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August 31, 2007
American Blinds-Google Lawsuit Settles
By Eric Goldman
Google Inc. v. American Blinds & Wallpaper Factory Inc., 5:03-cv-05340-JF (N.D. Cal. settled August 31, 2007)
After almost four years of litigation, the American Blinds lawsuit ended today with a stunning victory for Google. According to a copy of the settlement agreement sent to me, Google isn't paying any money to settle the dispute, and the settlement merely says that American Blinds won't sue Google so long as Google follows its current trademark policy. So, after spending enormous amounts on lawyers over the past 4 years, American Blinds gained absolutely nothing from the litigation. Instead, American Blinds ends the litigation worse than when it started (putting aside the legal fees); it had a judge declare two of its purported trademarks unenforceable, and it wrote a check to Google as a sanction for mismanaging the discovery process.
Some purists may be disappointed that we won't get a jury trial on consumer confusion out of this case (the trial had been scheduled for November). My only disappointment is that it took this long to get rid of a case that was ill-advised from the get-go.
As for lessons learned from this case, I think American Blinds' complete capitulation is the latest reminder to plaintiffs that it's often irrational to bring lawsuits over keywords. We already knew this--800-JR CIGAR wasted 6 years fighting over Yahoo's generation of $345 from keyword sales; and in the Buying for the Home lawsuit, the plaintiff ended up writing a $10,000 check to the defendant to settle up the lawsuit it instigated. But this case reiterates that keyword-related lawsuits can be a sucker's bet.
UPDATE: I have posted a copy of the settlement agreement.
UPDATE 2: According to the Recorder, American Blinds says it gave up the case "for financial reasons" and because American Airlines is in a better position to challenge Google.
Posted by Eric at 04:43 PM | Search Engines , Trademark | TrackBack
August 29, 2007
Anti-Spyware Vendor Protected by 47 USC 230(c)(2)--Zango v. Kaspersky
By Eric Goldman
Zango Inc. v. Kaspersky Lab, Inc., No. C07-0807-JCC (W.D. Wash. Aug. 28, 2007)
There has been a fair amount of hand-wringing/teeth-gnashing over the legal liability of anti-spyware vendors when they label a software program as spyware or some other synonym. On the one hand, vendors might present those labels in a way that causes consumers to overreact to the actual threat, or vendors may make factual errors, and either case can have significant adverse effects on the affected software manufacturer. On the other hand, if vendors are liable whenever software manufacturers don't like their labels, the vendors will make labeling decisions based on risk management, not editorial criteria, and that may degrade the tool's utility to consumers.
That's what makes this ruling so important. The court says, clearly and unambiguously, that anti-spyware vendors' labeling judgments are completely protected by 47 USC 230(c)(2), a statute designed to protect online filtering judgments. In support of this conclusion, the court says that:
1) Kaspersky qualifies as an interactive computer service provider (specifically, as an access software provider)
2) The labeled software does not have to be actually "objectionable;" the vendor qualifies for protection so long as it subjectively considers the software objectionable.
3) There is no "good faith" standard in the statute for the vendor's decision to consider software objectionable.
230(c)(2) has been interpreted fairly infrequently, but a few decisions have applied it to anti-spam vendors and search engine filtering. As best I can remember, this is the first time the statute has been applied to protect anti-spyware vendors. (Am I forgetting any?). As a result of this decision, we should see a decrease in software manufacturers' efforts to strongarm vendors into recharacterizing their software. There will still be private negotiations/discussions between vendors and software manufacturers (which is often a healthy process), but any software manufacturer's threat to escalate the matter to litigation should be fairly empty.
This should close the book on Zango's ill-fated legal initiative from May to change anti-spyware vendors' characterizations of its software. Some previous coverage of those cases: Zango loses TRO against PC Tools; Zango loses TRO against Kaspersky. Yesterday, Zango announced that it voluntarily dismissed the lawsuit against PC Tools; and this ruling appears to put an emphatic end to Zango's lawsuit against Kaspersky.
Posted by Eric at 02:08 PM | Adware/Spyware , Derivative Liability | TrackBack
August 28, 2007
Douglas v. Talk America Revisited
By Eric Goldman
Last month, I blogged on the Douglas v. Talk America case. I think it's fair to say that a lot of lawyers are scratching their head about this case. The case *might* stand for the proposition that websites cannot unilaterally amend their user agreements simply by posting new terms to the website, making it a significant case that would invalidate a broad swath of current online user agreements. On the other hand, we're not exactly sure what the case says because the court opinion is cagey about the exact sequence of events and contract terms at issue.
To sort through this, it would helpful to see AOL's actual contract. I haven't found that yet, but a trusted source sent me a declaration from the case that attaches a copy of a Talk America user agreement. Unfortunately, we're not sure how this agreement differs from the initial AOL agreement or to what extent the court considered this agreement in its discussions.
In any case, the self-described amendment procedure (Secs. 1(b), 7(d) and 8) is complicated and provides a variety of ways that notice can be effected--per 7(d), many types of changes can be effected unilaterally by posting to the website, but other mechanisms can be used, such as publishing a newspaper ad. I have no idea what that means! Perhaps Talk America didn't contemplate that it would amend the contract that way. Otherwise, a newspaper ad announcing a major contract change but published in a single newspaper in some obscure corner of the world satisfies the literal requirement.
This type of odd provision suggests why the Ninth Circuit may have ruled as it did. In my opinion, as someone who has drafted plenty of aggressive user agreements, this agreement is imbued with an extraordinary amount of hubris and arrogance about Talk America's ability to unilaterally abuse its users. If I were a judge presented with this contract, I wouldn't like it either, and I would be inclined to eviscerate its provisions. I'm not sure if the Ninth Circuit was similarly influenced, but it's a good reminder that an online user agreement must be written in a way that won't alienate judges.
Posted by Eric at 09:09 AM | Licensing/Contracts | TrackBack
August 27, 2007
Google's AdWords Contract Upheld Again, But Advertiser Lawsuit Against Google Continues--CLRB Hanson v. Google
By Eric Goldman
CLRB Hanson Industries LLC v. Google Inc., 5:05-cv-03649-JW (N.D. Cal. Aug. 21, 2007)
This lawsuit is one of several advertiser lawsuits against search engines from 2005 (see my initial post when the lawsuit was filed). Many of those lawsuits involved click fraud allegations and have subsequently settled. In this particular lawsuit, advertisers claim that Google did not honor some budget limits set by advertisers.
At its core, this is a breach of contract lawsuit, but the plaintiffs contended that they were not bound by Google's AdWords contract. The court rejects those arguments, holding that Google properly formed the AdWords agreement when it used the following process:
In this case, before being permitted to register for AdWords, Plaintiffs were provided with a scrollable box of “Terms and Conditions.”10 The first sentence of the “Terms and Conditions” was: “Introduction. This Agreement between you and Google, Inc. (“Google”) consists of these AdWords Select Standard Terms and Conditions (“Terms and Conditions”), the AdWords Select Program (the “Program”) Frequently Asked Questions, which may be revised periodically, and the terms of any advertising campaign you submit or modify.” The sentence, “By creating my AdWords Select account, I agree to the above Terms and Conditions,” appeared directly below the scrollable box; immediately below that sentence was a button, “Sign me up for AdWords Select.”
