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December 31, 2007
2007 Blog Year-in-Review
By Eric Goldman
A look back at 2007:
Most Popular Blog Posts
1) The Most Effective Anti-Terrorism Law EVER
2) Utah Bans Keyword Advertising
3) Rescuecom v. Google Law Professors' Amicus Brief [overflow from #1]
4) Sex.com -- An Update
5) Regulating "Stealth" Marketing [overflow from #2]
6) Keyword Ads and Metatags Don't Confuse Consumers--J.G. Wentworth v. Settlement Funding
7) American Airlines Sues Google Over Keyword Ads
8) Search Engines Defeat "Must-Carry" Lawsuit--Langdon v. Google
Some Posts You Might Have Missed the First Time Around
* The Victorian Internet
* Best and Worst Internet Laws
* Gifts for Incoming First Year Law Students
* Israel Trip Reflections
* Suggestions for Conference Organizers
Blog Statistics
* Despite the overall softness in the legal blogosphere market, all of the blogs' key metrics (unique visitors, visits, page views) roughly doubled in 2007 compared to 2006.
* Google represented about 90% of search engine referrals.
* Top 10 referral search terms: "sex.com"; "barbri class action"; "law professor salaries"; "law professor salary"; "eric goldman blog"; "donotcall.gov"; "facebook connectu"; "eric goldman"; "goldman"; "american blinds". This is the third year in a row that "law professor salary" was a top 5 referral term. I wonder why such a small number prompts such great interest?
* The blogs had about 320 posts this year. Top categories include derivative liability, search engines and trademarks, each with about 70 posts this year.
* According to Google Analytics, I had visitors from 184 countries, including countries with low Internet usage (<50k Internet users per CIA Factbook) such as Greenland, Guinea-Bissau, Andorra and Reunion.
* AdSense continues to disappoint. My eCPM has been progressively decreasing over time, and it's down to $1.60 in 2007. As confirmation of how poorly AdSense performs for my site, in the month of December, I earned about 3X from Amazon Affiliates program than I did from my AdSense on my blogs, even though I have affiliate links only on about a half-dozen pages (compared to the couple thousand pages displaying AdSense ads).
Blog Year-in-Review from 2005 and 2006
Posted by Eric at 10:45 AM | General | TrackBack
December 30, 2007
"SmartSearch" = Dumb Trademark -- Applied Information Sciences v. eBay
By Eric Goldman
Applied Information Sciences Corp. v. eBay, Inc., 2007 WL 4553999 (9th Cir. Dec. 28, 2007)
This is not an earth-shattering case, but it's a nice example of a worthless trademark enforcement action and a refreshing example of the Ninth Circuit not being flummoxed by an Internet trademark case.
AIS registered a trademark in the term "SmartSearch" in 1998 (application filed in 1994) for "computer software and instruction manuals sold together which allow the user to retrieve information from on-line services via phone line in the fields of agriculture and nutrition, books, chemistry, computers and electronics, education, law, medicine and biosciences, news, science and technology, social sciences and humanities." This sounds like some modem-based product. Whatever it was, it went defunct in 2004.
Starting in 2000, eBay described its advanced search option page using the term "Smart Search." (It now appears to use the more conventional "advanced search" label). On its face, this looks like a textbook example of descriptive fair use, but the Ninth Circuit opinion doesn't mention the doctrine at all. instead, the district court ruled that AIS didn't have any protectable rights in the term because the trademark description did not extend to eBay's type of usage. The district court's rationale is a little confusing because it conflates two separate inquiries: validity of the TM and the scope of the rights. The Ninth Circuit correctly notes this conflation and holds that AIS had a valid TM (as evidenced by the federal registration). Nevertheless, the Ninth Circuit affirms the dismissal because AIS failed to produce evidence of a likelihood of consumer confusion.
Since it was in court anyway, eBay tried to get attorney's fees under the Lanham Act fee shifting provision. The court correctly says this case isn't exceptional enough to warrant fee-shifting. Too bad; it would have been a fitting cap to a lawsuit that didn't look too smart from inception.
UPDATE: Michael Atkins is on the case too.
Posted by Eric at 12:13 PM | Trademark | TrackBack
December 29, 2007
New Jersey Authorizes Ban of Sex Offenders' Internet Access
By Eric Goldman
New Jersey S1979 (signed December 27, 2007)
New Jersey has passed a law allowing various punishment authorities (judges, parole officers, etc.) to restrict Internet use by convicted sex offenders. The main operative restriction says that these authorities may:
Prohibit the person from accessing or using a computer or any other device with Internet capability without the prior written approval of the court except the person may use a computer or any other device with Internet capability in connection with that person’s employment or search for employment with the prior approval of the person's parole officer
Other restrictions may include unannounced inspection of their computers, devices to monitor Internet use and other appropriate restrictions.
Some observations about this law (expanding on my comments here):
1) There is an obvious grammar ambiguity. The law allows the restriction of a "computer or any other device with Internet capability." Read literally, this appears to enable the restricted use of a computer even if it's not connected to the Internet. I don't think that's what the legislature meant, but it may be what they said.
2) This law is a small example of a much broader social effort to strip sex offenders of civil liberties. Legislators love to pass laws that appear to protect kids from Internet threats, and sex offenders (a) are an obvious target and (b) have zero political clout to combat these efforts. As a result, legislators can pass laws reducing sex offenders' rights without any opposition. (Like most laws of its ilk, this law passed unanimously at every level of review.) I say more about sex offenders as the new pariah here.
3) I would support these laws if social science confirmed (or even suggested...) that the restrictions actually might curb recidivism or otherwise protect kids. However, these laws typically have no social science behind them. As a result, we don't know in advance if the laws are likely to help--or hurt--the situation.
For example, the laws restricting the residence of registered sex offenders (i.e., can't live within 2000 feet of a school) have caused some sex offenders to move out of urban areas (thus potentially limiting their employment prospects), left other sex offenders homeless and caused yet others to drop out of the supervision of their parole/probation officer. Do these outcomes reduce recidivism? There is an answer to this Q; but I don't know it, and I'm guessing our legislators don't either. Similarly, could cutting off sex offenders from the Internet backfire? We should know the answer before proceeding. [UPDATE: This article lays out this argument better than I did.]
4) In 10 years, the Internet exceptionalism of this law will be comically anachronistic. When the Internet is everywhere, there is no way to "wall off" the Internet and stop using it. The Internet can be accessed through computers, of course, but it's also accessed through cellphones, handheld devices and smart appliances--all of which are seemingly potentially off-limits under this law. A TiVo can access the Internet--is that off-limits to sex offenders? When a refrigerator is Internet-accessible, will that be off-limits? Cars are Internet-connected; are they off-limits too? This law makes about as much sense as banning sex offenders from using our road system (which they also use to commit their crimes). The Internet is part of our infrastructure and impossible to avoid, and there is no way to fence it off.
As we have seen over and over again, Internet-related legislation can succeed only when it regulates bad behavior, not "bad" technology. Kicking sex offenders off the Internet as a prophylactic sounds great in theory, but I'm guessing in practice it won't help and might hurt the cause.
Posted by Eric at 10:13 AM | Content Regulation | TrackBack
December 28, 2007
December 2007 Quick Links
By Eric Goldman
Marketing
* I've blogged about Various, which operates AdultFriendFinder.com, before. They made the news recently in two ways. First, they sold to Penthouse for half-a-billion dollars. Second, they settled with the FTC for "pelting" users with unwanted sexually graphic pop-up ads. Do you think these developments are linked in any way... ? Could it be that Various was willing to settle up with the FTC on any terms so that they could get a half-billion dollar check? In this respect, I'm reminded of the MySpace/Intermix $7.5M settlement with the NY Attorney General's office in a dubious enforcement action that was immediately followed by MySpace's sale to News Corp. for $580M. Hey government enforcement agencies--if you can spot hot dot-coms that are negotiating mergers and bring an enforcement action, you can name your price!
