December 31, 2010
Nov.-Dec. 2010 Quick Links, Part 3 (Special Extra-Long Copyright Edition)
By Eric Goldman
* Oracle got a $1.3B jury verdict in its anti-scraping lawsuit against SAP. My prior blog coverage (1, 2, 3). This is one of the largest copyright damage awards ever (if not the largest), and it ranks highly on the list of largest verdicts of any kind. Oracle got another $16M+ in prejudgment interest, and Oracle and SAP settled Oracle’s other claims for an additional $120M. Oracle also got the non-monetary benefits of publicly tweaking its major rival (SAP), plus it was able to get a few digs into its frenemy Hewlett Packard over the testimony of AWOL former SAP exec Léo Apotheker. However you measure it, Oracle got a huge win here.
The jury’s verdict was partially a product of SAP’s litigation strategy, which included admitting responsibility for its subsidiary TomorrowNow’s behavior and admitting copyright liability—leaving only the question of damages for the jury. SAP’s basic argument to the jury was “Yes, we did it, just don’t make us pay a lot of money for it.” Those kinds of arguments rarely play well with juries.
Although the damages calculations raised some complex and novel doctrinal issues, because it’s a jury verdict, I don’t think this case is likely to have a significant precedential effect. However, the verdict does act as a cautionary M&A tale. SAP bought TomorrowNow for $10M; if the jury verdict stands, the true cost of TomorrowNow will be nearly $1.5B. What looked like a cheap deal for SAP turned out to be quite expensive.
Still unresolved is whether the US DOJ will bring any criminal charges against executives from TomorrowNow or SAP. It’s possible that the massive financial punishment already meted out civilly will partially alleviate the pressure to seek separate criminal punishment.
* In response to allegations that they facilitated copyright infringement, ICE seized—without warning—82 domain names in “Operation In Our Sites.” As we learn more about this seizure, it’s clear that ICE’s seizure was lawless. Techdirt sketches out some defects, and check out a seizure warrant application for yourself. Worse, some of the seized sites were busted for distributing music at the copyright owner’s request. Details at Techdirt (1, 2) and NYT. This provides yet more evidence that it’s become impossible to distinguish between “pirated” online files and files that copyright owners are deliberately “leaking” for the promotional value. YouTube can’t figure it out; ICE can’t figure it out; the copyright owners can’t figure it out. It’s time to abandon any pretense that online copyright infringement is “apparent” on its face. Meanwhile, this seizure reiterates why COICA, and any other efforts to cut off putatively illegitimate activity through domain name seizures, are irreparably ill-conceived.
* HarperCollins Publishers L.L.C. v. Gawker Media LLC, 2010 WL 4720396 (S.D.N.Y. Nov. 22, 2010). Prepublication excerpts of Sarah Palin's book on Gawker led to a TRO.
* I could have a whole post dedicated to Righthaven. A few tidbits:
- Failed Senate candidate Sharron Angle settled Righthaven's copyright infringement lawsuit.
- Sherman Frederick, the former publisher of the Las Vegas Review-Journal, got caught in a hypocritical situation.
- LA Times on Righthaven.
* The Supreme Court affirmed the Costco v. Omega appeal by an equally divided court in a one-line opinion. Also, Supreme Court certiorari denials include:
- Bryant v. Media Right Productions Inc. My prior blog post.
- Harper v. Maverick Recordings, with an interesting dissent from Justice Alito. Sheffner’s take.
* Heartland and Forest River are rival RV manufacturers locked in a litigation death match. My initial blog post. The latest ruling: RV floorplans aren't a protectable architectural work under the Architectural Works Copyright Protection Act, but republishing the competitor's floorplan in ad copy goes to trial.
* Faulkner Press v. Class Notes (N.D. Fla. Nov. 23, 2010). Some interesting discussion about the copyrightability of professor notes, the potential infringement by note taking services, and the liability for using the professor's name in marketing the notes.
* Capitol Records v. BlueBeat, 2:09-cv-08030-JST -JC (C.D. Cal. Dec. 8, 2010). A rogue online music website’s odd defenses get emphatically rejected.
* NYT on joke stealing via the Internet. “'The only way to battle a thief is to out-write and out-create them,’ said Patton Oswalt, a stand-up comedian and actor who has used the Internet as a bully pulpit to confront his imitators. ‘The good thing about the Internet is, it’s showing how much dumb thievery there is out there.’”
* I’m very delayed in mentioning BanxCorp v. Costco Wholesale Corp., 2010 WL 2802153 (S.D.N.Y. July 14, 2010), a case involving the IP protection for a numerical index. The court’s test for copyrightability: “to demonstrate that the final values produced from raw data are protectable by copyright, a plaintiff must demonstrate either that (1) the raw data used to create the final value were protectable; or (2) the method of converting the raw data into a final value was an original (but not necessarily novel) process that is neither widely accepted as objective, nor an industry standard; or (3) the final value did not attempt to measure an empirical reality.” Interesting FN7: “it is actually to be expected that the more acceptance a financial measure obtains (i.e. the more successful it is), the more ‘fact-like’ it becomes.” From my perspective, the court's approach, though thoughtful and nuanced, reflects how copyright doctrine has gone horribly wrong. The only doctrinally sustainable result is to say that final numerical values of a formula are categorically uncopyrightable—PERIOD. Otherwise, watch how this court contorts itself trying to deal with the copyright merger doctrine (the court doesn’t discuss fair use) and 1202 copyright management removal (how do you remove the CMI from a number???). The court also says the plaintiff’s hot news claim survives copyright preemption.
December 30, 2010
Hypocrisy Alert?! Expedia, a "FairSearch" Member, Marginalizes American Airlines in Its Search Results
By Eric Goldman
Just like manufacturers often have complicated relationships with their retailers, airlines and travel aggregators simultaneously compete and cooperate with each other. Airlines value the extra visibility that aggregators give them, but the airlines pay for that premium; aggregators siphon traffic away from the airlines' more lucrative direct-to-consumer sales. Airlines constantly must decide which sales approach (aggregated or direct sales) maximizes profits, which leaves aggregators with a constant risk of being disintermediated.
American Airlines' recent decision to pull out of Orbitz instantly created a disequilibrium in the entire online travel industry. American Airlines is one of the biggest US airlines, meaning Orbitz users will notice its absence, and Orbitz is one of the biggest online travel aggregators, meaning that a potentially significant number of fliers will take their business to other Orbitz listings. Either American will have to reengage with Orbitz and other aggregators, or other airlines could pull out as well and kill off the aggregator industry. Until we reach a new equilibrium, anarchy will ensue.
As part of the anarchy, Expedia reduced the visibility of American Airlines' offers in Expedia's search results in two ways. As Reuters explains:
American's ticket prices are no longer displayed in Expedia's initial search results. Consumers must click through to a separate Expedia page to get detailed information on flights and airfares. [American Airlines] is also no longer one of the first carriers to be displayed on Expedia when consumers make flight queries.
Expedia's choice is a little unexpected because American Airlines hasn't pulled the plug on Expedia (yet); it only pulled the plug on Expedia's competitor Orbitz. Explaining this puzzle, Expedia released a statement saying "This has been done in light of both American Airlines' recent decision to prevent Orbitz from selling its inventory and a possible disruption in Expedia's ability to sell American Airlines tickets when our contract with American Airlines expires." Retaliation, or a warning shot?
Expedia's move raises issues I explore in my Search Engine Bias article. As a consumer, I am annoyed when a search engine has a conspicuous omission; and online, I can easily switch between online travel aggregators and conduct my search at another site that offers me more useful results. So Expedia might be hurting itself with its users by offering less value to them. Or, due to its degraded sales, American Airlines might beg Expedia to restore its visibility. It will be interesting to see who blinks first.
For the reasons I describe in my Search Engine Bias article, I have no policy problems with Expedia's move against American Airlines. They don't "owe" it to American Airlines to show them in the results, and there is no such thing as "correct" search results. The market will drive a resolution to the Expedia/American Airlines tiff.
However, I have a huge problem with Expedia's apparent hypocrisy. Expedia participates in a mistitled alliance called "FairSearch.org." This alliance started as a self-interested way for the participating companies to harass Google's attempted acquisition of ITA, but their name and rhetoric stakes out the broader theme of search engine bias.
For example, FairSearch.org stakes out two main guiding principles it wants: "transparency" and "innovation." It defines transparency as:
TRANSPARENCY: Consumers – not search engines – should choose winners in the marketplace. Consumers benefit from more choices in the search marketplace competing to win users, innovating to improve products and displaying results transparently. When search providers engage in search discrimination – manipulating search results to promote a favored product and punish competitors – consumers pay the price.
Wait a minute...didn't Expedia do EXACTLY what FairSearch said it didn't want search engines to do? Expedia appears to be engaging in "search discrimination" (a nonsensical phrase for reasons I explain in my Search Engine Bias article) by manipulating its search results to punish American Airlines, which competes with Expedia through its direct sales to consumers. Worse, I couldn't find any on-site explanation of why Expedia was treating American Airlines' search results differently, thus seemingly displaying its results opaquely, not transparently.
Given the rhetoric on FairSearch's website, it looks like FairSearch should be leading a charge against Expedia for violating the alliance's principles. Perhaps Expedia ought to drop out of FairSearch.org if it can't abide by the group's rules. Or perhaps FairSearch.org should drop the "fair" in its titling to make clearer that its real organizational raison d'etre is to advance the parochial interests of online travel intermediaries who are paranoid that Google will disintermediate them. Until then, Expedia's position looks uncomfortably duplicitous.
To be clear, I understand that, unlike Google's organic results, Expedia's airline search is a pay-for-play search engine (although I don't believe Expedia transparently discloses how much it gets paid, by whom and for what). For purposes of the ridiculous rhetoric from FairSearch and Expedia's fidelity to the organization's articulated principles, I think it's equally (or even more) important for pay-for-play search engines not to punish their competition by downgrading search results or make sorting decisions opaquely.
Google Files Unredacted Brief in Rosetta Stone v. Google Appeal
By Eric Goldman
After some prodding by Paul Levy of Public Citizen, Google has filed an unredacted version of its response brief in the Rosetta Stone v. Google appeal. As Paul explains in his blog post, the newly disclosed information is nowhere close to confidential. Some of the new information:
* page 9: Google advertising performs well for Rosetta Stone. Between 2007-10, it made $27M from Google referrals (organic and paid) and got 330k+ orders from Google ads.
* page 10: Google helped Rosetta Stone catch fraudsters
* page 33: Rosetta Stone customers take 2-4 weeks to make a purchasing decision
* page 56: in 2005, Rosetta Stone's unaided consumer recognition was 2% and aided recognition was 13%
Some of these facts may be mildly embarrassing to Rosetta Stone, but way more embarrassing is that anyone thought this information was actually confidential.
In a partially related development, Marty Schwimmer and I are working with Public Citizen to request unsealing of the entire joint appendix in this appeal. Paul Levy blogged an explanation.
UPDATE: Oral arguments in the case are scheduled for the week of March 22.
The case library:
* Public Citizen's motion (with Marty Schwimmer and me) to intervene and request to unseal the joint appendix.
* Rosetta Stone reply brief.
* Public Citizen amicus brief in support of Google.
* Public Knowledge/EFF amicus brief in support of Google.
* eBay/Yahoo amicus brief in support of Google.
* Google's opening response brief: redacted and unredacted (warning: 60MB file).
* UK Intellectual Property Law Society amicus brief in support of neither party.
* Rosetta Stone's opening appellate brief: redacted and unredacted.
* INTA's amicus brief in support of Rosetta Stone.
* Carfax et al amicus brief in support of Rosetta Stone.
* Association for Competitive Technology et al amicus brief in support of Rosetta Stone.
* ConvaTec et al amicus brief in support of Rosetta Stone.
* Volunteers of America amicus brief in support of Rosetta Stone.
* District court's main opinion granting SJ. My blog post.
* District court's opinion granting a motion to dismiss on the unjust enrichment claim.
* Rosetta Stone's initial complaint. My blog post.
December 29, 2010
Nov.-Dec. 2010 Quick Links, Part 2
By Eric Goldman
Wikileaks has been on my mind for the past 2 months, but the stories have moved faster than I can. From my perspective, Wikileaks is principally a story about The Empire Strikes Back (It is a dark time for the Rebellion....). You may recall John Perry Barlow's classic cyberspace exceptionalist screed, "A Declaration of the Independence of Cyberspace" and its government baiting: "Governments of the Industrial World, you weary giants of flesh and steel...[y]ou have no sovereignty where we gather....[y]ou have no moral right to rule us nor do you possess any methods of enforcement we have true reason to fear."
For a dying dinosaur, the US government has shown remarkable agility marshaling forces to combat Wikileaks. Think of all of the private companies that shunned Wikileaks because it was ticking off the US government: PayPal, Visa, Mastercard, Amazon, EveryDNS, Swiss banks, etc.; and many US government agencies tried to block their employees from accessing Wikileaks. Recall in The Empire Strikes Back how Darth Vader relentlessly and single-mindedly pursues Luke and his band across the galaxy (The evil lord Darth Vader, obsessed with finding young Skywalker, has dispatched thousands of remote probes into the far reaches of space). That’s kind of like how the US government is chasing Wikileaks throughout the Internet galaxy.
As several people have pointed out, the US government would be lauding Wikileaks as heroes if they were releasing secret Chinese government documents. But, because they are releasing US government secrets, some have hyperbolically called them terrorists who should be assassinated. Hypocrisy alert! (More on this from Techdirt).
Despite the US government’s relentless efforts to pursue and destroy Wikileaks, its failure to excise Wikileaks-published secrets from the Internet is telling. It reminds us that efforts like COICA and domain name seizures are tools of censorship, but those efforts will not effectively suppress unwanted activity. (More on this from Derek Bambauer and WaPo).
There has only been a little discussion about Wikileaks’ US legal liability. As a republisher of third party material, Wikileaks--and all of its upstream service providers--presumptively qualify for 47 USC 230. However, there are a variety of criminal doctrines restricting the dissemination of US government secrets (although, as this CRS points out, none are a slam dunk; but see Declan’s perspectives), and federal criminal prosecutions are outside the scope of 230. As a result, the possible criminality here helps explain why Wikileaks could face significant legal risk and why all of Wikileaks’ service providers fold like a house of cards when confronted with requests/pressure from the US government.
In so many ways, both important and not, the Obama administration hasn't deviated from the paths set by the Bush administration. However, in the past couple months, some new winds have been blowing from the Obama administration.
* The FCC's net neutrality proposal (NYT, WaPo, Reuters). Given the steadfast opposition from Congress to the FCC’s power grab and the likelihood that the courts will say the FCC overstepped its authority, are these DOA?
* The FTC released a report, Protecting Consumer Privacy in an Era of Rapid Change: A Proposed Framework for Businesses and Policymakers, digesting over a year’s worth of FTC hearings (see my recap of the Berkeley hearing) and warnings. Among other things, the report advocates for browser vendors to incorporate a “do not track” feature analogous to the Do Not Call registry (an unhelpful analogy for reasons I explore in this article). Vladeck’s testimony on Do-Not-Track. In response, Microsoft will integrate a “do not track” feature into the Internet Explorer 9 browser, and Mozilla will add something similar in Firefox.
* US v. Warshak (6th Circuit Dec. 14, 2010). Email is protected by the Fourth Amendment.