This is at least the third case where Google's AdWords contract has been upheld. The other two that come to mind are the Person and Feldman cases.
Although Google's contract governs the dispute, the court didn't dismiss the breach of contract claims. Instead, it identified two classes of advertisers who might still have viable claims:
1) advertisers who ran campaigns for less than 1 month or ended a campaign with a partial month (i.e., less than 30 days). These advertisers may have been charged more than expected because Google treated an advertiser's "Daily Budget" limit as an input to compute a monthly cap. So if an advertiser set a $10 daily cap in a 30 day month, the advertiser would not be charged more than $300 in the month, but in a period of less than 30 days, Google may have "overdelivered" on some days to run up a bill that exceeded [# days x daily cap].
2) advertisers who "paused" their campaigns prior to Sept. 2006, Google's language may have implied that these advertisers would not be charged for the time the campaign was paused, but Google' system treated the pause as an underdelivery that was eligible to be "caught up" by overdeliveries later in the month.
While surely Google isn't thrilled about this ruling, it does appear to severely limit the amount of money at risk in this lawsuit. The only money at risk--even for big advertisers who have run multi-million dollar campaigns--is for the last month of an advertiser's relationship or for those months where an advertiser used the pause feature. Because the court's ruling had the clear effect of substantially suppressing the maximum possible damages, the parties should now have enough data to work out a settlement.
The judge also left open plaintiff's false advertising claim based on what advertisers would think the words "daily budget" mean.
Finally, the court addressed Google's contract provision saying that "Customer waives all claims related to charges unless claimed within 60 days after the charge..." These types of provisions are pretty common in contracts as a way of trying to encourage customers to speak up fast if they have a problem with their bills, but I don't know that lawyers actually expect them to be legally binding. Here, the court quickly rejects the clause as an unreasonable reduction of the statute of limitations (taking the normal 4 year SOL for contracts to 2 months). Personally, I don't include this provision in my contracts because I think they are too aggressive, and this ruling gives me no reason to change my thinking.
Despite the fact that Google couldn't dismiss this case completely, this ruling is still mostly good news for Google. First and foremost, yet another court upheld its AdWords contract. Second, this opinion should prompt a settlement that will not materially affect Google's quarterly financials--like the click fraud settlements, I expect any settlement of this lawsuit to bring significant joy to plaintiffs' lawyers and no appreciable financial benefit to advertisers.
Posted by Eric at 11:44 AM | Licensing/Contracts , Marketing , Search Engines | TrackBack
August 25, 2007
Website Isn't Liable When Users Lie About Their Ages--Doe v. SexSearch
By Eric Goldman
Doe v. SexSearch.com, 2007 WL 2388913 (N.D. Ohio Aug. 22, 2007)
Introduction
This case adds to the burgeoning 230 jurisprudence involving people looking online for love or sex. (Others that come to mind include Carafano, Anthony, Landry-Bell, Barnes and Doe v. Myspace) The court broadly construes 47 USC 230 to absolve the website of liability for user-supplied content--in this case, a user's misrepresentation of her age. It's a particularly refreshing discussion/outcome after the Ninth Circuit screwed up 230 jurisprudence in the Roommates.com case, which seemingly could have applied but was not discussed at all by the court.
47 USC 230
Defendants operate a website that helps people hook up to have sex. Roe posted a profile saying that she was 18 and wanted sex. After Doe connected with Roe via the profile, they met offline at Roe's home and had "consensual" sex. But Roe was actually 14, and Doe was busted for felony statutory rape. Doe turned around and sued the website on 14 counts, which the court summarizes as claims that "(a) Defendants failed to discover Jane Roe lied about her age to join the website, or (b) the contract terms are unconscionable."
The Defendants defended the lawsuit on 47 USC 230. On its face, it looks this like this lawsuit might very well fall into one of the cracks opened by the Roommates.com decision, especially because the website apparently used structured data collection to build the profile and gather the age information. However, the plaintiff appears not to have cited Roommates.com (although the Carafano case was cited and discussed). Instead, the plaintiff rehashed the lame and futile arguments that the website loses 230 when it reserves the right to edit the content and that 230 only preempts defamation. These are loser arguments and I cannot believe plaintiffs still try those arguments. Hey plaintiffs, if your lawsuit might be preempted by 230 and these are the best arguments you can make, save your time and money and skip the lawsuit altogether.
In any case, the court has no problem concluding that (1) the website is an ICS, (2) the user supplied the content at issue (on the structured data issue, the court says "the mere fact SexSearch provided the questionnaire Jane Doe answered falsely is not enough to consider SexSearch the developer of the false profile"), and (3) 230 preempts "all civil liability" (other than the statutorily enumerated exceptions), whether the claim is based in tort or otherwise.
Contract Claims
However, this case exposes a troublesome area for 230 jurisprudence. Plaintiff alleges that the website represented that all members were over 18. This statement is the website's own words presumably written by its employees, but the statement can be untrue only if users provide false info. Is such a marketing statement protected by 230 when, in fact, users do lie? (For a slightly analogous circumstance, see Anthony v. Yahoo, which was cited by the court). This court wasn't asked this Q in this manner, so we don't get a definitive answer. I think the answer should be yes, though it may depend on the exact words of the marketing statement. For example, if the website said that it confirms that all members are adults by checking their drivers' license, but in fact it doesn't check drivers' licenses, then I think we're outside 230's reach--the falsity is in the website's description of its behavior, not in the user-supplied information. In this case, the plaintiff alleged that the website said it verified profiles, but there was no allegation of age verification.
The court independently dismisses the contract claims because the user agreement said that the website does not "assume any responsibility for verifying[ ] the accuracy of the information provided by other users of the Service."
The court also dismissed the UCC breach of warranty claim because the membership was a non-UCC service. While this isn't entirely wrong, a lot of us (outside of Virginia and Maryland lawyers) treat online services as governed by the UCC, so this casual dismissal may raise some future complexity.
The court also rejects a challenge to the contract on unconscionability grounds. If you're interested in unconscionability analyses of online user agreements, check it out.
Conclusion
Lurking in this case are some deeply troubling issues about how and why a 14 year old girl accessed an adults-only online sex site, solicited sex from a stranger and had sex with him at her house. However, the court rightly realized that the legally significant event did not occur when Doe read Roe's online profile and self-reported age. Instead, the locus of harm occurred offline--as the court says, "Plaintiff clearly had the ability to confirm Jane Roe’s age when he met with her in person, before they had sex, yet failed to do so."
Posted by Eric at 09:41 AM | Derivative Liability , Licensing/Contracts | TrackBack
August 22, 2007
Online Reputation and its Implications for Online User Agreements
By Eric Goldman
Shmuel Becher and Tal Zarsky, E-Contract Doctrine 2.0: Standard Form Contracting in the Age of Online User Participation
Right now, the rules applicable to online user agreements are a doctrinal mess. We want to encourage businesses and consumers to strike private bargains, but the reality is that non-negotiable user agreements may restrict freedom of contract more than they promote it. As a result, courts have fractured in their interpretation of online user agreements (and particularly mandatory arbitration clauses); some courts have no problems with them because they are part of a private exchange, other courts are ripping them up because they aren't really negotiated.