* Abrams v. Facebook, the lawsuit over Facebook sending text messages to old phone numbers, has settled. See Michael Erdman and the AP.
* Newsday circulation fraud case (involving inflated circulation numbers) nets $83M restitution, $15M criminal settlement, and nine criminal convictions.
* Texas AG Abbott is prosecuting two companies under COPPA. As far as I know, this is the first state-level enforcement action under COPPA.
* Florida AG Michael Palecki looks to be targeting online advertisers for ads placed by their affiliates.
* The Do-Not-Call registry has become an even less dynamic reflection of preferences.
Copyright
* The Second Circuit kicked out the settlement struck in Tasini's aftermath because it covered unregistered copyrights. Rebecca makes some good points.
* Perez Hilton drops YouTube because they took down one of his videos in response to a takedown notice. On the one hand, this shows that there can be marketplace mechanisms that give feedback to intermediaries based on the restrictiveness of their takedown policies. On the other hand, YouTube was a free service; what did you expect?
* Michael Savage, a radio personality, is suing a website for posting audio clips of his rants as part of the website's criticism of him. See the NYT and CMLP.
* A special master has been appointed in the Grokster case to determine the possible filtering options available to Streamcast. I'm actually amazed that this case is still going!
Reviews and Ratings
* WSJ: Restaurants are giving away free meals to online reviewers to try to get improved consumer ratings.
* BrokerCheck, a regulator-sponsored website for consumer gripes about securities brokers, deletes negative gripes if the complaint settles.
* Retail store signage ("shelf talkers") routinely overstate the Wine Spectator ratings assigned to wine on the shelves.
Best of Mike Masnick
Mike Masnick of Techdirt is a terrific blogger who is smart, prodigious and opinionated. This month he had some noteworthy posts (even by his standards), including:
* Some wise words about Fark's trademark application for NSFW.
* “Noncompete Agreements Are The DRM Of Human Capital.”
* "Anything Goes Wrong Online? Yell 'Net Neutrality' As Loud As Possible!"
Search Engines
* Google appears to have categorically wiped out PageRank for bloggers participating in PayPerPost.
* Danny's sensible remarks on the role of humans in Google's algorithmic search results.
* Search engines pay $31.5M to settle up for running gambling ads. A significant share of this settlement amount is actually public service ads, not cash. Note that enforcement of federal criminal gambling laws is one of the few exceptions to 47 USC 230; if this had been an enforcement of state anti-gambling criminal laws or a civil action, it should have been preempted.
General
* "Like the proverbial tree falling in a forest, the unauthorized use of a trademark that is never perceived by anyone cannot be said to create a likelihood of consumer confusion." Custom Manufacturing and Engineering Inc. v. Midway Services Inc. (11th Cir. Nov. 21, 2007). This statement was made in the context of a counterfeit component part, but it sounds like a good reason to reject liability for including trademarks in keyword metatags.
* Todd Hollis is suing DontDateHimGirl.com a second time. Last time the court sidestepped 230. This time, I hope the court will use 230 to terminate the lawsuit permanently.
* Mark Radcliffe's "2007 Top Ten Free and Open Source Software Legal Issues"
* A nice recap on "location-based mobile services," the delivery of services predicated on GPS devices in cellphones. UPDATE: It looks like mobile marketing/privacy is the topic du jour (or, at least, a topic worthy of end-of-the-year recaps). AP weighs in on the same topic.
* Kaspersky flags Windows Explorer as a virus and then reverses itself, calling this a false positive. Then again, many people consider Microsoft software "malicious code," so maybe the positive wasn't so false after all.
Posted by Eric at 09:39 AM | Adware/Spyware , Copyright , Derivative Liability , Marketing , Search Engines , Trademark | TrackBack
December 27, 2007
Keyword Advertising is TM Use in Commerce But Doesn't Violate Injunction--Boston Duck Tours v. Super Duck Tours
By Eric Goldman
Boston Duck Tours, LP v. Super Duck Tours, LLC, 2007 WL 4465464 (D. Mass. Dec. 5, 2007)
In the latest advertiser-vs.-advertiser lawsuit over keyword advertising, a court from the First Circuit (in Massachusetts) deemed keyword advertising to be a trademark use in commerce but concluded that the trademark-triggered keyword advertising didn't violate the governing injunction.
This case is reminiscent of the Sport Court v. Rhino Court case. The trademark owner, Boston Duck Tours (BDT), obtained an injunction against a junior user, Super Duck Tours (SDT) restricting the use of "the phrase 'duck tours' as a trademark or service mark in connection with its sightseeing tour service in the greater Boston area." SDT bought keyword advertising triggered by the phrase "boston duck tours," and BDT sought recourse for the alleged violation of the injunction.
The court acknowledges the caselaw split about whether buying a competitor's trademark constitutes a trademark use in commerce. This court sides with the opinions of the courts outside the Second Circuit, concluding that "Because sponsored linking necessarily entails the “use” of the plaintiff's mark as part of a mechanism of advertising, it is “use” for Lanham Act purposes."
Despite this, the injunction only restricts the use of the term "duck tours" as a trademark. The court concludes that the injunction doesn't restrict every possible reference of the trademark and consumer confusion isn't likely in this particular circumstance. Thus, SDT didn't violate the injunction by purchasing the keyword advertising.
From my perspective, this case is another silly keyword advertising lawsuit. First, I generally think most keyword advertising lawsuits are stupid and a waste of time, and this case doesn't appear to be any different. Maybe I'm missing something, but I'd be very surprised if duck tour companies have such fat profits that they can afford to bring expensive trademark lawsuits. In this case, BDT only succeeded in forcing SDT to adopt the trademark "Super Duck Excursions." I'm having a tough time seeing how that name change will increase BDT's profits by the tens/hundreds of thousands of dollars of legal fees it cost to get it.
Second, I wonder if the term "Duck Tours" has become a generic description of tours in an unattractive amphibious vehicle. These tours are ubiquitous throughout the world. On the first page of a Google search for the term "duck tours," I see promotions for duck tours in Miami, Washington DC, Baltimore, Seattle, Austin, Philadelphia, Portland and London. (Not all of these use the words "duck tours" in that order, but several do). I am sure there are many others--for example, I can't erase my mental image of the omnipresent duck boats in Wisconsin Dells. See the Wikipedia entry on this topic, listing other venues. Wikipedia also informs that "duck" is a variation of DUKW, a WW2 amphibious vehicle, further reinforcing that the phrase might be generic. As a result, giving BDT the exclusive rights to use the term "duck tours" in Boston seems unnecessary and unwarranted.
UPDATE (12/28): Super Duck Excursions is showing up as the lead AdSense ad on the site today. And on the post-specific page, Viator (a consolidator reselling tickets for BDT) is the lead advertiser.
Posted by Eric at 11:44 AM | Search Engines , Trademark | TrackBack
December 20, 2007
Tiffany v. eBay Post-Trial Briefs
By Eric Goldman
Fred was kind enough to post the post-trial briefs filed by Tiffany and eBay in the lawsuit over eBay's contributory liability for Tiffany counterfeit goods sold via eBay. These briefs provide a nice overview of the points of contention as well as a treasure trove of facts. Some highlights:
* Tiffany sent almost 135k takedown notices to eBay in 2006. (Interestingly, that number appears to have dropped substantially in 2007). That translates to about 370 takedown notices each day, or 15 every hour, or about one every 4 minutes.
* As reported via Tiffany, eBay's top 10 filers of takedown notices filed a quarter-million per month in 2003, growing to over 400,000 takedown notices per month in 2005--or, about 5,000,000 takedown notices per year from just the top 10 complainers.
