvo is purging judges' ratings. If so, this might reinforce that perhaps Avvo went to public beta a little too early.
UPDATE 2: Yesterday, I spent an hour or so filling out my Avvo profile and boosted my score 1.7 points. Probably could have gone a little higher if I spent even more time. Looks like a pretty rigorous game-proof system when self-reporting moves me up 2 categories.
UPDATE 3: Avvo has tweaked its system to reduce the precision of its rankings when it has limited data. This is a wise move, but I think there are a lot more tweaks that will need to be made before the rating system is helpful.
June 12, 2007
AutoAdmit Fiasco Turns Into a Lawsuit--Doe v. Ciolli
By Eric Goldman
Doe v. Ciolli, 307CV00909 CFD (D. Conn. complaint filed June 11, 2007)
AutoAdmit is a message board for law students and related groupies. It's a relatively untamed corner of cyberspace. The site owners have espoused a relatively ideological view that they don't remove user posts, which has contributed to a rough-and-tumble site with lots of inappropriate and juvenile postings.
The site has been well-known in legal education circles for a number of years, but it crossed over to widespread national prominence with a Washington Post article in March discussing how some law students had been harmed by posts on AutoAdmit. The article starts out:
She graduated Phi Beta Kappa, has published in top legal journals and completed internships at leading institutions in her field. So when the Yale law student interviewed with 16 firms for a job this summer, she was concerned that she had only four call-backs. She was stunned when she had zero offers.
The article then points the finger at AutoAdmit, blaming it for her lack of job market success.
Things generally have gone downhill from there, contributing to the relatively unusual situation where one of the site operators had his law firm job offer revoked. But now the heat has been turned up even higher with a lawsuit against a number of the posters to the AutoAdmit site. This is a very messy situation, so let me try to offer some (I hope) relatively innocuous observations:
1) I suspect the law students whose aliases were named in the complaint had that sickening stomach-liquefying feeling when they realized they were being sued. Being sued is an expensive and scary process.
2) The facts aren't entirely clear, but I believe the plaintiffs aren't trying to hold defendants liable for postings they didn't make. Of course, 47 USC 230 would likely bar most/all of such claims (although after Roommates.com, who knows how far 230 goes?), so it appears that the plaintiffs are wisely steering away from that trap.
3) I think the plaintiffs face some very significant causation issues here, at least with respect to the defamation claims that aren't per se libelous. For example, the plaintiff with 16 interviews and zero offers will have to connect the dots to show the online postings caused or contributed to this result. This doesn't sound very easy at all, and it creates the opportunity for the defendants to pick over the plaintiff's life and qualifications with a fine-tooth comb to show that there were other explanations for her lack of success. In all likelihood, this means more embarrassing revelations for the plaintiff; compare the public disclosures that Robert Steinbuch faced by bringing his lawsuit against Jessica Cutler.
4) I wonder if the judge will consider the message board's wide-open and infantile nature when evaluating the postings. Some of the postings cited in the complaint were, in context, so over-the-top that I can't imagine any reader giving them serious credibility. For an analogous circumstance where the judge recognized the contextual silliness of some remarks, see DiMeo v. Max.
5) This lawsuit could be very divisive in the legal education community. In one corner, free speech and personal/professional autonomy; in the other corner, intolerance for harassing and discriminatory behavior (especially by professional school students, like law students) that can seriously harm the professional opportunities and personal enjoyment of other students. These conflicting norms aren't new, but they tend to divide groups into camps that have a hard time finding a middle ground.
6) Although the defamation and related claims will get most of the attention, the copyright claim seems more pernicious--the postings might be covered by fair use [update: see Rebecca's take], but otherwise the defenses against copyright infringement are narrower and less squishy than the defenses against the other personality harm claims.
HT: WSJ Law Blog.
UPDATE: Eugene has a number of interesting observations.
UPDATE 2: David Lat recaps and summarizes the discussion.
Domain Names Can't Be Trespassed--Utube.com v. YouTube
By Eric Goldman
Universal Tube & Rollform Equipment Corp. v. YouTube, Inc., 2007 WL 1655507 (N.D. Ohio June 4, 2007)
Boy, this case got a lot of attention when it was first filed (which isn't surprising; YouTube lawsuits usually do). You may remember the story: the plaintiff is a dealer of used tube mills, used pipe mills and used pollforming machines. The plaintiff operated a website at utube.com. As you might expect, like most other industrial B2B vendors' websites, utube.com had a small but targeted audience.