Becher and Zarsky approach this issue with a powerful insight. Consumers may not have the ability to negotiate online user agreements, but they can blog about the ridiculous terms in them, and collectively the noisy reactions of bloggers will give some power back to consumers that will hold companies accountable for their choice of contractual terms and force companies to moderate the terms accordingly. I have my own work-in-progress on the implications of online word-of-mouth on trademark law, so I instantly agreed with their assumptions. However, I'm not sure consumer behavior will work as they describe. It remains unclear to me just how much users really care about the substance of their user agreements, so even if the bloggers gang-tackle a company for offering bum boilerplate, I wonder how many companies will actually be affected by market forces accordingly? Perhaps, as we saw with the search engines' recent movements on privacy policies, the watchdog effect of the blogosphere can reverse a race-to-the-bottom and turn it into a race-to-the-top. More likely, I suspect there will still be more of a lottery effect: a few companies will get tagged for bad press (as they do today) and the rest of the scrutiny won't change anyone's practices.
Even though I'm suspicious about its conclusion, this paper is provocative and raises important issues, so I thought this was a very good paper. The abstract:
The growing popularity of e-commerce transactions revives the perennial question of consumer contract law: should non-salient provisions of consumer standard form contracts be enforced? With the focus presently on an ex-ante analysis, scholars debate whether consumers can and should read standardized terms at the time of contracting.
In today's information age, such a focus might be misguided. The online realm furnishes various tools, so-called Web 2.0 applications, which encourage the flow of information from experienced to prospective consumers. The article, therefore, reframes the analysis of online consumer contracts while taking into account this new flow of information. In doing so, we draw out several typical ways in which such information flows in the online realm, while addressing the role of search engines, blogs, message boards and social networks. The article also accounts for the major challenges to the success of such information flow: the motivations of both information providers and receivers, and the accreditation of the data which might be compromised both unintentionally and maliciously.
After applying the key law and economics and behavioral law and economics insights pertaining to consumer contracts to the new dynamic created by the online environment, we conclude that this online information flow will strengthen market forces' ability to generate a fair and balanced contractual equilibrium. We accordingly provide new policy recommendations that are better tailored to deal with online consumer contracts and thus limit the need for legal intervention in the market for consumer contract terms.
Posted by Eric at 12:02 PM | Licensing/Contracts | TrackBack
August 21, 2007
Search Engine Strategies Copyright and Trademark Panel
By Eric Goldman
Today I participated in the Copyright and Trademark panel at Search Engine Strategies in San Jose, along with Clarke Walton, Eve Chaurand-Fraser of Ask, Mary Berk of Microsoft and Debra Wilcox of Baker & Hostetler. As usual, Jeff Rohrs was our moderator. Some interesting tidbits I learned:
* Microsoft is loosening its search engine trademark policy somewhat. They will still allow trademark owners to block competitive purchases of their trademarks as keywords. However, Microsoft will reduce the documentation necessary for resellers and affiliates to purchase trademarks because Microsoft isn't in a position to arbitrate rights under a third party contract. Further, to reduce advertiser frustration, they will not require verification from advertisers seeking to purchase a third party trademark (assuming the TM is otherwise available for purchase). It seems like Microsoft's policy is regressing just a bit to look more like Google's. This should also have the effect of increasing Microsoft's ad revenues a little and reducing their administration costs.
* Eve Chaurand-Fraser said that Ask receives about 10 take-down requests each week, split about equally between copyright, trademark and personal names. I was a little surprised the number was this low.
* I learned that the 800-JR Cigar v. GoTo.com case quietly settled in October 2006.
Other write-ups of the panel:
* Barry Schwartz
* WebProNews wrote up the following talks: Mary Berk, Debra Wilcox
* RB Digital Rodeo (with a photo!)
* Navneet Kaushal
* DM News (misattributing a statement to me)
____________________________
Here are my notes for my brief remarks at the panel. My main goal was to provide a contrarian view to all of the plainitff-oriented discussion that had taken place in the rest of the panel.
1. Don’t be duplicitous.
• Ex: if you collect third party data using robots, don’t complain if people bot your site
- Solution: for an aggregator, we used robot exclusion headers plus a generous API license
• Ex: if you don’t like third parties buying your trademarks as keywords, don’t buy theirs.
- Ex: Buying for the Home v. Humble Abode. BFTH sued HB for buying its TMs as keywords (among other things). HB countersued because BFTH bought its keywords (and some other reasons). Parties settled with a $10,000 check going from BFTH to HB. Whoops!
2. Invest in IP protection/enforcement wisely.
• If you see an infringement, DON’T FREAK OUT
- If a two-bit splog uses snippets of your content, so what?
- Never assume anything, but preserve evidence
• Dollars invested in protection/enforcement instead can be invested in buying more marketing. Which is the better investment?
- Ex: 800-JR CIGAR v. GoTo.com over GoTo’s sale of TMs as keywords. 800-JR CIGAR litigated this case 6+ years at a cost of hundreds of thousands of dollars in lawyer fees. GoTo’s gross revenues from the sale of the keywords? $345! Can you imagine how much better they would have been pouring their litigation costs into proactive marketing?
- A lawsuit can get you into a worse position than you started. Ex: 512(f), anti-SLAPP, Rule 11 sanctions (KinderStart), American Blinds sued Google and ended up losing some of its trademarks.
• If you think a problem warrants enforcement, plan on using extra-judicial options to maximum extent possible (DMCA, search engine trademark policies)
• If you want to enforce your copyrights:
- register within 3 months of first publication to be eligible for statutory damages. At Epinions, timely copyright registration was difference between a check and being blown off
- Be very careful with Creative Commons licenses—they are a trap for the unwary
Posted by Eric at 02:07 PM | Copyright , Search Engines , Trademark | TrackBack
August 20, 2007
Roommates.com Plaintiff's Reply to EFF Brief
By Eric Goldman
The Fair Housing Councils have filed a reply to the EFF et al amicus brief (which I joined) in favor of an en banc hearing in the Roommates.com case. In it, the plaintiffs admit that aspects of Kozinski's opinion "created some lack of clarity," "mistakes the nature of the claim," contains "unnecessary and confusing language" and should be amended. Yet, the plaintiffs don't think an en banc hearing is necessary to correct these problems.
Other documents in the case:
* EFF et al amicus brief supporting a rehearing en banc
* Fair Housing Council's response to Roommates.com's request for an en banc rehearing
* Roommates.com's En Banc Request
* The original Ninth Circuit opinion
* My blog post on the Ninth Circuit opinion
Posted by Eric at 06:04 PM | Derivative Liability | TrackBack
August 16, 2007
American Airlines Sues Google Over Keyword Ads
American Airlines v. Google, 4:07-cv-00487 (N.D. Tex. complaint filed Aug. 16, 2007) [Warning: 4.4MB file]
"American Airlines does not bring this lawsuit lightly." (para. 6)
Well, this is interesting. It's not unusual for a trademark owner to sue Google for keyword-triggered ads--been there, done that. However, the fact that American Airlines pulled the trigger catches my attention. Many trademark owners who have sued Google had relatively obscure brands. Rescuecom? JTH Tax? Check-n-Go? Even American Blinds is hardly a household name. In contrast, American Airlines is an extremely well-known trademark owner with a big portfolio of trademarks. Further, American Airlines apparently decided it was worth going to war over this issue--and is prepared to pay the big bucks to litigate this case accordingly. If this lawsuit runs its course, I expect this to be a hard-fought and expensive lawsuit.
