May 29, 2009
Another Lawsuit Over Google AdWords--Stratton Faxon v. Google
By Eric Goldman
Stratton Faxon v. Google, Inc. (New Haven Superior Ct. complaint filed May 27, 2009)
Today's lawsuit combines two trends:
Trend #1: Lawyers-as-plaintiffs suing Google for their own account. I don’t have a complete inventory of these lawsuits, but other examples include the Field, Feldman, Person and Bradley lawsuits. Ironically, I believe all of these lawsuits were shot down in inglorious flames--lawyers-as-plaintiffs often seem to do even worse than other plaintiffs.
This lawsuit is brought by a Connecticut plaintiff-side law firm that discovered a rival law firm was keying AdWords ads to the law firm name. Trademark owners faced with this situation might normally contact the rival and ask them to stop (which the rival firm claims to have done as soon as it heard of the lawsuit) and take advantage of Google's trademark policy. But, if you're a plaintiff's lawyer, it sure is tempting to sue first and ask questions later…
And this lawsuit does raise a lot of questions, including:
* why didn't the plaintiff sue for trademark infringement? The plaintiff claimed interference with business relations and unfair competition, but both claims fundamentally sound in trademark law and would be preempted if there was a robust trademark preemption doctrine. Perhaps a trademark claim is coming.
* why didn't the plaintiff sue the advertiser instead of Google? Among other things, the plaintiff complains that its rival firm is mimicking other offline marketing efforts. If the problem is with the rival firm, wouldn't they be the more appropriate target?
* why did the plaintiff seek a prejudgment $50,000 lien against Google instead of just filing a complaint? Maybe Connecticut law has some quirks that encourage or require this procedural step. Otherwise, is the firm concerned that Google won't have $50,000 to pay off the plaintiff if it wins?
* did the plaintiff really just discover that its competitors are advertising on its name? The plaintiff was quoted as saying that the Firepond lawsuit prompted him to check the search results for the first time. What is this, 2002?
All of these questions make me wonder if this lawsuit is really intended to get some publicity and maybe prompt some calls from potential plaintiffs to form a new class action suit. Otherwise, Connecticut law may differ from California law, but under CA law this lawsuit would almost certainly be DOA. For example, even without relying on 47 USC 230, under CA law I don't see any possibility that the plaintiff could establish the requisite scienter to make the interference with business relations claim stick. For a good analogous example of a failed misdirected attempt to smack a search engine for unwanted advertising, see the Heartbrand Beef case, where Yahoo was excused (without relying on 230) from a false designation of origin claim for selling trademarked keywords.
Stated differently, lawsuits like this--from lawyers who are clearly new to our community--simultaneously make me feel really smart and really stupid. Their allegations are so unmoored from our normal legal discussions that either the lawyers know something I don't, or they have no idea what they are doing. I'll let you to form your own conclusion about this lawsuit.
Clearly, this lawsuit isn't a clone of the Firepond lawsuit, but I think it's fairly characterized as a spawn of it in that the Firepond lawsuit helped educate another plaintiff lawyer about the desirability of suing Google. I expect other plaintiffs’ lawyers are getting the same message as we speak.
In theory, if the plaintiff firm really wanted to tweak its rival, it might also complain to the bar regulators about impermissible advertising under rules about lawyer advertising. This prompted me to wonder: have any bar association opinions on the permissibility of buying trademarked search keywords? I am not aware of any, but I may be forgetting something. Please let me know if you've seen such an opinion.
May 28, 2009
Contributory Cybersquatting and the Impending Demise of Domain Name Proxy Services?--Solid Host v. NameCheap
By Eric Goldman
Solid Host, NL v. NameCheap, Inc., 2:08-cv-05414-MMM-E (C.D. Cal. May 19, 2009)
This case involves an alleged domain name theft. Solid Host is a web host and initial owner of the domain name solidhost.com, which it registered through eNom in 2004. Solid Host claims that in 2008, a security breach at eNom allowed an unknown interloper (Doe) to steal the domain name and move the registration to NameCheap. Doe also acquired NameCheap's "WhoisGuard" service, a domain name proxy service that masked Doe's contact information in the Whois database. Solid Host contacted Doe and sought the domain name; Doe asked for $12,000, and Solid Host took a pass. Instead, Solid Host demanded that NameCheap hand back the domain name and identify Doe, but Doe claimed that he had bought the domain name legitimately. NameCheap, apparently feeling like the cheese in a sandwich, demurred to Solid Host's requests. Solid Host then got a TRO ordering NameCheap to transfer the name and reveal Doe's identity, both of which occurred. For unclear reasons, Solid Host hasn't amended the complaint to name the Doe, but it is proceeding against NameCheap on various claims, including an Anti-Cybersquatting Consumer Protection Act (ACPA) claim.
Who is the Registrant?
My understanding of domain name proxy services is that the service acts as the legal registrant, thus supplying its contact information, but it registers the domain name for the benefit of its customer, making the customer the beneficial registrant. An analogy: a bank may take legal title of a property as part of securing a loan on the property, but the borrower retains beneficial title to the property.
So, for purposes of the ACPA, is the proxy service the “registrant” of the domain name? ICANN’s agreement with registrars seemingly contemplates this characterization in Section 18.104.22.168 of its Registrar Agreement, which says “A Registered Name Holder licensing use of a Registered Name according to this provision shall accept liability for harm caused by wrongful use of the Registered Name, unless it promptly discloses the identity of the licensee to a party providing the Registered Name Holder reasonable evidence of actionable harm.” However, it’s not clear to me that a proxy service “licenses” the domain name, especially if you accept my lender-borrower analogy above. Alternatively, if the proxy service is the “agent” of the customer, the licensing analogy also breaks down.
Whether the proxy service is the registrant matters a great deal to the legal outcome, and unfortunately, the court’s analysis of this important question was cursory, muddled, and possibly internally inconsistent.
In this case, the court’s inquiry is made more difficult by the fact that NameCheap acted as both the registrar and the proxy service provider. As a registrar, an ACPA claim against NameCheap should be squarely preempted by the domain name registry/registrar safe harbor enacted as part of the ACPA (15 U.S.C. §1114(2)(D)). For example, 1114(2)(D)(iii) says:
A domain name registrar, a domain name registry, or other domain name registration authority shall not be liable for damages under this section for the registration or maintenance of a domain name for another absent a showing of bad faith intent to profit from such registration or maintenance of the domain name
(This provision only moots damages, not an injunction, but since Solid Host has the domain name back in its possession, damages seem like the only remaining issue).
The court concludes that NameCheap is not eligible for the domain name registrar safe harbor because NameCheap is the domain name registrant. It says, "NameCheap is, by virtue of the anonymity service it provides, the registrant of a domain name that allegedly infringes Sold [sic] Host’s trademark." Thus, NameCheap is ineligible for the registrar safe harbor, which applies only when the registrar acts as a registrar.
But, having rejected the domain name registrar safe harbor because NameCheap was the domain name registrant, the court then inconsistently says that NameCheap is not the registrant for purposes of the prima facie ACPA claim. Instead, for ACPA purposes the court treats Doe as the registrant, leaving NameCheap exposed to a possible secondary ACPA liability claim. (The court acknowledges that NameCheap would defeat a direct ACPA claim because NameCheap did not have any bad faith intent to profit from the domain name. Offering the proxy service wasn't enough to qualify as a bad faith intent to profit).
Wait a minute—how can NameCheap simultaneously be both the registrant (no safe harbor) but not the registrant (thus, subjected to a secondary claim)? The court does not acknowledge or explain this apparent inconsistency.