With the phenomenal and quick rise in popularity of YouTube, a lot of web users mistyped youtube.com and entered utube.com instead, causing utube.com to suddenly experience disproportionate popularity. Unfortunately for the plaintiff, few of these visitors were interested in pollforming machines--as the opinion starts out, "This is a case about two very different types of “tubes.”" As a result, the plaintiff was paying big bandwidth charges for customers who weren't buying. In some cases, the plaintiff claimed that the traffic overwhelmed the servers, causing utube.com to be offline and preventing the plaintiff's real customers from conducting business with the plaintiff.
The plaintiff sued YouTube for trademark infringement, trespass to chattels and related claims. Last week, the court addressed YouTube's motion to dismiss. The net result is that the court allowed some of the plaintiff's trademark and related claims to survive, but the court dismissed several other claims (with leave to amend).
Trespass to Chattels
Most interesting to me is the court's dismissal of the plaintiff's claims that YouTube "trespassed" utube.com. The court correctly says that trespass to chattels (TTC) claims require physical contact, so it is not possible to trespass intangible property like a domain name. While this is the right result, I can't help but note the Ninth Circuit's holding that domain names can be converted like personal property (in the Sex.com case), and the recent Thyroff case, which also said that digital files could be converted. But here we're talking about a smaller possessory interest than conversion, and the court rightly understands that TTC could become a bypass to trademark infringement. As a result, this decision channels unhappy domain name owners towards trademark claims instead of some TTC bypass.
Even if the domain name itself can't be trespassed, the plaintiff can still claim that the computer servers attached to the domain name were trespassed. The court dismisses the claim for two independent reasons:
1) The plaintiff uses a third party web host, and the court says that the plaintiff didn't allege an adequate possessory interest in its host's equipment.
This may just be a pleading issue that gets corrected in an amended complaint, but it raises an interesting question about TTC standing that I don't recall seeing discussed before. Assuming that TTC is occurring to a site hosted by a third party vendor, does the TTC claim rest with the website operator, the vendor, or no one? I had always assumed that the website operator and the vendor EACH had standing for TTC because each has shared possessory interest in the computers, but I can see outer limits to this. For example, a person using a free web host vendor who is one of a zillion customers shouldn't have standing if there's a TTC to the vendor's computers. OTOH, if a customer is paying a vendor to operate a dedicated computer, and the customer will bear all economic charges associated with that computer's usage, I think the customer has standing. In that circumstance, perhaps the vendor does as well.
In my case, I pay a nominal amount to my web host for shared computer usage, but I pay bandwidth charges associated with my domain name. I think that if a third party were trespassing my website, and I bore the economic consequences from bandwidth usage, I should be able to claim TTC even though I only "lease" the computer space and I share that computer with other sites. Perhaps this warrants more thought.
2) Independently, the court correctly says that YouTube's customers, not YouTube itself, are "contacting" utube.com, and therefore YouTube isn't committing the actus reus. This result also appeared to be designed to channel this complaint into trademark law.
Some pundits have theorized about the existence of a nuisance claim that would parallel (or supplant) online TTC claims. These nuisance claims are occasionally pleaded (for example, a nuisance claim was made initially in the Intel v. Hamidi case, though Intel voluntarily dropped it), but this argument has not gotten any traction in court. This court's terse rejection of the claim is typical:
Universal has provided virtually no legal support for its contention that a private nuisance can exist when no land is involved. Nor has Universal shown any support for the proposition that a domain name, a website, or a computer that hosts a website somehow constitutes real property. There being no such support or other basis for its nuisance claim, that claim will be dismissed.
The court also dismissed the plaintiff's attempt to cancel (in district court) YouTube's trademarks and claims for negligence and violation of state RICO laws. The court rejected YouTube's motion to dismiss for unfair competition, state dilution, and deceptive trade practices, so those claims are still active (plus any causes of action revived with an amended complaint).
June 10, 2007
Cavazos Presentation on Open Source
By Eric Goldman
At the UT Austin Technology Law Conference in May, Ed Cavazos spoke about open source issues. He proffered seven common myths about open source:
#1: the phrase “open source” is meaningful, or developers understand all this so I don’t have to.