This complaint pleads the usual claims for this type of action, including direct, contributory and vicarious trademark infringement (I don't know why the vicarious claim was made; it's deficiently pleaded); a false advertising claim that the "sponsored link" language communicates a false impression of actual sponsorship; dilution; various "soft" state claims (unfair competition; misappropriation and others); and tortious interference with contract because Google allegedly knew that American's distributors weren't supposed to buy American's trademarks as keywords.
A few observations about the complaint:
* I'm pretty sure that at least a few of American's examples involve broad matching on the word "airlines," which may not be actionable.
* I thought there were a number of "whatever" arguments (ex: Google doesn't allow keyword advertising on its own trademark), but let me focus on one in particular. American Airlines complains a number of times that the advertisements triggered by its trademarks lead to sites that sell both American Airlines tickets and those of its competitors. So what? Any retailer can advertise that it sells X even though, in its store, it displays X next to competitive offerings.
* Lead counsel for this lawsuit is Terence Ross of Gibson Dunn DC. He's no stranger to keyword lawsuits. Earlier this decade, he brought several plaintiff-side lawsuits against adware companies--including significant losses on the "trademark use in commerce" issue for his clients Wells Fargo and 1-800 Contacts. Lawsuits against Google certainly haven't gotten easier since the 2d Circuit 1-800 Contacts ruling, but maybe Ross has figured out how to get a different result this time. Certainly bringing the lawsuit in a court outside the 2d Circuit makes sense.
We'll have to wait-and-see how this lawsuit plays out, but my working theory is that this was not a good lawsuit for American Airlines to bring. I've noted many times before that lawsuits over consumer "diversion" often cost more than the lost profits from the allegedly diverted consumers. In this case, I wonder how many consumers pick an American Airlines competitor instead of American Airlines solely due to keyword advertising. After all, American Airlines has a loyalty program that inhibits brand switching of its most loyal customers, and very good comparison sites like Orbitz encourage comparison shopping if that's what consumers want. Given those factors, I wonder how much keyword advertising contributes to bona fide "diversion." Plus, this could be a very costly lawsuit. I also wonder if American Airlines itself has ever bought third party trademarks as keywords--plenty of keyword plaintiffs have engaged in such duplicity, and I'd be surprised if American Airlines has run a completely clean shop. Finally, it's not in Google's nature to retaliate this way, but I wonder what would happen if Google decided to cut off keyword advertising for American Airlines?
UPDATE: American Airlines has issued a press release saying, basically, "we don't have a problem with Google's business model, except the part we don't like."
Posted by Eric at 08:30 PM | Search Engines , Trademark | TrackBack
August 15, 2007
Lemley on Online Safe Harbors
By Eric Goldman
Mark Lemley, Rationalizing Internet Safe Harbors
Mark Lemley has weighed in on an topic near and dear to my heart--secondary liability online. He advances two principal arguments in his paper. First, it would make sense to harmonize the disparate legal treatment between secondary liability for copyright law (basically, the notice-and-takedown scheme) and secondary liability for just about everything else (which has no liability under any circumstance per 47 USC 230). Second, the right harmonized model would use, as its starting point, trademark law's safe harbor for innocent publishers/printers (15 USC 1114(2)). As with Mark's other work, his arguments warrant careful consideration.
The abstract:
Internet intermediaries - service providers, Web hosting companies, Internet backbone providers, online marketplaces, and search engines - process hundreds of millions of data transfers every day, and host or link to literally tens of billions of items of third party content.
Some of this content is illegal. In the last 12 years, both Congress and the courts have concluded that Internet intermediaries should not be liable for a wide range of content posted or sent through their systems by another. The reasoning behind these immunities is impeccable: if Internet intermediaries were liable every time someone posted problematic content on the Internet, the resulting threat of liability and effort at rights clearance would debilitate the Internet.
While the logic of some sort of safe harbor for Internet intermediaries is clear, the actual content of those safe harbors is not. Rather, the safe harbors actually in place are a confusing and illogical patchwork. For some claims, the safe harbors are absolute. For others, they preclude damages liability but not injunctive relief. For still others they are dependent on the implementation of a “notice and takedown” system. And for at least a few types of claims, there is no safe harbor at all. This patchwork makes no sense. In this article, I suggest that it be replaced with a uniform safe harbor rule. A single, rationally designed safe harbor based on the trademark model would not only permit plaintiffs the relief they need while protecting Internet intermediaries from unreasonable liability, but would also serve as a much needed model for the rest of the world, which has yet to understand the importance of intermediaries to a vibrant Internet.
Posted by Eric at 03:16 AM | Copyright , Derivative Liability , Trademark | TrackBack
August 13, 2007
2007 Cyberspace Law Syllabus
By Eric Goldman
I've posted my 2007 Cyberlaw syllabus. Unlike the past few years, which were a little slow cyberlaw-wise, the past 12 months saw a lot of important developments. Let me recap some of changes I made to my reader reflecting these developments:
Additions
Copyright: I added the Cablevision case (after editing out some of the mind-numbing description of cable technology), which provides an interesting exposition on how the source of bits matters in copyright law (we'll reinforce that message with the Amazon.com "server test"). I companioned the Cablevision with the Field case to show a very different philosophy about "volitional" server activity, so I'll ask the students to see if they can reconcile the two cases.
I struggled with how to handle the Ninth Circuit's troika of Perfect 10 opinions. The opinions are long, complicated and irresolute, but it's hard to discuss one without discussing the other two. I decided to include all three but I don't feel great about that decision, given that it takes 115 pages (about 1/6 of my total reader) to work through the three cases, and I'm not sure students will come away any smarter about Ninth Circuit online copyright law after reading all three.
Trademark. I substituted the FragranceNet case for the 1-800 Contacts v. WhenU case. The 1-800 Contacts case remains a very important keyword law precedent, but as a teaching case it was just so-so. The adware subject matter increased the complexity, and it punted on the most interesting question of search engine liability. However, most of the other recent keyword law cases have been even less teachable. Fortunately, the FragranceNet case does a pretty job of recapping the 1-800 Contacts case as well as other recent decisions, and it frames the policy issues nicely. I've paired it with the Playboy v. Netscape case, which will make a good compare/contrast. However, if the Second Circuit gets off its duff, I'd be thrilled to substitute in the court's opinion in the Rescuecom appeal. (I'd be even more thrilled if the court reaches the "right" result!).
I also updated my materials to reflect the Trademark Dilution Revision Act.
230. I continue to stick by the seminal Zeran case, which remains both powerful precedent and a colorful teaching case. However, this year I added the Ninth Circuit hairball Roommates.com opinion. I really didn't want to--it's such a messy opinion--but I think for now the case represents a vitally important incursion into 230 law that any good Cyberlawyer needs to know about it (even if they don't know what to do about it). If we're lucky, perhaps the Ninth Circuit will rehear the case en banc and issue a new and more lucid opinion before I have to teach the existing opinion.