* In 2004, Tiffany purchased 186 Tiffany items listed for sale on eBay and, according to its assessment, only 5% of those were legitimate Tiffany goods.
* Tiffany repeatedly calls eBay a "rats nest" for Tiffany counterfeits (presumably, the rodential analogy to "red flags" of infringement under 512).
* eBay says that Tiffany has dedicated only 0.1% of its gross sales to counterfeit enforcement (excluding the litigation costs in this case). [This raises a terrific issue for empirical research or a law review paper--what percentage of revenues should an IP owner spend on enforcement of its IP?]
* eBay thinks Tiffany could have spent 1.0-1.5 FTE on additional paralegal support for reporting through the VeRO program (at $50k/FTE) to achieve the same results that it is trying to achieve through this $3-5M litigation.
* eBay's service levels for takedown response: "eBay’s practice is to remove reported listings within 24 hours, with about 95 to 99 percent removed during that time; 70 to 80 percent of reported listings were removed within 12 hours of notification during the course of the litigation, and nearly three-quarters are currently removed within four hours."
* Less than 50 of the 100,000 takedown notices from Tiffany between 2003-05 required any followup by Tiffany.
* 1/4 of eBay's worldwide employee headcount of 16,000 is devoted to trust & safety issues. [That number sounds a little puffy; I'd love to see what departments got defined this way. Then again, I've heard repeatedly that eBay has 2,000+ CSRs, all of whom have T&S responsibility.] Of those, 200 work full-time on combating infringement, and 70 work full-time coordinating with law enforcement.
In the end, just like the battle over 512, this lawsuit is really a battle about who will bear the investigation costs for questionable user content. Framed that way, given the fat profits earned by both litigants in this case, it's hard to find a lot of sympathy for either side. But in a world of long-tail content where each content item has relatively low economic value to anyone, the allocation of investigation costs may be dispositve. This case could have a significant bearing on that allocation.
Posted by Eric at 07:45 AM | Derivative Liability , Trademark | TrackBack
December 19, 2007
Avvo Wins Big in Ratings Lawsuit--Browne v. Avvo
By Eric Goldman
Browne v. Avvo, C07-0920RSL (W.D. Wash. motion to dismiss granted Dec. 18, 2007)
The lawsuit against Avvo for lawyer ratings has been dismissed without leave to amend. This is a big win for Avvo.
The ruling turns on two legal conclusions. First, the judge says that Avvo's ratings, even if generated through automated algorithms, are opinions, not facts, and thus fully qualify for First Amendment protection. Second, the judge rejects the lawyers' claim under Washington consumer protection law because (A) the "editorial" rankings are not commercial enough to be regulated by the act, even when the publication of those rankings is supported by advertising (a conclusion I fully agree with, but many courts--especially in the trademark arena--would have inappropriately labeled the rankings a commercial activity), and (B) the lawyers' damages are too speculative because it's impossible to measure how many consumers will be misdirected by any rankings inaccuracies and how much value a lawyer would have derived from those misdirected consumers.
Along the way, the judge expresses a healthy skepticism (bordering on snideness) about lawyer rankings in general, calling the Lawdragon rankings "nonsense," pointing out that he had trashed a "Super Lawyer"-ranked lawyer who had engaged in "unreasonable and vexatious litigation tactics" in his courtroom (and who retained the ranking even after the trashing) and chiding "how ludicrous the rating of attorneys (and judges) has become." This judge fully understands ranking silliness and gives it no quarter. Right on, judge!
Lawyers being lawyers, it wouldn't surprise me to see the plaintiffs appeal the ruling. But the judge's opinion is solid and any appeal would likely be fruitless.
Other comments on the case:
* Mark Britton of Avvo tells the story from his perspective. The official Avvo press release.
* John Cook of the Seattle Post-Intelligencer
* WSJ Law Blog
* Denise Howell
* The complete CMLP page on the lawsuit
Posted by Eric at 10:23 AM | Derivative Liability , Marketing | TrackBack
December 18, 2007
Co-Blogger Identity Isn't Disclosed via 512(h), but Takedown Letters Are Copyrightable
By Eric Goldman
In re Subpoena Issued Pursuant to The Digital Millennium Copyright Action To: 43SB.Com, LLC, 2007 WL 4335441 (D. Id. Dec. 7, 2007)
We have long known that the DMCA expedited subpoena procedures for identifying copyright infringers (17 USC 512) could be abused. Even so, it is disturbing to see this particular example of abuse.
The background: A pseudonymous co-blogger ("Tom Paine") blogged a post containing some critical rumors about Melaleuca and its CEO to the 43rdstateblues.com blog. Melaleuca's lawyer sent a takedown letter to a blog administrator. Through an unknown process, another of the 43rdstateblues' pseudonymous co-bloggers, "d2," got his/her hands on the takedown letter. Like any good blogger, d2 posted the takedown letter to the blog.
Along the way, Melaleuca's lawyer obtained a copyright registration for the takedown letter. The lawyer sent a series of DMCA takedown notices predicated on the fact that the blog was hosting the copyrighted takedown letter. This takedown spam succeeding in forcing the blog's host to remove the takedown letter, and at some point the original Tom Paine post was redacted as well. Melaleuca now is seeking defendants to sue for infringing the takedown letter and sent a 512(h) subpoena to the blog operator, 43SB.com, LLC, seeking identifying information for d2 and Tom Paine. The LLC responded by trying to quash the subpoena on two grounds (among others): (1) the letter isn't protected by copyright, and (2) 512(h) does not apply to Tom Paine.
Melaleuca's choices here are troubling in at least two ways.
First, enforcing the copyright in the takedown letter is bogus. Takedown letters can satisfy the technical requirements for copyrightability under the statute, but this letter is so completely pro forma that it should barely clear the copyrightability hurdle (if it does at all). Further, republication of demand letters is so strongly infused with public interest that it should be clearly covered by fair use. Most problematically, the primary target all along appears to be Tom Paine, but because 230 may insulate other bloggers from liability for Tom Paine's post (a point I explore in this article), the plaintiff appears to be using copyright law to pressure the co-bloggers to turn over the griper. It's sad to see a plaintiff desperately deploy a junk copyright claim for these purposes.
Second, using copyright as the tool, the plaintiffs tried to sweep the griper Tom Paine into the subpoena that targeted d2 for the alleged copyright infringement of the takedown letter. The plaintiffs cannot connect Tom Paine to the infringement other than noting that d2 is a co-blogger, but they still tried to piggyback off the copyright infringement to force the identity disclosure. Fortunately, the court rejected this attempt to use the copyright subpoena as a backdoor to unmask the griper. This doesn't mean that Tom Paine's identity is safe; it just means the plaintiffs will have to work harder to get it.
(It caught my attention that an LLC operated the blog--a relatively rare risk management strategy for co-bloggers. See my Co-Blogging article for more on this).
The news is less favorable on the copyrightability front. The court treated the plaintiff's copyright registration as fully satisfying the 512(h) requirements. I understand why the court did this--after all, copyright registrations are prima facie evidence of copyrightability--but the court was overly deferential to the copyright registration. After all, this is a motion to quash the subpoena, and this letter is on its face thinly copyrightable. The court should more aggressively police the underlying merits of the plaintiff's claim.
One more interesting legal quirk: this ruling assumes that 43SB.com, LLC is covered by 512(h) at all. The procedure applies to "service providers," which includes all "providers of online services," and that should include a blog as well. However, 43SB.com, LLC does not appear to be seeking protection under the 512 safe harbors because they do not appear to have made the requisite filing with the Copyright Office. So can a service provider not seeking 512 protection be obligated to fork over information in response to the expedited subpoena procedure of 512(h)? This court assumes the answer is yes, and the statute facially appears to support that answer. However, I think this should be explored further given the lack of any quid-pro-quo for the service provider.