#2: open source software is all in the public domain, or open source licensing isn’t consistent with copyright ownership
#3: contributors to open source developments have the necessary rights to contribute, or the SCO lawsuit proves that all liability risk is FUD
#4: all open source software is “viral” and can change proprietary code to free code, or you can inadvertently give away your proprietary code with bad open source license compliance.
#5: the GPL is a well-written document, or millions of adopters can’t be wrong
#6: lawyers can answer the tough questions if they spend enough time on them, or a $30,000 memo on “linking” or “derivative work” is a good idea
#7: scrapping non-compliant code is the only option, or the sky is falling.
Heather Meeker was scheduled to present but was a last minute scratch, but Ed relayed her assessment of the three generations of M&A representation about open source software:
* circa 1999: sellers were asked to represent that they didn’t use any open source software—a ridiculous representation that was almost always untrue
* circa 2002: sellers were asked to disclose all open source software they used—a virtually impossible task that still lead to widespread non-compliance by sellers
* circa 2007: sellers are being asked to represent that they are in compliance with all open source licenses—a much more reasonable solution that seems to get at the only important issue. But why limit this to open source? Presumably buyers care about compliance with proprietary software license agreements as well. Therefore, ultimately I think a discrete open source representation should go away and the issue should be addressed by the typical material agreements representation.
June 06, 2007
SPY Act Passes House...Again
By Eric Goldman
For the third year in a row, the House passed the SPY Act. I was hopeful that the House's passing of the I-SPY Act would forestall further action on this bill, but unfortunately I was wrong. The SPY Act is a terrible solution to problems that may be already self-correcting, so let's hope the Senate either takes a pass on both bills or at least takes a pass on the SPY Act a third time.
Zango Also Loses Kaspersky TRO Motion
By Eric Goldman
Zango, Inc. v. Kaspersky Lab Inc., C07-0807-JCC (W.D. Wash. TRO motion denied June 6, 2007)
Yesterday, Zango's TRO request against PC Tools was denied but Zango claimed the result was nevertheless a "victory for consumer choice" because PC Tools had made important classification changes. Today, the same judge denied Zango's TRO request against Kaspersky Lab even though Kaspersky hasn't made commensurate classification changes. Is this result a loss for consumer choice?
Like yesterday's opinion, the court's opinion is short and plainly stated, and it repeatedly points readers to yesterday's opinion. The only substantive differences are (1) Kaspersky made fewer technical changes, but the court says that this fact isn't significant enough to reach a different result, and (2) the court suggests, but does not conclude, that a 230(c) defense might be meritorious.
The opinion doesn't say it, but I think implicitly the two opinions signal very clearly that Zango will need to present much stronger evidence of its problem if it hopes to ultimately prevail. Or, if it can't present stronger evidence, this judge doesn't look like he will be easily impressed. On that basis, Zango may find the better choice is to pursue out-of-court options.
UPDATE: Zango says this ruling puts "Consumer Choice on Hold."
June 05, 2007
Zango Loses TRO Motion Against PC Tools But Claims Win
By Eric Goldman
Zango, Inc. v. PC Tools Pty Ltd., C07-0797-JCC (W. D. Wash. TRO denied June 5, 2007)
The judge denied Zango's TRO request against PC Tools. The actual opinion is efficient and somewhat non-committal, as befits an opinion written quickly in response to a TRO request. However, the court's opinion reflected that it was aware of Zango's historical practices and understood the public benefit from giving space for anti-spyware tools to do their thing. Venkat's take: "This Order would make me reconsider if I were Zango."
Despite the TRO loss, Zango claims this as a "victory for consumer choice" because the lawsuit caused PC Tools to substantially change its categorization of Zango, giving Zango the results it sought anyway.
Regardless of these developments, I'm failry confident this story isn't over. I suspect PC Tools and Zango will have continued categorization spats in the future. And, the lawsuit against Kaspersky is still pending, so perhaps that will give us some more useful insights into this legal area.
PC Tools & Kaspersky Respond to Zango Lawsuit
By Eric Goldman
PC Tools' response reads like a typical anti-spyware gripefest about Zango generally, only some of which actually responds to Zango's TRO motion. (For an analogous circumstance, see Symantec's gratuitous smear of Hotbar in a similar lawsuit). Then again, Zango had to know that its dirty laundry was going to be aired when it filed this lawsuit. I thought it was particularly interesting that PC Tools didn't raise the 230(c)(2) defense--not sure why they didn't do so, because it seems like the quickest path to success.
