January 30, 2008
State of the Net Conference Recap
By Eric Goldman
Today I attended the State of the Net conference, sponsored by the Congressional Internet Caucus Advisory Committee. This event has become the "go-to" event for Internet policy wonks. Well over 300 people attended, including many well-known folks. If you deal with Internet policy, you should be at this conference.
A few notes from the event:
The morning keynote was delivered by Mary Bono Mack, who delivered one of the most true believer IP-maximalist talks I've heard in a long time. It was almost cartoonish. Based on the fire-and-brimstone talk, I imagine she would support just about any expansion of IP rights proposed to her. In response to a Q&A, she said that she had been previously misquoted and that she doesn't support a perpetual copyright duration. But she thought the Eldred opinion vindicated Congress' previous term extension as a reasonable policy; she must have read a very different opinion than the one I read. See Anne Broache's writeup of Mary's talk.
I've now heard a few different suggestions that server-level filtering by IAPs would drop them out of 512(a) coverage. (Today, Gigi Sohn raised this issue). This arises in response to AT&T's proposal to filter for copyrighted material, but it's also a subtext of the net neutrality discussion. I'm not sure if this is an accurate reading of 512(a), though. 512(a) says it applies only if the "the transmission, routing, provision of connections, or storage is carried out through an automatic technical process without selection of the material by the service provider." (Emphasis added). What does it mean for a service provider to select material? In context, I think the statutory language means that the user, instead of the service provider, selects the particular file moving over the IAP's network. I don't see how this exclusion was meant to cover automated filtering. In contrast, if the language is read to apply to filtering; would any type of filtering, including spam and virus filtering, knock out IAPs from 512(a)? If so, then no one could ever qualify for 512(a). It's not beyond Congress to draft a safe harbor that describes a null set of activity (see, e.g., 512(d)), but I suspect the courts will be more flexible in their reading than this.
The always-entertaining Federal Trade Commissioner Jon Leibowitz spoke about social networking sites. He implied that if Facebook hadn't backed down on Beacon, he was going to encourage the FTC to investigate it. He also wondered how online speech could receive the same level of protection as offline speech, and specifically referenced Marsh v. Alabama (the company town case) in suggesting that some online sites might be analogized to essential facilities. I'm not really sure what to make of this, as every court that has reviewed these state action arguments as applied to private online sites have rejected them squarely. But I'm sure virtual world exceptionalists will be thrilled to know that an FTC Commissioner might be sold on weighting player rights over provider rights.
At the post-event technology exhibition, I had the most remarkable demo from a woman at Quova, the geolocation company that claims 97% accuracy to the state level and 95% accuracy to the city level. I don't feel comfortable repeating some of the things she said because I haven't been able to validate them, but suffice it to say that all of you privacy advocates who freaked out about ChoicePoint may have a new company to freak out about. Among the questions that I'd like to see answered about Quova:
* what websites supply them with IP address data based on their users' activities? If it's the companies she named, then I'm pretty confident that at least some big Internet brands have been regularly violating their privacy policies.
* what government agencies are Quova's customers? And what are they doing with the data?
* what kinds of subpoenas is Quova getting from private plaintiffs, and how are they handling those subpoenas? Based on what I heard, it sounded like plaintiffs have been wasting their time tendering subpoenas to individual websites when Quova may offer some interesting one-stop-shopping.
If you have any insights into any of these Qs, I'd welcome your thoughts.
January 29, 2008
ABA IP Section Quietly Considering Anti-Consumer Proposals to Regulate Keyword Advertising
By Corynne McSherry and Eric Goldman
[Eric's note: this is a bit of an unusual post for this blog, as it is being simultaneously posted both here and on the EFF Deep Links site]
The tussle over keyword advertising has spilled over into numerous arenas, including the courts, the legislatures (such as Utah’s ill-conceived attempt to ban keyword advertising), the private trademark policies of the search engines and the law review literature. Given the magnitude of the issue—and the billions of dollars associated with keyword advertising—it’s not surprising that new battlefields are cropping up all over the place. But the latest skirmish has an unexpected venue—the closed-door deliberations of the American Bar Association.
The Trademark Litigation subcommittee of the ABA’s IP Section is evaluating four resolutions relating to keyword advertising. The emergence of this battlefront is hardly good news, however. From a substantive standpoint, the resolutions reflect misguided and anti-consumer priorities. From a procedural standpoint, it’s hard to see why the ABA would take a side in these contentious matters, and it’s not clear how these resolutions add any value to this debate. We strongly urge the subcommittee members to reject the resolutions.