While the court didn't conclude that reposting the takedown letter constituted an infringement of the letter's copyright, this ruling surely will send chills down the spines of some bloggers. It's become standard for threatened bloggers to repost demand letters for the world to see. In fact, these repostings have social merit. In the modern era, copyright law is not "made" in the courtroom; it's made in the field when recipients make choices like deciding how to respond to demand letters. And with weak rights under 512(f) for bogus takedown notices, public scrutiny often is the only practical tool available to small players to fight back against widespread takedown notice abuse. But if demand letters are copyrightable, bloggers will keep those letters off the Internet and away from public scrutiny. As a result, this case threatens to curtail an important tool that bloggers had to fight back against abusive takedown demands.
For more commentary on this case, see Sam Bayard's thoughtful comments on this ruling and the Citizen Media Law Project's very helpful page on this incident with links to the underlying source material.
Some other discussion about IP rights in cease-and-desist letters:
* My blog post about cease-and-desist letters that claim to be "confidential" and copyrighted; I argue that courts should provide little copyright protection to such letters. Dan Solove's response.
* Greg Beck on the risks of posting a demand letter. This arose in the context of DirectBuy's claim of copyright in its demand letter. In response, Patry wrote about the assertion of copyright interests in demand letters as a copyright misuse. Sam Bayard's response to Patry.
Posted by Eric at 11:28 AM | Copyright , Derivative Liability | TrackBack
December 14, 2007
Oct.-Nov. 2007 Quick Links, Part 2
By Eric Goldman
Marketing/Branding
* To stimulate demand for its services, the British postal service is pointing out that snail mail is a good way to use olfactory marketing. Try to keep up with THAT, spammers! But doesn't this give new meaning to the observation that “junk mail stinks”...?
* Dunlop Tires offered a free set of tires to people who would get a tattoo of the company's logo. This tops a past promotion where they gave free tires to anyone who got tire tracks shaved into their hair. As a promotion, tattoos have an obvious advantage over hair-shaving because hair grows back. See my comprehensive post on tattoo advertising.
* As the Internet increases price competition and reduces margins in the jewelry market, diamond manufacturers are trying to prop up prices by branding their diamonds.
* Another lawsuit over the scorching-hot Hannah Montana concert tour—this time, alleging that the Hannah Montana fansite overpromised priority access to tickets.
* Anthony v. Yahoo, which involved a claim that Yahoo misled consumers of its dating service, has settled for $4M.
* I enjoyed this YouTube Video, Mr. Spam Man. Brought to mind the Spam-Free-or-Die video, which is still funny today.
Copyright
* William Patry on crazy copyright rulings against the “segOne,” a device that allows retailers showing broadcast TV to their patrons to substitute in ads sold by them instead of the ads sold by the broadcasters.
* Textile Secrets International, Inc. v. Ya-Ya Brand, Inc. (C.D. Cal. Oct. 31, 2007). 17 USC 1202 (the restriction on modification/removal of “copyright management information”) has been rarely interpreted, so this is a noteworthy case on that basis alone. This case involved the removal of CMI in offline activities. The court concludes "Court nevertheless cannot find that [1202] was intended to apply to circumstances that have no relation to the Internet, electronic commerce, automated copyright protections or management systems, public registers, or other technological measures or processes as contemplated in the DMCA as a whole."
* The Copyright Office has (finally) updated its electronic copy of Title 17.
Blogging
* David Hoffman discusses some considerations when structuring a group blogging LLC's operating agreement.
* U.S. v. Citgo Petroleum Corp., 2007 WL 4116066 (S.D. Tex. Nov. 19, 2007). An attendee at a trial blogs some of her observations about the jury. Her reward? One of the litigants can depose her as having potentially relevant information about jury impartiality. See my first-hand experience with potentially being deposed due to a blog post.
E-Commerce
* College students are ordering tires, pool tables and Winchester rifles online.
* The Canadian taxing authorities have won a victory allowing them to order eBay’s US company to disclose vast amounts of transactional data that presumably will be cross-checked against Canadian PowerSeller tax returns.
Miscellaneous
* Express Media Group, LLC, v. Express Corp., No. C 06-03504 WHA (N.D. Cal., May 10, 2007). Martin Samson's summary: "Court finds defendant, who claimed to have purchased plaintiffs' Express.com domain for $150,000 from someone who purported to be, but was not, the domain's Administrative Contact, guilty of conversion and directs defendant to return the domain to plaintiffs."
* Fallout from the Oracle v. SAP case: SAP may sell TomorrowNow, and several TN executives have been axed.
* A good use for a geolocated cellphone-mediated information service: the location of the nearest public toilet.
* Declan rallies against a federal "Do Not Track" list.
* NYT: US News & World Reports is getting into the consumer review business by aggregating third party opinions. According to the NYT, "The magazine has searched the work of dozens of automotive reviewers at newspapers and magazines, assigned a numerical value to each review (a process U.S. News describes as complex, rigorous and top secret), and then aggregated those into final scores. The Web site offers a description of each vehicle, sprinkled with snippets of quotes from those reviewers, so that it reads as much like a Zagat's restaurant blurb as something you might find in Consumer Reports."
* Don'tcensorme.com: a website for commenters who believe that their comments have been deleted by moderators on hubris overload.
* BusinessWeek: 101 Best Web Freebies.
Posted by Eric at 08:20 AM | Copyright , Domain Names , E-Commerce , Marketing , Privacy/Security , Spam | TrackBack
Roommates.com Updates
By Eric Goldman
Howard Bashman provides some useful updates on the Roommates.com case.
First, the Ninth Circuit has rejected the amicus brief filed by Amazon.com and numerous other Internet companies because, according to Bashman, the amicus brief would have created a conflict for one or more judges that would have required recusal. The bounced brief. This is an unfortunate development for two reasons. First, the brief was first-rate advocacy. Second, the list of parties signing onto the brief was very impressive and really illustrated the depth and breadth of parties that are affected by the ruling. I hope the panel internalizes that point anyway.
Second, the members of the 11 judge en banc panel have been revealed: Chief Judge Kozinski and Judges Reinhardt, Rymer, Silverman, McKeown, Fletcher, Fisher, Paez, Bea, Milan Smith and Randy Smith. Judge Ikuta, who wrote the most sensible of the three opinions from the original panel, didn't get the call, but the other two judges from the initial panel (Kozinski and Reinhardt) did. Unless those 2 judges change their mind (which seems highly unlikely given the personalities involved), there should already be 2 votes to affirm the initial Ninth Circuit ruling, meaning that a reversal will require 6 of the 9 other judges. Interestingly, Bashman thinks those 6 votes may be on the panel.
Third, the en banc argument was last Wednesday in Pasadena. I haven't heard any color commentary from the hearing. Can anyone help out? [UPDATE: Howard has posted more thoughts and a link to the oral argument.]
UPDATE: Jeff Neuburger fishes out some interesting comments from the oral argument. The tenor of these Qs certainly isn't good for Roommates.com.
The case library:
* amicus brief from a variety of Internet companies such as Google, eBay and Amazon plus non-profit organizations such as the EFF
* amicus brief from various news organizations
* amicus brief from the ACLU. Roommates.com's reply brief to the ACLU brief.
* The Fair Housing Councils' request to brief Batzel. Roommates.com's opposition. The Ninth Circuit denied the Councils' request on Nov. 6.
* The Ninth Circuit order granting the en banc hearing
* Fair Housing Councils' reply to the EFF et al amicus brief
* 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 08:00 AM | Derivative Liability | TrackBack
December 13, 2007
Oct.-Nov. 2007 Quick Links, Part 1
By Eric Goldman
I was so jammed at the beginning of November that I didn't have time to post my quick links from October. Never fear; that omission is being corrected with a double shot of quick links covering October and November:
Wikipedia
* Slashdot: Has Wikipedia peaked? If true, I'm not surprised.