In addition, I created a new module on "blogs and social networking sites" and added the Doe v. MySpace case, a great opinion for exploring the differences between online and offline "premises."
Spam. I teach spam at the semester's end, when time is running out, so we'll see what I'm actually able to cover this year. I've added two recent cases: the Mummagraphics case, which wiped out a lot of state anti-spam laws and has a nice interplay with trespass to chattels, and the MySpace v. theglobe.com case, which has an odd contrast with Mummagraphics on the state anti-spam statutory analysis; plus it shows how online contracts can substitute for legislative rights.
Other. I added some explanatory material, including my standard dog-and-pony CLE presentations on keyword law and blog law and my brief distillation of social networking site law. I also updated the CRS on Spyware.
Other Changes
* I eliminated my standalone section on "search engines" and folded the material into the rest of the reader. I think there's pedagogical value to isolating and deeply exploring search engine issues, which is why I initially segregated the material. However, search engine issues crop up throughout the foundational material, so I'm not sure that segregation worked.
* I deleted the following material:
- Corbis v. Amazon. This was an excellent case to teach 512, but I think the ccBill case superseded it in a number of respects.
- the district court opinion in Perfect 10 v. Google, which was superseded by the Perfect 10 v. Amazon Ninth Circuit opinion.
- 1-800 Contacts v. WhenU (as discussed above)
- Alaska SB 140, which I ran out of time to discuss last year.
Deliberately Excluded
* The Utah anti-keyword advertising law represents one of the most important statutory changes of the year, but I omitted it because I anticipate Utah will modify it, and there's no point teaching a moot law.
* I skipped the Unlawful Internet Gambling Enforcement Act. I've generally shied away from teaching online gambling in Cyberlaw; the topic requires a lot of time to teach, making it hard to squeeze into a semester-long survey course. Plus, the new law is an analytical mess, so I'm not sure what the students would get out of the discussion.
* We were so excited to get the California Supreme Court's Barrett v. Rosenthal ruling, but the actual opinion doesn't add much to Zeran, so I thought it wasn't worth the time.
Posted by Eric at 07:57 AM | Adware/Spyware , Copyright , Derivative Liability , Internet History , Search Engines , Spam , Trademark | TrackBack
August 11, 2007
Bracha Responds re. Search Engine Regulation
By Eric Goldman
Last week I blogged on the new paper by Frank Pasquale and Oren Bracha advocating for substantive regulation of search engine operations. In my critique, I said:
My biggest beef with the paper is that it focuses principally on a search engine's intentional and manual biasing of its algorithmic rankings to suppress/omit a specific website for illegitimate reasons (i.e., I think the authors are OK with search engine anti-spam efforts, at least if they are motivated for that purpose). While illegitimate suppression is an analytically interesting issue (not dissimilar to a situation where a newspaper editorial team is out to "get" a particular individual or company), the paper doesn't offer much empirical evidence showing search engines actually engage (or have engaged) in the behavior that the paper seeks to redress. Thus, the paper may build a strong theoretical construct to attack a non-existent practice.
Oren responded to me privately because my comments are still shut down from my last comment spam attack, and this led to a good email exchange. With Oren's permission, I'm sharing our back-and-forth:
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FROM OREN:
The point about the lack of empirical evidence of relatively targeted discrimination by search engines is a good one.
Do search engines engage in targeted discrimination?
There are some suspicious signs or hints that they occasionally do. But this is anecdotal at best. The fact is that we don't know.
In fact, it is nearly impossible to know.
This is an important part of the problem and this is our point!
Search Engines' practices form a "black box" nearly inaccessible to others.
The basic technology is Asymmetric: the search engine has all the information about its practices and the user or listed entity has almost none. As a matter of business practices, search engines are very secretive and protective in regard to information about their algorithms and ranking practices, and for good reasons, some of which are quite legitimate. The law too plays its part in creating this veil of secrecy. Trade secret law affords protection to such information. The sweeping rejection of any cause of action in regard to manipulation minimizes the prospect that the information will ever be divulged.
The net result is an opaque veil which is very hard to pierce. We simply don't know what search engines do. This is part of a broader, and to my mind, troubling phenomenon of "the closed hood society" where areas of information crucial to public policy are shut away behind a secrecy wall.
To put it in fancy legal theory terms, there is a classic article by Felstiner, Abel and Sarat called "The Emergence and Transformation of Disputes: Naming, Blaming, Claiming." It explains how before a legal dispute can ever arise there have to be conditions that allow claimants to recognize (name) the wrong, associate it with the culprit (blaming), and claim redress. In the current black box world of search engines there are some first signs of naming, but blaming and claiming is almost impossible.
Our first important point in the paper is that, while there are some legitimate reasons for search engines' secrecy, someone has to be allowed to peer into the black box and scrutinize their practices, to ascertain whether there is a problem. Toward this end we discuss several mechanisms that can balance search engines' legitimate interest in secrecy and the need to look inside the black box.
This is the first necessary step. It will enable whichever intuition is in charge to know in specific cases and more generally whether there is a need to proceed to step [2] and do something about targeted manipulation. But a sweeping dismissal of step [2] by assuming that search engines can do whatever they want with "their" rankings prevents us from ever getting to step [1], looking inside the black box and answering the empirical question that Eric correctly identifies as an unanswered one.
Concentrated power is suspicious. Concentrated power that operates in the dark is even more suspicious.
Oren Bracha
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FROM ERIC:
Do a global replace of the words "search engine" below with "newspaper editor" and does your analysis change one bit? If not, what implications for your article? In other words, do you know what method or criteria your newspaper editors (or any other print publisher) decide which stories to cover, how many column-inches to give stories, and where to place them in the newspaper? (i.e., what stories go on the front page with a big headline; what stories get reduced to a "notes" section of a paper)? If you don't know, does it matter? I think explaining how/why search engine placement decisions differ from newspaper editorial decisions will make explicit a set of key assumptions about the ways that people "consume" media and the nature of trust we as media consumers repose in our media intermediaries. Eric.
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FROM OREN:
You ask: “Do a global replace of the words ‘search engine’ below with ‘newspaper editor’ and does your analysis change one bit?”
The answer is yes and no.
“No” because, as we explain at length in the paper, the search engines as intermediaries debate is really a reincarnation of the familiar debate about the mass media. In the early days of the Net it was common to think and argue that the Internet with its “democratizing” effect would do away with the intermediaries and solve all the problems of the mass media system. It seems a bit naive now, but there are newer more sober versions of this line of thought (e.g. Benkler’s argument about filtration from below in his book may be read that way). It turns out that search engines are the new intermediaries that replicate many of the difficulties raised by the old ones. Thus the debate over search engines has the same general patterns as that over traditional mass media. However, there are differences of degree and nuances between the two that may convince in the search engines context even some that were concerned by mass media but were ultimately unconvinced that anything should be done.
Which brings me to the “yes” or to some of the differences between the two contexts.