Courts have rarely discussed a contributory ACPA claim. The only one cited by the court was a 2001 case (the Ford Motors vs. Greatdomains.com case) and I can’t think of any others. Perhaps this isn’t surprising because (1) as the Greatdomains.com case indicated, a contributory ACPA claim is available "in only exceptional circumstances," and (2) registrars are the most likely targets of a contributory ACPA claim, and the domain name registrar safe harbor effectively eliminates their contributory ACPA liability.
Adopting the analysis in the Greatdomains.com case, this court equates contributory ACPA liability with the Ninth Circuit’s 1999 Lockheed standard for online contributory trademark infringement (as opposed to ACPA liability), which requires that "a plaintiff must prove that the defendant had knowledge and ‘[d]irect control and monitoring of the instrumentality used by the third party to infringe the plaintiff’s mark.'"
So how did NameCheap have the requisite control over Doe's instrumentalities? Good question. The court tosses out this gem: NameCheap was "the “cyber-landlord” of the internet real estate stolen by Doe." WHAT??? The court continues:
NameCheap’s anonymity service was central to Doe’s cybersquatting scheme. If NameCheap had returned the domain name to Solid Host, Doe’s illegal activity would have ceased.
The second sentence is true with respect to NameCheap, but it is also true of every registrar for every domain name they register--and we know from the 1999 Lockheed case that registrars lack control over the instrumentalities of their registrants. So the proxy service seems to make a legal difference, but how does the proxy service evidence NameCheap's greater control over the registrant's instrumentalities? I think something is amiss here.
To complete the prima facie contributory ACPA claim, in addition to control, Solid Host must show that NameCheap has the requisite knowledge of Doe's ACPA violation. The court sets a high scienter bar--mere notice from an aggrieved party isn't enough--but the court conclusorily says that the complaint alleged enough knowledge to survive the motion to dismiss.
Why This is a Troubling Ruling
As I trust is clear, I think the court's analysis is questionable at best. I’m also troubled about the normative implications. Most obviously, this case could portend the demise of domain name proxy services. Read literally, every proxy service is exposed to potential contributory ACPA liability for every domain name it services. I can’t imagine proxy service providers will be excited about that liability exposure, and some may choose to exit the business.
If proxy services evaporate, domain name registrants will have a tougher time maintaining their privacy. This could affect at least two groups. First, businesses seeking to register domain names for unlaunched new brands often want to procure the new brand's domain names without publicly announcing their intentions through the Whois database. (Of course, some businesses register such domain name through agents or shell companies, but at a much greater expense than a proxy service). Second, gripers, whistleblowers, critics and others may want to use proxy services to make it harder for their targets to unmask their identities. This ruling jeopardizes the potential privacy options available to both groups.
I’m also troubled by this ruling’s narrow reading of the domain name registrar safe harbors. There haven’t been many cases interpreting those safe harbors, and this case might influence other courts to read them narrowly.
A Mini-Trend of Lawsuits Against Registrars
I’ve noticed a small but troubling increase in lawsuits against domain name registrars in the past few months. In addition to this case, see the Vulcan Golf v. Google lawsuit (which named some registrars as defendants), OnlineNIC cases, Philbrick v. eNom and uBid v. GoDaddy. Personally, I believe this litigation trend mirrors the expansion of new and legally untested non-registration services offered by registrars. I explored this issue with Elliot Noss of Tucows in the most recent installment of TWiL (worth listening to, IMO). Discussing the uBid lawsuit, Elliott explained how registrars monetize dropped domain names before being returned to the available pool of unregistered domain names. The delay is putatively for the benefit of customers who mistakenly let a registration lapse; but this also has the happy (?) by-product of letting registrars create new ad inventory that they are monetizing.
In the past, a lot of the legal attention regarding domain names has focused on trademark owners vs. registrants. From my perspective, those lawsuits are becoming passé. The real litigation growth industry appears to be trademark owner vs. registrar lawsuits over new registrar service offerings that trademark owners don't like. Rulings like this one, with a broad reading of contributory ACPA liability and a narrow reading of the domain name registrar safe harbor, raise the specter that registrars may find more legal trouble than they anticipated.
UPDATE: Commentary from Domain Name News
UPDATE 2: A call for registrars to exit the domain name proxy business.
May 27, 2009
Barnes Also Seeks Rehearing in Barnes v. Yahoo
By Eric Goldman
Cecilia Barnes has also filed a brief requesting a rehearing in Barnes v. Yahoo. The brief says it's seeking rehearing on a single issue, although it doesn't actually summarize that issue in a single sentence. However, the brief at the end says it wants the court to "conclude that once Yahoo! had voluntarily assumed a publisher’s responsibility to remove the postings, the responsibility is enforceable by any lawfully applicable remedy." The brief describes that Yahoo's voluntary promise to take down the content should give rise to tort liability in addition to the promissory estoppel claim.
The brief is short. It's also remarkable as the first appellate brief I can recall seeing where the "discussion" section has zero citations.
The case library:
* Barnes' petition for rehearing
* Public Citizen et al amicus brief in support of rehearing
* Yahoo's petition for rehearing
* Ninth Circuit opinion and my blog post on it
* Ninth Circuit oral arguments
* District court opinion and my blog post on it
* Barnes' response to Yahoo's motion to dismiss
* Yahoo's brief in support of its motion to dismiss
* Yahoo's motion to dismiss
* Yahoo's notice of removal to federal court (which contains Barnes' initial complaint)
The Justia page has even more materials from the district court proceedings.
May 26, 2009
Speth on Barnes v. Yahoo and 230 as an Affirmative Defense
By Eric Goldman
I've already blogged a couple times on the Ninth Circuit's Barnes v. Yahoo ruling (commentary post; post on rehearing request). In response, I got an email from Maria Crimi Speth of Jaburg & Wilk in Phoenix, AZ. Maria has appeared in this blog before and is well-known as outside counsel to the Rip-off Report, which has appeared in this blog more times than I can remember. With her permission, I'm sharing Maria's email:
As the attorney who may hold the record for 12(b)(6) motions on the CDA, I would like to address that portion of the opinion. Your analysis discusses the procedural change inherent in finding that a 12(b)(6) motion is not the appropriate vehicle. I agree completely, but the harm goes further.
The Ninth Circuit has now unequivocally referred to 230 as an affirmative defense. I believe that is wrong. I have been taken the position in my pleadings that it is not an affirmative defense; it addresses the prima facie case. I avoid referring to 230 in my motions as an affirmative defense and I plead 230 in my answers as a failure to state a claim rather than an affirmative defense.
The reason: If I ever have to take one of these to trial, the plaintiff should have the burden of proving that my client is an information content provider of the content at issue. I should not have to prove the negative. Especially in light of the author's right to anonymous free speech, it can be very difficult to prove that your client did not write something when the real author is anonymous.
The reasoning: 230 provides that "no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provider by another information content provider." The plaintiff must plead and prove the elements of its claim. In defamation, for example, the plaintiff generally must prove the following elements: a defamatory statement; published to third parties; and which the speaker or publisher knew or should have known was false. Thus, the Plaintiff must prove that my client was the speaker or publisher of the false statement. 230 further defines that element of the claim and provides that the Plaintiff can only prove that element if they can show that my client is the actual information content provider. "A defense which demonstrates that plaintiff has not met its burden of proof is not an affirmative defense." See Flav-O-Rich v. Rawson Food Service, Inc. (In re Rawson Food Service, Inc.), 846 F.2d 1343, 1349 (11th Cir.1988) (recognizing that a defense which points out a defect in the plaintiff's prima facie case is not an affirmative defense); Zivkovic v. Southern California Edison Co., 302 F.3d 1080, 1088 (9th Cir. 2002).