* Doe v. Shurtleff, No. 09-4162 (10th Cir. Dec. 1, 2010). Amended 10th circuit opinion that sex offenders can be required to register their Internet aliases.
* Dunbar v Google (E.D. Tex. complaint filed Nov. 17, 2010): class action that Google's scanning of emails in Gmail to trigger ads violates the ECPA. This is such a déjà vu back to 2004!
* WSJ: Deep packet inspection coming back on an opt-in basis?
* In re Quantcast Advertising Cookie Litigation, No. 2:10-cv-05484-GW-JCG (C.D. Cal. proposed settlement filed 12/3/10) and In re Clearspring Flash Cookie Litigation, No. 2:10-cv-05948-GW-JCG (C.D. Cal. proposed settlement filed 12/3/10). Persistent flash cookie lawsuit proposes to settle for $2.4M.
* Shefts v. Petrakis, 2010 WL 5125739 (C.D.Ill. Dec. 8, 2010). President of telecommunications company sues when the company monitors his email (using SpectorPro software) as part of a sexual harassment investigation.
Court Rejects Agence France-Presse's Attempt to Claim License to Haiti Earthquake Photos Through Twitter/Twitpic Terms of Service -- AFP v. Morel
[Post by Venkat with a few comments from Eric]
Agence France Presse v. Morel, 10 Civ. 2730 (WHP) (S.D.N.Y.; Dec. 23, 2010)
The Southern District of New York issued an order denying AFP's request to dismiss photographer Daniel Morel's copyright claims, rejecting AFP's argument that uploading pictures to Twitter/Twitpic granted third parties (including AFP) a broad license to exploit this content. The result is not surprising from a legal standpoint, but should allow photographers (and others who upload content into Twitter's ecosystem) to breathe a sigh of relief.
The court recaps in detail the factual background underlying the dispute in its order. In a nutshell, Morel took what turned out to be iconic photographs in the aftermath of the Haiti earthquake. He uploaded the photos to his Twitpic account and linked to them via his Twitter account. Shortly after Morel uploaded his photographs, Lisandro Suero copied the photographs and posted them to Suero's own Twitpic page. Suero did not attribute the photographs to Morel. The facts are somewhat murky, but it does not seem disputed that AFP downloaded the photographs from Suero's account, marketed and distributed the photographs, and initially credited Suero with taking the photographs. Ultimately, Morel cried foul, and AFP filed a declaratory judgment lawsuit saying it did not infringe. [Some of the discussions between AFP and Suero took place on Twitter, and make for interesting reading. I wonder if the casual nature of Twitter and email discussions contributed to AFP's foibles here.] [Also, the photos were broadly distributed and licensed downstream, so there are a slew of defendants. I've mostly omitted discussion of the various defendants, focusing on AFP.]
Copyright Claim: AFP's primary argument was that (1) "[it] had an express license to use Morel's images [by virtue of the Twitter or Twitpic terms]" or (2) that it was a third party beneficiary of the agreement between Morel and Twitter. The court rejects this argument:
[b]y their express language, Twitter's terms grant a license to use content only to Twitter and its partners. Similarly, Twitpic's terms grant a license to use photographs only to Twitpic.com or affiliated sites. . . . the provision that Twitter 'encourage[s] and permit[s] broad re-use of Content' does not clearly confer a right on others to re-use copyrighted postings
The court also rejects the argument that AFP was a third party beneficiary to the Twitter license agreement, since AFP was not a "partner or sublicensee" of Twitter - AFP acknowledged that it was only a "user."
Contributory/Vicarious Infringement: With respect to the contributory infringement claim, the court held that Morel's allegations were sufficient:
Morel's allegations that AFP and Getty knew that the images where his, disregarded his rights, and licensed his images to third parties are sufficient to plead knowledge and inducement of infringement.
The court similarly rejects AFP's and Getty's request to to dismiss the vicarious infringement claim. (The court does grant the request by CBS and CNN to dismiss the vicarious infringement claim because Morel failed to plead any "direct financial interest" in the exploitation of images by the affiliates of CBS and CNN.)
DMCA Copyright Management Information Claims: Morel's DMCA claims against AFP were premised on AFP's miscrediting of the images. AFP did not contest that the credit lines constituted "copyright management information" (as defined in section 1202), and the court finds that AFP acted with the requisite knowledge and intent. Interestingly, with respect to AFP, the court notes that Morel alleged that:
an AFP photo editor viewed [Morel's] photos before asking about identical photos on Suero's Twitpic page, and that when Morel failed to respond to the editor's email, AFP downloaded the pictures from Suero.
Morel brought a second 1202 claim based on AFP's "removal or alteration" of CMI, or distributing copyrighted material "knowing that CMI has been removed or altered." The crux of Morel's argument seems to be that he had posted CMI on his Twitpic page (e.g., by including "by photomorel," "daniel morel," and "morel") next to the photos when he uploaded them, and AFP violated section 1202 when it distributed photos downloaded from Suero's Twitpic account (which did not contain this information). The court construes the term CMI broadly, rejecting AFP's argument that CMI must be contained on the photograph itself. In the court's view, the information attached to Morel's Twitpic account constitutes CMI, and Morel's allegations regarding AFP's distribution of the photo which did not contain this CMI was sufficient to state a claim.
AFP argued that CMI is limited to a "component of an automated copyright protection or management system" (i.e., a technological measure that controls access and reproduction), but the court rejects this argument, and the line of cases which take this approach.
Lanham Act: The court rejects Morel's Lanham act claim as being foreclosed by Dastar, a case in which the Supreme Court rejected Lanham Act claims with respect to communicative products (finding that these claims should be brought under copyright law and allowing Lanham act claims would impermissibly broaden the scope of copyright protection).
As I mentioned in a previous post, AFP's position was a stretch, and it's nice to have some clarity that uploading content into the Twitter ecosystem does not grant third parties a license to use that content outside the ecosystem. (Nor does sharing and encouraging others to share result in a license to third parties.) Twitter and its partners have a broad license, but that's different from a random third party coming along, and claiming rights to the content. Photographers can rest easy!
The court construes Morel's 1202 arguments broadly, and as Professor Goldman notes below, this is equally interesting (if not more so) than the Twitter/Twitpic license issue. This looks like a boon to content providers - almost any sort of notation which indicates that the content is yours can be copyright management information (under the court's definition), and disseminating the content without this information (or after having removed it) can cause someone to incur 1202 liability. It seems like the court's reading of section 1202 (although it is supported by the language of the statute) allows a plaintiff to assert exactly the type of claim the Supreme Court negated in Dastar.
"Twitter Clarifies Usage Rules, but AFP Still Claims Unbridled Right to Use Content Posted to 'Twitter/TwitPic'" (I blogged that AFP's position was a stretch, but this post at duckrabbit contains a link to the oral argument, which will give you a flavor of how incredulous the court was at AFP's argument that it had a license through the Twitter or Twitpic terms: "AFP, CNN, Getty, ABC, V Morel, why this case matters to all professional photographers or why Getty could be selling your photos without you even knowing …")
Earlier coverage of the dispute:
* paidContent: "Lawsuit Tests Whether Twitter Pictures Are Free For The Taking"
* ReadWriteWeb: "Agence France-Presse: "All Your Twitpics Are Belong to Us"
* Techdirt: "AFP Still Not Giving Up On Its Bizarre Claim That Twitpic Images Are Freely Licensed To Anyone"
This case is a clusterf**k. AFP made numerous mistakes that resulted in infringing photos being injected into the news coverage of a major world crisis, which inadvertently tainted a variety of downstream media properties--all of whom, due to copyright's strict liability standard, are likely to write checks to Morel. AFP and its unfortunate partners should end their likely-futile and sometimes-silly defense and settle up with Morel so that everyone can move on to more productive endeavors.
Even though the Twitter/Twitpic discussion will get the most attention, I think the court's discussion about the 1202 liability is the opinion's most noteworthy aspect. There has been an ongoing schism in the 1202 jurisprudence about whether or not it's a 1202 violation to copy a copyrighted work without retaining the CMI located somewhere other than in the work itself. This case is a fine example of the problem: when people copied Morel's photos, they didn't go back to Twitpic to see what additional CMI might have been presented on the pages alongside the images. Some courts, recognizing the potential trap this creates, have read the 1202 statute narrowly, basically saying that metadata not in the file itself can't trigger a 1202 violation. I've been skeptical about the statutory fidelity of those rulings, but I've applauded their efforts to keep 1202 from becoming a backdoor Dastar as Venkat calls it. Other cases, including this one, have rejected these narrow readings of 1202 and indicated that failing to capture and republish metadata outside the file itself could violate 1202. Should more courts jump on this bandwagon, expect 1202 to become the copyright plaintiff's favorite new toy in 2011.
December 28, 2010
MySpace Profile and Photo Evidence Used to Support Conviction for "Participation in Criminal Gang Activity" -- State v. McCraney
[Post by Venkat]
State v. McCraney, 2010-Ohio-6128 (Ohio Ct. App.; Dec. 15, 2010)
There has been a proliferation of MySpace (and more recently, Facebook) cases in the criminal context. Most of these cases involve evidentiary issues where the prosecution seeks to use profile evidence to show motive, absence of alibi (etc.), but a recent Ohio case is remarkable in that the MySpace evidence was used to support a conviction for "participation in criminal gang activity."
The defendants' convictions for robbery and participation in "criminal gang activity" stemmed from their alleged participation in two incidents at a gas station. At one incident, they harassed a patron and "asked him for money" (but didn't receive any) and in another incident, they attacked another patron and stole beer that the patron was buying for a party. One defendant was found guilty of all charges, but the other was found not guilty of one of the robbery charges.
Two officers testified as experts regarding the nature of the local gangs, the fact that the "the focus of criminal gangs is to make money." One officer also testified that gangs have increasingly been using social networking websites:
The trend that we've been noticing and beginning to use is the fact that a lot of our suspected gang members in their photos and in some of the conversations they have will talk about criminal gang activity. There will be photos of individuals throwing up gang hand signs, photos of individuals doing other kinds of illegal activities, such as drugs, guns. And then there's also the kind of representing type of photos where they'll have large sums of cash, wear a lot of jewelry, kind of status-type things.
The officer also testified that gang colors, clothing, and affiliation with other gang members were all hallmarks of gang activity. The Officers also testified regarding photographs of the defendants - some of which were allegedly taken from defendants' accounts:
Officer Criss . . . noted [defendants] were friends on MySpace. Mr. Owens was pictured in two photographs on Mr. McCraney's MySpace page. In one of the photographs, Mr. Owens was wearing all black and he was standing with several other people who were wearing all black, or black and red. Further, several of the people in the photograph were displaying gang hand signs. The other photograph from Mr. McCraney's page depicted [defendants, along with] a known gang member.
Officer Criss also discussed photographs taken from Mr. Owens' own MySpace page. One of the photographs depicted Mr. Owens in a red hat and a fur coat. Officer Criss said this was significant because red is a gang color and the fur coat is a status symbol in the gang community. In addition, Mr. Owens' gold teeth were also alluded to as being a status symbol. Another photograph from Mr. Owens' MySpace page depicted Mr. Owens holding a large sum of cash and wearing red and black clothing. Further, dollar signs are superimposed all over the photograph. Again Officer Criss stated that red and black are associated with the Bloodline gangs and the money symbols and the display of a large amount of cash represented that Mr. Owens was able to get large sums of money.
One of the officers also testified regarding a tribute one of the defendants had on his MySpace page to a "fallen gang member," and that offering this type of a tribute was "common practice among fellow gang members." Finally, one of the officers testified that he had personal knowledge of individuals depicted in the photographs and they were "known gang members."
The majority finds this evidence (when viewed in the light most favorable to the prosecution) sufficient to sustain the conviction. One of the judges dissented because he viewed the evidence as insufficient to sustain the conviction for participation in criminal gang activity for one of the defendants:
Essentially, the majority's decision allows one to conclude that someone actively participates in a criminal gang if that person has committed theft or drug crimes in the past, wears one color associated with a gang, and associates with people who are in a gang or who make gang hand signs. I also find it troubling that the majority suggests that despite the lack of evidence concerning the significant indicators of participation in gang activity, the gap in the evidence is satisfied simply because an officer stated that he believed Mr. Owens actively participated in a criminal gang.
Unlike many of the other cases which involve evidentiary issues where MySpace evidence was used to buttress the conviction, in this case, at least with respect to one of the charges, the bulk of the evidence of the alleged criminal activity itself came from MySpace.
Ripoff Report Isn't Bound By Injunction Against User Post--Blockowicz v. Williams
By Eric Goldman
Blockowicz v. Williams, No. 10-1167 (7th Cir. Dec. 27, 2010)
I blogged about this case a year ago. The Blockowiczs objected to allegedly defamatory posts on the Ripoff Report. They obtained a default injunction against the posters requiring removal of the posts. With this default order and the defendants AWOL, the Blockowiczs approached Ripoff Report and other websites and asked them to remove the posts. The Ripoff Report has a well-publicized no-takedown policy, even if the author wants to remove his/her post, so the Ripoff Report refused. The Blockowiczs then claimed that the Ripoff Report violated FRCP 65(d) because the Ripoff Report was "in active concert or participation" with the initial posters by refusing the injunction's removal order. The district court disagreed with the Blockowiczs.
In this ruling, the Seventh Circuit affirms the district court and says that FRCP 65(d) does not require the Ripoff Report to remove the posts based on the default injunction. Ripoff Report can't be compelled to remove the posts through a direct legal action because of 47 USC 230, which the opinion didn't mention. As a result of the FRCP 65 interpretation plus 230's immunity, the Blockowiczs now have no way to force the posts' removal other than a contempt proceeding against the AWOL initial posters.
The legal question is whether the Ripoff Report was "in active concert or participation" with its users regarding their posting. The court rephrases this as whether Ripoff Report "aided and abetted" the posters' violation of the injunction. The court treats this as an easy statutory interpretation question and says:
the record indicates that Xcentric and Magedson have simply done nothing relevant to this dispute since the defendants agreed to the Terms of Service, which occurred before the injunction was issued. Further, the fact that Xcentric is technologically capable of removing the postings does not render its failure to do so aiding and abetting. Xcentric’s and Magedson’s mere inactivity is simply inadequate to render them aiders and abettors in violating the injunction.
The Blockowiczs point out various aspects of the Ripoff Report's user agreement, including clauses prohibiting defamatory posts and getting an indemnity from users. The court dismisses these facts as irrelevant. The court concludes:
With sympathy for the Blockowiczs, we conclude that Rule 65(d)(2)(C) is not the appropriate mechanism for achieving the removal of the defendants’ posts....The Blockowiczs likely could have pursued a contempt charge against the defendants for their failure to comply with the injunction. This avenue for relief may still be available.
One thing the court doesn't directly address: what happens if the Blockowiczs find the initial posters and force them to remove the post or be in contempt, but the Ripoff Report declines due its no-takedown policy? The court skirts the fact that the initial posters no longer have the technical capacity to remove the posts, so it's not clear what would happen if the Ripoff Report refuses the initial posters' removal requests.