The first resolution offers a perplexing answer to a problem that doesn’t exist. It declares that the likelihood of consumer confusion is "purely an issue of fact." The question is: who has argued otherwise? As noted by the leading treatise on trademarks, by Prof. McCarthy, this resolution restates the general rule that “Traditionally, the law has classified likelihood of confusion as an issue of fact.” See McCarthy on Trademarks and Unfair Competition Sec. 23:67.
Indeed, no keyword advertising case has suggested otherwise. Having said that, at least one case was resolved on summary judgment when the court concluded that there were no material disputes about the facts—and rightly so. See, e.g., J.G. Wentworth SSC Ltd v. Settlement Funding LLC, 2007 WL 30115 (E.D. Pa. Jan. 4, 2007), where the court granted summary judgment to the advertisers based on the lack of evidence of consumer confusion. The resolution doesn’t seem to affect the J.G. Wentworth situation, so it’s not clear what it’s supposed to accomplish.
At the moment, it appears this resolution doesn’t do anything more than restate current law. Surely the Section has better things to do than pass resolutions approving the status quo.
The resolution also proposes that, with respect to keywords, the analysis must consider how a keyword or trademark is used in an ad or to link to a separate site. Again, in most cases that will already happen. But there may be other circumstances to consider in any given case: e.g., whether links appear in such a way that consumers are highly unlikely to be confused. Judges already have ample guidance on this issue, and they are well capable of applying that precedent to specific factual situations.
The only conceivable benefit of this resolution is that it might discourage courts from using doctrinally deficient heuristics like the initial interest confusion doctrine, which some courts have used to bypass a more careful inquiry into consumer confusion. For more discussion about the problems of the initial interest confusion doctrine, see Eric Goldman, Deregulating Relevancy in Internet Trademark Law. We’d be thrilled if that were the goal, but it would be better accomplished by explicitly encouraging courts to stop using the initial interest confusion doctrine. However, given that the initial interest confusion doctrine is a favorite tool of plaintiffs with weak cases, and given the pro-plaintiff bias of the resolutions, we suspect that wasn’t the point here. So we’re left scratching our heads, wondering why this resolution is being proposed at all.
The second resolution seeks to declare that a trademark use in commerce always occurs (1)“if it appears directly in an advertisement on the resulting Internet web page,” and/or (2) when a trademark is (a) “hidden in a Metatag,” or (b) “used principally for its importance as a Keyword.”
The first part of this resolution appears to restate the law. Every court that has opined on the topic has concluded that a use in commerce occurs when an advertiser references a third party trademark in a keyword-triggered ad. See, e.g., Hamzik v. Zale Corp./Delaware, 2007 WL 1174863 (N.D.N.Y. Apr. 19, 2007).
Even so, the current state of the law is misdirected, and the Section should not encourage it further. If the ad copy says “our product is cheaper than [competitor’s trademark],” the advertiser isn’t trying to portray its goods as the competitor’s—yet, the advertiser has to defend an expensive lawsuit over whether its reference creates a likelihood of consumer confusion. Instead, trademark law should give more breathing room to advertisers making “referential uses” of third party trademarks. See Universal Communication Systems, Inc. v. Lycos, Inc., 2007 WL 549111 (1st Cir. Feb. 23, 2007); Eric Goldman, Online Word of Mouth and its Implications for Trademark Law.
Because of the misguided state of the current law, Google has adopted a trademark policy that allows trademark owners to prevent competitors from including the phrase “we’re cheaper than [trademark owner]” in the ad copy—or, for that matter, referencing the competition at all in the ad copy. This may make keyword ads more confusing to consumers, not less.
The second part of the resolution has at least two fundamental flaws. The discussion about metatags reflects an uneducated—or, at best, dated—view of the Internet. Back in the 1990s, some search engines considered “hidden text” such as metatags in their rankings algorithms. Today, many search engines—most notably Google—simply ignore hidden metatags when making ranking determinations. If a website includes a third party trademark in its metatags and the search engines simply ignore it, treating it as a use in commerce defies reason.
A blanket rule that a trademark is used in commerce whenever it is “used principally for its importance as a keyword” is equally specious. We don’t understand how this test is supposed to be applied, and the accompanying discussion does little to illuminate matters. For example, the resolution explains that the person making a “use in commerce” is the person “who was to gain click-through monies at the expense of the trademark owner,” which raises a set of impossible-to-determine factual questions, such as when does keyword advertising actually take money out of the pockets of trademark owners, rather than simply presenting consumers with increased choices that improve their marketplace decisions. Of course, some trademark owners mistakenly think that every consumer searching for their trademark is “their” customer and therefore is poached by anyone who seeks to educate that consumer about other marketplace alternatives. We hope the resolution drafters aren’t succumbing to such an empirically unsupportable and anti-consumer view.