* The new status symbol of the digital age? A personal Wikipedia page. FWIW, my personal Wikipedia page was crunched and rolled into a general criticism of Wikipedia page. I found this ironic given that the Wikipedians had already caucused about the merits of my page and decided not to kill it; and then a single Wikipedian swept through and ignored that decision. Sounds like the process worked really well there, guys.
* The newest fork from Wikipedia: Veropedia.
Google
* Webmasters give preference to the Googlebot over other search engine robots in robots.txt files.
* Searchers prefer Google results in a blind taste test. But...searchers also prefer search results when they are branded Google!
* For years, people have speculated that Google advertisers get extra bounce in organic search results. Search Engine Guide lays out the case.
* Carl Person isn't giving up in his (unquestionably futile) fight against Google. The latest: he's appealed his case to the Ninth Circuit. HT Links & Law.
Adware/Spyware
* FTC Commissioner Leibowitz thinks bigger civil fines would help shut down more spyware operators. Then again, it seems like the market is doing that job for them; another adware vendor, DirectRevenue, has gone under.
* Zango has appealed Zango v. Kaspersky to the Ninth Circuit. I wasn't a fan of this lawsuit from the outset, so pursuing the case sounds like a mistake to me.
Virtual Worlds
* Herman Miller (maker of the famous Aeron chairs--I had one at Epinions) is combating the makers of fake virtual Aeron chairs in Second Life.
* Bragg v. Linden Lab has settled. The case involved a claim that Linden Lab improperly impounded some virtual assets.
* Wired: "Cheaters in multiplayer online games beware: Game developers are turning to advanced financial fraud-detection software to keep you from crooking your way to online riches."
47 USC 230
* Roskowski v. Corvallis Police Officers' Ass'n, 2007 WL 2963633 (9th Cir. Oct. 10, 2007). A summary opinion upholding a dismissal based on 47 USC 230. See my blog post on the district court ruling. Michael Erhman's comments.
* The US Supreme Court denied certiorari in Perfect 10 v. ccBill.
* The AutoAdmit plaintiffs filed an amended complaint that dropped Ciolli as a defendant and reworked the substantive allegations. Coverage: Above the Law, Concurring Opinions (1, 2), WSJ Law Blog.
* A former student informed me that a judge on the show Boston Legal (the Nov. 13 episode, "Attack of the Xenophobes," episode 74) applied 47 USC 230--correctly!--to dismiss a lawsuit against YouTube for a defamatory video. See the episode recap.
Online Contracts
* Adsit Co. v. Gustin (Ind. Ct. App. Oct. 16, 2007). Daughter-in-law gives credit card number to mom-in-law to complete online transaction. Court holds that mom-in-law acted as daughter-in-law’s agent and thus bound the daughter-in-law to the vendor’s clickthrough agreement. Accord: the Hofer and Abramson cases.
* Whitnum v. Yahoo, Inc., 2007 WL 2609825 (NY Supreme Court, Sept. 5, 2007). Woman sought damages because Yahoo shut down her website the same day she got a good publicity hit. Yahoo pointed to the liability limits in its user agreement, and the court found that those limits supported a motion to dismiss. Given the ubiquity of similar provisions in web hosting contracts, this case nicely illustrates that web hosting customers really don’t have any recourse if their vendor just shuts them down. This is also why I find 17 USC 512(g) (the DMCA limit on liability if a web host honors a counter-notification) so baffling—web hosts don’t need any help from the statutory safe harbor when they have already eliminated the risk through their contracts.
Posted by Eric at 02:05 PM | Adware/Spyware , Derivative Liability , Licensing/Contracts , Search Engines , Virtual Worlds | TrackBack
Internet Doctor Gets Extra Jail Time for Using Website--US v. Hanny
By Eric Goldman
U.S. v. Hanny, 2007 WL 4322265 (8th Cir. Dec. 12, 2007)
Given its blatant illegality, I'm a little surprised that we don't hear more about busts of companies and individuals selling prescription drugs over the Internet. I did a quick search in Westlaw and it looks like there have been a few dozen cases, but they don't seem to get much mass-media attention. I also wonder if the enforcement actions have succeeded in actually reducing consumers' ability to order prescription drugs over the Internet. I don't see as many brazen spammed come-ons as I recall getting a few years ago, but I'm not sure how generalizable my experience is.
Today's case involves the criminal prosecution of Dr. Thomas Hanny, a Connecticut-licensed doctor who retired after 30 years as a surgeon. He then hopped on the dot-com bandwagon, writing Internet-mediated prescriptions first for Pharmacon and then, after Pharmacon was shut down by law enforcement, for Jive. Hanny initially had doubts about the propriety of this line of work and even went so far as to hire his own attorney (who also expressed doubts), but Hanny either felt the issue was colorable enough or decided to look the other way, going so far as to ignore a cease-and-desist letter from Missouri prosecutors. Collectively, these proved to be poor decisions that will cost Hanny 33 months of his liberty.
It's a little hard to feel sorry for Hanny renting out his doctor's license, especially given that he doubled down after the Pharmacon flameout by going to another dot-com and double doubled down by persisting after the Missouri C&D. On the other hand, Hanny did get screwed on the issue decided in this opinion by the Eighth Circuit.
The issue is the 2 level sentencing enhancement for "the distribution of any controlled substance 'through mass-marketing by means of an interactive computer service.'" The government did not appear to introduce any evidence that Pharmacon or Jive used spamming or other advertising methods to generate traffic to their websites. Instead, the government contended that the mere existence of an e-commerce website itself constitutes mass marketing. The Eighth Circuit signs off on this interpretation, invoking some moldy-oldy analogies when it says "A public, interactive website reachable by an ordinary web search engine is, at the least, a billboard on the information superhighway." [If it were up to me, any Cyberlaw opinion invoking a tired and misused billboard metaphor would itself be subject to a 2 level enhanced penalty]
My problem with this is that the court conflated retailing with marketing. Simply operating a retail store without marketing to generate traffic cannot qualify as "mass marketing" under any reasonable interpretation of that phrase. As a result of this confused interpretation, every Internet retailer automatically qualifies as engaging in "mass marketing" for purposes of the sentencing enhancement.
Posted by Eric at 10:50 AM | Content Regulation , E-Commerce , Marketing | TrackBack
December 11, 2007
Facebook v. ConnectU Update
By Eric Goldman
Facebook, Inc. v. ConnectU LLC, 2007 WL 4249924 (N.D.Cal. Nov. 30, 2007) (denying sanctions); Facebook, Inc. v. ConnectU LLC, 2007 WL 4249926 (N.D.Cal. Nov. 30, 2007) (dismissing individual defendants)
You may recall the intertwined relationship between ConnectU and Facebook. ConnectU was a dorm-room project at Harvard. The students hired Mark Zuckerberg to help with the programming. Shortly thereafter, Zuckerberg started a competitive site called Facebook, instantly spawning acrimony between the parties that persists until today. Facebook is now allegedly worth $15B, ConnectU is worth a trivial fraction of that, and both parties seemed destined to pour their entire net worth into suing each other into oblivion. At the rate they are going/spending, all of the lawyers' kids will be able to afford Harvard where they can make their own "friends" in the dorms.
There are 2 main battlefronts. ConnectU and its owners are suing Facebook and Zuckerberg in Massachusetts alleging that Zuckerberg ripped off their IP. Facebook is suing ConnectU in California for allegedly harvesting user email addresses from Facebook and spamming the users with competitive exhortations. In my previous post on the Facebook v. ConnectU lawsuit, I explained how ConnectU cleaned out some of the harvesting/spam related claims.