This is an excellent point, and one that I had not focused on previously. I know I've seen other courts refer to 230 as an affirmative defense, but I can't recall any meaningful judicial explication of that characterization. In this case, I'm sure the panel tossed off the characterization breezily, but this is another gratuitous aspect of the opinion that the panel needs to defend or, better yet, correct.
May 22, 2009
Yahoo and Amici Seek Rehearing in Barnes v. Yahoo
By Eric Goldman
Last week I ruminated at length (3,200 words!) about the Ninth Circuit's Barnes v. Yahoo opinion. As you may recall, I thought the court's actual holding--230 preempted a negligence claim but did not preempt a promissory estoppel claim--was mostly correct, although I worry about the normative implications of a promissory estoppel bypass to the 230 immunity. However, I complained loudly about the sloppy drafting and loose reasoning used by the opinion to reach the right result, and I speculated this would be a good case for rehearing by the panel or en banc.
Fortunately, Yahoo has requested such a rehearing. Plus, a coalition of public interest groups led by Public Citizen (and including CDT, CMLP and EFF) have filed an amicus brief in support of Yahoo's request (see Paul Levy's post). Both briefs focus on the two most egregious mistakes by the court:
* the sloppy dicta that 230 does not support a 12(b)(6) motion to dismiss, and
* the even sloppier misstatement of the 230 prima facie defense to say that it only applied to state law claims, not federal claims.
Let's hope the judges grant the rehearing and, at minimum, clean up those two points. Kudos to the Yahoo and amici teams for pushing these issues.
The case library:
* Public Citizen et al amicus brief in support of rehearing
* Yahoo petition for rehearing
* Ninth Circuit opinion and my blog post on it
* Ninth Circuit oral arguments
* District court opinion and my blog post on it
* Barnes' response to Yahoo's motion to dismiss
* Yahoo's brief in support of its motion to dismiss
* Yahoo's motion to dismiss
* Yahoo's notice of removal to federal court (which contains Barnes' initial complaint)
The Justia page has even more materials from the district court proceedings.
May 20, 2009
EFF's Guide to Griping, Plus Some Recommendations of My Own
By Eric Goldman
The EFF has posted "Avoiding Gripes About Your Gripe (or Parody) Site," which includes 6 prophylactic recommendations to prospective gripers:
1) Be noncommercial — no ads, no links to commercial sites, no affiliate links, no Café Press T-shirt sales, no fundraising if you can help it.
2) Don't use the target's name alone in the domain name — adding "sucks" is good, but you can be creative.
3) Have a prominent disclaimer that explains that your target is neither affiliated with nor endorses your site.
4) Find a service provider with backbone.
5) If you borrow from the target's own materials, such as text or images from the target's own websites, be selective.
6) If a mark-owner challenges your use of a mark in a domain name, don't offer to sell it to the mark-owner without the assistance of legal counsel.
All excellent advice. I'd like to add a few suggestions of my own (all standard disclaimers apply--this is not legal advice, and you should consult your own attorney):
7) I would modify #1 to say don't have any outlinks from your gripe site, period. Courts sometimes engage in bizarre link-counting exercises to determine commerciality, including in some cases considering sites two or more links away. Keep it simple and skip outlinks altogether if you can.
8) I would modify #5 to recommend against using the target's logo at all unless it is absolutely essential to the gripe. Otherwise, courts can get hung up on the logo display even when if other aspects of a trademark claim are weak. See, e.g., BidZirk v. Smith and SMJ v. Lafayette Restaurants.
9) I would also modify #5 to say that if you recycle any graphics or photos from the target, consider presenting them as a thumbnail (with a link to the original source if necessary) rather than presenting them full-size. The thumbnail sizing may help with a fair use defense.
10) Never EVER include the target's trademarks in the site's keyword metatags. Some courts lose all sense of perspective the moment they see a trademark in the keyword metatag. Plus, the keyword metatag offers very little or no SEO benefit, and there are much more effective ways to spread the word about your site. It should be OK to include the trademark in the description metatag if the site description clearly communicates the griping nature of the website, but even then, be careful. Courts don't know how to evaluate description metatags either.
11) Think carefully before buying the target's trademark as a keyword for sponsored ads to promote your gripe site, Some courts are suspicious of keyword advertising and may unduly fixate on the ad triggering and not the underlying message.
12) Make sure every fact you say is 100% accurate and everything else is couched as your opinion. Plaintiffs will carefully read every word on your site text looking for anything that they can argue is inaccurate.
May 19, 2009
Expansive Preemption of State Anti-Spam Laws Is Curtailed
Courts are splitting over the scope of CAN-SPAM preemption, with even judges in the same federal division disagreeing.
By Ethan Ackerman
It is a truth universally recognized that a legal blogger whose legal positions cause them to eat crow or be left crying out in the wilderness usually will be entitled to the occasional I-told-you-so post as well. Two (of three) recent court opinions from California suggest that courts are (sometimes) beginning to reject the broad CAN-SPAM preemption holdings that have followed the reasoning of the 4th Circuit's Mummagraphics case.
Hypertouch v. ValueClick
First, the status quo. A slight majority of the cases addressing CAN-SPAM preemption of state laws have found preemption. Starting with some adverse rulings in response to repetitious pro-se litigants in Washington state, and building on the sweeping Mummagraphics opinion from the 4th Circuit Court of Appeals, many judges have been tempted to dismiss state anti-spam law claims as somehow preempted by the federal CAN-SPAM Act.
Hypertouch v. ValueClick falls squarely into this category. The opinion was handed down by Los Angeles Superior Court judge Richard Adler, but it basically relies on the N.D.Cal. District Court Opinion by Judge Chesney in Hoang v. Reunion.com, which in turn relies on Mummagraphics for its preemption analysis. Judge Adler's holding, "that any claim [desiring to survive preemption] must be based on fraud" represents just the most recent of what is becoming a majority position on CAN-SPAM preemption cases. This case was likely particularly problematic for plaintiff Hypertouch, representing a state court loss following on the heels of its federal court loss earlier.
Fortunately, the tide may be turning away from impossible fraud standards and back in favor of the actual language of the CAN-SPAM preemption clause, as two recent opinions show.
Asis Internet Servs. v. Consumerbargaingiveaways
The defendants in this N.D.Cal. district court case seemed to put in a rather rote defense recycling the holdings of Hoang v. Reunion.com, a previously blogged N.D.Cal. district court that found CAN-SPAM preemption and even a blurry holding that plaintiff might lack Constitutional standing. I imagine they were a tad surprised when another N.D. Cal. district judge in the same division, Judge William Alsup, held that their Constitutional standing argument was "without merit" and their California anti-spam law standing argument was "mistaken." Over and above this significant difference from the Reunion.com line of thinking, Judge Alsup's biggest departure occurs later in the opinion where he parses the preemption language of the CAN-SPAM Act. Because a second N.D. Cal. case in another division also follows and amplifies Judge Alsup's reasoning, I thought I'd summarize them together below.
AsIs v. Vistaprint
Judge Saundra Brown Armstrong wastes no time in getting to the meat of the preemption issue in her Vistaprint holding, declaring after one brief paragraph listing the differing cases on the issue that "[t]his court agrees with the preemption analysis in the recently published order in Asis [v. Consumerbargaingiveaways], and similarly rejects Defendants' preemption challenge."