Finally, in an ineffectual nod to fair use, the resolution makes a confused distinction between a purely nominative or “otherwise allowable” use and a use intended to trigger keyword ads. Of course, the one does not preclude the other.
The third resolution proposes that search engine liability for keyword advertising should always be a question of fact. Like the fourth resolution (discussed below), this appears to be a simple attack on 1-800 Contacts ruling—which held that the use of trademarks to display ads does not, by itself, trigger trademark liability—with no justification for why the Section should substitute its judgment for that of the Court of Appeals and allow trademark owner to effectively control what appears on consumers’ desktops.
Moreover, this resolution appears to be designed to ensure that keyword lawsuits will be as expensive as possible, to no good purpose. It rejects the numerous cases that have held that search engines don’t make a trademark use in commerce when selling trademarked keywords (see, e.g., Rescuecom v. Google), which have led to very quick and efficient victories for the search engines. In contrast, when courts have held that search engines do make a trademark use in commerce for their sales, the lawsuits can become needlessly protracted. For example, the American Blinds case went almost four years before American Blinds completely capitulated in a settlement; the 1-800 JR Cigar v. Yahoo case ran a remarkable six years before settling. Years of litigation may generate a lot of legal fees and help lawyers pay the bills, but these lawsuits do little to help most trademark owners or consumers.
Besides, search engines already do plenty to help trademark owners. Every major search engine has an internal policy that allows trademark owners to restrict advertising on their trademarks without needing to run to court. In practice, this means that search engines help censor ads that trademark owners don’t like, especially ads that may increase competitive pressures on trademark owners. If courts ever held search engines liable for selling keywords, search engines would be even more aggressive about squelching ads that might benefit consumers.
The fourth resolution seeks to declare a 2005 Second Circuit opinion, 1-800 Contacts v. WhenU, to be a “minority position” that is “flawed in its reasoning.” In support of this, the resolution notes that the case was “based on facts too unusual to apply to most other cases in this area.”
The 1-800 Contacts v. WhenU case involved the sale of trademarked keywords by an adware vendor. In that case, the Second Circuit flatly declared that such sales did not constitute a trademark use in commerce, handing a decisive and clean victory to the defense. This case has proven to be a major ruling, with at least a half-dozen cases favorably interpreting it to find for the defendants in keyword advertising cases.
The resolution is therefore factually wrong to characterize the 1-800 Contacts opinion as a minority view, as it is the case that is the most frequently cited favorably. The resolution is also normatively wrong when it says the case is flawed in its reasoning; nor does it offer any explanation for this conclusion.
Beyond the substantive deficiencies, these resolutions raise two interesting procedural issues.
First, why is the ABA IP Section attempting to intervene in this contentious area of the law in the first place? These resolutions are political in nature and reflect a deep trademark owner-favorable bias that does not necessarily reflect the views of American lawyers generally or IP lawyers specifically. It’s hard to see how these biased and divisive statements are an appropriate use of the ABA’s resources or authority.
Second, the ABA subcommittee proposing these resolutions has sought to keep them from public dissemination. An ABA committee representative emailed one of us to claim that we “cannot share committee or subcommittee work product with [non-committee members]” (although we received the resolutions from several sources, including the subcommittee chair himself), and we were asked to destroy “any ABA-IPL Section 208 Keyword Subcommittee work product that you may have received.” We don’t understand why an ABA committee seeks to conduct deliberations about resolutions--that are presumably intended to be promulgated to the legal community--behind closed doors, away from public scrutiny. As this critique of their content indicates, these resolutions would substantially benefit from the input of a wider range of voices. We hope the committee solicits that input or, better yet, squelches this ill-conceived effort to micromanage the courts.
UPDATE: Paul Levy offers more insights.
January 22, 2008
Wikipedia Revisited: the Wikipedia Community's Xenophobia
By Eric Goldman
Regular blog readers know that I have mixed emotions about Wikipedia. On the plus side:
* Wikipedia is a terrific and fascinating resource that I use multiple times a day (Wikipedia remains the #2 visited site in my Google personalized search history).
* I went to Epinions because I am an enthusiast of the "wisdom of the crowds"--that a dispersed community can generate better results than a single designated editorial source/expert. Wikipedia is the flagship website trying to translate that theory into action.
However, I have serious reservations about Wikipedia. On the minus side:
* With high PageRank and visibility, Wikipedia is a juicy target for spammers and vandals. As a result, at any particular time, it’s hard to know if the content on a page is reliable.