The policy implications of this ruling are clear. If UGC websites refuse to voluntarily honor injunctions against user postings and the initial posters can't be found, there could be circumstances where pernicious content simply can't be forced off the web. I would be more troubled by this if I expected this outcome to arise frequently, but it won't. In addition to the Blockowicz case, I can think of one other situation where this issue has come up (the Bobolas v. Doe case), and it was still an open question there if the service provider would do a voluntary takedown. So for now the potentially troubling outcome of this case remains an interesting intellectual issue with minimal practical import.
UPDATE: The Ripoff Report has appended a statement to the three posts in question. See, e.g., this post. A highlight from the statement:
"Other sites claim they support free speech, but when the going gets rough, they will usually protect their bottom line rather than the Constitutional rights and freedoms this country was founded upon. Unlike other sites, even when the speech involved is harsh or negative and even if our position sometimes generates negative press for us, we think that the First Amendment requires us to put our principles before our pocketbook and fight against censorship."
The statement also notes:
"although the existing reports remain visible in their original form, we have made minor redactions to the titles of the affected reports to remove language that was needlessly offensive and profane. Furthermore, despite our decision not to remove this text, anyone reading these reports should keep in mind that a court order has been entered which finds the statements below are not true."
December 27, 2010
Nov.-Dec. 2010 Quick Links, Part 1 (Trademarks and Advertising Edition)
By Eric Goldman
I have a big backlog of Quick Links from the last 2 months. I'll post them over the next few days. I also have a backlog of other blog posts I need to write, especially my reassessment of my prediction of Wikipedia's demise. I'll get to those posts after I finish grading final exams.
An administrative note: This blog was named to the ABA Blawg 100 for the second year in a row, although oddly in the Legal Tech category. Many thanks for your continued readership. Feel free to vote in the popularity contest if you’d like. I voted for Techdirt and Not-So-Private Parts in their respective categories.
* Tiffany (NJ) Inc. v. eBay Inc, 2010 WL 3416635 (U.S. Nov 29, 2010). The Supreme Court denied cert in this long-running case. My prior blog post.
* FreecycleSunnyvale v. The Freecycle Network (9th Cir. Nov. 24, 2010). A rare ruling saying that a trademark owner (The Freecycle Network) abandoned its TMs due to naked licensing. If you have a logo license program, this is a good reminder to make sure you have both quality control provisions in the license agreement and actually exercise quality control. For more on naked licensing, see this article by my former colleague Irene Calboli.
* A fight over the name "Ernie's Liquor" in Palo Alto.
* K.S.R. X-Ray Supplies, Inc. v. Southeastern X-Ray, Inc., 2010 WL 4317026 (S.D. Fla. Oct. 25, 2010). ACPA violation and $10k award when a competitor registers a slight variation of its competitor's trademark as a domain name.
* Rebecca on a bizarre trademark battle over vehicle license plate designs.
* NYT: Star athletes are trying to trademark their catchphrases.
* B&B Hardware, Inc. v. Hargis Industries, Inc., 2010 WL 4683725 (E.D. Ark. Nov. 10, 2010): "Here, the jury expressly found that B & B copied Hargis' fastener photos and size/weight charts and posted them on its website as its own, thus causing Hargis to prevail on its cross-complaint for false advertising and false designation of origin. The Court finds B & B's conduct focusing on the creation of a new website as well as its contacting Hargis customers, using metatags and purchasing domain sites using the term “sealtite” or phrases containing that term, introducing bogus design drawings into evidence of purported construction fasteners, and other conduct previously discussed, was a willful and deliberate attempt to manufacture evidence to support its trademark infringement claim. The Court finds this is an exceptional case in which the award of fees is justified."
* NYT: A New York state law requires “the education commissioner’s consent for the words library, school, academy, institute and kindergarten, among others to be used in a certificate of incorporation or company name.” Thus, the incorporation papers for a library-themed chocolatier named “Chocolate Library” got bounced.
* The EU has opened an antitrust investigation into Google. I know that Google's making too much money to just walk away from Europe, but I think both the EU and Google would live happier lives if they were to go their separate ways.
* Google is changing its ad label from "Sponsored Link" to "Ad." Google has rolled this change out in Gmail, and I've also noticed a new ad unit right by the place where I archive or delete messages--sloppy clicking will earn Google a few extra pennies.
* Congress enacted the “CALM Act” to regulate the volume of TV commercials.
* California's rules on Political Online Advertising. (see items 19 and 20)
* Seattle mandates an opt-out system for Yellow Pages book deliveries, which prompts a lawsuit. Meanwhile, Verizon wants to stop distributing white pages directories.
* In re Facebook PPC Advertising Litigation, 2010 WL 5174021 (N.D. Cal. Dec. 15, 2010). Facebook gets another dismissal without prejudice. The judge says:
To the extent that Plaintiffs allege that Facebook is subject to UCL liability merely because its filtering system is insufficient or ineffective, such allegations fail to state a claim….To the extent that Plaintiffs could allege that Facebook failed to employ any "filtering" system to protect against click fraud or knew but did not disclose that its system was subject to regular and frequent failure in excess of flaws inherent in such systems, they might state a claim.
* More detail on the Largo Cargo v. Google settlement.
* ClickZ: Still No Answers for Digital Pharma Marketers.
* Google is telemarketing local advertisers.
December 24, 2010
Deep Packet Inspection (NebuAd) Litigation: Court Dismisses ECPA Claim but CFAA Claim Continues
[Post by Venkat with comments by Eric]
Mortensen v. Bresnan Comm., CV 10-13-BLG-RFC (D. Mont. Dec. 13, 2010)
A district court in Montana hearing one of the many NebuAd "deep packet inspection" lawsuits partially granted a defendant's motion to dismiss. This lawsuit arises out of NebuAd's alleged attempt to monitor and use an end user's internet activity for advertisement targeting purposes - i.e., not using cookies or other tracking, but actually routing the communications themselves through NebuAd's "appliance." There have been a slew of lawsuits out of this practice; this lawsuit involved claims against Bresnan Communications, an Internet access provider, who is accused of letting NebuAd install the appliance for its profit.
Electronic Communication Privacy Act Claims: Bresnan first argued that it did not engage in any interception itself, so it could not be held liable under the ECPA. The court rejects this argument on the basis of plaintiff's allegation that Bresnan "allowed" NebuAd to install its device on Bresnan's network, and but for the appliance, the monitoring would not have occurred.
However, the court accepts Bresnan's argument that the plaintiffs agreed to the interception based on disclosures in the terms of service and elsewhere. The court quotes from Bresnan's "Online Privacy Notice," which says:
the equipment used to provide the service collects information . . . [including] information about . . . 'electronic browsing,' and the text of email or other electronic communications the [users] send or receive using [the] services.
The notice also references that the information that is collected will be disclosed to third parties. Bresnan's "Online Subscriber Agreement" contained similar disclosures. Finally, the court notes that Bresnan alleges that it provided customers "specific notice" and a link to opt-out from information collections.
Shockingly, plaintiffs did not contest that "they agreed, by way of Bresnan's Privacy Notice and Subscriber Agreement to the interception." (??) Instead, plaintiffs quibble with the scope of the documents in question and argued that Bresnan construes plaintiffs' consent "cavalierly." The court rejects plaintiffs' argument, and grants Bresnan's motion to dismiss the ECPA claim on the basis of consent.
Invasion of Privacy Claims: Plaintiffs brought a common law invasion of privacy claim. The court finds that the notice and disclosure (discussed above) undermines any expectation of privacy plaintiffs had in their use of the service. This ends the court's discussion.
Computer Fraud and Abuse Act Claims: Although the court rejects plaintiffs ECPA claim, the court allows plaintiffs' Computer Fraud and Abuse Claim to go forward. The court concludes (based on Bresnan's disclosures to its customers) that Bresnan's access of plaintiffs' computers had some authorization. Nevertheless, the court finds that Bresnan may have exceeded the authorization that was initially granted. The court bases this conclusion on the fact that the notices provided by Bresnan did not clearly apprise plaintiffs that "their computer settings were to be actively altered or tampered with by Bresnan." The court concludes that for purposes of surviving a motion to dismiss, plaintiffs have sufficiently alleged that:
Bresnan's act of tampering with the security and privacy protocols exceeded any authorization that Plaintiffs may have given.
The court also addresses the jurisdictional damage requirement, under which a CFAA plaintiff must show that the unauthorized access caused $5,000+ in damages. The court notes that plaintiffs' allegations of emotional distress are not compensable, since only economic losses are recoverable under the CFAA. However, the court finds that plaintiffs satisfy the jurisdictional damage threshold since they allege they were "forced to mitigate Bresnan's invasive actions by expending time, money and resources to investigate and repair their personal computer's diminished performance."
Trespass to Chattels: Finally, the court allows plaintiffs' trespass to chattel claims to go forward. With respect to the trespass claim, the court says that the plaintiffs sufficiently alleged an interference with their chattel (their computers).
This is one of many privacy lawsuits that are percolating through the courts right now. I think this one differs qualitatively from many of the others in that here, there is an allegation of improper monitoring of the contents of the plaintiffs' communications. It's one thing to surreptitiously find out what websites someone has been visiting or leak someone's unique user ID. It's another thing entirely to read their email and the contents of what they access while browsing. This is an important distinction to keep in mind. I don't think you can necessarily extrapolate a tentative result in the other cases based on this result. Apart from the damages issue (discussed below) a key unknown in the pending cases is to what extent the information that is captured or disclosed are covered by the statutes in question.
I was somewhat surprised to see little or no discussion from the court on whether the policies were presented in a "leak proof" manner, or whether the disclosure satisfied FTC standards. Was there evidence that plaintiffs could not access the service without encountering the policy? (See Prof. Goldman's post on that topic: "Clickthrough Agreement With Acknowledgement Checkbox Enforced.")
The court's conclusion on the consent issue is also somewhat perplexing, in light of the exact same judge's earlier order denying Bresnan's request to compel arbitration, which you can access here. BNA recaps the decision denying Bresnan's request to subject the claims to arbitration as follows: "A mandatory arbitration clause in an internet service provider's terms of service—which was presented in capitalized text in the ninth paragraph of the unsigned document—was an inconspicuous part of a contract of adhesion and unenforceable under Montana law."
On the other hand, if plaintiffs conceded the consent/disclosure issue, then the court did not need to get into it. [What were the plaintiffs thinking, conceding this? If you are bringing this type of a lawsuit, you have to be able to put together enough allegations of no-consent to get past the motion to dismiss stage.]
At the end of the day, if consent is going to be the basis to defend against these types of privacy claims, defendants would be well advised to really be thorough in procuring this consent. In fact, I'm surprised that Bresnan - given that it is an IAP allegedly engaging in gray area practices - didn't just secure written consent at the time it first provided the service.
I'm also surprised at the court's conclusion on the Computer Fraud and Abuse Act damage issue, given its conclusion on the ECPA issue. If it was going to split hairs on the notice and consent (as it did with respect to the CFAA claims), it could have probably done so on the ECPA claims as well. Courts often keep in claims they may otherwise dismiss if they decided that some claims are going to survive. Also, some cases construe the CFAA narrowly as requiring damage to the protected computer (or an interruption in data). It's conceivable that plaintiffs could have suffered the requisite loss (which can be aggregated in the class action context), but the court's discussion of plaintiffs' allegations made the damage allegations seem awfully light. (Two posts from Nick Akerman look at some recent CFAA dismissals and discuss the restrictive approach taken by some courts with respect to the CFAA's jurisdictional damage requirement: "Dismissal of CFAA Claim for Lack of Jurisdiction" and "Why Two District Courts Dismissed Valid Computer Fraud and Abuse Claims for Lack of Jurisdiction.")
The dismissal of the ECPA claim as opposed to the CFAA claim could have some ramifications on the damages front. Statutory damages are available under the ECPA, but not under the CFAA. For what it's worth, there's conflicting authority on the issue of whether non-economic damages are recoverable under the CFAA. (See Garland-Sash v. Lewis, 348 Fed. Appx. 639 (2d Cir. 2009) (construing the phrase "compensatory damages" - which was added to a provision of the CFAA after the DoubleClick case came down - to include damages for pain, suffering, and other emotional harms").) Even if for some reason the court decides that plaintiffs are entitled to non-economic damages, it will be interesting to see how plaintiffs prove up these damages.
The trespass claim is a bonus claim, but again, the court doesn't dig in to the damage issue with respect to common law trespass. Although the court cites to California law, the court does not discuss damage or slowdown to the machine in question as articulated by the California Supreme Court in Intel v. Hamidi (an email bombardment case) or as interpreted by the Fourth Circuit in the Omega v. Mummagraphics case.
I'm not sure how much light this ruling will shed on the many pending privacy lawsuits that involve things like surreptitious tracking, sniffing, and leakage of personal information. Damages issues aside, the ruling may highlight the importance of choice, consent, and the requirement that any disclosures or disclaimers be conspicuous, all issues the FTC seems to frequently opine on and issue reports about.
(h/t Wendy Davis)
As Venkat notes, this ruling is an inconsistent mix of formalism and realism. In light of the judge's ruling last month that Bresnan made inadequate disclosures to uphold an arbitration clause, it's odd for the judge to now find that Bresnan made adequate disclosures to wipe away the ECPA and privacy invasion claims via dense/buried EULA language plus an opt-out notice; while that same consent wasn't good enough to wipe away the CFAA and Trespass to Chattels claim. The CFAA ruling on damages was also oddly formalist given the consent ruling. I respect formalist judges for being careful and methodical, but it would have been nice if this judge had been a little more aggressive about calling a spade a spade.
I am not a fan of deep packet inspection (DPI) by IAPs done on anything but an opt-in basis. We're basically back to the old battles about unwanted adware/spyware getting onto users' hard drives as part of some bundle. Sure, the adware vendors could claim user consent through a formalist reading of the contracts, but there wasn't true consumer consent, and we all knew it. I'm reminded a little of the FTC's bust of Sears for its trackware installations--Sears paid people for the installation, but the software did things far beyond anything users might have expected, even though these attributes were putatively explained deep in the EULA. If you're an IAP trying to implement DPI on an opt-out basis, bonne chance, and don't expect a lot of friends to rally around your cause.
At the same time, I'll be interested to see if the plaintiffs can marshal any true evidence of harm. If the plaintiffs are advancing a recycled version of the old, tired and completely laughable arguments that installing cookies on a user's computer creates cognizable harm, I hope this judge will quickly give them the boot they deserve. In that respect, I'm disappointed the judge didn't more aggressively police the trespass to chattels claim on the harm requirement per Hamidi. Personally, I think these plaintiffs should have been forced to put-up-or-shut-up on the harm issue early. Then again, this case came out the day before the Ninth Circuit's recent Starbucks case, but perhaps it's consistent with it.
Overall, this ruling is just another small data point in a much larger struggle over targetable consumer data. My Coasean Analysis of Marketing article doesn't directly address DPI by IAPs, but the article tells the story of how different intermediaries are fighting with each other to capture better datasets of targetable consumer behavior. After the flameout of the early 2000s model of adware, IAPs are trying to squeeze into the middle by using their more favorable position (compared to websites) to see more complete consumer data. Similarly, Facebook is trying to use tools like Beacon nee Instant Personalization to sweep up targetable consumer data from throughout the web, not just the smaller dataset it can capture at facebook.com. Meanwhile, Google is trying to move onto the desktop (the toolbar, Desktop, Chrome and its various OSes) to let it get closer to the honeypot of consumer data residing there, rather than just rely on the data it can get at google.com properties. Adware circa 2005 may be dead, but battles between different intermediaries fighting to get the good stuff is a perennial. For more, see my posts Adware is Dead and Relevancy Trumps Creepiness.