Judge Armstrong's similarly brief elaboration on this holding is equally informative in its brevity - the core of her holding taking up a few brief paragraphs:
"The very terms of the savings clause exempt laws that proscribe "falsity or deception" in email advertisements, and although the terms are not defined in the Act, this Court finds they should be applied more broadly than just to common-law fraud claims. After all, Congress explicitly used the term "fraud" in the next provision of the preemption clause, yet did not in the savings clause... In the provision immediately preceding the preemption provision, Congress specifies that "[n]othing in this chapter shall be construed to affect in any way the Commission's authority to bring enforcement actions under FTC Act for materially false or deceptive representations or unfair practices in commercial electronic mail messages." The Court is persuaded that here too, Congress intended the phrase "falsity or deception" to be apply more broadly than just to common-law fraud claims."
I told you so?
If this 'when Congress meant one thing, it said it, when it meant something else, it said something else' argument doesn't sound familiar, I'll step in with my own I-told-you-so pointer to my prior post on Congress' careful word choice in the CAN-SPAM drafting negotiations:
When 'falsity' was intended, as in 15 USC 7707(b)1, 'falsity' was used. When 'fraud' was intended, as in a mere paragraph later in 15 USC 7707(b)2, 'fraud' was used. When 'falsity' wasn't enough, but 'fraud' was too much, as in 15 USC 7701(a)1, 'materially false' was used. When Congress wanted to require actual knowledge, or a specific intent, as in 7704(a)2 and 7702(12), it used the terms "actual knowledge" and "intentionally."
The brief icing on this I-told-you-so cupcake comes from Judge Alsup's astute observation that the Mummagraphics opinion doesn't even expressly hold all that subsequent courts have attributed to it, a point I identically brought up in criticizing the scope of the Mummagraphics holding. Judge Alsup has this to say:
"Most or all of the district court decisions that have equated “falsity or deception” with fraud have relied on [Mummagraphics. Mummagraphics,] however, merely held that state laws were preempted insofar as they permitted claims for immaterial errors. It did not hold, at least not expressly, that all elements of common-law fraud were required or that any particular element other than materiality was required to survive preemption."
I'd say that's a more eloquent version of my earlier observations that district courts were extending Mummagraphics even further than its mismatched holding suggested:
"[T]he Mummagraphics holding, for all its strong dicta about fraud and broad preemption, only held that CAN-SPAM would preempt a strict liability statute... Mummagraphics' stated holding (strict liability is preempted) is inconsistent with the Mummagraphics result (a 'more-than-strict-liability' statute was preempted)."
Also worth a read is the observant coverage at spamnotes.com.
May 18, 2009
Takedown Notice Sent to Parent Doesn't Affect Subsidiary's 512(c) Defense--Perfect 10 v. Amazon
By Eric Goldman
Perfect 10, Inc. v. Amazon.com, Inc., 2009 WL 1334364 (C.D. Cal. May 12, 2009)
This long-running case is working its way through the district court after the Ninth Circuit's 2007 remand. See my previous blog posts about the May 2007, December 2007 and post-remand July 2008 rulings.
Last week's ruling involves A9, Amazon's search subsidiary, that Perfect 10 sued for republishing allegedly infringing Google syndicated search results. Starting in 2004, Perfect 10 sent at least 8 takedown demands to A9's parent, Amazon, with the apparent intent that the takedowns apply to both Amazon and A9. However, Perfect 10 never actually sent a proper takedown notice to A9 until November 2008--well after its complaint was filed.
Judge Matz gives Perfect 10 no benefit of the doubt. Instead, the judge grants summary judgment to A9 based on the 512(c) safe harbor because Perfect 10 could not show that A9 knew of the copyright infringement (thus, Perfect 10's contributory copyright infringement claim failed; the other copyright claims had already been dismissed). The judge takes a formalistic approach (appropriately so, IMO) to 512(c)(3) takedown notices, concluding that:
1) The 512(c)(3) notices sent to the parent Amazon did not confer knowledge to the subsidiary A9.
2) The November 2008 notice sent to A9 are too late to support the allegations in the already filed complaint. Presumably, the November 2008 notice could now support a new complaint, but only if A9 hasn't expeditiously responded to it.
3) Amazon was not A9's agent for notice. This is complicated because Amazon's site disclosures could have been clearer about the Amazon-A9 relationship. However, A9 had its own 512 designation of an agent for service of process on file with the Copyright Office, and a search of the Copyright Office website would quickly reveal this. This is a good practice pointer for copyright owners: you need to research the 512 filings of every website you are targeting with 512(c)(3) notices. The search is free and super-simple, and a failure to communicate with the website's designated agent can kill a copyright claim when the website invokes the 512(c) defense. This is also a good reminder to websites seeking a 512(c) defense: if you plan to rely on the formalities, make sure your 512 designations are up-to-date and error-free!
4) Even if Amazon hosted the A9 website, it had no responsibility to communicate Perfect 10's 512(c)(3) notices to A9.
5) A9's designation of a web form for complaints, rather than the statutorily required email address, was an immaterial deviation from the statute.
I'm always amazed when copyright owners flub the fairly simple requirements of 512(c)(3). The statutory requirements are so easy to comply with! These omissions are especially perplexing in Perfect 10's case given that they've gone on a litigation frenzy and spent hundreds of thousands of dollars (probably millions) relying on mishandled facts. A little more care and investment upfront could have prevented an avoidable loss like this.
UPDATE: Plagiarism Today explores the meaning of this ruling.
May 15, 2009
Google Liberalizes US Trademark Policy: "What, Me Worry?" Part 2
By Eric Goldman
In my Deregulating Relevancy article from a few years ago, I explained how trademark law was having pernicious consequences for online conversations. Among other unwanted effects, trademark law hinders online discussions about trademarks even when both conversationalists found the discussion relevant.
I don't think things have gotten better since I wrote the article in 2005. Perhaps we have a better understanding of trademark law's capacity for harm, but we continue to see misguided lawsuits from trademark owners and mixed results from judges.
While the courts do not automatically support online trademark-mediated discourse, the bigger practical threat to online trademark law comes from extrajudicial privately enforced trademark policies, such as the search engines' "voluntarily" adopted trademark policies. These policies minimize search engines' exposure to trademark liability for their ad sales, but they effectively resolve a huge percentage of trademark owners' "problems," almost always in the trademark owner's favor, without any judicial oversight at all.
Thus, I was delighted to see Google's announcement that it was liberalizing its trademark policy to allow a group of "special" advertisers to reference third party trademarks in the advertisers' ad copy, even if the trademark owner objects. See Google's official announcement. The "special advertisers" includes resellers, review sites, and sellers of compatible/complementary/replacement products.
In practice, this means that these advertisers and consumers can now use the same trademark to speak with each other. In contrast, today, the advertiser can purchase the trademark as the triggering keyword but can't use the trademark to explain why the consumer was seeing the ad. Personally, I had always thought the "blind" nature of the ad copy had the potential to confuse consumers, and Google has taken a big step forward in solving that apparent problem.
Having said that, I wish Google had gone further. There are two obvious groups of advertisers who should be able to reference the trademark in the ad copy but still will not be able to do so: (1) competitors making comparative claims, and (2) gripers who wish to complain about a trademark owner's practices. These two advertiser groups can still buy third party trademarks, but they will still be forced to speak in code in the ad copy to explain why they did so. Nevertheless, we shouldn't let these omissions detract from what is otherwise very good news from Google.
While I think the policy change is good news, I don't expect trademark owners will agree. Trademark owners already are wary of Google due to the widespread perception that Google's trademark policy is less trademark owner friendly than Microsoft or Yahoo. (Google will not disable a trademark as a keyword at the trademark owner's request; while Yahoo and Microsoft will do so in many circumstances). Google's move could antagonize trademark owners further.