First, one important difference seems to be concentration. Traditional mass media is concentrated enough, but I don’t think it is as concentrated as the search engine market (especially if the yardstick is newspapers). I would be much less worried in the absence of a picture in which a handful of titans control the bulk of the market. The point is not merely the existence of gatekeepers, but the fact that a very small number of them control huge chunks of the market. In this respect search engines seem, at the moment, worse than the mass media.
Second, it is somewhat disingenuous for search engine to claim that they are just like newspapers editors. In other contexts search engines strongly maintain that they are merely conduits and not media outlets. They need that in order to justify sweeping immunity as in the case of DMCA 512 and CDA 230. But they cannot have it both ways. Search engines cannot be “just conduits” for purposes of immunities and “media outlets” when it comes to regulating their discriminatory practices. If you ask me they are right when they claim to be closer to mere conduits. Of course, both conduits and media outlets have a gatekeeping element, but search engines as conduits seem to be located at a deeper layer of the system. Also they are and are perceived as less associated with the content toward which they channel people.
Third a related point is the first amendment implications. It’s impossible to develop here the full array of arguments for and against first amendment protection to search engines’ discretion/discrimination, but one point is directly related to their distinction from more traditional media. Even if one starts from the (controversial but good law) Tornillo premise that interfering with the media’s absolute discretion about what to carry would be prohibited forced speech, that does not mean that there are good reasons to apply this rule to search engines. The common rationale of Tornillo and all its various extensions was that the “carrier” is associated with the speech or content. However, because search engines, unlike a newspaper for example are generally perceived and experienced as conduits rather than speakers or media outlets, they are simply not associated with the content toward which they point people. Most people do not associate Google with the content they find using its search engine, just as they do not associate the content of a telephone conversation with their telephone service provider. Hence, the Tornillo line of case is distinguished and there is less doctrinal and substantive reason to shield search engine’s discretion.
The list could be extended, but I’ll stop here. In short, despite the general common patterns, there are nuanced important differences between search engines and other more traditional media. Most of those differences, I think, point in the direction of a stronger justification to impose some scrutiny on search engine’s discretion to discriminate and manipulate.
Oren Bracha
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FROM ERIC:
[Note: I hate to cut off this interesting discussion, but Oren said in the previous reply that I could have the last word. As I'm sure you know, I'm always going to take an offer like that!]
I think your weakest argument is that people *think* of search engines as conduits. Even if this is true, I guarantee that in the near future people will realize that search engines are active content mediators. When this consumer perception changes, you have a tough time distinguishing Tornillo. Also, assuming you read the newspapers, does it bother you that you don't know how your editors make decisions?
It's also pretty weak to argue that newspapers in the 1970s (i.e., at the time of Tornillo) were less concentrated than the search engine market today, both as a matter of local market concentration and regarding switching costs/procuring substitutes. Eric.
[Note: As I said, comments are down, but if you want to chime in on this debate, feel free to email me and I will post your comments.]
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AUGUST 11: FROM KEVIN SOURS
I can't speak to the state of newspapers in the 1970s, but I do have some insight into search engines. From the data I have there are three that show up and only one of those really matters. Some events earlier this year drove home the fact that if you run a web business these days, you stay on Google's good side or you don't have a business. While I don't have any reason to believe that Google is specifically targetting anyone in particular, I can echo the fact that its impossible to know. I've spent a lot of time researching how to stay on Google's good side and its all rumor, inuendo, and guesswork.
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AUGUST 12: FROM MIKE MADISON:
I don't know a ton about newspapers in the 1970s, but I know something (I come from a family of newspaper people). Media concentration among print media in particular was a high-profile issue in the 1965-1975 time period. During the 1960s, a number of cities with multiple daily newspapers turned into one- or two-newspaper towns. The reaction was a bit of regulatory intervention from Congress called the Newspaper Preservation Act of 1970, which created conditions for exempting Joint Operating Agreements from the Sherman Act. A JOA enabled two newspapers in a city to combine advertising, printing, and distribution facilities while preserving separate editorial operations. Post-NPA, there were close to 30 JOAs in existence; today, there are a dozen or fewer.
The points being:
The newspaper market of the 1970s was more competitive than today's search engine market, but only if you consider "the market" to be essentially national. In any given geographic area, editorial competition was on the way out, and in JOA contexts it was preserved only artificially, via regulation. Many local markets were effectively monopolized by one paper.
The specific regulatory intervention of the NPA didn't open up the editorial black box, as Oren and Frank's paper would do in the case of search engines. The First Amendment had a talismanic authority in the newspaper context. But background conditions of the industry assumed that left to their own devices, journalists would compete like crazy anyway; the point of the regulation was to enable them to do so in spite of economic pressures that would otherwise kill media firms. I take Oren and Frank's ultimate point to be essentially the same; their regulatory proposal is a cure for a related kind of market failure.
I note, however, that the history here doesn't necessarily make me sympathetic to their proposal. The NPA was viewed at the time as the product of interest group capture (the primary sponsors were believed to be handmaidens of big media interests), and the subsequent history of the media industry shows that little could have saved the idea of multiple independent daily papers in any but a handful of American cities (New York, Chicago, Boston, DC). It's hard to argue that the NPA was a good idea in cost/benefit terms.
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AUGUST 12: FROM FRANK PASQUALE:
Frank has posted more thoughts in reply to my comments here.
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AUGUST 13: FROM SETH FINKELSTEIN:
Seth posts some comments at his blog. An excerpt:
But the authors' specific attempts to find a hairsplit for search engines (my paraphrase here) - secret algorithms, or overblown marketing claims, or Google-is-God perceptions, or defining it as not discussion among citizens - just seem to me to be playing to the discomfort that some liberal-arts types have with anything involving technology.
August 15: Seth adds more thoughts here.
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AUGUST 13: FROM GREG STERLING:
Greg Sterling picks up the discussion at Search Engine Land. An excerpt: "While fairness in search results sounds good to some in the abstract, the practical implementation of such a regulatory scheme is where it all might break down and wreck havoc."
Posted by Eric at 02:46 PM | Search Engines | TrackBack
August 08, 2007
Pasquale & Bracha on Regulating Search Engines
By Eric Goldman
Oren Bracha and Frank Pasquale, Federal Search Commission? Access, Fairness and Accountability in the Law of Search
Frank Pasquale has written several interesting papers on search engine regulation. See, e.g., my blog post on a prior work of his. This time, he teams up with Oren Bracha to explain why search engines shouldn't have complete freedom to manage their own algorithms. Regular blog readers know that I vehemently disagree with this argument, but you might still find it worthwhile to check out how the other side thinks. My biggest beef with the paper is that it focuses principally on a search engine's intentional and manual biasing of its algorithmic rankings to suppress/omit a specific website for illegitimate reasons (i.e., I think the authors are OK with search engine anti-spam efforts, at least if they are motivated for that purpose). While illegitimate suppression is an analytically interesting issue (not dissimilar to a situation where a newspaper editorial team is out to "get" a particular individual or company), the paper doesn't offer much empirical evidence showing search engines actually engage (or have engaged) in the behavior that the paper seeks to redress. Thus, the paper may build a strong theoretical construct to attack a non-existent practice.
The abstract:
Should search engines be subject to the types of regulation now applied to personal data collectors, cable networks, or phone books? In this article, we make the case for some regulation of the ability of search engines to manipulate and structure their results. We demonstrate that the First Amendment, properly understood, does not prohibit such regulation. Nor will such interventions inevitably lead to the disclosure of important trade secrets.