These two latest rulings relate to the Facebook v. ConnectU lawsuit as well. In one ruling, the court dismisses three of the individual defendants (Cameron and Tyler Winklevoss and Divya Narendra) because they are not subject to jurisdiction in California. Facebook initially sued in California state court, which concluded that it lacked jurisdiction over these three individuals, a result that Facebook tried to relitigate in federal court. This court responds: "Even if the Superior Court reached an incorrect legal determination, the outcome is conclusive. Facebook 'does not now get a do-over.'"
In the other ruling, the judge rejects Facebook's claim for sanctions against ConnectU and some of the individual defendants. Facebook's argument is based on an apparent inconsistency in claims made by the defendants in the California state court and the Massachusetts court (in CA, defendants claimed that Narendra was a member of ConnectU's LLC; in Massachusetts, the defendants claimed he wasn't). The court determines that the facial inconsistency is actually reconcilable (due to a Delaware law that allows retroactive membership in an LLC combined with the different times the fact was asserted) and rejects sanctions accordingly, although the judge suggests that the Massachusetts court might feel differently about sanctions.
Collectively, these two rulings represent yet another preliminary skirmish between the parties before they reach any substantive evaluations of any of their respective claims. Given that the ConnectU v. Facebook lawsuit has been going on for 4 years, that's a lot of wheel-spinning. C'mon Facebook, throw the ConnectU folks a billion or two so that you can free up your time to focus on more pressing matters, like how to generate revenues without abusing your users' privacy.
Posted by Eric at 09:15 PM | Spam | TrackBack
December 10, 2007
Yale Reputation Economies Symposium Recap
By Eric Goldman
Reputation is a hot topic in Cyberlaw circles, so the Yale ISP conference on Reputation Economies in Cyberspace came at a propitious time. Some of my meta-observations from the talks.
1) We lack a uniformly accepted definition of reputation. During the conference, it was clear that most speakers were working with their own idiosyncratic definitions. Without a standardized definition, people can easily talk past each other.
2) Reputational systems are everywhere--FICO scores, letters of recommendation, Google PageRank, product review sites like Epinions, spam filters, employee evaluations, etc. I plan to catalog them in my next big paper. For now, Jonathan Zittrain gave two interesting examples: (1) British pubs are now taking patrons’ fingerprints and publishing a blacklist of rowdy pubgoers to other pubs, and (2) websites allow angry drivers to criticize bad drivers by license plate number.
3) We often treat reputation as a monolithic assessment (good or bad), but it is granular and contextual. Reputation systems need to reflect these nuances, and we’re seeing movement in that direction. For example, eBay is considering more granular feedback scores, which might entail different scores for product description accuracy and shipping speediness. However, increased granularity is subject to the accuracy/simplicity tradeoff—increased complexity improves accuracy but makes it more costly to participate in the system.
To overcome the accuracy/simplicity tradeoff and reduce collection costs, reputational data can be collected automatically. Bill McGeveran compared Facebook’s automatic collection of recommendations through Beacon with ratemyprofessor.com (a site I’ve critiqued before--1, 2, 3), where the communication costs discourage students from providing feedback unless they hold extreme views (i.e., love it/hate it).
Jonathan Zittrain suggested that people should be able to request that some information should not become part of their reputation. He gave robots.txt as an analogy; it is a voluntary standard that web publishers can use to keep content (that might have reputational implications) out of the search engines, which in turn significantly reduces its visibility. Although robots.txt is voluntary, it is widely followed. Jonathan thinks a similar voluntary system might be helpful for reputational data.
4) As noted by several speakers, reputation has economic value that can be converted into cash. For example, spammers have better delivery success—and thus make more money—if they can work with a high-reputation email address that is less likely to be blocked/filtered, and an seller with high feedback commands premium prices for his/her auctions. These payoffs create incentives for “bad guys” to capitalize on undeserved reputation, leading to the hijacking of high-feedback accounts and feedback-inflating activity (such the serial consummation of penny auctions) that can be used for a short but intense burst of fraud.
Bill McGeveran gave Facebook’s Beacon as another example of reputation’s selling power. In that case, Facebook and marketes are engaged in “reputational piggybacking” to get extra credit from the “recommending” user’s validation.
Because reputation has economic payoffs, we are tempted to provide property-like protections for reputation. Trademark law is an example of this in the commercial context. In contrast, with respect to individuals, damaged reputations can have significant non-economic harms that are not well-handled through property systems. Discussions about legal protection for reputations can get confusing when economic protectionism are conflated with these non-economic harms.
5) No reputational system will be perfectly accurate. Any system will have Type I and Type II errors. So how accurate must a reputational system be for it to be credible? We should assess this question by comparing a reputational system’s errors against the errors from alternative systems (or the absence of the system altogether).
A reputational system might be improved through more robust error correction mechanisms. Jonathan Zittrain gave the example of the Google News feature that allows a quoted individual to add comments right below the article. This reminded me a lot of Frank Pasquale’s asterisk proposal.
6) Reputational information is time-sensitive in that more recent reputational information is more useful to assessing reputation. Jonathan Zittrain proposed a concept of “reputational bankruptcy” where "old" information could be permanently suppressed because it is not useful to make future assessments. He analogized this to the time-based degrading of eBay’s feedback score, which segregates transactional information by date (i.e., 1 month, 6 month, all time).
More resources on this topic:
* notes from my talk
* my article on the intersection between online word of mouth and trademark law
* the collection of position papers from the event
* other recaps: the conference wiki, Jenny Ambrozek, James Grimmelmann, Aldon Hynes, Greg Lastowka, Andy Oram, Frank Pasquale (1, 2), Rebecca Tushnet (1, 2, 3, 4), Michael Zimmer
Posted by Eric at 10:27 PM | E-Commerce , Publicity/Privacy Rights , Spam , Trademark | TrackBack
December 06, 2007
Copyright Owner Enjoined from Sending DMCA Takedown Notices--Biosafe-One v. Hawks
By Eric Goldman
Biosafe-One, Inc. v. Hawks, 2007 WL 4212411 (S.D.N.Y. Nov. 29, 2007)
This case involves competitors in the septic system cleaning products business (a topic of apparent personal interest to William Patry). Defendant acted as the plaintiff's mortgage broker and then, 18 months later, launched a competing business. The correlation is a little suspicious on its face, and the plaintiff believed there was causality: the plaintiff alleges that the defendants impermissibly used data from the mortgage application (and supporting documentation) to help launch the rival. Unfortunately for the plaintiff, the court concluded that this argument wasn't credible.
The plaintiff also claimed that the defendant cut and paste content from the plaintiff's website to the defendant's website. The defendant admitted to copying some text, but that text has been removed, and the court deemed it inconsequential, so the court denied the plaintiff's preliminary injunction request. Patry and Brown discuss this in a little more detail.
As part of its attack on the defendants' competing website, the plaintiff sent DMCA takedown notices to the defendants' web hosts, both of whom complied. In response, the defendant moved its hosting offshore (thus out of reach of the takedown notices, but at a higher cost), and as a counterclaim brought a 512(f) claim for false takedown notices. The court rejects that claim because the plaintiff had some justification for the takedown notices; after all, the defendant had copied some material. As the court says: "Defendants have not submitted any evidence that plaintiffs were aware or understood that they were misrepresenting the fact that defendants' website was infringing when they filed their notices. Plaintiffs have submitted ample evidence in their moving papers and by Jorgensen's testimony that they believed, and continue to believe, that defendants' website violated their copyright when they filed the notices."