Should the battle move into the courtroom, I think Google's move is legally defensible on two fronts: (1) The group of special advertisers generally should be protected by the nominative use doctrine, and (2) to the extent the ads are no longer "blind," there may be less consumer confusion about the ads than there has been in the past.
Even so, I expect trademark owners to be even more aggressive about suing Google. First, some trademark owners will bring trademark lawsuits to control their online channels (see, e.g., the Mary Kay case and the many cases I cite therein), so special advertisers like resellers are an irresistible target for trademark owners trying to reduce competition among their retailers. Second, the Rescuecom decision eliminated Google's ace-in-the-hole to eliminate trademark lawsuits early, so trademark owners may feel like their odds of success have gone up.
Indeed, in what I think is a completely unrelated move, this week a group of plaintiffs' lawyers initiated two class action trademark lawsuits against Google (1, 2). I would not be surprised to see other trademark owners decide they've had it with Google. I could also see trademark owners deciding to push legislative solutions, especially in Google-hating Utah. (Although, some of the special advertiser groups in Google's new policy would not have been able to take advantage of Utah HB 450, Utah's most recent foray in disrupting the online advertising business). It could take years for all of the legal shenanigans to shake out.
I think the biggest question is why Google is making this change now. After all, Google has not had any good news recently on the trademark front. If anything, the Rescuecom decision might have counseled Google to become more restrictive. not less. Further, it's clear from the Firepond lawsuits that trademark owners aren't afraid to sue Google over Google's multi-billion-dollar cash cow. And, although Google is now in line with Microsoft and Yahoo's policies with respect to their trademark policies as applied to the special advertiser groups, none of those voluntary trademark policies are successfully battle tested in court; Google has no precedent to confirm that it will win in court if challenged. Collectively, it's not like a cloud of doubt about the trademark law implications of Google's policy changes has magically lifted.
Indeed, the timing is interesting given last week's announcement that Google was liberalizing its trademark policies for 190 countries. On the surface, it looks like the two liberalized policy announcements may be connected because both could have the same effect of increasing Google's ad revenues. In other words, perhaps Google is feeling the effects of the market downturn and looking for easy sources of new revenues, and what is easier than taking cash from customers who are already asking to buy ads but Google is voluntarily refusing?
Personally, I don't think this is a cash grab by Google. If nothing else, if the policy change also leads to an increase in expensive lawsuits, the change may not be cash-flow positive for Google any time soon. (Though it should be immediately cash-flow positive for Google's outside trademark counsel!) Instead, I'm willing to accept Google's argument that the policy change is actually about allowing advertisers and consumers to speak the same language, which simultaneously improves the consumer experience and should lead to better ad performance for advertisers. And, in my opinion, that's exactly what trademark law should be about.
Firepond "Copycat" Lawsuit Filed Against Google--John Beck Amazing Profits v. Google
By Eric Goldman
Earlier this week, a group of lawyers filed a class action lawsuit against Google and its distribution partners (FPX v. Google) alleging that Google's AdWords infringed the rights of Texas trademark owners. The same group of lawyers has now filed a second putative class action lawsuit against Google in the Eastern District of Texas.
I didn't do a word-for-word comparison, but two main differences were obvious. First, a smaller number of Google's distribution partners are targeted. Second, and more importantly, this complaint alleges a class comprised of all US trademark owners, instead of restricting the class just to Texas.
I don't fully understand why the same group of class action lawyers would file two separate class action complaints covering the same basic defendants and issues, but it's not the first time we've seen this tactic (the advertisers suing Yahoo over "syndication fraud" pulled the same stunt). I suspect it has something to do with trying to ensure lead dog position if/when a judge consolidates multiple copycat lawsuits from other plaintiffs' lawyers.
In any case, this lawsuit covering all US trademark owners now squarely offers Google the option to resolve and clean up any past trademark liability for past AdWord sales should it choose to accept this battle. In light of Google's liberalized AdWords trademark policy announced last night (which I'll blog shortly), it doesn't seem like Google is looking for an easy way out.
May 13, 2009
Ninth Circuit Mucks Up 47 USC 230 Jurisprudence....AGAIN!?--Barnes v. Yahoo
By Eric Goldman
Reading Barnes v. Yahoo, I had an overpowering sense of deja vu. Almost precisely 2 years ago, a 3 judge panel wreaked havoc on 47 USC 230 jurisprudence in the initial Ninth Circuit Fair Housing Council v. Roommates.com ruling via a set of terribly drafted opinions that sent shock waves through the Internet industry. That mess was so bad that the Ninth Circuit needed to take the case en banc to clean up the mess. The Roommates.com en banc ruling didn't change the substantive result--Roommates.com still lost--but the en banc majority opinion was much cleaner and had less pernicious superfluous language. As a result, the lower courts have so far cabined its effects on 230’s strong immunization; out of a half-dozen cases citing the opinion, only the StubHub case has cited it in favor of the plaintiff.
In light of the Ninth Circuit’s troubled history with 230, it seemed reasonable to assume that Ninth Circuit judges would draft 47 USC 230 opinions with extra care and precision. No such luck. Instead, this opinion in Barnes v. Yahoo is filled with gratuitous and dangerous dicta, sloppy reasoning and sloppy language--just like Kozinski's first opinion in the Roommates.com case. Reading it, I thought, "oh no, not again." What is it about 47 USC 230 cases that causes otherwise talented Ninth Circuit judges to lose it?
To be clear (and I know some of you will give me grief for saying this), I think the court's two main substantive conclusions are correct. Stripping away all of the opinion's unfortunate excess, the court says:
1) 47 USC 230 preempts any claims under negligence law for failing to remove third party tortious content, even if the website promises to do so. The court calls this "negligent undertaking;" I might have called it "negligent takedown."
2) 47 USC 230 does not preempt a claim for promissory estoppel that a third party might have against a website that promises to take down third party tortious content and fails to do so. To me, this is just another way of saying that websites can be liable for the words they choose (1st party content) even if those words relate to user content (third party content).
Unfortunately, Judge O'Scannlain, seemingly intoxicated by a 47 USC 230 case, goes so much further in the opinion than these two conclusions, and without any reason to do so except apparently a desire to hork 47 USC 230 jurisprudence. Among the court's missteps along the way include:
3) establishing as Ninth Circuit law that 47 USC 230 cannot support a 12(b)(6) motion to dismiss--even though neither party asked the court to opine on that procedural issue and, I believe, did not adequately brief or argue that point for the court
4) saying, for absolutely no reason whatsoever, that 47 USC 230 only preempts state law claims, not federal claims. WTF? Everyone knows this is wrong wrong WRONG, but the language is right there in black-and-white, begging for plaintiffs to cut-and-paste it into their briefs.
Before I outline some implications of this ruling, let me drill down a little on each of these 4 points.
This case is one of many involving fake dating profiles (other cases in this category include Carafano, Landry-Bell, Friendfinder, Anthony v. Yahoo--I’m sure I’m forgetting some). The situation typically goes as follows: sexual partners break up, aggrieved partner A sets up a fake dating profile saying that target partner B is looking for sex, and B then is harangued by strangers seeking sex. I'm amazed at how often this story occurs (or a variation, like a fake Craigslist ad designed to target an individual for unwanted inquiries) but it's hardly new; the Zeran prank didn’t involve sex but did involve publication of false information online to deliberately make a target’s life miserable. I'm also amazed at how often people fall for these fake profiles and treat them as legitimate even though the content is not authenticated. I believe a number of laws potentially criminalize the posting of fake profiles, so in theory there should be ample recourse to punish the miscreants who cause such mischief. However, enforcement may be spotty, especially when the prank is effectively anonymous.