After setting forth normative foundations for evaluating search engine manipulation, we explain how neither market discipline nor technological advance is likely to stop it. Though savvy users and personalized search may constrain abusive companies to some extent, they have little chance of checking untoward behavior by the oligopolists who now dominate the search market. Against the trend of courts that would declare search results unregulable speech, this article makes a case for an ongoing conversation on search engine regulation.
UPDATE: Oren and I have continued the debate here.
Posted by Eric at 10:11 AM | Search Engines | TrackBack
August 07, 2007
Food Tastes Better When Branded "McDonalds"
By Eric Goldman
Recently I blogged on a study showing that consumers like search results more when they are branded as coming from Google, even if the search results are substantively identical. We now have a similar study, this time showing that kids think food tastes better when it's branded as coming from McDonald's--even McDonalds' branded carrots are easier to get down the hatch. It's a powerful reminder of (1) the power of brands generally, (2) the power of brands to construct meaning, and (3) the extra susceptibility of kids to branding.
We had our own recent first-hand experience with the power of brands over kids. We normally don't shop in the "traditional" grocery stores like Safeway; the vast bulk of our grocery dollars go to Trader Joe's or the farmers' markets. However, on a recent vacation, we stopped into a traditional grocery store (the Save Mart in Angels Camp), and my 2 year old daughter Dina went absolutely bonkers. She's a fan of Dora the Explorer, and it turns out that there are an amazing number of Dora-branded products available in the traditional grocery store--we as parents had blissfully ignored these products, but they shone like bright beacons to our otherwise unexposed/inexperienced daughter. Through some disciplined parenting, we escaped with a single Dora-branded pack of yogurt...and a vow never to go back to traditional groceries!
Posted by Eric at 03:41 PM | Marketing , Trademark | TrackBack
August 06, 2007
CAN-SPAM Defendant Awarded $111k in Fees/Costs--Gordon v. Virtumundo
By Eric Goldman
Gordon v. Virtumundo, 06-0204-JCC (W.D. Wash. Aug. 1, 2007)
I believe this ruling represents the first time that a CAN-SPAM plaintiff has been ordered to pay attorneys' fees and costs to a defendant. As a result, it's a leading example that courts can and do grow tired of bogus anti-marketing lawsuits, and perhaps it will serve as an expensive warning to CAN-SPAM plaintiffs to ensure the merits of their lawsuit.
Gordon is an uber anti-spam plaintiff, leading countless CAN-SPAM lawsuits. (Ethan blogged a little on Gordon's litigation here). As the court describes, Gordon runs a "spam business"--basically, a for-profit plaintiff litigation shop to go after spammers (the court also calls it a "litigation factory"). The court doesn't seem very impressed with this business model. Having already dismissed the lawsuit's substance, the court repeatedly rips on Gordon for bringing a junk lawsuit, saying that "The Court finds that Plaintiffs’ instant lawsuit is an excellent example of the ill-motivated, unreasonable, and frivolous type of lawsuit that justifies an award of attorneys’ fees to Defendants" and "the Court finds that the goal of deterrence is particularly relevant here. Plaintiffs should be deterred from further litigating their numerous other CAN-SPAM lawsuits now that they are aware their lack of CAN-SPAM standing."
Along the way, the court interprets the appropriate standard for awarding fees under the CAN-SPAM fee shifting provision. Informed by Gordon's litigation abuses, the court decides that the fee-shifting provision should use the more defendant-favorable "even-handed" standard when evaluating a defendant's fee requests (like it is in the copyright context) instead of the "dual standard" where the plaintiff gets a favorable review on both its fee requests and defendant's fee requests (the latter standard thus encourages plaintiffs to bring lawsuits without the fear of a loser-pays ruling). The court correctly notes that Congress really wasn't trying to enable lots of private lawsuits from CAN-SPAM, so the risk of chilled plaintiffs is appropriate in this context. As the court says, "Promotion of prolific private CAN-SPAM litigation is not what Congress intended." Thus, this ruling paves the way for CAN-SPAM defendants to request and get attorneys' fees when faced with bogus CAN-SPAM claims.
More generally, I remain frustrated that so much regulatory attention is focused on curbing marketers' abuse while comparatively little attention is given to curbing marketing plaintiffs' abuse. But make no mistake--every new anti-marketing law with a private right of action will stir up more action than some chum thrown into shark-infested waters. As I think I've mentioned before, I have a Westlaw alert set up on TCPA cases, usually triggering several alerts each week, and the amount of wasted judicial resources is stunning--there is a steady and mind-numbing stream of rulings over whether TCPA lawsuits are covered by advertising injury insurance; whether (in light of the business relationship exception) TCPA plaintiffs have enough in common to form a class; whether the TCPA preempts state law; and lawsuits where plaintiffs try to get standing to sue under TCPA provisions that are clearly specified as enforced only by the FTC or FCC. In other words, most of the rulings relate to largely procedural squabbling before the parties even get to the substance of the marketer's allegedly impermissible behavior. What a colossal waste of society's resources.
Fortunately, rulings like this one (and others I've blogged about based on anti-SLAPP and Rule 11 sanctions) suggest that plaintiffs can and do go too far and that courts won't ignore this either. But it remains to be seen how well these sanctions work at curbing litigation abuse. At minimum, I hope this award convinces Gordon that his "spam business" may not be as profitable as he initially thought.
HT: Venkat
Posted by Eric at 01:45 PM | Spam | TrackBack
August 04, 2007
Taking Intangible Electronic Files is Criminal Fraud--NM v. Kirby
By Eric Goldman
New Mexico v. Kirby, 2007-NMSC-034 (N.M. June 13, 2007)
This is a very confusing case, so maybe you can help me figure out what it means. At minimum, this case highlights the problems that can be arise when a web design/development relationship goes sour. More broadly, it also contributes to the already confused case law about when intangible electronic records can be "stolen," but this lesson comes at a high cost--in this case, 18 months of jailtime for the defendant.
Facts
According to the Supreme Court's statement of facts, Kirby retained Collett, a website designer, to "develop[] and/or improv[e] a World Wide Website to be installed on the client's web space on a web hosting service's computer." I believe the site at issue is environmentalbenefits.com. The agreement specified that Collett retained the copyright "to the finished assembled work of web pages" and Kirby would be "assigned rights to use as a website the design, graphics, and text contained in the finished assembled website" after Kirby paid the contract price of $1,890 plus tax.
But Kirby never paid Collett--although, according to this site, Kirby paid with an allegedly bum check. Kirby also changed the password for the designed website, which effectively cut off Collett's ability to access those files--the files that, per the contract, Collett still owned.
If Kirby stiffed Collett, it seems like Collett had several legal options, including breach of contract and copyright infringement. Instead, this case went to state prosecutors, who prosecuted Kirby for criminal fraud based on Kirby having taken "a Website Design belonging to Loren Collett, by means of fraudulent conduct, practices, or representations." The jury convicted Kirby, and the Supreme Court affirmed. According to this site, Kirby was sentenced to 18 months in jail.