* Further, its unlimited editability limits Wikipedia's utility as an academic resource, and I do not cite it (nor do I not allow students to cite it) for the truth of the matter asserted.
* Spamming and vandalism challenges Wikipedia’s gatekeepers to preserve editorial integrity. So far, Wikipedians have done an admirable job combating these forces. However, the anti-spam/vandal fight has created a major second order problem. Specifically, the Wikipedia community has developed an exclusionary and insular culture that undercuts the community's ability to deliver on Wikipedia's mission in at least three ways:
1) Wikipedia Doesn't Reflect the Wisdom of the Crowds
Wikipedia is an editorially controlled content database. It may have more editors than traditional editorial publications, and those editors volunteer rather than work on payroll, but Wikipedia is effectively indistiguishable from other tightly-controlled editorial publications.
Due to this editorial control, Wikipedia does not internalize the “wisdom of the crowd” effect because the editors prevent the site from actually reflecting the crowds' input. Sure, the technological tools invite contributions from anyone, but the community members do not. Accordingly, most readers can make contributions that actually stick (i.e., aren’t quickly reverted) only by joining the community--a time-consuming process that suppresses contributions from people with domain expertise who don't care enough to jump through those hurdles. The community's xenophobia is completely understandable given the constant attacks from spammers and vandals, but it also blocks valuable contributions from improving the site.
Worse, Wikipedians routinely rely on their own judgments to make editorial decisions, even if they lack the requisite expertise. As a case study, let me describe (with some bemusement) the fate of my own Wikipedia page.
The page was first created in response to my initial prediction of Wikipedia's demise--IMO not the most noteworthy thing I've done in my career, but clearly interesting to dedicated Wikipedians. Subsequent Wikipedians wisely questioned the merit of having a Wikipedia entry only based on the "meta" nature of my prediction, and my page was nominated for deletion. Unfortunately, very few voting Wikipedians appeared to do any independent research to assess my notability (which isn't a hard thing to do in my case). Instead, they based their judgment on the internal credibility of the content already on the page plus a limited number of external links submitted by other Wikipedians. As a result, the Wikipedian votes were not based on any first-hand expertise or any meaningful infusion of outside knowledge. Even so, the community deadlocked on my notability, which preserved the status quo and kept my page up...until, a half-year later, a single Wikipedian swept through and killed the page anyway. Thus, the editorial process was suspect at every stage: (1) the initial decision to create a page about me based on an unimportant attribute, (2) the assessment of my notability by non-experts who did not conduct outside research, and (3) the post hoc decision of an individual Wikipedian to bypass the community vote.
2) Wikipedia's Brand Suffers From Its Exclusionary Responses
Wikipedia’s exclusionary nature does more than simply prevent good contributions from improving the site--it may degrade users' loyalty towards Wikipedia. Consider the following unsolicited email I received in response to my predictions of Wikipedia's future demise:
There's another angle you should look at, which may have just been recently emerging: Wikipedia pisses people off.
It doesn't piss off the regular person who just uses it as a reference, but it pisses of about 100% of everyone who sincerely tries to contribute. Everyone that I've met in real life who has tried to edit Wikipedia has had a bad experience editing Wikipedia, and many feel that the people who reverted their edits or deleted their pages were mean-spirited about it.
Wikipedia is a lot more like Microsoft or Wal-Mart, and a lot less like Google. If someone hacks into Microsoft's system, or Wal-Mart's system, then they're going to have friends that say, "Way to go dude!" If someone hacks into Google, they're going to have friends that say, "That's not cool, dude."
For some reason, Microsoft and Wal-Mart have a lot of ill will toward them. At the same time, Google has a lot of good will toward it. Microsoft and Wal-Mart have deep pockets to fend off the attackers, but if Microsoft or Wal-Mart were supported entirely by volunteers and donations, they'd both die immediately. Wikipedia is a Wal-Mart, and not a Google.
Eventually, as part of your prediction, Wikipedia will piss off enough people that it won't just be gamers or marketers corrupting Wikipedia. It will be people who have been slighted.
I'm not sure about the Walmart-Microsoft/Google analogy, but when Wikipedians brusquely squash people trying to contribute, the contributing individuals may think less of Wikipedia and decrease their willingness to support Wikipedia’s mission. Today, Wikipedia may be so popular that it can afford to lose a few friends; but fortunes inevitably change, and schadenfreude feelings can persist a long time.