The Ninth Circuit’s opinion doesn't really revolve around the fake dating profile. Instead, the essential facts are that Barnes, the target of the prank, contacted Yahoo to get the fake dating profile removed but instead got the brushoff. The press learned of Barnes' plight and scheduled a broadcast on the incident. Yahoo's PR flack then told Barnes that she would fix Barnes' problem, presumably so that the broadcasted story would be more flattering to Yahoo. However, nothing happened to the fake profile for 2 more months, at which point Barnes sued Yahoo. Only then did Yahoo finally remove the profile, but the lawsuit failed in court with a quick 230 dismissal.
Barnes’ "negligent undertaking" claim is, in all material respects, identical to the legal issues in the 1997 Fourth Circuit Zeran case. In that case, the target of the fake content (offensive ads) contacted AOL, was told AOL would remove them, and ultimately sued AOL for negligence (not defamation) for failing to remove the content. A court less determined to muck up 47 USC 230 jurisprudence could have simply cited Zeran without lengthy exposition.
This court ultimately reaches the same conclusion as Zeran, and along the way the panel addresses and explicitly rejects some anti-230 arguments that still appear, including:
* 230 only applies to defamation claims. The court rejects the argument, saying "what matters is not the name of the cause of action—defamation versus negligence versus intentional infliction of emotional distress—what matters is whether the cause of action inherently requires the court to treat the defendant as the “publisher or speaker” of content provided by another."
* 230 no longer applies after the website has received notice of a problem. The court says that 230 applies to both affirmative decisions to publish as well as affirmative or inadvertent decisions not to take down content. As the court says, "removing content is something publishers do, and to impose liability on the basis of such conduct necessarily involves treating the liable party as a publisher of the content it failed to remove."
* 47 USC 230 protects only content publishers, not distributors. The court does a nice job destroying this argument, but I think the strongest argument it makes is that the statute covers lots of causes of action, and it wouldn't make sense to import a defamation-specific distinction between “publishers” and “distributors” into a statute of general applicability.
* the statute is inconsistent with its legislative history. The court also does a nice job with this argument, concluding that we can safely ignore any conflicting legislative history of the statute.
* 230 encourages websites not to undertake any site policing, and Congress could not have meant that. The court says that (c)(2) was designed to protect active policers, which means that it's rational for Congress to say that (c)(1) protects the do-nothing folks.
Having rejected that Yahoo had any duty under default tort law to remediate the third party tortious content, the court then considered if Yahoo nevertheless voluntarily created the duty. For this, the court charitably construes the plaintiff's garbled pleadings as an allegation of promissory estoppel. The court says that the complaint properly alleged promissory estoppel when Yahoo's PR flack promised to intervene as a way of suppressing a forthcoming story.
Although the court didn't address the existing precedent on this point, this case appears to conflict with the 2001 Schneider v. Amazon.com ruling, which said that 230 preempted a claim for breach of contract based on a promise to take down content. I assume that ruling is now shaky precedent. [last sentence edited to correct error]
This conclusion indirectly addresses the festering issue about how 230 deals with marketing representations made by a website that are rendered untrue by third party content or actions, an issue I first raised with the Mazur case a year ago. Since then, the issue has been coming up regularly. Most noteworthy is the 6th Circuit's December ruling in Doe v. SexSearch, which waived off the lower court’s ruling that a website could be protected by 230 for its own marketing representations. This case seems even more appropriate to waive off 230; here, Yahoo's PR flack's promise to Barnes related to third party content, but no third party could render Yahoo's promise untrue. In a regulatory regime where we try to distinguish between first party and third party content, it seems like Yahoo's promise should be appropriately characterized as first party content.
While superficially the promissory estoppel ruling looks like a potentially big hole in 230, I don't think it will materially change 230 jurisprudence for at least two reasons. First, promissory estoppel claims are notoriously hard to win. You may recall Prof. Grant Gilmore's 1970s assessment that promissory estoppel was the "Death of Contracts" [Amazon Affiliates link] because the exception (promissory estoppel) swallowed up the main rule (mutual assent/consideration required to form legally binding promises). Prof. Gilmore was absolutely right in theory, but he was wrong in practice. Successful promissory estoppel claims are rare, so judges generally do a good job treating them as an exception and not the rule. Indeed, I am skeptical that Barnes can win this promissory estoppel claim.
Second, websites can easily manage their potential exposure to this claim by picking their words carefully. As the court says, "a general monitoring policy, or even an attempt to help a particular person, on the part of an interactive computer service such as Yahoo does not suffice for contract liability. This makes it easy for Yahoo to avoid liability: it need only disclaim any intention to be bound."
As a result, I don’t expect this conclusion to rip open 230 jurisprudence. Nevertheless, this is not a good ruling for the 230 immunization. Going forward, I expect that plaintiffs will *always* raise promissory estoppel claims when they fear their main claim is preempted by 230, and the promissory estoppel allegations are not easily resolved at the motion to dismiss/judgment on the pleadings stage. As a result, plaintiffs will be able to get further into the litigation process (to the summary judgment stage or even to trial) and substantially raise the costs of a 230 defense.
47 USC 230 as an Affirmative Defense
(For more on this point, see Paul Levy)
Although the litigants and the lower court did not address the issue, the panel on its own initiative (with a single cite to the 2003 Doe v. GTE case from the 7th Circuit) characterized 47 USC 230 as an affirmative defense that cannot support a 12(b)(6) motion to dismiss. This issue has been discussed in several cases before, and many courts have had no problem supporting a 12(b)(6) motion to dismiss based on 47 USC 230. The court did not discuss any of this precedent or acknowledge that it was rejecting numerous cases from Ninth Circuit-governed courts. I'd also have to research the issue more closely, but I suspect this implicitly or explicitly contravenes the holding of other federal appellate courts. It would have been nice if this panel had acknowledged that this was a change from current practice and defended its conclusion accordingly, rather than simply treating this as a matter the appellate panel could resolve sua sponte. To be clear then, this panel now established Ninth Circuit law--changeable only by an en banc panel or the Supreme Court--without adequate briefing by the parties. That's not cool.
I am not a proceduralist, but my understanding is that defendants in the Ninth Circuit will now have to file an answer to the complaint, at which point they can simultaneously file a 12(c) motion for judgment on the pleadings. Despite the extra paperwork, if the judge acts promptly on the judgment on the pleadings, then the net result will not be materially different (in cost or time) from the current procedure of filing a 12(b)(6).
However, discovery can commence on the filing of the answer. As a result, while plaintiffs have been unable to launch discovery attacks against 230-immunized defendants under the current rule, I expect plaintiffs will use this new opportunity to significantly jack up the defense costs. Indeed, a slow or cautious judge might allow discovery to proceed pretty far before the judge rules on the 12(c) motion. As a result, this procedural change has potentially significant economic consequences by creating the opportunity for expensive and abusive discovery.
Immunization of Federal Claims
The court recaps the prima facie 230 defense as follows:
subsection (c)(1) only protects from liability (1) a provider or user of an interactive computer service (2) whom a plaintiff seeks to treat, under a state law cause of action,[FN4] as a publisher or speaker (3) of information provided by another information content provider. [emphasis added]
On the surface, this looks fine (as it should, because it largely tracks the statutory language), but where did the bolded language come from? Immediately before this, the court discusses 230(e)(3), which says that the statute preempts inconsistent state or local law. So is the court saying that 230 ONLY preempts state law and not any federal law? The blockquoted text is pretty darn clear.