Questions
This case raises some tough issues, including:
* Why did NM prosecutors pursue this case? On its face, this looks like a garden-variety $2000 commercial dispute. Heck, it could have been handled in small claims court. Instead, Kirby get a felony conviction and jailtime. Huh?
* Did Collett retain a duplicate copy of his files in his possession? If so, how did Kirby "take" non-rivalrous electronic files?
* In that vein, why isn't this crime preempted by copyright law? Copyright preemption is inherently confusing, so I don't feel too bad about being confused here. Indeed, on its face, a commercial fraud crime should be sufficiently removed from copyright law to avoid preemption easily. But in this case, Kirby was prosecuted for converting Collett's intangible files. This sounds a lot like copyright infringement to me. Of course, this ruling isn't completely unprecedented: cases like Kremen v. Cohen and Thyroff have held that intangible electronic records can be converted, though I think the copyright preemption analysis in these cases is hardly satisfying (plus, the recent Utube case held that an intangible asset could not result in trespass to chattels). Though the case talks about copyright a lot, there's no reference at all to preemption--perhaps it wasn't raised by the public defender?
Lessons
1) This case reminds us of the importance of drafting a website development agreement properly. For example, the contract's provision that Kirby would be "assigned rights to use" the website is fatally ambiguous. I wrote a lot on the issues associated with web development agreements in the 1990s; see, e.g.,
* A Fresh Look at Web Development and Hosting Agreements (1998) with sample web development agreement
* Top 10 legal issues for clients of Web developers (1996)
* Pitfalls in Outsourcing Your Website (1996)
In particular, the excerpted contract language indicates that the parties were struggling with defining their respective ownership interests. This is a typical area of confusion; I racked up a fair amount of billable hours in the late 1990s on this very point with people (including opposing lawyers) who didn't get it. Even when the deal value is low, a savvy lawyer can add significant value, at relatively low cost, helping the parties understand this topic.
2) This case reminds us that, unless the contract specifies otherwise, the web designer owns his/her web development work product even if the retaining party pays for the work. This isn't new either (web development lawsuits from the 1990s addressed this point), and here the parties actually expressed addressed ownership in their contract. Nevertheless, caveat emptor!
3) This case extends the meme that intangible electronic records are just as tangible as chattel for conversion purposes. I remain concerned in general about this trend. We may benefit from a careful rethinking about the implications of rivalrousness on conversion doctrines.
4) I'm trying to figure out how broadly this case could apply. For example, would it apply in other circumstances where a party cuts off another party's access to electronic files by changing a password? With little effort, I can think of two: (1) divorcing spouse cuts off spouse's access to shared account containing copyrighted works, and (2) website terminates customer by changing the password, cutting off access to copyrighted material stored in the account (I'm assuming the contract doesn't expressly grant this right). Each fact pattern appears indistinguishable from the elements at issue in this case, although there may not be the requisite scienter to find fraud. if there were (for whatever reason), this case could expand the realm of criminality much further than we might have anticipated.
5) No matter what, the Supreme Court opinion and some of the source materials at this site strongly indicate that the New Mexico judicial system still doesn't understand Internet technology very well. If this were a typical civil case, that would be a shame; if this technological confusion directly led to jailtime for the defendant, it may have produced a travesty.
Posted by Eric at 04:05 PM | Copyright , Internet History , Licensing/Contracts | TrackBack
August 01, 2007
July 2007 Quick Links, Part II
By Eric Goldman
Virtual Worlds
* After a remarkable run as media darlings, Second Life is now experiencing some of the inevitable backlash. Case in point: Wired's "How Madison Avenue Is Wasting Millions on a Deserted Second Life." In this respect, Second Life reminds me a little of Keen.com--both provide fantastic platforms for monetizing user-generated content, but that powerful economic platform is likely to take root primarily in the sin businesses (porn, gambling, etc.). (FWIW, Keen.com appears to have cleaned up the dial-a-porn and is now focused exclusively on dial-a-horoscopes). As a result, it will be interesting to see what happens to Second Life's numbers in response to their anti-gambling crackdown. Meanwhile, lawyers--the classic late adopters--are gushing about Second Life's potential as a business generator--an interesting counter-perspective to the Wired article.
* World Copyright Law Report: "Some residents have been using a rogue version of a program called CopyBot to make a copy of anything in the Second Life world, thus threatening to undermine the whole basis of the Second Life economy."
Wikipedia
* More marketers wake up to the value of inserting links into Wikipedia despite Wikipedia's nofollow tag. See my earlier explanation of this. Meanwhile, a Wikipedia administrator talks about what Wikipedians consider white hat practices for marketers.
* Willing to cite to Wikipedia in your legal briefs? Need some custom-tailored authority to support your argument? Edit Wikipedia to say what you want!
* Mike Godwin has become Wikimedia’s GC. You may recall that Mike and I bet about Wikipedia’s future; it appears he has raised the stakes on that bet substantially!
User Generated Content
* "GC's Client from Hell": Whole Food's CEO John Mackey pseudonymously posted about his company's stock and his competitor's stock on Yahoo Finance. The WSJ article has some of the juiciest postings. The NYT on CEO "sock puppetry."
* A restaurant owner used consumer reviews from Yelp as part of deciding to fire employees.
* Interesting interview with the pseudonymous founder of a pay-for-Diggs business.
Blogs
* The ABA Journal has entered the crowded field of blawg directories with one of their own.
* Blawgworld 2007: 77 blawgers chose their favorite posts, which were compiled into an e-book. The compilation turns out to be a great way to get noisy blawgers to promote their brilliant contributions to the e-book, which generates traffic and link love for the publisher, which in turn creates a nice delivery vehicle for sponsored content/advertising.
Miscellaneous
* Asch Webhosting, Inc. v. Adelphia Business Solutions Investment, LLC, 2007 U.S. Dist. LEXIS 52932 (D. N.J. July 23, 2007). IAP terminates customer based on complaints that customer was a spammer. Court holds that the consequential damages waiver applies, effectively negating customer's alleged damages. Rejecting the customer's argument that the termination was in bad faith, the court says: "Plaintiff’s arguments about the accuracy of the spamming complaints do not change the Court’s determination because regardless of the ultimate accuracy or veracity of the spamming complaints, defendant was entitled to rely on those complaints so long as it did so in good faith, and plaintiff has not demonstrated any bad faith by defendant." HT: Technology Law Update.
* Consumer Law & Policy Blog: "companies in two recently filed federal cases explicitly invoke [the recent Supreme Court decision in] Leegin as a justification for terminating the eBay auctions of competitors that charge lower prices online."
* Declan on whether anti-spyware vendors are screening for "fedware" (government keystroke loggers designed to capture data before it's encrypted).
Fun
* More proof that technology can save lives: During a power outage at a hospital, doctors were able to complete a surgery using the light of open cellphones.
* I’m a new fan of Oddee. Some recent posts (it helps to think about sexual connotations when interpreting the photos):
- "15 Unfortunately Placed Ads."
- "Most Unfortunate Logos Ever"
- "Unfortunate Business Names.”
Posted by Eric at 11:06 AM | Adware/Spyware , E-Commerce , General , Internet History , Marketing , Spam , Virtual Worlds | TrackBack