3) Wikipedia Will Struggle to Replace Editors Who Turn Over
Hardcore Wikipedians inevitably will check out over time because of life changes, burnout or frustration with the community norms. However, the insular nature of the community makes it hard to join the community, so Wikipedia will struggle to replace departing Wikipedians. Worse, I think there is a tipping point of volunteer editors; below that number, the community will not replenish itself. Instead, the community will enter a death spiral as everyone independently decides to head for the door before becoming the last person standing. There is some limited evidence to suggest that Wikipedia might be slowly declining—the first stage in a possible downward spiral. We’ll have to see.
Is Xenophobia Unavoidable in Wiki Communities?
All of this leads me to a thorny theoretical question that I've been wrestling with. Is it inevitable that every mass-market wiki will form a community of xenophobic editors, or is there something unique about this particular wiki's culture that has caused it to do so? Because of the threats of spammers and vandals, it seems likely that any wiki will need some level of inherent paranoia among its guardians to survive. Arguably, Wikipedia has gotten this far and succeeded as well as it has only because it has vigilant guardians who don't trust outsiders. At the same time, this insularity sows the seeds for the community's destruction as the turnover problem reaches the tipping point that leads to the death spiral. So perhaps mass-market wikis are inherently doomed from the outset, no matter how high a pinnacle they reach along the way.
January 18, 2008
Who Owns "CyberLaw"(TM)? Eric Menhart, a DC IP Attorney, Thinks He Does
By Eric Goldman
Every now and then, we see comical efforts to claim trademark rights in common Internet-related terms. You might recall that the word "Internet" itself was once a trademark (see a list of registrants dated 1994); the term "listserv" is also a trademark that the owner is trying to preserve (bonne chance!), and Hormel has protested the use of its "Spam" trademark in connection with email. Typically, the trademark owner is trying to prevent the genericism of its trademark. Those battles are almost always futile, but I can see why they are fought.
The latest would-be-funny-if-it-wasn't-so-sad attempt to assert trademark rights in a common Internet term involves the term "Cyberlaw." But unlike the anti-genericism efforts, Eric Menhart--a self-described "recognized leader" in intellectual property--is seeking to fence in the generic term "Cyberlaw" to convert it into his own property. He has filed a federal trademark application (application 77341910) in the term "CyberLaw" for the following services:
Legal document preparation and research services for attorneys; Legal research; Legal services; Legal services, namely, preparation of applications for trademark registration; Consulting and legal services in the field of privacy and security laws, regulations, and requirements; Expert witness services in legal matters in the field of intellectual property and information technology; Providing a website that features information on the development of international law, regulations, legal policies, and legal practices in a manner that promotes global governance by all types of organizations; Reviewing standards and practices to assure compliance with intellectual property and information technology laws and regulations; Attorney services; Litigation services; Legal services, namely, trademark maintenance services; Copyright management; Copyright management consultation; Registration of domain names for identification of users on a global computer network; Arbitration; Arbitration services; Consultation in the field of data theft and identity theft; Intellectual property consultation; Intellectual property watch services; Licensing of advertising slogans and cartoon characters; Licensing of computer software; Licensing of intellectual property; Litigation consultancy; Mediation; Patent licensing; Preparing and filing incorporation papers; Providing information relating to legal affairs
He claims a priority date of Feb. 22, 2007. Mysteriously, his website displays the circle-R next to the term "CyberLaw" even though it's only a pending application (the application was just filed Dec. 1, 2007).
Fortunately, I'm 100% confident that the TM Office will reject this application because the term "Cyberlaw" has become a generic description for the law of the Internet and related fields--see the Wikipedia entry on the topic. In fact, the term "Cyberlaw" has been around over 15 years. I did a search in Westlaw's News Database and the earliest reference I found was a Macweek article discussing Jonathan Rosenoer's AOL "Cyberlaw" column--from 1992. I'm reasonably confident we could find earlier references. For example, I found a 1993 National Law Journal article ("A Shingle in Cyberspace: Lawyers Online Find Clients--and Some Risks" by Rosalind Resnick) that discusses the "burgeoning field of cyberlaw, those legal issues confronting the online world."
Unfortunately, the improbability of this trademark hasn't stopped Menhart from asserting his perceived rights against third parties. The EFF writes about one such demand against Michael Grossman, a Chicago attorney who runs a blog entitled "CyberBlawg." I'm wondering how many other people have been the unlucky recipient of a demand letter from Menhart asserting similar claims over "CyberLaw." Perhaps those demands will stop once the TM application gets bounced by the TM Office, but the harm done in the interim could be substantial.
One final observation (and I apologize in advance for any snarkiness here, but I know I'm saying what most of us are thinking). It's impossible to ignore that the trademark applicant is a lawyer claiming expertise in Cyberlaw. What kind of Cyberlawyer doesn't know that the term "Cyberlaw" isn't trademarkable for Cyberlaw services, *especially* not by one who claims a priority date of 2007?