FN4 only clouds matters further: "Section 230(e) also refers to the Amendment’s effect on several federal laws, but those laws are not relevant to this case." OK, so is the court saying that the limiting language in the blockquoted text was OK only because this case didn't involve federal claims, or is the court saying that it actually intends to preclude federal claims from 230 coverage unless Congress expressly instructed otherwise?
There is ZERO question in my mind that 230 preempts federal claims except for those expressly protected in 230(e). The statute's architecture is entirely clear, and the caselaw has been crystal clear about this as well. After all, if federal claims weren't preempted by 230, the Ninth Circuit could have easily and quickly disposed of the Roommates.com case on that ground without its other angst. So why, then, did the panel recap the prima facie defense with an express and easily quoted but clearly imprecise limitation in it? In my opinion, this is just sloppy, irresponsible, gratuitous dicta. If the Ninth Circuit doesn't correct this error, I'm confident plaintiffs will force them to do so soon enough.
(Making this error especially irresponsible is that the Ninth Circuit has already struggled with distinguishing 230's application to federal and state claims, adopting in the ccBill case that all state IP claims were preempted by 230--a ruling that two district courts have already rejected, and I expect none will follow).
I see two main alternative futures. The first is that there could be further proceedings in this case, either a rehearing by the same panel or a rehearing en banc. In theory, this case could be appealed to the Supreme Court, but I can't imagine the defendants would seek cert before trying another round at the Ninth Circuit. Frankly, if I were Yahoo, I would rather try my luck on the promissory estoppel claim in the district court (or settle up with the plaintiff) than try my luck with the Supreme Court. Personally, I think this is an outstanding candidate for rehearing, especially on the affirmative defense issue where the panel inappropriately freelanced, and in an ideal world the panel or the 9th Circuit would issue a new opinion that is better than this one. This is exactly what happened in the Roommates.com case, and part of why I'm having a deja vu feeling.
The other main alternative is that the opinion could stand as written. Irrespective of what happens on remand, in this alternative we will see plaintiffs routinely allege promissory estoppel as part of virtually every litigation where 47 USC 230 might be a defense. We'll also see plaintiffs bang on the other sloppy interstices of the opinion, looking for new loopholes in the immunization. Finally, I expect we'll see more plaintiffs seek out the 9th Circuit as the venue of choice for claims that involve 47 USC 230--not only can the plaintiffs try to exploit the holes in the Roommates.com and Barnes opinions, but it's also overwhelmingly clear that a number of Ninth Circuit judges are hankering for an opportunity to take their whack at 47 USC 230.
Ironically, to the extent websites change their behavior in response to the opinion, the primary effect will be counterintuitive and perhaps counterproductive. This opinion might actually *reduce* the flow of information to people who complain to a website about third party content because the website could be liable for what it says in any emails or other communications in response to the complaints. In many cases, the website's non-responses should be so content-free that they are useless. As a result, I think people complaining about third party tortious content are going to find it even more frustrating dealing with websites when trying to get those websites to take down the content.
Finally, I expect this opinion to force the issue that has been percolating since the Mazur case: can a website be liable for its marketing representations even if those marketing representation are rendered untrue by third party content or actions? I think this panel indirectly answers the question with a loud YES. Thus, I expect more plaintiffs will use website marketing copy or other site disclosures to allege a breach of contract or one of the many related claims (false advertising, promissory estoppel, unfair competition, etc.) and thereby bypass 47 USC 230 altogether. Website operators, this is your cue to clean up your site disclosures or other marketing copy PRONTO.
A Final Thought: What is Going on With 230 Jurisprudence in the Past 6 Months?
47 USC 230 has weathered plaintiff attacks very well in the past dozen years, but the last 6 months have opened up a number of angles for plaintiffs to explore. Consider the track record:
* Woodhull (October): soliciting and publishing a defamatory third party email wasn't covered by 230
* Doe v. SexSearch (December): as mentioned, the court stepped back from saying 230 preempted liability for marketing representations
* StubHub (January): interference with business claim wasn't preempted by 230
* Gourlay (March): web host who provided extra commercial services to its customer couldn't claim 230
* Project Playlist (March): 230 doesn't preempt state IP claims (this is a loss only because it contravenes the wrongly decided Ninth Circuit ccBill case, which was more defense-favorable).
* This case, saying that a promissory estoppel claim isn't preempted by 230.
I'm not sure what to make of this trend, but it's clear that we're finally finding some substantial limits in 230's reach, and that's creating new litigation opportunities for plaintiffs. For more on this, see Evan Brown.
May 11, 2009
Google Hit With Major Class Action Trademark Lawsuit Over Trademarked Keyword Ad Sales--FPX v. Google
By Eric Goldman
FPX, LLC v. Google, Inc., 2:2009cv00142 (E.D. Tex. complaint filed May 11, 2009)
In retrospect, it seems so obvious. Why were the lawyers for these chickenscratch plaintiffs (Rescuecom? Check 'n' Go?) suing Google over trademarked keyword ad sales on behalf of just one aggrieved trademark owner client when they could sue Google on behalf of thousands of trademark owners? GOBOGH! (Go big or go home). After all, even if Rescuecom wins an injunction on its own behalf, Google will just excise Rescuecom from the database without any real change, so Rescuecom's leverage over Google isn't huge. But if a plaintiff's lawyer could win an injunction on behalf of every trademark owner in the state of Texas, that could bring Google to its knees. Surely Google would be willing to write over a few billion dollars to prevent that from happening....
So a two-bit plaintiff, Firepond (who?), brought a trademark infringement lawsuit against Google and some of its distribution partners in Marshall, Texas (where?) alleging that Google's flagship (and only real) revenue generator, AdWords, infringes the trademark of all Texas trademark owners. (Note: I expect copycat lawsuits of this complaint will be filed by other plaintiffs' lawyers seeking some spoils for themselves, all of which should get consolidated into a single action). This is a well-structured lawsuit that squarely raises the long-contentious debate over the legitimacy of selling trademarked keywords. (I won't recap that debate here, but I still think this article of mine best explains why plaintiffs' whining about competitive diversion from search ads is fundamentally misguided). Should this lawsuit reach a final judgment on the merits, we will have a very important answer about what search engines and other keyword sellers can and can't do.
But, I don't think this lawsuit will give us that answer because the judge is very unlikely to certify the class. As we saw in the Vulcan Golf lawsuit, where the court denied class certification over Google's domain name parking program, trademark issues are just too complicated and individualized for class adjudication. Every trademark is different, the identity of each competitive (or other) advertiser is different, every AdWords ad copy is different, the informational needs of every trademark owner's customers are different (for more on this, see Hearts on Fire's complicated standard for evaluating consumer confusion), trademark defenses are idiosyncratic, etc. Perhaps the reason no one has sought a trademark class action over AdWords before is that it probably can't be done. (Although I realize a prediction like that just fans the flames of a plaintiff class action lawyer).
While on the surface this lawsuit sounds like bad news for Google, Google might look at it as an opportunity, not a threat. Similar to the way it got favorable solutions from the click fraud class action and the Google Book Search settlement, Google could decide it wants to form the class so that it can permanently end all trademark owners' beefs at once. If the class forms, then Google can either (a) make its stand in a single case, fight to the death and try to win the lawsuit outright, effectively eliminating further challenges, or (b) more likely, settle up by paying an amount that represents a pinprick to its financial well-being but makes a few lawyers in Marshall, Texas rich enough to buy more cow pasture than they can shake a rattlesnake at. The settlement would then bind all trademark owners governed by the class, eliminating their right to sue. This could be cheap one-stop shopping for Google.