December 22, 2010
Court Rejects Plaintiff's Proposal of Class Notice via Twitter, SMS, and Email -- Jermyn v. Best Buy
[Post by Venkat]
Jermyn v. Best Buy, No. 08-Cv-00214-CM-DCF (S.D.N.Y.; Dec. 06, 2010)
Plaintiffs brought a class action against Best Buy alleging that Best Buy failed to honor its price-match guarantee. The court certified the class with respect to New York residents who had bought certain items from Best Buy since 2002 and who were denied Best Buy's price guarantee.
The named plaintiff suggested several forms of notice to potential class members, including notification via: (1) Best Buy's "Twelpforce" Twitter account, (2) SMS, and (3) email. Noting that overinclusive individual notice is not required, and that Best Buy is only required to undertake "reasonable steps" to identify individual affected class members, the court rejects all three suggestions.
Notice via Twitter: The court conducted a random sample of Best Buy's "Tweplforce" account and concluded that it was primarily a medium for providing technical support to customers:
As an online help desk--primarily focused on providing technical advice-- Twelpforce is not tied to Best Buy's price-match guarantee in any way and therefore there is no evidence that customers denied a valid price match use or even know of Twelpforce. Further, as Best Buy points out, Twelpforce is a nationwide help desk and Best Buy cannot limit its "tweets" by geographic area. Thus, a "tweet" about the pending class action will likely reach a nationwide audience--a group that is significantly broader than the defined class.
The courts rejects this form of notice, observing that:
Notice via Twitter is a form of individual notice (akin to notice via mail).
Notice via SMS: As with respect to the suggested notice via Twitter, the court accepts Best Buy's argument that notice via SMS was overinclusive, based on Best Buy's argument that:
Best Buy is unable to restrict its text messages to class members. Best Buy's list of mobile telephone numbers includes the telephone numbers of employees (who are excluded from the class) and select high-level Reward Zone members (i.e., members of Best Buy's loyalty program). Although Best Buy may be able to restrict its text messages to New York customers, there is no link between the list of mobile telephone numbers (which includes individuals excluded from the class definition) and class members. Moreover, the list of mobile telephone numbers is underinclusive because it contains only a select group of Reward Zone members and Best Buy employees.
Notice via email: The proposed email notice suffered the same fate, since Best Buy was "unable to restrict notice via email to only class members . . . [it] only collected customer emails when a customer makes a purchase on bestbuy.com; when a customer obtains a protection or service plan for an item purchased at bestbuy.com or at a Best Buy store; or when a customer voluntarily shares her email address when visiting bestbuy.com."
The court's treatment of Twitter as an form of individual notice was interesting, and not entirely accurate. Tweets are not "individualized messages" in the sense that the list of recipients is not controlled by the sender (there's not a finite list) - the list of recipients includes people who follow the general stream of Tweets as well as those who have opted in to receive messages. Additionally, tweets can be disseminated further by those who see initial tweets, increasing the odds that the word would get out to its intended audience.
It's also worth noting that the "Twelpforce" account is not Best Buy's only Twitter account. For some reason, plaintiff didn't suggest notice via Best Buy's main account, which has approximately 123,000 followers. Given that the costs involved in disseminating notice via Twitter are de minimis, I'm surprised the court wasn't more open to the suggestion. Also, I was surprised that neither party brought up Facebook as a possibility. Best Buy's Facebook page is approaching 2 million followers, and offers a similarly inexpensive way to get the notice out to a broad group of interested people. I would think Best Buy's resistance stems from not wanting to suffer any negative branding implications from including news of this class action in its overt marketing channels, but I would have thought the minimal cost would have swayed the court.
The accepted form of class action notices will evolve over the years (the court agreed that notice via Best Buy's website was proper, and Best Buy did not object to class counsel setting up a website where it would disseminate notice). Interestingly, the court approves notice via the New York Times, and suggests a few other local newspapers where notice is appropriate, even though there's no empirical evidence that these methods of notice are any better targeted to reach prospective class members than the ones proposed by class counsel, and undoubtedly they are more expensive. (I don't know where revenue from this notice fits into a newspaper's revenue stream, but it's nice to see that the court is looking out for the dying print media.)
I was somewhat surprised - given the infinite degree of targeting and consumer tracking companies are portrayed as engaging in - that the court did not push Best Buy to take additional steps to identify individual customers within the class. Under the rules as articulated by the court, only class members that can be identified through "reasonable steps" should receive individual notice, but I would have thought Best Buy would have ample "reasonable" means at its disposal to identity affected customers.
Hotels Benefit When Distributors Reference the Hotel's Trademark in Keyword Ad Copy
By Eric Goldman
Lesley Chiou of Occidental College and Catherine Tucker of MIT have posted an empirical study, How Does the Use of Trademarks by Third-Party Sellers Affect Online Search? The study tries to model what happens when distributors use a manufacturer's trademark in keyword ad copy, specifically by looking at data for the hotel industry.
This intra-channel conflict was exacerbated by Google's 2009 trademark policy change that meant manufacturers could not prevent channel members and aggregators from using the third party manufacturer's trademark in their keyword ad copy. Trademark owners did plenty of teeth gnashing about this change, and that change (plus the Rescuecom Second Circuit decision) helped open the floodgates of trademark litigation against Google that peaked with a dozen pending lawsuits.
As usual with empirical studies, we could debate the data, the assumptions and the conclusions in this study. Acknowledging these limitations, the article reaches a provocative yet perhaps intuitive conclusion that trademark owners were unnecessarily freaking out about Google's policy change. According to this study, when travel distributors/aggregators reference specific hotel trademarks in their ad copy, the hotel sees a slight reduction in the clicks on the hotel's own ad but simultaneously gets a more significant increase in the clicks on the hotel's organic listing. Effectively, then, when channel members include the upstream "manufacturer's" trademark in their ad copy, it indirectly contributes to the manufacturer getting more users for "free" (i.e., by clicking on the free organic links instead of the CPC links). As the article says:
when third-party ads started displaying the brand name, this encouraged search engine users to click directly on the main link to the branded website. This change in click-through behavior for the main non-paid link after a change in the composition of paid search ads suggests that there are spillovers from the presence of a branded search ad to that brand's main non-sponsored link.
I discuss spillover effects from keyword advertising in more detail in my Brand Spillovers article.
The article offers some social science theories to try to explain this phenomenon. I personally didn't find the explanations compelling, but they are worth considering if you are thinking about this topic.
If we find these empirical results credible, I can see some implications:
1) TM owners should be *encouraging*, not discouraging, its channel members to reference its trademarks in keyword ad copy.
2) Aggregators/distributors might decide it's not in their best interests to include the actual trademark in the ad copy, even if Google's policy lets them do so. The article suggests that these advertisers may drop poor-performing ads over time, so advertisers may be reaching this conclusion independently.
3) This article supports the cases that have found that keyword ads aren't likely to cause consumer confusion (e.g., the trial findings in College Networks and Fair Isaacs cases and the summary judgment in the Rosetta Stone case).
4) It would be ridiculous to hold search engines liable for trademark infringement from keyword advertising when the keyword advertising may be creating positive spillovers for the trademark owner. I explore the possibility of trademark owner duplicity in my Brand Spillovers article.
The article doesn't address the implications where channel members purchased a trademarked keyword but don't show the trademark in the ad copy. That issue is just one of many unresolved questions about consumer perceptions of and interactions with keyword advertising.
The article abstract:
Should firms who want to promote their direct channel allow the use of their trademarked brand name by third-party sellers of their products? This paper examines this question empirically using a natural experiment in advertising on search engines. In June 2009, Google started allowing any third-party reseller for a product to use a trademark, such as "Doubletree," in the text of its ad, even if the reseller did not have the trademark owner's permission. We study the effects of this practice within the hotel industry. We find some evidence that allowing third-party sellers to use a trademark in their online search advertising did indeed divert clicks from the hoteliers' paid search ads. However, this decrease in paid clicks was more than outweighed by an increase in consumers clicking on the unpaid links to the hotelier's website within the main search results. We provide evidence from both historical data and a lab experiment as to why this occurs. When third-party sellers focus on the trademarked brand in their ads, this distracts from their own low-price marketing message, and customers are consequently more likely to buy from the direct channel.
December 21, 2010
Ninth Circuit's Mixed Opinion in Glider/WoW Bot Case -- MDY Industries v. Blizzard
[Post by Venkat, with comments from Eric]
MDY Industries, LLC v. Blizzard Entertainment, Nos. 09-15932 & 16044 (9th Cir. Dec. 14, 2010)
The Ninth Circuit issued its opinion in the Blizzard Glider "bot" case, which is one of three cases in the Ninth Circuit that tackle the license vs. sale issue and what conditions the licensor can put in place. Vernor v. Autodesk, was the first, and Augusto v. BMG is still pending. The Blizzard ruling also covers some other ground in addition to the license vs. sale issue, including: (1) what parts of a licensing agreement support infringement claims (as opposed to breach of contract claims) and (2) the scope of a DMCA claim under section 1201. It will be interesting to see the effect of the case on two big cases from the Federal Circuit: Jacobsen v. Katzer (an open source case involving model train sets) and The Chamberlain Group v. Skylink Technologies (a garage door opener DMCA case). It took me a couple of times to read this case - it made my head spin!
The crux of the Blizzard dispute is that MDY made available a "bot" which World of Warcraft players could use to advance through levels without actually playing the game. Blizzard alleged that players' use of the Glider "bot" infringed on Blizzard's copyright (because the end user agreement contained a restriction on playing the game using a bot or other automated means), and Blizzard asserted claims for secondary infringement against MDY based on this. Blizzard also implemented measures (a software program ominously called the "Warden") to detect Glider's operation, which MDY allegedly circumvented. Blizzard asserted a DMCA claim based on this.
Copyright Infringement: Blizzard argued that MDY was secondarily liable for infringement by the players who used the bot. Blizzard's claims of infringement focused on the RAM copy made in the course of playing the game. If the transaction between Blizzard and the players was a sale, the players could take advantage of the "essential step defense," under which there is no infringement for copies that are created and used "as an essential step in the [use] of the program." (section 117(a)) The threshold question was whether WoW players were licensees or owners of the particular copies of the software that they had purchased. Applying Vernor v. Autodesk, the court concludes that the players are licensees and therefore, the RAM copies may be infringing unless they are licensed.
WoW License Agreement: Whether or not the bot-using players infringed turns on the terms of the WoW EULA. The court runs through the EULA process (which looks leak-proof) and then turns to the question of whether a violation of the no-bot provision of the license constitutes infringement. The court distinguishes between "covenants" and "conditions" -- violations of covenants are actionable as breaches of contract and violations of conditions are actionable as infringement. (A copyright infringement lawsuit has obvious advantages, such as statutory damages and injunctive relief, and in this case, infringement would have been a hook for Blizzard to hold MDY derivatively liable.) Ultimately, the court concludes that infringement by breach of a condition occurs only where the licensee:
exceeds the scope of the license in a manner that implicates one of the licensor's exclusive statutory rights.
With respect to Glider, the court holds: "Glider does not infringe any of Blizzard's exclusive rights. For instance, the use does not alter or copy WoW software." End result, no infringement by end users and no liability for infringement to MDY. But that wasn't the end of the story.
Blizzard's DMCA Claims: Although the court took a restrictive view of what violations of a license constitute copyright infringement, the court took an opposite approach with respect to Blizzard’s DMCA claim. The key question here was whether the cause of action created under section 1201(a) was "linked" to copyright infringement, or whether it created a totally separate cause of action. Blizzard implemented measures which prevented access to the game while the bot was in operation, but these measures did not prevent copyright infringement by the players (per the court's conclusion on the covenant/condition issue discussed above). The court concludes that regardless of whether the underlying use is infringing, anti-circumvention of a measure that restricts mere access to a work can support DMCA liability under section 1201. The court repudiates the Federal Circuit's approach in Chamberlain, the infamous garage door case, and concludes that:
a fair reading of the statute . . . indicates that Congress created a distinct anti-circumvention right under section 1201(a) without an infringement nexus requirement.
According to the court, Glider violated 1201(a) with respect to WoW's "dynamic non-literal elements" -- i.e. "the real-time experience of traveling through different world, hearing their sounds, viewing their structures, encountering their inhabitants and monsters, and encountering other players." The court found no violation with respect to the source code or actual audiovisual elements of the game because the anti-circumvention measures implemented by Blizzard did not effectively restrict access to these.
This case made my head spin. Eric discusses more of the opinion's messiness below, but I wanted to offer a few quick comments.
1. Application of Autodesk to determine sale/license: the Ninth Circuit recently decided Vernor v. Autodesk where it ruled that Autodesk CAD software was licensed and not sold to its clients. One question the Autodesk decision raised is how the analysis would play out in other contexts -- i.e., where the software is less expensive, off-the-shelf, and looks more like a license. Surprisingly, the court here didn't spend much time on this, giving just one page to the treatment of the license/sale issue.
2. RAM copies and the essential step defense: The court's opinion contains this zinger:
Since WoW players, including Glider users, do not own their copies of the software, Glider users may not claim the essential step defense. 17 U.S.C. § 117(a)(1). Thus, when their computers copy WoW software into RAM, the players may infringe unless their usage is within the scope of Blizzard’s limited license.
Whether it's a matter of clunky legislative drafting or otherwise, the conclusion that people who purchase copies of software can be held liable for RAM copies that are necessary to utilize the program (i.e., "an essential step in the utilization of the computer program") is remarkable. If you were to accept the court's conclusion, I don't see much utility for section 117(a)(1) at this point. If section 117(a)(1) is not available to licensees, not many people are going to be able to take advantage of it.
3. The covenant/condition distinction: The court's conclusion that a breach of a license agreement term can constitute copyright infringement only where the licensee exceeds the scope of the license "in a manner that implicates . . . the licensor's exclusive statutory rights" drastically narrows the scope of available claims for copyright infringement in the licensing context. One big question this raises is how this squares with Jacobsen v. Katzer [pdf] where the federal circuit held that a failure to comply with certain open source attribution and "modification transparency" requirements constitute copyright infringement. The Ninth Circuit's opinion in Blizzard contains some pretty restrictive language with respect to the covenant/condition issue (the breach of license must be "in a manner that implicates one of the licensor's statutory rights"). Katzer, in contrast, referenced the fact that the requirements would inform downstream users and generate awareness for the incubation page which would further the "economic goal" of the copyright holder. How would Jacobsen have fared under the Ninth Circuit's standard in Blizzard? A 2008 EFF blog post by Michael Kwun flags the tension between the two decisions: "Condition or Covenant, and Why Should You Care?"
4. The DMCA Claim: What the Ninth Circuit taketh away with the copyright analysis, it giveth back with the DMCA analysis. After concluding that use of Glider while playing WoW does not cause the players to infringe, the court concludes that MDY violated the DMCA when it circumvented Warden. Here is the crux of Chamberlain [pdf]:
the anticircumvention provisions convey no additional property rights in and of themselves; they simply provide property owners with new ways to secure their property.