Kaspersky's response claims (among other defenses) that Kaspersky USA is an independent entity from the true classifying organization in Moscow. I'm not sure how a court will handle the factual issues raised by this contention; TROs hearings don't normally engage in extensive fact-finding.
Both motions rely heavily on the New.net v. Lavasoft (see, e.g., the stern anti-SLAPP and dismissal opinion in that case). Also, in case you're curious, Ben Edelman is PC Tools' expert and Ray Everett-Church is Kaspersky's expert.
HT: Venkat. See Venkat's comments here.
More Defendants Lose 230 Defense
By Eric Goldman
On the heels of the Roommates.com train wreck, two more defendants have had their 47 USC 230 defenses rejected. Interestingly, both cases come out of Tennessee federal courts in the Sixth Circuit--not normally known as a problem circuit for 230.
1) Energy Automation Systems, Inc. v. Xcentric Ventures, LLC, 2007 WL 1557202 (M.D. Tenn. May 25, 2007). Xcentric Ventures, a/k/a the Rip-off Report, a/k/a Bad Business Bureau, a/k/a Ed Magedson's alter ego, is no stranger to this blog (see, e.g., Hy Cite Corp. v. badbusinessbureau.com, Whitney Information Network v. Xcentric Ventures, RSA Enterprises v. Bad Business Bureau and my remarks in the Phoenix New Times article). Indeed, they now occupy the rarefied position of being a multi-time loser of a 230 defense--although, to be fair, 230 isn't totally lost in this case.
Here, the plaintiff sued for defamation and other claims, and the defendant responded 230 in a motion to dismiss for lack of jurisdiction (12b2). The court said that any 230 immunity for liability did not extend to create immunity from jurisdiction, and the court refused to convert the motion into a 12b6 motion to dismiss. The result is that the plaintiff can now seek discovery in a case that otherwise could be preempted by 230. For a similar result, see Doctor's Associates v. QIP Holders; in that post, I point to other precedent expressly using 230 to shut down discovery fishing expeditions.
I don't have a problem with saying that 230 isn't responsive to a 12b2 motion, but the judge should have gone straight for the 12b6 motion, which I think should generally result in a defense win. However, with the Rip-off Report, there have been plenty of allegations that Magedson writes the content himself rather than parrotting other people's content, and those allegations should survive a 12b6 motion.
2) Avery v. Idleaire Technologies Corp., 2007 WL 1574269 (E.D.Tenn. May 29, 2007). This is an employment discrimination lawsuit brought by an employee against a former employer. At the facility in question, all of the employees shared a single computer. (Hard to believe in this era of cheap computers, isn't it?!). According to the plaintiff, when she used this shared computer, she was exposed to porn pop-ups constantly, and there was plenty of evidence that the computer was regularly used to access porn. The defendant tried to dismiss the hostile work environment claim per 47 USC 230. The applicable discussion:
IdleAire argues that “by its own terms, the section prohibits any federal or state claim that seeks to hold an employer that provides computer systems to its employees for use on the job from being held liable based upon the content of the information ‘provided by another information content provider.’ “ [Doc. 81 at 40]. The defendant cites no authority for this proposition, and the Court is not aware of any such authority. Indeed, the Court is not aware of any federal case in the country that has applied this Act in such a manner, and the Court declines to do so now.
I think this is the right result, but it would have been nice to see the court discuss Delfino v. Agilent, which held that an employer could claim 230 for an employee's actions. I was dubious that other courts would follow the Delfino precedent, as this case illustrates.
June 03, 2007
May 2007 Quick Links
By Eric Goldman
* MySpace Inc. v. The Globe.com Inc., No. CV 06-3391 RGK (C.D. Cal. Feb. 27, 2007). This case has some personal interest because theglobe.com was one of my flagship clients before I left the law firm in 2000. This ruling held theglobe.com liable under CAN-SPAM, California's anti-spam law and the user agreement for spamming within the MySpace network. See the BNA writeup. Among other remarkable angles of this ruling, the court upholds the liquidated damages clause based on the anti-spam restrictions in the contract. Based on this adverse judgment, in April the parties settled for over $2.5M —basically, all of theglobe.com’s remaining cash, leaving its survival in serious jeopardy.