Coverage from around the web:
* Boing Boing
* Las Vegas Trademark Attorney (with a careful analysis of precedent trademark applications)
* Freedom to Differ
* Lex Ferenda (finding a Cyberlaw reference as early as 1987)
* Likelihood of Confusion
* Your Name is My Business
* Life on the Wicked Stage
UPDATE: The Baltimore Sun ran an interesting feature on Eric Menhart in 2004. The article notes some critics said that Menhart's "enterprising nature has led him into another pursuit that some people describe in harsh terms -- like 'extortion' or 'blackmail.'"
UPDATE 2: Mr. Menhart has blogged a response to EFF that reinforces that he really doesn't get it. Two unavoidable facts of life for him:
1) The PTO will bounce his TM application
2) If he ever attempts to enforce his purported trademark rights in "CyberLaw" again, he will be met by a buzzsaw of opposition from some very determined folks.
In light of these facts, most savvy lawyers would realize that the absolutely wrong approach is to dig in his/her heels.
January 16, 2008
Contract Formed Even If Customer Never Received It--Schwartz v. Comcast
By Eric Goldman
Schwartz v. Comcast Corp., 2007 WL 4212693 (3d Cir. Nov. 30, 2007)
This case just crossed my desk, and I'm surprised it hasn't gotten more attention. (Declan at News.com wrote about it with a misdirected headline, and other coverage has been thin). The opinion provides a surprising answer to the thorny existential question of how to form a contract without forming a contract.
Schwartz is a disgruntled Comcast customer (is there any other type?) because he thinks Comcast has overpromised and underdelivered (Comcast claimed that it was "always on," except for the 10 days it was off for Schwartz). Schwartz wants his day in court. Comcast prefers that he have his day in arbitration per the terms of its subscriber agreement--which, not incidentally, also handily says that there are no class actions in arbitration. Comcast says that it included a copy of the subscriber agreement in its welcome kit for all new customers and posted a copy on its website, but Schwartz claims he never saw the subscriber agreement. The court's response to this factual dispute is rather amazing:
Comcast's evidence of its consistent practice regarding delivery of subscription agreements and of the conduct of the parties in this case constitute prima facie evidence that Schwartz was aware that the services he accepted were being offered pursuant to a subscription agreement
Isn't this a complete non sequitur? Sure, Comcast can enter evidence that it spams its new customers with the subscriber agreement, but it's also likely that this process is not 100% effective--surely, some errors in the system cause some customers not to receive the agreement. The court cites a Federal Rule of Evidence that says a corporate routine is relevant to prove that the routine was followed in this case. So when Comcast claims it has a pattern of spamming its users with the subscriber agreement, the court says that it will treat all customers as having agreed to those terms--even if they never saw those terms, let alone actually manifested assent to them.
That's a pretty neat parlor trick. Too bad it's not contract law. There's no question that Schwartz and Comcast have a contract for services. Most likely, it formed when Schwartz placed his order and Comcast accepted (or, less likely, when Comcast made its offer and Schwartz accepted by ordering). All we're haggling about is what terms were included in that contract when it formed. [Note: because this contract is for services, the UCC-based contract cases saying "pay now, terms later" do not automatically apply here...not that any of them were cited by this court.] This court says that Schwartz is bound to terms that were sent post-formation (a dicey proposition) even if Comcast can't prove that Schwartz received the terms (let alone assented to them) (a doubly dicey proposition). How in the world can those terms become part of the bargain?
The court bolsters its shaky conclusion with two other facts:
* Schwartz signed a piece of paper when he disconnected his cable service (but not his Internet connectivity) that said "If other non-installation work was provided, I agree to continue to be bound by the current Comcast Subscriber Agreement" and contained the cryptic reference "O/L PRO SERV" which stood for "Online Pro Internet Service." I'm not sure what to make of this language because (1) I don't know what the term "if other non-installation work was provided" refers to, (2) we're haggling over the terms of the original subscriber agreement, so this language doesn't clarify the terms, and (3) the cryptic reference makes no sense to anyone other than a Comcast employee.
* the subscriber agreement was on the web. Noting this, the court makes this remarkable statement: "the terms of the contract were available to Schwartz via the web site, and thus they are binding, despite the fact that he was unaware of them." I don't think the court could possibly mean what it says.