The obvious concern here is that the parade of horribles (and absurd claims) that Chamberlain warns of will come to pass if courts allow anti-circumvention claims that are divorced from copyright claims, as the court did here.
paidContent: "New Ruling Will Impact Software Licensing Agreements"
Before I go off the rails here, let me start with the only piece of good news: I think the court reached the right result in finding for Blizzard and against MDY. I'll probably get some flack for that position, but I thought it was reasonably clear that MDY could not do what it did. As a result, if the panel had simply affirmed the lower court per curiam and vacated the lower court's opinion, I would have viewed this outcome as appropriate.
(This assessment differs from my normative view. I understand that Glider posed some potential problems for WoW gameplay, but I think Blizzard overreacted. At minimum, Blizzard should thank MDY for showing the existence of an underserved market segment worth millions of dollars. The fact that Blizzard doesn't directly capitalize on that market demand, such as by setting up a “fast play” WoW on servers separate from the normal WoW, puzzles me).
Unfortunately, the Ninth Circuit panel attempted to explain *why* it was ruling for Blizzard, and everything went to hell.
Nevertheless, I'd be more upset about this opinion if I actually believed it. The Ninth Circuit clearly makes up Internet law with each new case and each new panel, so I have no reason to think this opinion will stick any more than the dozens of other implicitly reversed Internet law opinions from the Ninth Circuit over the past 15 years. Because I think this opinion's predictive power for the next opinion is so low, I don't really believe this panel means what it says. At least, I choose not to believe it. This would be a great opinion to take en banc, although that would probably only further solidify the doctrinal disasters lurking in this opinion.
The opinion gets itself into trouble for a number of reasons, but the biggest reason IMO is that the opinion dances around the seminal cyberlaw issue of whether web browsing is infringement. We all know what copyright law says, and should say, about browsing. So long as copies into RAM are putatively infringing unless there's a defense, current copyright law says browsing can be infringement. Copyright law *should* say that browsing isn't infringement, which would eliminate some pressure that caused the court to engage in doctrinal gymnastics here.
This was not exactly a browsing-as-infringement case because Blizzard also licensed client-side software that facilitated player access to the copyrighted materials on WoW servers. However, as more websites load client-side software as part of web browsing, that distinction may be diminishing. Plus, Glider didn't modify Blizzard's client-side software; it only interacted with Blizzard's servers. As a result, Glider was part of the way players browsed Blizzard's web service.
Perhaps in response to the problems of treating browsing as copyright infringement, the court makes it clear that violating a website's EULA by browsing would most likely just be a breach of contract, not a copyright infringement. Eliminating browsing as infringement would clean up the problems applying 1201(a) because it would not treat browsing as "accessing" copyrighted works on web pages. To take this issue off judges’ minds, we would benefit from a statutory amendment saying that web browsing isn't infringement.
Treating a software license breach as sometimes creating copyright infringement and other times creating solely a breach of contract isn't new legal doctrine, but it's problematic. It does ameliorate concerns about oppressive but marginally relevant license terms buried in EULAs; in many cases, this opinion says those terms can’t be enforced via the coercive power of copyright remedies. However, trying to cleave between infringement-related and other contract restrictions sounds like a litigation morass; and I'm unclear if fancy drafting (e.g., stating that all EULA covenants are conditions on the software license) is an all-too-easy workaround. See, e.g., the provision where the court says "Although ToU § 4 is titled, 'Limitations on Your Use of the Service,' nothing in that section conditions Blizzard’s grant of a limited license on players’ compliance with ToU § 4’s restrictions." By inference, simple changes in EULA drafting could change this calculus.
I also wonder how this ruling affects open source licenses. The Jacobsen v. Katzer case held that an open source license was a condition on the enjoyment of the copyrighted software. The Jacobsen case didn't directly address the fact that the open source license failed to meet basic contract formation requirements. To the extent this case indicates that some software license agreement breaches are only contract breaches, not conditions on the enjoyment of copyright, this case leads to one of two outcomes, both of which are weird. Either (a) the "conditions" in open source licenses are not subject to the rules in this case, in which case provisions not included in a binding contract will be more enforceable than provisions in properly formed software license agreements (a result that can't be right), or (b) conditions in open source licenses are equally enforceable as software license agreements, in which case some provisions of open source licenses are enforceable only as contract breaches--but since open source licenses usually aren't properly formed as contracts, those provisions will be effectively unenforceable. Either result seems like a catalyst for anarchy.
In addition to these issues, I'll reiterate two other obvious areas of mischief noted by Venkat:
1) By reiterating Vernor's standards for ownership vs. license of material, this case does not reduce the risks that copyright owners will contractually eliminate the first sale doctrine for copyright-containing chattels (such as books) by characterizing the copyrighted material transfer as a license. I'm still hoping the UMG v. Augusto case gives us some better news on this front.
2) The court's standards for a 1201(a) circumvention raise all of the anti-competitive concerns we feared with the Chamberlain case where two independently manufactured chattel (which contain software) need to make an electronic handshake with each other. This happens all the time for interoperability purposes, including the sale of replacement or complementary goods. The court punts on the antitrust issue:
Concerning antitrust law, we note that there is no clear issue of anti-competitive behavior in this case because Blizzard does not seek to put a direct competitor who offers a competing role-playing game out of business and the parties have not argued this issue. If a § 1201(a)(2) defendant in a future case claims that a plaintiff is attempting to enforce its DMCA anti-circumvention right in a manner that violates antitrust law, we will then consider the interplay between this new anti-circumvention right and antitrust law.
Only time, and future Ninth Circuit panel flip-flops, will tell us if these fears will come to pass.
December 17, 2010
Domain Name Privacy Protection Services Not Liable for Failure to Disclose Identity of Alleged Spammer -- Balsam v. Tucows
[Post by Venkat]
Balsam v. Tucows, No. 09-17625 (9th Cir.; Dec. 16, 2010)
Prolific spam litigant Dan Balsam sued the registrant of [adultactioncam.com] under California's spam statute for allegedly sending Balsam thousands of pieces of spam. Balsam obtained a default judgment in the amount of $1,125,000 (!) against Angeles Technology, Inc., who was listed as the registrant of [adultactioncam.com]. Balsam was ultimately unable to recover against Angeles and then sued Tucows. His beef with Tucows was that Tucows refused to turn over the identity of the registrant of [adultactioncam.com] (when he conducted his initial search, apparently, Angeles was the registrant, but at some point later, Angeles opted into Tucows' privacy protection services). He demanded that Tucows disclose the identity of the registrant "or pay the default judgment." Tucows predictably refused, and Balsam sued, trying to hold Tucows liable. I should note that the court's description of the facts is much better than mine, although it's somewhat charitable to Balsam. The court concludes its recitation of facts by saying that "[a]lthough [Balsam's] approach is novel and creative, it cannot survive a motion to dismiss."
Balsam's main argument is that Tucows as the registrar is bound by the ICANN registrar accreditation agreement, which contains the following provision (Sec. 18.104.22.168):
A Registered Name Holder licensing use of a Registered [domain] Name . . . shall accept liability for harm caused by wrongful use of the Registered Name, unless it promptly disclosed the identity of the licensee to a party providing the Registered Name Holder reasonable evidence of actionable harm.
As the court notes, Balsam's claim against Tucows depends on his status as a third party beneficiary to the RAA agreement between ICANN and Tucows. The court concludes that Balsam is not a third party beneficiary because among other things, the agreement contains an explicit "no third party beneficiary clause," and because the agreement itself does not contain terms applicable to ICANN or any registrar - it merely provides that a a registrar must include certain terms (including this one) in its domain name registration agreements. Balsam responded that the "no third party beneficiary" clause does not relieve Tucows of its obligation as a registrant (which it or one of its affiliated entities is in name when it provides privacy protection services) but the court rejects this argument as well. Tucows entered into the agreement as a registrar, and didn't agree to bind itself as a registrant.
Balsam has an uphill battle arguing that the RAA creates third party rights. See Register.com v. Verio, 356 F.3d 393 (2d Cir. 2004.) (Interestingly, Register v. Verio dealt with the use of WHOIS information where Verio sent unsolicited emails to Register registered domain names advertising Verio's services.) However, more relevant to the court's discussion is a recent case involving proxy registration services - Solid Host v. NameCheap - where the court found that NameCheap could be held liable for contributory cybersquatting based on the actions of the registrant-in-fact. Here's Prof. Goldman's post on the muddled ruling in that case: "Contributory Cybersquatting and the Impending Demise of Domain Name Proxy Services?--Solid Host v. NameCheap." As he mentions in that post, it's important to be clear about who is the registrar and registrant (and in what capacity a particular entity is acting when it's providing services). He raises the issue of whether registrars will shy away from providing privacy protection services. I don't know the answer to that, and although it may be early to assess the fallout (if any) of the NameCheap case, this case seems to indicate that proxy registrars don't roll over and readily disclose registrant information absent a court order.
In any event, I don't think Balsam had a strong argument here since Angeles's utilization of the privacy protection services did not contribute in any way to the alleged harm. Although the facts aren't crystal clear, it seemed like Balsam obtained a judgment (after having determined that Angeles was the registrant) and only then did Angeles opt in to the privacy protection feature. The damage (if any) was done by the time the privacy protection feature entered into the picture. Additionally, as the district court's order notes, the Angeles lawsuit was pending at the time Tucows declined to reveal the underlying registration info - Balsam had an obvious solution (which he failed to take advantage of). He could have issued a subpoena seeking the registrant information and could have easily obtained it. There may be some set of facts under which a refusal to reveal the registrant information could support a claim, but those facts were not present here.
This also raises the issue of the appropriate response from a company who provides private registration services. The registrars have an interest in not freely disclosing registrant information absent a court order, but NameCheap suggests that in some cases, a failure to disclose may result in liability to the provider of privacy protection services. (NameCheap raised the issue of whether the registrar was acting in its capacity as registrar or in another capacity - in its capacity as registrar, it may be able to take advantage of an ACPA safe harbor. As I mentioned in my previous post about this case, Tucows may have been able to take advantage of a Section 230 defense, although ultimately it didn't end up needing to invoke the protections of Section 230, given the court's ruling.) This case indicates that courts are reluctant to freely impose liability on a registrar who provides proxy registration services, which isn't necessarily a bad thing from the standpoint of protecting registrant anonymity and privacy. A finding of possible liability in this case could have resulted in registrars getting more nervous when they receive requests for the identity of the underlying registrant.
December 15, 2010
Supreme Indecision: Costco v. Omega Gums up the (Watch)Works
By Ethan Ackerman
In coming to a 4-4 procedural tie that defaults to upholding the ruling below, the Supreme Court let stand a 9th Circuit opinion territorially limiting the first sale defense's applicability to domestically made goods. While still not an actual, controlling opinion from the Supreme Court, this default outcome lets the 9th Circuit opinion remain as controlling precedent there and exhausts any appeals for Costco and Omega in this case. It also leaves the 2nd Circuit with no real guidance in deciding the same issue itself in the pending textbook importation appeal.
The issue of "grey market" importation and reimportation is heavily controlled by the degree to which such importations are prohibited or permitted by the various types of IP protection. Trademarks, copyrights, and patents all have slightly different statutes, court cases, and even federal regulations controlling the contours of when they can be used to block unauthorized reimportation. Generally, each doctrine's laws prohibit unauthorized importation, but also have controlling "first sale" exceptions in those laws. Important and intelligent people think about the scope of those exceptions a lot, and do excellent scholarship on those doctrines as well. Unhelpfully, those boundary lines don't even match up from one area of protection to the others, resulting in a reimportation that may be illegal or legal depending on whether the work bears a trademark, or whether it is covered by a patent, or both.
Copyright law, over the whining and screaming of a protectionist Congress and the U.S. government, was kicked towards greater market openness by the 1998 Supreme Court decision in Quality King v. L'Anza, where the Supreme Court (re)imposed the first sale doctrine of Section 109 on Section 602's near-prohibition on grey market re-imports.
Faced now with the slightly different factual circumstances of a grey market import (rather than re-import) the 9th Circuit in Omega v. Costco slunk back to its pre-Quality King precedents and held that the limitation in Section 109 applying the section only to "works lawfully made under this title" meant 'works lawfully made in the United States.' To hold otherwise, the 9th Circuit implied, would be to impermissibly extend the reach of U.S. copyright law extraterritorially. Embarrassingly for the 9th Circuit, Costco and the U.S. Solicitor General both (politely) mocked such ideas in their briefs before the Supreme Court, with the Solicitor demurely stating that "the court of appeals appears to have overstated the matter." This author would demurely state that analyzing overseas conduct to determine compliance with the conditions of section 109 is no more an "extraterritorial application of the Copyright Act" than analyzing overseas conduct to determine compliance with the conditions of section 104 is.
With the looming prospect of control-seeking (and rationally price maximizing) manufacturers rushing to manufacture goods abroad to achieve an important control they would lose if they manufactured domestically, U.S. retailers and foreign manufacturers rushed to the Court with a considerable number of opposing and supporting amicus briefs. IP public interest groups like the EFF and Public Knowledge also weighed in, highlighting the statutory and precedential inconsistency in the 9th Circuit decision and emphasizing the absurd outcomes that would follow if the decision were upheld.
In response to Costco's petition to the Supreme Court, then-Solicitor General and now Supreme Court Justice Elena Kagan made an argument for the government in 2009 that ultimately precluded her participation in this case and resulted in the 4-4 procedural default. What was the government's argument this time anyway? In Quality King, the government had argued that Section 602 trumped 109, which it asserted was not applicable in any cases of imported works. As Solicitor General Kagan's brief delicately acknowledged, "The Court rejected that contention" in Quality King. This time around, the government again argued in favor of the continued applicability of 602 over 109, on the (somewhat narrower) theory that 109 isn't applicable to this case of imported works. When the Supreme Court held in Quality King that the location of first sale didn't matter, the Solicitor now responds in Costco that maybe the location of first manufacture does. [author's note - This is actually a great example of one of the canons of Supreme Court argument construction in action - if the Court rejects your broad theory, adopt a narrower one that still applies in your case.]
To see how much is riding on Justice (not Solicitor) Kagan's opinion in the future, and just what not having it here means for the law in this area going forward, Public Knowledge's Anjali Bhat does an excellent backgrounder on the case and its impacts.
[Eric's note: Venkat and I soon will blog the MDY v. Blizzard case, which further compounds some of our confusion on these topics.]
Starbucks Data Breach Plaintiffs Rebuffed by Ninth Circuit -- Krottner v. Starbucks
[Post by Venkat]
Starbucks employees sued Starbucks due to a data breach resulting from the theft of a laptop computer which contained "names, addresses, and social security numbers of approximately 97,000 Starbucks employees." The trial court dismissed the lawsuit, finding that Washington law doesn't recognize a cause of action where the sole damage is "risk of future harm." The trial court also held that the plaintiffs had not alleged sufficient facts to bring an implied contract claim.
The Ninth Circuit largely agreed, noting that under Washington law, "actual loss or damage is an essential element" of a negligence claim. The sole plaintiff who alleged that his data had been misused did not point to any actual loss from the data misuse. Finally, the court notes that plaintiffs waived the argument that "anxiety constitutes actionable injury." With respect to the contract claim, the court found that none of the documents (employee policy statements) included "an offer to safeguard data." Although the plaintiffs sought to have the question certified to the Washington Supreme Court, the Ninth Circuit declined, finding that resolution of the case was sufficiently clear under Washington law.