In addition to the 512(f) claim, the defendants sought an injunction against future takedown notices and an order that one of the web hosts restore service. The court granted both. With respect to the injunction, the court says "if plaintiffs continue to send DMCA notices defendants will be burdened, financially and otherwise, with arranging for alternative companies to host their website outside the country. A preliminary injunction barring plaintiffs from sending additional DMCA notices, absent court approval, however, would impose little or no burden on plaintiffs."
To my knowledge, this is the first time a court has enjoined the delivery of future takedown notices (please email me if I'm forgetting something). Removing the plaintiff's ability to seek extra-judicial recourse is a pretty powerful remedy, making it a potentially very useful tool to combat takedown notice abuses. Perhaps this will become standard relief sought by defendants--at least during the pendency of an action, when the court is being asked to evaluate the merits of the copyright complaint. In this sense, I'm reminded a little of how UDRPs go on hold once a case goes to court; the extra-judicial process is no longer appropriate once the parties are squaring off in court.
Posted by Eric at 02:47 PM | Copyright , Derivative Liability | TrackBack
December 05, 2007
eBay Sued for Failing to Take Down Listings--Hansson v. Brower
By Eric Goldman
Hansson Inc. v. Brower, 4:07-cv-05898-CW (N.D. Cal. complaint filed Nov. 21, 2007)
In my Cyberspace Law course, I teach students that they should not just consider the liability of the person who committed the allegedly tortious behavior, but they must always ask who else is liable for that behavior. We saw that principle illustrated recently in the ISC2 v. Degraphenreed case, where Google and Yahoo got pulled into a trademark lawsuit for hosting some content that allegedly infringed the plaintiff's trademark.
Today's case in point is Hansson v. Brower, a seemingly garden variety trademark enforcement action. Hansson makes dollhouse furniture and claims that Brower is selling competitive items under the Hansson name via eBay, so Hansson is suing Brower for trademark infringement, dilution and related causes of action. But Hansson goes further. Hansson claims it sent 8 takedown notices to eBay and that they were all ignored and that it sent a C&D letter and that too was ignored. So Hansson has added eBay as a defendant for contributory trademark infringement.
Some questions I have:
1) What happened to those 9 communications from Hansson to eBay? Did they all get lost in the mail? Did eBay make a policy choice that they should be rejected? Did eBay just muff them?
2) What is the appropriate legal standard for eBay's liability? This is a big open question mark in Cyberlaw. 230 doesn't apply by its terms to federal trademark claims, and 512 only applies to copyright. eBay might be able to claim the innocent printer/publisher defense in 15 USC 1114(2), although Hansson has alleged that eBay has the requisite scienter to negate "innocence." So at the moment, eBay's risk of contributory liability may be governed by the common law of contributory trademark liability, and we really don't have many good/illustrative precedents for how this applies to a platform like eBay's. We're closely watching the Tiffany v. eBay lawsuit in NY, which is an analogous lawsuit, but we don't have any useful precedent from that yet. So should eBay be liable if they actually received notice of infringement and failed to take down the noticed auctions? Perhaps.
3) Even so, was it wise to drag eBay into this otherwise ordinary enforcement lawsuit? As I explored with the ISC2 lawsuit, suing eBay ensures that a well-funded litigant with good lawyers will be on the defense side. I swapped emails with James Cai, attorney for Hansson, asking him why he named eBay, and he said the goal was to get eBay to intervene. I'm sure he'll get eBay's attention now, but he may get more of it than he wanted.
Posted by Eric at 02:28 PM | Derivative Liability , E-Commerce , Trademark | TrackBack
December 04, 2007
Perfect 10 v. Amazon Opinion Amendment--Ninth Circuit Does 180 on Fair Use Burden for Preliminary Injunction
By Eric Goldman
In the Perfect 10 v. Amazon case, the Ninth Circuit has reversed itself on who has the burden of establishing fair use in the context of a preliminary injunction motion. See the revised opinion. In the original Ninth Circuit Perfect 10 v. Amazon ruling, the court put the burden on the plaintiff to disprove fair use as part of its PI obligations. Now, in an amended opinion, the Ninth Circuit has put the burden on the defendant to establish fair use to defeat the PI. This is a pretty big reversal of a key holding from the initial opinion (at the time, I said that aspect of the ruling was "significant and could have widespread effects on copyright cases, both online and off"). Interestingly, it doesn't change the results in this case--the original injunction issued by the district court is still dissolved--but fair use will be a hotly contested issue in many future PI cases, and the Ninth Circuit just made plaintiffs' jobs easier.
The original text from the May 2007 opinion:
Because Perfect 10 has the burden of showing a likelihood of success on the merits, the district court held that Perfect 10 also had the burden of demonstrating a likelihood of overcoming Google’s fair use defense under 17 U.S.C. § 107. Perfect 10, 416 F. Supp. 2d at 836-37. We have not previously ruled on this issue, see Napster, 239 F.3d at 1014 n.3 (cataloguing conflicting authority), and we now agree with the district court’s ruling. In order to demonstrate its likely success on the merits, the moving party must necessarily demonstrate it will overcome defenses raised by the non-moving party. This burden is correctly placed on the party seeking to demonstrate entitlement to the extraordinary remedy of a preliminary injunction at an early stage of the litigation, before the defendant has had the opportunity to undertake extensive discovery or develop its defenses. Our conclusion that a party seeking a preliminary injunction in the copyright context bears the burden of showing its likely success in overcoming a fair use defense is consistent with decisions of the Federal Circuit purporting to apply Ninth Circuit law. See Atari Games Corp. v. Nintendo of Am. Inc., 975 F.2d 832, 837 (Fed. Cir. 1992) (“[F]ollowing Ninth Circuit caselaw [for review of a district court’s grant of preliminary injunction], this court must determine whether Nintendo has shown a likelihood of success on its prima facie case of copyright infringement and a likelihood that it will overcome Atari’s copyright misuse defense.”); see also H.H. Robertson, Co. v. United Steel Deck, Inc., 820 F.2d 384, 387-89 (Fed. Cir. 1987) (requiring a patent holder seeking preliminary injunctive relief to overcome the defense that the patent is invalid even though the patent is presumed valid at trial), overruled on other grounds by Markman v. Westview Instruments, Inc., 52 F.3d 967, 977-79 (Fed. Cir. 1995).
However, entitlement for preliminary relief “is determined in the context of the presumptions and burdens that would inhere at trial on the merits.” H.H. Robertson, 820 F.2d at 388. Because the defendant in an infringement action has the burden of proving fair use, see Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 590 (1994), the defendant is responsible for introducing evidence of fair use in responding to a motion for preliminary relief. See Dr. Seuss Enters., L.P. v. Penguin Books USA, Inc., 109 F.3d 1394, 1403 (9th Cir. 1997). The plaintiff must then show it is likely to succeed in its challenge to the alleged infringer’s evidence.
The amended language:
Because Perfect 10 has the burden of showing a likelihood of success on the merits, the district court held that Perfect 10 also had the burden of demonstrating a likelihood of overcoming Google’s fair use defense under 17 U.S.C. § 107. Perfect 10, 416 F. Supp. 2d at 836-37. This ruling was erroneous. At trial, the defendant in an infringement action bears the burden of proving fair use. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 590 (1994). Because “the burdens at the preliminary injunction stage track the burdens at trial,” once the moving party has carried its burden of showing a likelihood of success on the merits, the burden shifts to the nonmoving party to show a likelihood that its affirmative defense will succeed. Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 429 (2006); see also Abbott Labs. v. Andrx Pharms., Inc., 473 F.3d 1196, 1201 (Fed. Cir. 2007) (to defeat a motion for preliminary injunctive relief in a patent infringement case, the non-moving party must establish a likelihood of success in proving its defenses of invalidity or unenforceability); PHG Techs., LLC v. St. John Cos., 469 F.3d 1361, 1365 (Fed. Cir. 2006). Accordingly, once Perfect 10 has shown a likelihood of success on the merits, the burden shifts to Google to show a likelihood that its affirmative defenses will succeed.