* From the AP: Entrepreneurs loaded up on Virginia Tech- and victim-related domain names following the massacre.
* Broadway producer Scott Rudin was annoyed that the New York Times' website published user-submitted reviews of his play. To tweak them for doing so, the play cherry-picked some comments from the users' submissions and ran them in ads for the play with the attribution "The New York Times Online." An NYT editor objected to that attribution because it connoted an editorial judgment of the paper, rather than the paper's readers. Read the fun back-and-forth between Rudin and the editor.
* From the Washington Post: Billboards are the second-fastest growing ad category (after the Internet) due to increased traffic congestion and new digital billboard technology. And a technologist has developed eye-tracking technology that may let billboard advertisers accurately count eyeballs.
* Optima Funding, Inc. v. Strang, 2007 WL 1430699 (Cal. Ct. App. May 16, 2007). A mortgage company said it never sent unsolicited faxes or authorized anyone to do so on its behalf, but it did use lead generation companies. Strang sued Optima repeatedly in small claims court for TCPA violations. Optima struck back with a 17200 claim, basically saying that Strang was falsifying evidence to connect Optima to the faxes. In this ruling, the California Appellate Court upholds Strang's anti-SLAPP motion to strike.
* Rebecca discusses false advertising developments in one of our least favorite 1201 cases, Static Control v. Lexmark.
* AP: Wisconsin bar owner gets a ticket for serving Coors Light beer using a Miller Lite-branded tap. He should have known better than to cross the only major brewery still in Brewtown by serving Colorado beer.
* Brodsky v. Yahoo (C.D. Cal. complaint filed May 11, 2007). A stockholder derivative lawsuit against Yahoo alleging that Yahoo inflated its stock price by hyping its ad businesses. I read through the lengthy complaint and found it mostly nonsensical. For example, consider this allegation of wrongdoing: "whereas Yahoo!’s rivals were paying high-traffic vendors to route traffic through their Web sites, Yahoo! was charging large vendors for access and was dependent on that revenue to make its revenue targets, making Yahoo!’s Web site a less desirable location for vendors to drive traffic to." Huh? Search Engine Land has more.
* Grisman v. YouTube, Inc., C-07-2518 (N.D. Cal. May 10, 2007). Second class action lawsuit against YouTube (and third major broadside, including the Viacom lawsuit). Appears to be highly derivative of the Football Association Premier League lawsuit (see the WSJ Law Blog for more on this).
* Clark v. Amazon.com, CIV S-05-2187 (E.D. Cal. May 10, 2007). Clark published a book, sold 187 copies and gave away 234. He sued Amazon (and other online booksellers) claiming that he alone had the exclusive right to distribute the book, so their resales were infringing. Amazon responded that the resales were covered by the First Sale doctrine. Clark responded by saying that Amazon sold more copies than he sold/gave away, but that's because Clark mistakenly believed that a seller's lifetime transactions rating were all based on sales of his book. Summary judgment for Amazon.
* Like other content producers, pornographers are feeling the sting of online competition--especially due to the low barriers to entry of amateur-produced content.
* From Washingon Post: Appraisers are going to war over recycling of data they generate during appraisals, which they claim violates promises made to them. When I was guest-blogging at Concurring Opinions, I blogged on the possible IP angles of this dispute.
* BusinessWeek: "Faking out the Fakers: Faced with a tidal wave of counterfeit goods, companies are turning to secretive sci-fi technology. But crooks catch on fast." It's like the analog version of DRM.
* The USPTO's collection of aural TMs.
* Bray v. QFA Royalties LLC, 2007 WL 1306517 (D. Colo. May 3, 2007). Posting a suicide note on a private franchisee-group's website isn't grounds for termination of franchises. See Wiggin and Dana's writeup.
* Nazaruk v. eBay, Inc., 2007 WL 1417287 (10th Cir. May 15, 2007). In a non-substantive opinion, the 10th Circuit upheld the venue clause in eBay's user agreement. My post on the district court opinion.
* Washington Post article on individuals declaring "email bankruptcy," i.e., deleting everything in their in-box and starting afresh.
* To mitigate risk, the Concurring Opinions multi-contributor blog has been converted into an LLC.
* University of San Francisco has created a single page aggregating blogs from the entire USF community.