Even though the court went out of its way to form the contract, it did remand the case to consider if the arbitration clause is unconscionable. (According to PACER, nothing has happened since the remand). There's good reason to consider the unconscionability question given that a primary goal of Comcast's arbitration clause was to destroy class actions. Courts have been striking down arbitration clauses for this reason with some frequency, so perhaps the district court will do so here.
The court designates the opinion non-precedential and otherwise clearly communicates its hope that no one other than the litigants will read the opinion. Given the opinion’s sloppiness, that is an appropriate desire. Accordingly, I'm not sure how much wisdom we can salvage from this case. A couple of points:
* the case seems to reinforce that a mandatory clickthrough process (i.e., every user has to go through the same process) should be well-received by a court because it reflects the kind of corporate routine the court lauds here.
* even though the court bailed it out here, it looks like Comcast (and, I suspect, many other telecommunications, cable and Internet providers) have a lot of work to improve their contract formation process so they don't have to rely on parlor tricks to form their contracts.
January 15, 2008
Web 2.0 Marketing and the Law
By Eric Goldman
Today I participated in the Pike & Fischer teleconference on Web 2.0 legal issues (" Best Practices for Businesses Exploring…Exploiting…and Expanding in Web 2.0"). Among other things, I was asked, in 8 minutes or less, to provide some insightful best practices about using social networking sites for marketing purposes. The irony is that we as professors struggle all of our lives to say anything insightful ever, so being asked to do so in 8 minutes was quite a stretch for me. Here are the notes I prepped for my big moment in the sun:
1) I’m not sure how much Web 2.0 marketing differs legally from Web 1.0 marketing. The same basic rules apply:
• The marketing content has to be true
• If required, the marketing needs the appropriate metadata
• The marketing must comply with media-specific rules for its dissemination
2) The main innovation of Web 2.0 marketing is leveraging off customers’ social networks.
The idea is that friends are more likely to find friends’ recommendations more influential than advertiser-supplied marketing.
Pimping out friendships isn’t entirely new. It’s the basic premise of multi-level marketing and in-home sales parties such as Amway and Tupperware.
Two examples of social network-based marketing.
First, word-of-mouth/buzz marketing, which increases awareness of a brand by getting bloggers and other consumers to start talking about the brand. Second, Facebook’s Beacon program, where a person’s purchases were disclosed to his/her friends as a type of implicit recommendation (i.e., if my friend is interested in X, maybe I should be too).
Social network-based marketing is surprisingly unregulated. There may be sponsorship disclosure rules or rules against trying to pass off marketing as editorial content. There may be privacy laws that govern the movement of consumer data in a Beacon-type situation. But in general, this area is lightly regulated.
Even if legal regulation doesn’t stand in the way of social network-based marketing, adverse consumer reactions might. People aren’t foolish, and they don’t like feeling deceived. When a marketer gets its hand caught in the cookie jar, the bad publicity and loss of consumer trust can put the marketer in a worse position. For example, I predict that Beacon, combined with some other missteps by Facebook, will suffer a long-term hit to their brand.
3) Although not unique to Web 2.0, three examples of ways that Web 2.0 marketing has created legal friction:
• If you’re dealing with kids, COPPA may apply. Xanga.com found this out the hard way when it was busted under COPPA for $1M because it allowed kids to self-report their age.
• Harvesting data from social networking sites can lead to trouble. ConnectU got into trouble by automatically collecting data from Facebook—even though Facebook users gave ConnectU their credentials to log in.
• Spamming is never good. theglobe.com basically got put out of business for using MySpace’s internal messaging tool to send spam.
January 11, 2008
Top Cyberlaw Developments of 2007
By Eric Goldman
I have posted my annual Cyberlaw recap, enumerating the top 10 Cyberlaw developments from 2007, at InformIT. You'll have to read the whole thing to find out my votes for the biggest developments from last year (can you guess my #1???). From the article, some of the runners-up:
* Jammie Thomas Loses P2P File Sharing Jury Trial. Even a jury of our peers knows that P2P file-sharing of copyright works isn't legit.
* DVR-as-a-Service Isn't Permissible. You can record broadcasted shows on a device in your house. Just don't ask anyone to do it for you.
* AutoAdmit Controversy Spills Over Into a Lawsuit. Some sophomoric online banter among law students is all fun-and-games until someone gets sued.
* Commercial Referential Trademark Use Is Successful Defense. A trademark owner can't use trademark law to stop people chattering about its business on a message board.
* Anti-Spyware Vendor Protected by 47 U.S.C. 230(c)(2). A company that doesn't like being called spyware can't use the judicial system to force a different label.
Curious what I thought was more exciting than these developments? Go check out the whole thing!