In any case, this self-reversal reminds me a little of the Ninth Circuit's struggles with Kelly v. Arriba Soft, also a search engine framing/linking case. In that case, 18 months after the initial ruling, the Ninth Circuit issued an amended opinion where it retracted about 1/2 of its original opinion that had resolved an issue that neither party had asked the Ninth Circuit to adjudicate. For now, it looks like the Ninth Circuit judges are having a tough time getting everything right in these complex Cyberlaw cases.
UPDATE: I've noticed some of the coverage (apparently distracted by this confusing LA Times article) seems to think that the amended opinion is a new win for Google. No--that occurred in May. Instead, this is a small amendment of a technical but important legal point.
Posted by Eric at 05:55 PM | Copyright , Derivative Liability | TrackBack
ISC2 v. Degraphenreed Update
By Eric Goldman
I previously blogged on ISC2 v. Degraphenreed. This case involves an individual (Degraphenreed) who was formerly certified as a CISSP and, after losing the certification, developed and used a new title with the same acronym. Not only did the certification mark holder (ISC2) sue the individual, but it sued Google and Yahoo for various hosting activities. Some developments in that case, based in part of a series of email exchanges with Dorsey Morrow, ISC2's general counsel:
1) ISC2's TRO request was denied. Subsequently, ISC2 withdrew its preliminary injunction motion against Google and Yahoo. However, it does not appear that ISC2 has dismissed Google or Yahoo from the case (at least, not yet).
2) Dorsey gave me two explanations for why ISC2 sued Google and Yahoo.
First, he said that Google and Yahoo refused to take down Degraphenreed's content without a court order. However, this rationale didn't make sense to me because ISC2 can get a satisfactory court order against Degraphenreed without suing Google or Yahoo.
Second, Dorsey said that Degraphenreed is the real target but he is allegedly very difficult to serve. Therefore, in order to get the case into court, it needed a findable defendant to serve (Google and Yahoo). I'm not a civil procedure expert but this doesn't sound right. In order to obtain a legally binding judgment against Degraphenreed, I believe he ultimately needs to be served, so merely being in court with him as a named but unserved defendant doesn't seem to be solving the problem. However, this rationale may help explain why ISC2 dropped the PI motions against Google and Yahoo; now that they are in court, they can focus on chasing down Degraphenreed.
3) In my previous post, I misdescribed the title Degraphenreed was claiming--he's using the term "Chief Information Systems Security Practitioner." You can find some of his activities using that term here. Interestingly, some of Blogspot usages are now unavailable. Did Google take them down?
Posted by Eric at 02:36 PM | Derivative Liability , Trademark | TrackBack
December 02, 2007
Taxonomies and Commercial Reputations
By Eric Goldman
This coming Saturday, the Information Society Project at Yale Law School is sponsoring a very attractive event entitled "Reputation Economies in Cyberspace." I'm especially excited about this event because I think my next big project will focus on reputation topics, so this should be a fantastic learning experience. I'm on the last panel, which is a precarious time because of the high preemption risk. As a result, I've picked a less-than-mainstream topic with a low preemption risk, although I may move into more mainstream topics depending on what gets discussed earlier in the day. Here's the short summary I provided to the conference organizers:
_____________
Taxonomies and Commercial Reputations
A “taxonomy” is a structure for organizing content. It provides the anchors that allow topically relevant content to be grouped together in a logical fashion. Among other benefits, taxonomies can provide a system for designating unique identifiers for marketplace offerings. These unique identifications are crucial for the development and management of commercial reputations. For reputational mechanisms to work properly, objective and subjective data about offerings need a place to be associated uniquely with the offering. Without this, the data has no place to attach, distorting the reputational mechanism.
Proprietary rights threaten the ability to optimally taxonomize marketplace offerings in at least two ways. First, taxonomy developers can assert a proprietary interest in their taxonomies. Second, trademark owners can use their proprietary rights to distort the taxonomy or content attached to it.
Taxonomy Developers’ Rights
Taxonomy developers may be able to claim copyright in their taxonomies. See American Dental Association v. Delta Dental Plans Association, 126 F.3d 977 (7th Cir. 1997); but see Southco, Inc. v. Kanebridge Corp., 390 F.3d 276 (3d Cir. 2004); ATC Distribution Group, Inc. v. Whatever It Takes Transmissions & Parts, Inc., 402 F.3d 700 (6th Cir. 2005). Even if they cannot, online taxonomy developers can restrict access to their taxonomies through server protection doctrines (such as trespass to chattels, Computer Fraud & Abuse Act, computer tampering doctrines, etc.).
Excludable taxonomies create two problems. First, competitors need to recreate taxonomies. This leads to duplicative efforts that are socially wasteful, and implicitly it increases barriers to entry by new intermediaries. Second, and perhaps more importantly, it hinders consumers’ abilities to do apples-to-apples comparisons between marketplace offerings, because consumers must do extra research to determine if taxonomical nodes in two different taxonomies are the same offering. As a result, consumers miss valuable reputational information because they cannot find it.
There is a licensing market for taxonomical data in many (but not all) product verticals. These licensing programs can be expensive for new entrants. Some licensors provide unique identifiers that can enable consumers to make apples-to-apples comparisons, but in other cases, catalog standardization/normalization remains a challenge. Furthermore, if there are competitive licensors in a particular vertical and they use different identifiers, then consumers may face a cacophony of identifiers.
This could be solved through a comprehensive and non-excludable product taxonomy with unique identifiers for all marketplace offerings. The exemplar is the ISBN taxonomy, which has done a remarkable job of allowing consumers to find and compare books. Because this economy-wide taxonomy hasn’t developed via private efforts, and because any developer will likely assert proprietary interests in the taxonomy in ways that would hinder its functioning, government sponsorship may be necessary (and appropriate) to develop the uniform taxonomy.
Trademark Owners’ Rights
By definition, trademarks should act as unique identifiers for marketplace offerings. Presently, trademarks provide the main taxonomical structure for marketplace offerings in most industry verticals. However, the proprietary interests of trademark owners limit the utility of trademarks as a taxonomy in at least two ways.
First, trademark owners can use trademark law to limit the use of their trademarks as a taxonomical node. Retailers can generally use trademarks for the products they sell under the trademark exhaustion doctrine. However, other intermediaries (such as product review sites) have no such defense, and their usage may qualify as a trademark use in commerce, meaning that any trademark inquiry becomes messy and unpredictable. Furthermore, search engines provide consumers with access to unstructured databases and use user-initiated search keywords—which may be trademarked—as a type of “dynamic taxonomy,” and this has exposed search engines to potential trademark liability as well.
Second, trademark owners may also use trademark law to strip out content that has been anchored at the trademarked taxonomical node. For example, in a group of product reviews, trademark owners could attack negative reviews as violating their trademarks. Once again, those reviews might satisfy the trademark use in commerce doctrine, leading again to messy and uncertain analysis. Indeed, trademark owners have every incentive to use trademark law to produce “lopsided databases” where favorable opinions remain and unfavorable ones are excised.
Some solutions to address these problems include:
1) We should provide a legislative safe harbor allowing search engines to use trademarks to create dynamic taxonomies for unstructured databases.
2) We should use the innocent printer/publisher safe harbor (15 U.S.C. §1114(2)(A)-(C)) more extensively to curb efforts to produce lopsided databases.
3) We should categorically exclude all referential trademark uses (i.e., uses of a trademark for its referential value), even if made by commercial actors in commercial settings, from trademark scrutiny. I build this argument out here.
Posted by Eric at 08:03 AM | Copyright , Derivative Liability , E-Commerce , Trademark | TrackBack