Separately, the court issued an opinion finding that the plaintiffs had Article III standing ("'generalized anxiety and stress' as a result of [the data breach] is sufficient to confer standing"). Unfortunately, this represents the hollowest of victories for the plaintiffs, since the court found that even though plaintiffs had Article III standing, they still could not maintain a cause of action under Washington law.
I'm not sure what to make of the fact that the Ninth Circuit spent the bulk of its energy discussing the standing issue while at the same time affirming the dismissal of claims in an unpublished opinion. It's tempting to see the Ninth Circuit's standing decision as a glimmer of hope, but I don't think that's the case. Other cases have found standing in the data breach context, only to turn around and rebuff the claims for lack of cognizable harm. (Pisciotta v. Old National Bankcorp, discussed by the Ninth Circuit in this case, is one example.) Whether a data breach claim is cognizable typically turns on state law (absent an applicable statute), and I'm not aware of any cases (whether or not they find plaintiffs have standing) that have allowed data breach plaintiffs to recover, absent out of pocket loss. Even in California! In any event, the uniform trend is that if you're proceeding under state negligence or contract claims, no out of pocket loss = no recovery. (See, e.g., Ruiz v. Gap; Amburgy v. Express Scripts, Inc.; Pinero v. Jackson Hewitt; Bell v. Acxiom; In re JetBlue.) While the Article III ruling may be of interest from the point of view of legal doctrine, it doesn't much help the plaintiffs here. Also, you have to see this ruling as hostile to data breach plaintiffs. Although the court gave a nod to the possibility of an claim premised on anxiety or risk of future harm, the court rejected the appeal in a case that stemmed from a data breach potentially encompassing 97,000 employees. If there was ever a case where a friendly court would have contorted the rules to give plaintiffs a chance, this would have been it.
One interesting data point (or lack of a data point) is that the data breach occurred in this case on October 2008. The data of some 97,000 employees was compromised. Yet, in the trial court proceedings (a year later) plaintiffs put forth no evidence of anyone having actually suffered out of pocket loss. I realize that the plaintiffs are not required to put forth this type of data at the pleading stage, but if hordes of people actually had their data misused, you would think counsel of plaintiffs would have casually mentioned evidence to this effect? (During oral argument (which is well worth a listen and which you can access here), one of the judges asked whether plaintiffs counsel "[had] any idea how many of the 97,000 people have suffered identity theft that's traceable to this [incident] . . . [and whether plaintiffs made] any allegations to that effect." In response, counsel for plaintiff cites to one example of the named plaintiff who had a bank account opened in his name, but who did not suffer any out of pocket loss as a result.) The fact that plaintiffs did not do so is not conclusive, but I think is telling, and this larger point is something worth exploring when thinking about data breach and harm generally. What does the data say about whether and to what extent plaintiffs who have had their data compromised actually suffer out of pocket losses?
"9th Circuit Affirms Rejection of Data Breach Claims Against Gap -- Ruiz v. Gap"
"The [Non]enforceability of Privacy Promises--Pinero v. Jackson Hewitt"
"Acxiom Not Liable for Security Breach"
December 13, 2010
Viacom, FAPL and Amici File Briefs in Viacom v. YouTube Second Circuit Appeal
By Eric Goldman
[note: all of the briefs referenced in this post are linked in the case library at the bottom of the post]
Viacom and the FAPL have filed their opening appellate briefs in the Second Circuit appeal of Viacom v. YouTube. As Wired and others have pointed out, the standout line from Viacom's brief was its empirically unsupported assertion that upholding the lower court ruling "would radically transform the functioning of the copyright system and severely impair, if not completely destroy, the value of many copyrighted creations." Really...? I would find such hyperbole more convincing if Viacom hadn't acquiesced to YouTube's behavior post-May 2008 and wasn't using it extensively today to create substantial value for itself.
Viacom's brief shows that it's not sparing any expense in this litigation. (Nor is Google, which has said it has spent $100M defending this lawsuit). Viacom has three high-priced Biglaw firms on the brief: Jenner & Block, Shearman & Sterling, and former Solicitor General Ted Olsen of Gibson Dunn.
A small but ironic tangent: In Ouellette v Viacom, a pro se litigant recently sued both Viacom and YouTube, putting them in the position of possibly jointly defending the lawsuit...if they can find a way to work together against a common enemy...
Three of the briefs, from AIPLA, Audible Magic and Vobile, support neither party. Audible Magic's brief (which YouTube did not grant consent to file) is a sales pitch designed to respond to the district court's implicit disparagement of its filtering technology. Vobile's brief (which YouTube also did not grant consent to file) is also a sales pitch to explain how great its filtering technology is. APILA's brief took an unusual (for them) pro-defendant position:
AIPLA urges this Court to affirm the district court’s holding that more than a generalized knowledge of infringement is required to deprive an Internet service provider (“ISP”) of the protection of the safe harbor provisions of the Digital Millennium Copyright Act (“DMCA”)....the level of knowledge that is sufficient to strip the ISP of its protection under Section 512 of the Copyright Act, as amended by the DMCA is knowledge of specific instances of infringement. The district court’s holding is consistent with the legislative history of the DMCA and relevant case law. AIPLA urges this Court to reject Viacom’s broad attempt to deprive Internet service providers of the benefits of the safe harbor provisions of the DMCA based on generalized knowledge that infringing activity is occurring on a site.
The remaining briefs, all in support of the plaintiffs, include several from copyright owner agglomerations. Most of these briefs generally riff on the premise that the Angel of Death will descend upon the world if the lower court's ruling is upheld. See, e.g., the BMI et al brief, which says:
A little more drama: YouTube did not automatically consent to filing of the MPAA's brief; instead, it withheld judgment until it could review the brief.
A few observations about the other briefs.
I'm sure you're shocked to learn that Microsoft weighed in with a brief against YouTube. Is there any opportunity Microsoft won't take to tweak its arch-rival Google--no matter how contrary to its own long-term interests?? Microsoft has many UGC businesses, yet as usual it emphasizes its software divisions' interests over its online services' interests.
One of the more interesting briefs was filed by eight "professors and scholars who, from various perspectives, focus their work on the economic incentives of legal liability rules, including questions about efficiency and deterrence." They argue that willful blindness is bad from an economic standpoint. It's a little hard to tell if this brief simply responds to a strawman argument (is anyone arguing in favor of willful blindness?). In any case, as far as I can tell, the brief mostly argues against the statutory allocation of responsibilities in 512(c). As a result, these arguments might be better directed towards Congress.
The Brotman/Cass/Nimmer (Ray, not David) brief covers similar ground, and it probably should have merged with the 8 professors' brief. The Brotman et al brief makes a "least cost avoider" argument, which to me points in favor of YouTube. Recall that even Viacom and its high-priced and very smart battalion of attorneys couldn't figure out which video uploads were authorized and which it thinks were infringing; yet they were in a way better position than YouTube to make that determination. Ironically, YouTube is doing many of the things the brief wants it to do (like filtering), so this further reinforces that this brief should have been in support of YouTube, not Viacom.
I was amused by the poorly written International Intellectual Property Institute amicus brief by Bruce Lehman, who held key IP-related roles in the Clinton administration. Attempting to resurrect failed arguments from the infamous copyright-maximalist "Green" and "White" Papers from the 1990s, the brief makes the stunning argument that the DMCA online safe harbors only protect data carriers, not content providers. For example, the brief says: "This Court should respect congressional intent and not extend the DMCA’s safe harbor to include content providers." What???
The seven IP professors' brief, by Marquette Law professor Bruce Boyden, argues that the district court did not properly consider the "red flags" of infringement standard. I exchanged emails with Bruce about this brief. In one of my emails, I wrote:
In particular, the "red flags" provision never contemplated that the copyright owners would post their own content designed to look like stolen content and in such a way that the legal department (and outside lawyers) couldn't figure out that their own marketing department had posted the content. As a result, I personally don't think it's possible to have "red flags of infringement" any more--whatever it meant initially--because even things that look like they are ripoffs might in fact be legitimate.
The case library (also see the EFF's helpful library):
* MPAA/IFTA amicus brief in support of Viacom. CBS amicus brief in support of Viacom just endorsing the MPAA/IFTA brief.
* BMI et al amicus brief in support of Viacom.
* Business Software Association amicus brief in support of Viacom.
* Microsoft/EA amicus brief in support of Viacom.
* Advance Publication et al amicus brief in support of Viacom.
* Brotman/Cass/Nimmer amicus brief in support of Viacom.
* Washington Legal Foundation amicus brief in support of Viacom.
* Seven IP professors' amicus brief in support of Viacom.
* International Intellectual Property Institute amicus brief in support of Viacom.
* Eight professors' amicus brief in support of Viacom.
* American Federation of Musicians et al amicus brief in support of Viacom.
* Vobile amicus brief in support of neither party.
* Audible Magic amicus brief in support of neither party.
* APILA amicus brief in support of neither party.
* FAPL's opening appellate brief.
* Viacom's opening appellate brief.
* District court opinion granting summary judgment to Google. My blog post.
* Viacom's summary judgment motion. My blog post.
* YouTube's summary judgment motion. My blog post.
* FAPL's initial complaint. My blog post.
* Viacom's initial complaint. My blog post.
December 12, 2010
Court Finds Juvenile Delinquent Based on Allegedly Offensive Instant Messages -- In re Alex C.
[Post by Venkat with additional comments by Eric]
In re Alex C., No. 2009-399 (N.H. Supreme Court; Nov. 30, 2010)
Rachel K.'s daughter ran away from home. In an effort to locate her, Rachel logged on to her daughter's AOL Instant Message account. One of her daughter's friends sent Rachel repeated offensive messages to Rachel's daughter's IM account ("hey Nicci hey"). They had the following IM exchange (after Rachel's mom inquired who the friend was):
thekaboomroom95 (11:19:26 AM): ha this aint even [Rachel K.’s daughter]
the kaboomroom95 (11:20:28 AM): f***ing idiots idk if this is hermom or not but get the f*** off her aim you stupid f***ing b****
hey Nicci hey (11:27:01 AM): nice language young man - have thelogs so we and the police are all set - thanks Alex and
thekaboomroom95 (11:28:10 AM): well for one fat ass learn to spell for 2 i dident say where she is u f***ing dumbasss i said if urthere i was gonna tell her to get the f*** out because the cops will be there you just get dumber and dumber go roll down a hill or something and squish a[ ]couple of kids u fat whale.
After this exchange, there was a lull in activity. The messages then continued:
Beginning at 12:14:59 p.m. and ending at 12:15:36 p.m. — a period of thirty-seven seconds — the juvenile typed the phrase “fats***” and sent it to“hey Nicci hey” [Rachel's daughter's IM handle] seventeen separate times. As the juvenile hit the “return” key in between typing each phrase on his computer keyboard, the phrase appeared as seventeen separate entries in the instant messaging window on Rachel K.’shome computer. Less than a minute later, at 12:16:00 p.m., the juvenile typed the phrase “stuppppid c***” and sent it to “hey Nicci hey.” For approximately four minutes more, until 12:20:23 p.m., the juvenile sent an additional twenty-one instant messages; Rachel K. responded with seven instant messages of herown. At 12:20:23 p.m., the juvenile sent a final instant message of “peacefaggot” to “hey Nicci hey” before logging off from his AIM account at 12:23:00p.m.
The statute (RSA 644:4 I(b)) requires:
repeated communications at extremely inconvenient hours or in offensively coarse language with a purpose to annoy or alarm another.
Alex C. argued - analogizing the IM exchange to a telephone conversation - that the IM conversations were a single communication and not "repeated communications." The court rejected this argument, likening an instant message to a telephone call that reaches an answering machine. (Talk about strained analogies.) The court also found the two dissimilar in that a telephone conversation allows for "simultaneous" communication, while in the IM context, a message must be "composed . . . typed . . . [and] electronically sent . . . " In the court's view, the 46 minute lull between the IM exchanges turned the entire exchange into two (or more) separate "conversations."
The court had to deal with previous precedent where it upheld section I(b) (in a telephone harassment case) and distinguished section I(b) from other subsections of the statute which it previously found unconstitutional. In the previous case, the court upheld section I(b) against a constitutional challenge on the basis that I(b) requires a "repeated course of calls."
Rachel K., the mother, is deserving of sympathy because she used her daughter's IM handle to try to locate her daughter. However, the conviction raises obvious First Amendment concerns. (A sidenote as to whether Rachel K. herself could have gotten into hot water for improperly accessing her daughter's IM account.)
First, Alex C. communicated with the victim through the victim's daughter's IM account, which the victim may or may not have had implied authorization to use. It was unclear as to who initiated the exchange. Second, an instant message conversation differs significantly from an email or a telephone call. IM conversations are typically opt-in (you have to agree to accept messages from a contact before they can message you) and you can block messages from anyone (even temporarily) pretty easily - IM messages are much less intrusive in this regard than a phone call or even email. There's no discussion in the decision of whether Rachel K. could (or should) have taken the simple step of ignoring or blocking the messages. Phone harassment cases often push the envelope, but likening an instant message to a phone call is a stretch - the answering machine analogy even more so.
One overall concern this decision raises is that it penalizes expression that I would guess occurs in comment sections or on Facebook pages with some regularity. (See, e.g., this Facebook rant from Bristol and Willow Palin for an example with language that some would say is milder but others may find equally offensive or annoying (we can probably all agree that the spelling is equally bad). This raises a related issue: what is the appropriate standard for determining whether something is annoying or offensive? Should people expect "coarser" language online?) The juvenile here made a bad call in sending offensive messages to Rachel K., but a delinquency charge? As a general matter, penalizing someone for using "offensively coarse language" with the purpose of "annoying" someone is a shaky First Amendment road to go down, even if the messages are communicated by email or phone. This decision seemed like it went off the First Amendment rails altogether. (Judging from the court's opinion, it did not seem like Alex C. raised much of a First Amendment defense.)
Eric's comments: As Venkat explores, the key issue here is what constitutes a "conversation" online. It turns out the meaning of "conversation" is surprisingly technology-dependent. Thus, we think of a telephone conversation as beginning with a ring and ending with a click; for most people, if one party hangs up and the other party calls again, that constitutes a new telephone conversation.
But what does it mean to have a "conversation" in online contexts? Consider this question with respect to email. Gmail threads emails with the same subject line so I can delete dozens of emails in the same thread with a single click; and I can "mute" the entire thread with another click. When there are two emails in a Gmail thread, are those emails one conversations or two? It appears that inquiry would matter to this court, although most Gmail users would find the question bizarre.
With respect to IMs, the opinion doesn't appear to acknowledge any differences between a chat that takes place in a single window as compared to serial chats that launch new windows. So, for example, if I'm done chatting and I close the window, and then a new window noisily pops up from the same person some time later and intrudes into my attention sphere, we might analogize that to a second telephone call after a hang-up on the first call. In contrast, if the conversation takes a break (a common phenomenon in chatting when one or both parties are multi-tasking) but remains in the same window throughout, we might analogize this to a telephone conversation where the parties take a long pause without talking. If all of the chatting took place in the same window that remains open throughout, to me it resembles an email thread in Gmail where I'd consider it all part of the same conversation.