June 02, 2007
Steinbuch v. Culter Update: Cox Out, Cutler Bankrupt
By Eric Goldman
Two updates in the always-interesting Steinbuch v. Cutler case.
1) Steinbuch v. Cutler, No. 05-970 (D.D.C. May 16, 2007). Ana Marie Cox, the Wonkette blogger--who was brought into the suit merely for linking to the allegedly tortious blog--was dismissed from the case on statute of limitation grounds.
2) Jessica Cutler has filed for bankruptcy. Not only has this resulted in a stay of the case, but after chasing Cutler in court for the past 2 years, Steinbuch apparently is going to learn first-hand the meaning of the term "judgment-proof defendant." The full text of the minute order:
MINUTE ORDER: In view of Defendant Jessica Cutler's notice of her Chapter 7 bankruptcy petition filing in the United States Bankruptcy Court in the Northern District of New York, this case is automatically STAYED pursuant to 11 U.S.C. Section 362. Signed by Judge Paul L. Friedman on 6/1/2007. (mm)
June 01, 2007
"Last Call" Draft of GPL3 is Posted
The General Public License (GPL) is one of the most widely used open source licenses. Version 1 was released in 1981, and Version 2 in 1991.
---GPLv3 is now compatible with version 2.0 of the Apache License.
---Distributors who make discriminatory patent deals after March 28 may not convey software under GPLv3. Apparently, Novell is not prohibited from distributing software under GPLv3 because the patent protection they arranged with Microsoft last November can be turned against Microsoft to the community's benefit.
---Terms have been added clarifying how one can contract for private modification of free software, or for a data center to run it.
---A reference to a US consumer protection statute has been replaced by explicit criteria, for greater clarity outside the US.
There is a 29 day comment period for this draft. The final GPL v3 will then be approved by FSF's board of directors on or about June 29, 2007.
UCC 2B/UCITA Resurrected--ALI's Principles of the Law of Software Contracts
By Eric Goldman
Let me start with two relatively uncontroversial propositions:
1) UCC Article 2, drafted principally in the 1950s, was designed to govern the sale of tangible items, not software
2) Accordingly, Article 2 fits awkwardly when applied to "intangible goods" like software
Given this, it seems eminently logical that the UCC should have an Article 2 complement written specifically for intangible goods. This premise animated the efforts to draft the proposed UCC Article 2B back in the 1990s. It sure seemed like a good idea at the time. The project may have made some poor drafting decisions (particularly the decision to extend 2B to apply equally to both functional software and "inert' data, which makes logical sense but also quickly expanded the effort's enemies), but the project was ultimately doomed by politics.
When the 2B project died, in its wake it left the same perceived doctrinal hole and a very large draft document. That draft morphed into UCITA, a draft with most of the same objections as UCC 2B and fewer supporters. I was always amazed that anyone adopted UCITA at all, but the early adopters--Maryland and Virginia--now look a little foolish. They are stuck with a highly complex law that is non-standard compared to the rest of the nation; and numerous states adopted anti-UCITA laws making the Maryland/Virginia law inapplicable to their residents. The contracts I've done with Maryland/Virginia companies invariably exclude the application of UCITA; and I'm reasonably confident that UCITA causes Maryland and Virginia companies to routinely lose negotiations over venue selection clauses in their contracts. With no one invested in UCITA and lots of remaining resistance to it, it just seems like a matter of time before Maryland and Virginia repeal UCITA.
Meanwhile, perhaps the third time is a charm. The American Law Institute is trying again to develop a law to govern software contracts in a project entitled "Principles of the Law of Software Contracts." The reporters are Robert Hillman from Cornell and Maureen O'Rourke from BU.
The project has two interesting architectural aspects. First, it purports to apply only to software, not content, so it seeks to avoid the topical sprawl that doomed the 2B/UCITA effort. Second, as a "Principles" project, it is not intended to be a model law, and there's no expectation that a final draft will be proposed to any legislature for adoption. Of course, this raises the question about the value of the effort--if it's not a model law, and it's not a treatise, what is it, and how will it help?
I skimmed through the first draft and, despite the amorphous purpose, it struck me as a thoughtful starting point for discussion on an important topic. More work needs to be done, and I will need to organize my thoughts about some of the points that didn't make sense to me. Fortunately, there's no immediate rush. ALI's projects tend to take several years, so we'll hear more on this project in the next few years.