As an aside, you may be wondering why I published the recap at InformIT instead of here on this blog. I've complained before about my crummy AdSense revenues. Apparently InformIT is much better at monetizing content than AdSense is, because InformIT pays me easily 100X (or more) what I would expect to earn by posting the article here. So whether InformIT is monetizing better or just spending like drunken fools, that ratio is enough to get my attention. As an added bonus, I spiked the InformIT article with generous links back to my site, and I never mind getting some extra link love from reputable third party domains.
January 09, 2008
1-800 Contacts Sues LensWorld for Keyword Advertising
By Eric Goldman
1-800 Contacts, Inc. v. LensWorld.com, Inc., 2:08-cv-00015-SA (D. Utah complaint filed Jan. 8, 2008)
My my, look who's decided to go back into court! It's none other than 1-800 Contacts, the online retailer with a lousy trademark and a love-hate relationship towards keyword advertising. This time their target is their chums LensWorld.com for buying "1800Contacts" as a keyword.
You may recall 1-800 Contacts for their decisive loss in the Second Circuit on the keyword advertising issue, in which the court emphatically shut down their trademark claims against WhenU because WhenU didn't make the requisite trademark use in commerce. This ruling has become a major precedent that has spawned no less than a half-dozen Second Circuit-based court rulings that keyword advertising isn't a trademark use in commerce.
Ironically, 1-800 Contacts also has routinely bought third party trademarks as keywords. They admitted to this in the WhenU litigation (a point that the Second Circuit noted sharply). They also were so concerned when Utah legislators banned using third party trademarks for keyword advertising that they helped push the legislators to back down. Hey 1-800 Contacts, maybe I'm missing something, but if you wanted to bring a keyword advertising lawsuit like this one, maybe you shouldn't have badgered your legislators to remove a law that would have ensured your success in court!
So it looks like 1-800 Contacts has a somewhat duplicitous attitude towards keyword advertising--good when they do it, bad when their competitors do it. Hmm. Then again, maybe we shouldn't be surprised; this isn't 1-800 Contacts' only example of marketing duplicity.
In any case, the LensWorld lawsuit is a garden-variety advertiser-vs.-advertiser keyword advertising lawsuit. Based on the limited data we have, I'm guessing the Utah federal court will deem keyword advertising a trademark use in commerce, but after that, who knows? The only twist here is that 1-800 Contacts claims that LensWorld aped their FAQs, prompting a tossed-in copyright infringement claim as part of the package. Also I can't help but note that there appear to be many other possible defendants who are buying 1800contacts as a keyword (see the screenshot in para. 22/page 6)...is a 1-800 Contacts litigation frenzy imminent, or is LensWorld uniquely positioned for 1-800 Contacts' enmity?
Finally, for those of you who purchase contact lenses and other eyecare items online, I trust you've noted 1-800 Contacts' affinity for using legal processes to shut down pro-competitive behavior. Personally, I'm voting against their regressive and duplicitous attitudes towards IP by taking my business elsewhere!
HT Evan Brown.
UPDATE: Tom O'Toole explains why Utah is a great venue for 1-800 Contacts.
January 08, 2008
Road Show Spring 2008
Some of the places I'll be this semester. As always, please let me know if I should plan to see you there!
Jan. 15: Best Practices for Businesses Exploring…Exploiting…and Expanding in Web 2.0, Pike & Fischer teleconference
Jan. 26: The Toll Roads: The Legal and Political Debate Over Network Neutrality, University of San Francisco School of Law. I'm moderating an afternoon panel.
Jan. 30: Congressional Internet Caucus Advisory Committee's 4th annual State of the Net Conference, Washington DC. Check out the panel I'll be on--there could be some sparks!
Jan. 31: Spyware: What's Worked, What's Left, and What's Coming, Anti-Spyware Coalition, Washington DC. I'm really excited about the panel topic of "Is Adware Dead?" I have some strong thoughts on this topic!
Feb. 1: Internet Collaboration: Charting the Waters of Virtual Worlds, Web 2.0, and the GPL, Santa Clara Computer & High Tech Law Journal. Judge Kozinski, a frequent presence on this blog, will be the keynote speaker, and the speaker list is studded with other luminaries.
Feb. 8-9: Fourth International Conference on Contracts, McGeorge School of Law in Sacramento.
Feb. 26 SMX West, Santa Clara
Mar. 24: Information Technology Law Institute 2008, Practicing Law Institute, San Francisco
Apr. 18: Co-sponsored event with Berkeley Center for Law & Technology to be held in Berkeley. This hasn't been publicly announced, but I promise you it will be relevant to this blog's audience and a top-notch event, so mark your calendars now.