Then again, from a legal standpoint, it ought not matter if the mom closed out the window or not. In AOL's AIM, Alex C. would not know if the mom had closed the chat window or left it open, so I see this as very different from a telephone caller who hears a click and then a dial tone and yet calls up the person again. But even if the mom had closed out the window, the facts strongly that Alex C. was on an episodic but nevertheless continuous evening-long rant. As a result, from my perspective, this was a terrible ruling. Alex C's chat messages are hardly praise-worthy, but calling it the equivalent of criminal cyber-stalking/cyber-harassment stretches those concepts far beyond any reasonable boundary.
The court's struggle to analogize IMs to telephone calls brought to mind other problems we've encountered trying to statutorily define methods of communication, such as the cases struggling with whether an email can be a telephone call (yes) or a pop-up ad is an email (no). Ideally, we would draft statutes that don't create these kinds of technological classification challenges. However, given the number of technological assumptions baked into statutory wording combined with increased technological convergence, I expect we'll get more of these goofy classification inquiries in the future.
Update: Professor Volokh comments on this ruling at the Volokh Conspiracy: "Illegal in New Hampshire to Repeatedly Use “Offensively Coarse Language” With the Purpose to Annoy."
December 11, 2010
Court Unlocks Allegedly Infringing Domain Name Based on Ineffectual Email Service -- Station Casinos, Inc. v. Murphy
[Post by Venkat]
Station Casinos, Inc. v. Murphy, 2:10-cv-01770-GMN-LRL (D.Nev.; Nov. 18, 2010) [pdf]
Plaintiff, who operates a family of Station-branded casino hotels and owns the "STATION CASINOS" mark, brought suit against Ryan Murphy, alleging that a website accessible via [stationcasinos.org] which was operated by Murphy infringed on plaintiff's trademark rights. The court granted an ex parte TRO which was fairly broad in scope. The order:
direct[ed] the current registrar to disable or change the domain name server (DNS) information for the allegedly infringing domain name and place the domain name on hold and lock for the pendency of the litigation.
Plaintiff also "requested that the current domain name registry place the Infringing Domain Name on Registry Hold status, thus removing Defendant from the TLD zone files maintained by the registry, which link the Infringing Domain Name to the IP address where the associated website is hosted." The court grants this request on an ex parte basis and allows plaintiff to serve defendant via email. However, the email sent by plaintiff's counsel bounced (was undeliverable) and as a result the court dissolves the TRO. [Added: Laura Wise pointed out that if the attempts at email service occurred after the TRO had been implemented (and the domain name disabled), it should come as no surprise that the emails bounced.]
Unfortunately for plaintiff, the defendant is located abroad, and this raises the possibility that the defendant transfers the domain name to a non-US registrar, which would complicate plaintiff's enforcement efforts.
The result in this case can be contrasted with the recent "seizure" of various allegedly infringing domain names by ICE. (I uploaded one of the warrants and seizure orders to Scribd: US v. Domain Names (LV-OUTLETSTORE.COM; LV-OUTLETS.COM; LV-OUTLETS.NET), 10-mc-00085 (D. Col.; Nov. 19, 2010) (Application for Warrant); (Warrant of Seizure).) From what I can tell, in those seizure actions, the courts issued an order (also ex parte) requiring a change in the DNS information which meant that people trying to access the domain names would now be directed to the following message:
[This] domain name [has] been seized by ICE - Homeland Security Investigations, pursuant to a seizure warrant issued by a United States Court.
For a good description of how this process worked, check out this post at Liberale et libertaire: "The Background Dope on DHS Recent Seizure of Domains." For a rundown of some Due Process issues that the ICE domain name seizures raise, check out this post by David Post: "Copyright Enforcement Tail Wags Internet Dog, Cont’d; or, What the Hell Ever Happened to Due Process?" (See also posts at Techdirt: "Who Needs COICA When Homeland Security Gets To Seize Domain Names?" and SearchEngineWatch: "Homeland Security Seized Torrent Domain That Gave Same Results Google Still Does.")
This also brings to mind whether improperly having a domain name locked can result in civil liability, and Eric posted about a case a couple of weeks ago that is relevant in this regard. In that case Tucows locked a slew of domain names in response to a demand by a trademark-plaintiff. This resulted in a rare ruling allowing a reverse domain name hijacking claim (against the plaintiff/trademark owner) to go forward. (Here's Eric's post on that case: "Wildcarding Subdomains Is OK; Reverse Domain Name Hijacking Isn't--Goforit v. Digimedia.")
This is a good a time as any to mention a few other domain name enforcement cases that are lurking around (some are a few months old, but still worthy of a mention):
Microsoft Corp. v. John Does 1-27, 10-cv-00156-LMB-JFA (E.D. Va.; Sept. 17, 2010) (R&R re default judgment); (Order adopting R&R): Microsoft obtains default judgment against unnamed defendants who allegedly used various domain names in connection with the Waledac botnet. Interestingly, the court awards Microsoft control over the domains. The case documents do not appear to have been physically served on defendants, but the court lets Microsoft slide, given (1) the extensive efforts at serving the case documents undertaken by Microsoft, and (2) the fact that Microsoft uploaded the pleadings to a website called [noticeofpleadings.com], coupled with evidence that someone who shared IP addresses with the offending domains accessed this site.
Chanel, Inc. v. Xuhui, et al., 10-cv-2040 (W.D. Tenn.; Nov. 4, 2010): Chanel obtains default judgment against an alleged seller of counterfeit items, after getting permission to serve via alternate means (email). Interestingly, the court orders a long list of domain names transferred to Chanel. The legal authority for a transfer is questionable (see "Domain Names as Property Subject to Creditor Claims--Bosh v. Zavala") but no one was around to raise this issue.
Xcentric Ventures, LLC v. Elizabeth Arden (Complaintsboard.com), No. C 10-80058 SI (N.D. Cal.; Oct. 1, 2010): Rip-off Report (which has garnered more than a few mentions on the blog) obtains a default judgment for copyright and trademark infringement against complaintsboard.com. It gets control over the complaintsboard domain name the old fashioned way - it takes the judgment to the Northern District of California where it obtains a writ of execution. Arden contested jurisdiction when Rip-off Report moved to enforce the judgment but the court rejected Arden's arguments. It's unclear as to whether the court orders the domain name transferred to Rip-off Report or whether Rip-off Report has to buy the name at an auction or from a receiver.
Righthaven v. Drudge: This just-filed complaint by Righthaven against Drudge hasn't produced any rulings, but it gets an honorable mention because Righthaven asks the judge to "lock the Drudge Report Domain and transfer control of the Drudge Report Domain to Righthaven." (See ArsTechnica.) It's safe to say that Righthaven's chances of getting Drudge's domain name range between slim and none.
December 10, 2010
SEO/Web Design Consultant Faces Contributory Trademark Liability for "Copycat" E-Commerce Site--Roger Cleveland Golf v. Price
By Eric Goldman
Roger Cleveland Golf Co. v. Price, 2010 WL 5019260 (D. S.C. Dec. 3, 2010). [Note: the case captioning is probably wrong. Apparently, it should have been Roger Cleveland Golf Co. v. Prince]
Online contributory trademark infringement liability remains a key underdeveloped area of Cyberlaw. This year, we've seen a strong defense win in Tiffany v. eBay, but we've also seen some puzzling and troubling defense losses, including the Louis Vuitton v. Akanoc ruling against a web host and the Gucci v. Frontline ruling against various payment service providers.
This ruling is another puzzling defense loss, but the outcome may be attributable in part to the defendant's procedural choices, not the substantive merits of its legal position. The defendant sought summary judgment using an unusually laconic motion of 1.5 pages that lacked legal citations or supporting evidence. The judge did not respond well to this approach.
Substantively, this case involves the domain names copycatclubs.com, worldtimegolf.com and legacygolfclubs.com, all of which led to a store that described itself as “your one stop shop for the best COPIED and ORIGINAL golf equipment on the internet.” Starting with the copycatclubs.com domain, a Roger Cleveland "mystery shopper" ordered counterfeit Roger Cleveland golf clubs through the site. In response, the TM owner sued a number of folks involved with the website.
This ruling involved the defendant Bright Builders, which allegedly provided several secondary support services to the website operators. Specifically, the TM owner asserted that Bright Builders played the following roles:
Bright Builders participated in the design, building, marketing, and support of the business model and websites through which Plaintiff’s trademarks were infringed, including but not limited to instructing Defendants on search engine optimization and methods of embedding keywords, such as Plaintiff’s federally registered trademarks, into metadata within Defendants’ websites and providing Defendants with a complete “Bright Builder Help Team” which, among other things, located vendors to supply the counterfeit products sold through Defendants’ websites . . . . Bright Builders . . . knew or should have known from the name of one of Defendants’ websites, “copycatclubs.com”, from the text contained thereon claiming to be a leading website for “copied” clubs, from the use of Chinese wholesalers to provide clubs for resale on Defendants’ websites, and from the use of Plaintiff’s trademarks as metatags for those websites that it was participating in trademark infringement.
Elsewhere, the TM owner asserted:
that, upon Bright Builders’ assurance that Prince would make at least $300 per month from operating his online store, Prince paid Bright Builders $10,000 to provide “coaching and mentoring” services to assist him in building his online business...Bright Builders provided Prince with a Project Advisor that had one-on-one discussions with him about developing copycatclubs.com; Prince specifically discussed his ideas about selling golf clubs with his Bright Builders team, at least one member of which encouraged Prince to do so...; under Bright Builders’ tutelage, Prince opted to “drop ship” his merchandise, a method of doing business that Prince’s Project Advisor seemed to acknowledge would not be a profitable way to sell name brand products without “massive” mark ups...; Bright Builders helped Prince design and build the website copycatclubs.com, whose name alone Plaintiff argues should have put Bright Builders on notice of Prince’s intention to sell counterfeit (or “copycat”) golf equipment; similarly, Plaintiff argues that the site’s content, which expressly anoints itself “your one stop shop for the best COPIED and ORIGINAL golf equipment on the internet,” should have put Bright Builders on notice of Price’s intention to sell counterfeit golf equipment.
These factual recitations were more than enough to defeat the defendant's 1.5 page summary judgment motion.
What's stunning to me is how many of the plaintiff's asserted facts seem facially irrelevant to Bright Builder's contributory trademark liability. Of what relevance is it that Bright Builders provided coaching/mentoring services? Or that a Bright Builders employee discussed selling golf clubs via the website? These and most of the other asserted facts don’t seem responsive to any relevant legal doctrine. I want to drill down more deeply on two of the asserted facts:
1) the plaintiff repeatedly harps on the domain name "copycatclubs.com." There are two problems with this. First, unless the golf clubs are protected by some industrial design doctrine (which will be true in some but not all cases), making "copycat" versions is a completely legitimate activity so long as they aren't marketed as the original goods. Second, the domain name, by itself, does not automatically set off red flags. For example, in Perfect 10 v. ccBill, the court said that the domain names "illegal.net" and "stolencelebritypics.com" did not confer "red flags" of copyright infringement because it could just be marketing hype. Although that case involved copyright, not trademarks, its reasoning seems highly analogous--ESPECIALLY when combined with the first fact that "copycat goods" aren't per se illegal.
2) the facts don’t specify what metatags were used, but we know that (a) Google ignores keyword metatags and (b) judges mistakenly think that keyword metatags are the holy grail of SEO. If you're an SEO who continues to believe that keyword metatags might help and can't hurt, you are 100% wrong from a legal standpoint.
Although the defense's procedural defects may overwhelm the substantive lessons we might take away from this case, I want to highlight three possible implications:
A) SEOs and web designers should not just assume they will avoid legal liability if they deal with shady businesses. I'm not saying the websites here were shady. However, if the court decides they were, Bright Builders might share legal liability with the client. Website service providers, pick your clients wisely. Not every paycheck is a good deal. Sarah Bird recaps some other examples of potential secondary liability for SEOs and web designers/hosts.
B) This case reminded me a lot of the Gucci v. Frontline case. In both cases, the judges seemed to have strong allergic reactions to sites selling "copycats" or "replicas"--strong enough to sweep in service providers who were a few steps removed from the bad action. As Venkat told me as we were discussing this case, a domain name like "copycatclubs" will almost certainly rub judges the wrong way. At minimum, judges are going to require lots of evidence showing good faith and legitimate activity at a site like "copycatclubs" to help them overcome their initial strongly negative reaction to such a domain name.
C) If you are an online business defending a secondary trademark claim, never treat contributory trademark claims lightly. Retain the most trademark-savvy litigators you can afford. The stakes are high for any litigation missteps. See, e.g., the $32M jury award against Akanoc.
Note: I sent an email requesting comment to Bright Builder's lawyer, Paul J. Doolittle of the Jekel-Doolittle, LLC firm in Mt. Pleasant, South Carolina, with a home page title of "South Carolina Nursing Home Negligence | Nursing Home Abuse Law Firm." He acknowledged my email but did not provide a public comment before my deadline.
December 09, 2010
Get Ready for a Rush of Facebooking Activity by Judges in Ohio
[Post by Venkat]
Ohio Supreme Court (Board of Commissioners on Grievances and Discipline): Opinion 2010-7 (Dec. 3, 2010)
I posted previously about Florida's restrictive attitude toward Facebook friending by judges: "Is the Florida Bar Taking Facebook Friendship Too Seriously?" The Ohio Board of Commissioners recently released an (advisory) opinion answering the question of whether "a judge [may] be a 'friend' on a social networking site with a lawyer who appears as counsel in a case before the judge." [Answer: yes.] The opinion is a surprisingly good read. For example, it notes that:
A rose is a rose is a rose. A friend is a friend is a friend? Not necessarily. A social network "friend" may or may not be a friend in the traditional sense of the word.
The Ohio advisory opinion runs through the code of conduct for judges and notes that
[u]pholding these required virtues may be challenging for a social networking judge. Social interaction on a network occurs rapidly and is widely disseminated.
Some specific guidelines:
maintain dignity in comments and photographs;
don't convey the impression that anyone is in the position to influence you;
don't make comments about pending matters (privately or publicly);
don't view a witness's profile;
don't give legal advice to others; and
be aware of the contents of [your] . . . page, be familiar with the social networking site policies and privacy controls, and be prudent in all interactions on a social networking site.
It looks like most of the states that have considered the issue have said jurists can friend (Kentucky, Ohio, New York, South Carolina), with just one state saying no (Florida).
When I wrote the post about Florida's opinion I thought it was taking the concept of Facebook friendship way too seriously. However, since then it seems like Facebook's privacy controls have grown more complicated. I do think there's that issue to consider. In light of this, Ohio's cautionary notes seem warranted. On the other hand, you have to wonder whether this smacks of Facebook exceptionalism. Do we have to articulate the rules for judges following a lawyer on Twitter? Do we need to reiterate the rules of engagement for judges emailing lawyers? Either way, it's nice to see Ohio take a practical stance on the issue.
For what it's worth, the ethics opinion contains reasonably good advice that is probably helpful to lawyers as well (even though lawyers aren't subject to the same canons as judges).
December 08, 2010
Advertising & Marketing Law Syllabus for Spring 2011
By Eric Goldman
Next semester, I am teaching Advertising & Marketing Law for the first time. My syllabus. This is a brand-new course built from the ground up. As teaching materials, I will be using an early draft of a new casebook that Rebecca Tushnet and I are co-authoring. I'll have more to say about the book later. I will also be relying heavily on Rebecca's database of artifacts/props. If you teach in the IP/Internet/advertising law area and don't already have access to the database, you should contact her.