The Marshall, Texas origins of this lawsuit are interesting for another reason. As most of you know, Marshall has become the patent litigation capital of the United States due to patent owners' perceptions that it has plaintiff-friendly judges and juries. However, I've been reading reports that the pace of new patent lawsuits in Marshall is slowing down. Could it be that the plaintiff's patent bar in Marshall now has a little extra time on their hands and is looking for a new revenue stream? Could Marshall, Texas become the new home of dubious class action trademark litigation by repurposed plaintiff patent lawyers?
UPDATE: Joe Mullin explores the "patent troll" ties to this lawsuit.
George Mason Talk and Paper on Economics of Reputational Information
By Eric Goldman
Last week I presented a version of my Economics of Reputational Information talk at the Third Annual Conference in the Law and Economics of Innovation series, an event co-sponsored by George Mason Law School and Microsoft. My talk slides. Apologies for the slide formatting, but I honored the organizers' request to use a standardized template. If you've seen my slides from previous presentations of this topic, these slides will look familiar, but I did change them around a bit for this audience.
In conjunction with the talk, I also posted a short draft essay giving an overview of the research project generally. This is my first time I've organized my thoughts about this project into an essay, so those of you interested in a high-level overview of the project might find this interesting. Then again, it's a rough draft, incomplete and not very decisive.
In response to the talk, I got some excellent questions from the audience, including:
Q: How do we know service providers will honor their promises in the future? A: life is uncertain, so there will always be future risk. However, my goal is to help design systems that gather the relevant information available at the decision-making time that allows the best decision about future performance.
Q: Why don't platforms have more incentives to police against fraud? A: 47 USC 230 provides some of that incentive by insulating websites for their fraud-policing efforts. With this regulatory freedom, we have seen many websites voluntarily adopt increased anti-fraud efforts. For example, consider how much more eBay does to mediate the buyer-seller transaction today than it did 10 years ago (see, e.g., this article). Indeed, we've repeatedly seen reputable websites increasingly undertake more voluntary efforts to protect their users over time.
Q: Reputational information is strewn all over the web. Why isn't there one-stop shopping for reputational information? A: One-stop shopping would be convenient. But competition among reputational systems is also useful.
Q: Why shouldn't reputational systems turn over information about anonymous posters? A: First, reputable websites already have incentives to manage content from anonymous posters to avoid garnering a reputation as a cesspool of content. Hence, JuicyCampus went out of business because it lacked credible content. Second, with respect to turning over information, websites already do in many cases, but only if they keep IP address information. However, we may not need a law requiring websites to retain IP address info. As proceedings in the AutoAdmit lawsuit showed, plaintiffs sometimes can overcome the information deficiency to unmask anonymous posters through other means.
May 05, 2009
Google's International Trademark Policy Change: "What, Me Worry?"
By Eric Goldman
I've had a number of discussions with folks about what Google would do in light of its adverse ruling in Rescuecom. Personally, I didn't expect them to do much of anything right now. I still think they have a good shot at winning the Rescuecom case in the end, and if they do, they probably won't feel any reason to change their practices. If they lose the Rescuecom case, then we'll have to see why the loss occurred before evaluating corrective changes.
Meanwhile, in a probably unrelated move that is nevertheless interesting especially due to its timing, Search Engine Land reports that Google has liberalized its trademark policy in 190 countries to conform to its current policy in the US, Canada, Ireland and the UK (the latter two may have been liberalized in response to the favorable UK Mr. Spicy case). Thus, in 190 additional countries, Google will no longer block the sales of trademarked keywords. Notorious litigation hot-spot France remains on the list of places where Google will block trademarked keyword sales.
I'm not sure what, if any, legal developments have changed in these 190 countries to give Google comfort on the trademark front. However, I am sure this move will be unpopular with trademark owners!
May 03, 2009
April 2009 Quick Links
By Eric Goldman
* Asis Internet Servs. v. Consumerbargaingiveaways. A district court diverges from Mummagraphics and says CAN-SPAM does not preempt CA's anti-spam law even if there is no common law fraud.
* Jackson v. American Plaza Corp., No. 08-8980 (S.D.N.Y. April 28, 2009), A Craiglist advertiser isn't a third party beneficiary of Craigslist's contract for purposes of stopping another advertiser from breaching the contract (in this case, spamming the forum).
* Gardner v. Martino (9th Cir. April 24, 2009). I'm not a fan of talk radio, and the 9th Circuit apparently isn't either. The court upheld an anti-SLAPP dismissal of a defamation claim against the radio talk show host because "The Tom Martino Show is a radio talk show program that contains many of the elements that would reduce the audience’s expectation of learning an objective fact: drama, hyperbolic language, an opinionated and arrogant host, and heated controversy." Accord DiMeo v. Max. As Marc Randazza notes, rulings like this pose a challenge for those who think contextually ridiculous statements should be treated as "cyberbullying" or "cyber-harassment." Cf. the Finkel v. Facebook case involving asinine but clearly meaningless chatter on a private Facebook page.
* Publicly republishing a private email leads to a default judgment of copyright infringement.
* Bryant v. Europadisk, Ltd., 2009 WL 1059777 (S.D.N.Y. April 15, 2009). In 2000, musicians authorized distributors to distribute their [hard copy] recordings, which the defendants ultimately ripped and allowed Amazon and Rhapsody to deliver via downloading. The resulting lawsuit turned on the interpretation of the license agreement term “internet sites.” The court says the term "is not ambiguous and does not extend to websites selling digital copies of songs. At the time the parties entered into the agreements, The Orchard sold physical copies only. As its Vice President explained by affidavit testimony, digital downloads of music did not become a “viable business” until iTunes was launched in approximately April 2004, long after Media Right and Gloryvision entered into contract."
* Octomom is seeking trademark registrations.
* GeoCities is shutting down.
Posted by Eric at 06:31 AM | Adware/Spyware , Content Regulation , Copyright , Derivative Liability , E-Commerce , Internet History , Licensing/Contracts , Marketing , Spam , Trademark , Virtual Worlds | TrackBack
May 02, 2009
Upcoming Talks in May and June
By Eric Goldman
May and June have become unexpectedly busy. I've got over a half-dozen public speaking engagements scheduled for the next two months. Where you can find me:
* May 7, Arlington, VA. Law and Economics of Innovation conference co-sponsored by George Mason University and Microsoft. I'll be speaking about my Economics of Reputational Information project.
* May 14, Stanford. Legal Frontiers in Digital Media co-sponsored by the Media Law Resource Center and Stanford. I'll be speaking about behavioral advertising.
* May 19, SCU, 11:45-1. Memory and the Web, a lunchtime talk by SCU Prof. Geof Bowker. I'll be commenting on his talk.
* June 2, Palo Alto, 8-10. Marked for Confusion: Has the Internet Changed Trademark Law? co-sponsored by HTLI and Bingham. Other panelists will be Mary Huser from eBay and Tom Kuhnle from Bingham. The RSVP page isn't up yet; contact me if you're interested in coming.
* June 4-5, Berkeley. Privacy Law Scholars Conference, I'll be speaking on my Economics of Reputational Information project.
* June 12, Stanford. 6th Annual E-Commerce Best Practices Conference. I'll be speaking about affiliate liability issues.
* June 18-19, Washington DC. Consumer Protection Conference sponsored by the ABA Antitrust Section. I'll be speaking about 47 USC 230.
As always, it would be a delight to see you there!