As you'll see in the syllabus, I am experimenting with several different grading options for the students. Among other things, I am participating in the Wikipedia Public Policy Initiative and allowing students to edit Wikipedia for a grade. See my recap of my prior experiment with graded Wikipedia assignments. I'll be interested to see how many students choose that option. [Note: I have more to say about my 2005 prediction of Wikipedia's demise shortly.]
I was absolutely blown away by student interest in the course. Over 80 students tried to enroll in the course! I had deliberately capped the course enrollment at 18 because of the course's experimental status as well as the fact that it's a voluntary uncompensated overload. As a result, I had a LONG list of disappointed students.
Based on this surprisingly high level of student interest and the course's relevance to new lawyers (many of whom will quickly encounter advertising law issues in their practices), I believe that many law schools would benefit from offering the course. If you're thinking about offering an advertising law course, I'd love to chat with you about it.
Court: Search of Contents of Student Cell Phone Covered by Qualified Immunity -- J.W. v. Desoto County School Dist.
[Post by Venkat]
J.W. v. Desoto County School Dist., et al., 09-cv-00155-MPM-DAS (N.D. Miss.; Nov. 1, 2010)
The Virginia Attorney General set off a small firestorm (e.g., "Should Teachers Be Searching Cell Phones?") when he issued an opinion to the effect that principals and teachers may seize student cell phones and laptops and access their contents in order to combat "cyber bullying." (You can access a copy of the opinion here: [pdf].) Interestingly, earlier last month, a federal court in Mississippi held that individual defendants were shielded from civil claims (by qualified immunity) based on an allegedly improper search of a student cell phone.
The facts of the Mississippi case are fairly straightforward. R.W., a student, opened his phone (while in class) to receive a text message from his father. A school district disciplinary rule prohibited students from possessing or using cell phones while at school. A school district employee confiscated the phone and, according to the plaintiff, "opened the phone to review the personal pictures stored on it." The employee discovered photos of another student holding a B.B. gun. R.W. was escorted to the principal's office where other school employees viewed the contents of his phone. As a result, R.W. was suspended for violating a rule which prohibits students from "displaying messages associated with any gang . . . [or] criminal activity." [The order isn't totally clear, but it looks like the school administrators must have found other photos as well.] R.W. was expelled and brought suit, alleging that the search and expulsion violated his constitutional rights.
The court held that the actions of the individual defendants were protected under qualified immunity (under which public officials can only held liable for damages if they violate "clearly established" constitutional rights). The court gives an obligatory nod to the relaxed standards for when searches are appropriate in schools. Although R.W. argued that there was no reason for the school officials to look at the contents of his phone, the court found otherwise, noting that the search could be viewed as reasonable for a variety of legitimate reasons (e.g., to find evidence of cheating or that the student was improperly communicating with another student via his cell phone).
The court distinguished a recent case from Pennsylvania (Klump v. Nazareth Area School Dist., 425 F. Supp. 2d 622 (E.D. Pa. 2006) [pdf]) where the court denied qualified immunity for individual defendants, on the basis that in the Pennsylvania case, the officials "appeared to use [the accident of the phone falling out of the student's pocket] as a pretext to conduct a wholesale fishing expedition into the student's life." In the Pennsylvania case, the facts of the search were more egregious: administrators used the student's phone to call other students, accessed the student's voicemail and text messages, and even had an AOL Instant Message conversation with someone using the student's phone.
Nevertheless, the court in this case had an awkward time distinguishing the two cases. There was little justification in this case for the officials to view the contents of the phone, much less the photos on there. That said, the court was clearly bothered by the facts of the case, and the fact that the search resulted in discipline for off-campus conduct. Although the court let off the individual defendants, the court was skeptical of the propriety of the school district's conduct overall, and admonished the school district to "give serious consideration" to settling the case. The court also chastises the school for its inconsistent reasons for expelling R.W. - the actual offense of bringing a phone to school was only punishable by a three day suspension, and justifying the expulsion based on the photos on the cell phone was akin to "call[ing] in a student on a Monday morning and ask him to explain, under penalty of expulsion, why he was observed wearing a particular piece of clothing or seen running around with a 'bad crowd' over the weekend." The court also notes that R.W. didn't actually "display" any of the photos. R.W. has a good chance of persuading the court to set aside the expulsion, but this may not end up being of much use to him. (At the time of the summary judgment ruling, R.W. was well into the school year at another school. He can only get money damages against the individual defendants, and the court found them to be protected by qualified immunity. While he may get equitable relief, this could come too little too late.)
The Virginia AG's opinion is somewhat narrow, and hints at the unreasonableness of the search in this case. Although the opinion only looks at the hypothetical posed by a specific factual scenario, it OKs a search of the contents of the phone based on a report from a student that a message from another student that is "either threatening or criminal or violates the school's bullying policy" - i.e., when the contents of the phone are related to the alleged violation in the first place. It was tough to make that argument here, although the court allowed the individual defendants to slide based on its view that the law was not clearly established.
December 07, 2010
Rosetta Stone v. Google Amicus Briefs in Support of Google
By Eric Goldman
Three amicus briefs were filed in support of Google in the Rosetta Stone v. Google appeal.
This is the "industry" brief, although in the past, typically more players have joined a brief like this. Easily the most interesting aspect is that eBay emerged as a Google supporter after an organization it supports, the Association for Competitive Technology, joined a pro-Rosetta Stone brief along with co-joiner Tiffany. I haven't heard what happened in response to that apparent oversight, but I've always assumed it would end badly for eBay's relationship with ACT. (As of now, eBay is still listed as an ACT "supporter").
Substantively, the brief addresses contributory trademark infringement standards and the importance of keyword advertising. The brief surprisingly engages in a few places with the Carfax amicus brief (most of the time, amici ignore each others' briefs). The brief also tries to distinguish the troubling 4th Circuit decision in Georgia Pacific Consumer Products LP v. Von Drehle Corp.
This brief argues that Google doesn't make a trademark use in commerce (I can't believe they waded into those waters again) and Google and its advertisers engage in trademark fair use.
We argue that, because both keyword advertising, and the “sale” of keywords, are commercial speech, the regulation of this practice must be consistent with the First Amendment. Next, we discuss trademark law’s basic principles and show that they are limited to protecting consumers against confusion about whether goods and services emanate from the trademark holder, and show that it is not Google’s function to deliver Internet users to a trademark holder’s official website. We further contend that those who compete with or criticize a trademark holder are entitled to call their own web content to the attention of those who have displayed interest in a trademarked term. Finally, we argue that, if any trademark confusion is at issue in this case, it is “initial interest confusion.” This Court has previously expressed skepticism about that doctrine; Rosetta cannot rely on that concept to hold Google liable here.______
The case library:
* Public Citizen amicus brief in support of Google.
* Public Knowledge/EFF amicus brief in support of Google.
* eBay/Yahoo amicus brief in support of Google.
* Google's opening response brief.
* UK Intellectual Property Law Society amicus brief in support of neither party.
* Rosetta Stone's opening appellate brief: redacted and unredacted.
* INTA's amicus brief in support of Rosetta Stone.
* Carfax et al amicus brief in support of Rosetta Stone.
* Association for Competitive Technology et al amicus brief in support of Rosetta Stone.
* ConvaTec et al amicus brief in support of Rosetta Stone.
* Volunteers of America amicus brief in support of Rosetta Stone.
* District court's main opinion granting SJ. My blog post.
* District court's opinion granting a motion to dismiss on the unjust enrichment claim.
* Rosetta Stone's initial complaint. My blog post.
December 06, 2010
Court Holds Defendant in Contempt for Failing to Scrub Trademark Use From the Internet -- TDC Int'l v. Burnham
[Post by Venkat, with comments from Eric]
TDC Int'l v. Burnham, 2010 U.S. Dist. LEXIS 116741 (E.D. Mich; Nov. 2, 2010)
TDC sued Burnham based on Burnham's use of the "Quick and Easy Moving" mark, which supposedly infringed on TDC's "EZ Moving/Moving and Storage" mark. The parties settled, and Burnham stipulated to a judgment against him. The consent judgment required Burnham to:
remove all internet postings, websites, email addresses, advertisements, online business listings, YouTube accounts, Twitter accounts, and any other online material associated with [Burnham].
TDC brought a motion for contempt, arguing that Burnham failed to comply. Burnham responded that he had been unable to remove pages hosted by Squidoo.com and Yelp.com because he was "locked out of them."
The court finds that, although Burnham is not required to do "the impossible," he should have taken reasonable steps. The court finds that Burnham failed to do so, and directs Burnham to:
contact the entities that maintain the sites [Squidoo.com and Yelp.com] and request that they be removed pursuant to the Settlement Agreement, Consent Judgment, and Injunction. . . . . This includes requesting sites remove keywords that Defendant would be prohibited from placing on the sites. This is no small undertaking, but is required by the Injunction.
Interestingly, the court also orders Burnham to take corrective measures in the form of including the following disclaimer "at the top of the initial page of any web site promoting, describing, advertising, or otherwise involving [Burnham's] business operations . . . that is maintained by or for the Defendant":
I, Jae Burnham, the owner of the content posted here, have been ordered by the United States District Court for the Eastern District of Michigan to post this notice because I have been twice found in contempt of court.
IF YOU ARE SEARCHING FOR “EZ MOVING” OR “EASY MOVING,” THIS IS NOT THE SITE OF ANY SUCH MOVING BUSINESS.
Until 2009 I used the name “Quick and Easy Moving” for my moving business and was ordered to cease using that name because it wasconfusingly similar to another more senior business, “EZ Moving and Storage.” My moving business is NOT “Easy Moving,” “EZ Moving,” oranything similar to the word “easy” in connection with “moving.”
Also, during the time I advertised to provide moving services using the words “Quick and Easy,” I made claims that my business had “5 employees and its own moving vehicles.” These statements were false when I made them, and they continued to be false through November 2010.
After I was sued for trademark infringement, I settled and agreed to remove the words “easy” and “quick” from my internet presence, and Iagreed to make certain payments.
I failed to comply with these terms, and I was held in contempt ofcourt. Additional monetary penalties were added.
I again failed to abide by the terms as ordered, and was again held in contempt of court.
I have been ordered by the court to post this notice to correct my past untrue statements connected with my misuse of the “Quick and Easy Moving” trade name and to ensure that I will comply with the terms of my agreement.__
This order raises the issue of how one wipes a trademark use off of the internet and whether courts will be sympathetic to an enjoined defendant's argument that they shouldn't be required to remove all references to a trademark on the internet because they can't control what's out there (here the court was not very sympathetic, but that may be due to the defendant's overall pattern of non-compliance). It's reminiscent of the Promatek v. Equitrac case, which Professor Goldman blogged about here: "Promatek Redux: Software Consultant Enjoined from Metatag Usage and Other TM References." It also reminds me of the CertainTeed Corp. v. Seattle Roof Brokers case, where Judge Jones (in a false advertising case) ruled for the plaintiff, and gave the defendant the option of (1) posting the court's order on defendant's website or (2) including a disclaimer. (See Mike Atkins's post on this case: "Shingle Manufacturer Obtains Permanent Injunction, with Compliance Options.") Rhino Sports v. Sport Court is another similar case, though that case reached a different result.
Eric's comments: Promatek v. Equitrac is one of my favorite cases to teach. At the end of the discussion, I ask the innocuous question: "who won this case?" That seems easy: the TM owner got its requested injunction from the district court, and the appellate court upheld the injunction. However, as you'd expect from a law professor, this is a trick question. The correct answer is "the parties' lawyers" who got cash from their clients. Everyone else appears to get an F in Cyberlaw (and shame on the lawyers for taking the money).
In Promatek, the TM owner asked for an injunction requiring the defendant to publish language very similar to the disclaimer above on its website. In both cases, the disclaimer language contained several keyword references to the TM owner in ways that would be well-indexed by the search engines. Effectively, in this case, the court orders the defendant to stop using the TM on other websites but then ORDERS THE DEFENDANT TO INCLUDE THE SAME TRADEMARKS MULTIPLE TIMES IN FULLY INDEXABLE FASHION ON ITS OWN WEBSITE.
The disclaimer may not be optimally SEOed language, but any SEO is surely amused by this remedy. Now, the court could have ordered this disclaimer to be presented in ways that the search engines wouldn't read (for example, as an image). The court did provide highly detailed formatting instructions, but these instructions reinforce the indexability:
The text must be encoded to display in Arial or Times New Roman font at a sizeof no less than 10 point font, black on a white background. The text may be directly above or directly below any banner across the top of the page. It must precede all articles, videos, or audio recordings that promote Defendant’s business or deal with the moving services industry. Defendant shall maintain such notice prominently on all websites, articles, videos, or other severable internet or computer content created or owned by or for Defendant and involving the moving services business. Defendant shall also prominently display such notice in any other online postings, articles, or other similar content placed on the sites of others by, for, or with the consent of Defendant. This requirement will continue from December 15, 2010, until December 15, 2011.
Overall, this result is a good cautionary tale for trademark lawyers pursuing corrective advertising remedies: make sure you've fully thought through the SEO implications of the corrective advertising you are seeking!
Venkat was also genteel enough not to disparage the plaintiff's trademark in "EZ Moving and Storage," but I can't believe the court gave any credit to that trademark. It seems highly likely the defendant's behavior had something to do with that.
Rosetta Stone v. Google Appellate Briefs: Google's Opening Brief and Rosetta Stone's Unredacted Brief
By Eric Goldman
Due to the intervention of Public Citizen, Rosetta Stone filed an unredacted brief in its appeal of Rosetta Stone v. Google. The actual redacted material seemed hardly worthy of confidentiality; in some cases, the information already was clearly public, and in other cases the information was so inconsequential that it strains my mind trying to think why anyone cared about its confidentiality.
I've gone through the redactions, and a few of the more interesting tidbits of newly revealed information:
- discussion of Google's consumer survey in 2004 when third party trademarks appeared in the ad copy (page 8). One survey distillation said that there was an "overall very high rate of consumer confusion" with an average of 30-40% and 94% of consumers confused at least once. I'd need to parse the actual studies, but we should remember this was 2004, when Google's method of presenting advertising was relatively new. Six years later, I would love to see the stats if we replicated that study. I am confident there would be much lower rates; and compared against a baseline level of confusion among online users generally regardless of what they see, my guess is that the numbers would be pretty close to the baseline.
- discussion of Google's trademark policy change in 2009. The brief argues that the 2004 survey evidence shows Google knew consumers would be confused in 2009. Given the many changes in technology and consumer expectations from 2004 to 2009, that's not really a credible argument to me. More remarkable to me is that Google says it didn't test consumer reactions to this policy change at all. Google is known for being an obsessive tester of UI changes, so to fly blind on this seems conspicuously anomalous.
The evidence also indicates that Google expected to generate at least $100M of new annual incremental revenues from the 2009 policy change, and up to $1B annual. For those pundits who were loving Google's year-over-year profit increases from 2009 to 2010, we have a partial explanation.
- Rosetta Stone has spent approx. $100M on advertising (page 23). It would be interesting to compare how much Rosetta Stone is wasting on legal fees in this case and how far they could advance their marketing objectives if they redirected those litigation dollars.
- Both Google's current and former Chief Trademark Counsels (Terri Chen and Rose Hagan, respectively) "could not tell that three of the sponsored links - two ads for counterfeiters and one for a Rosetta Stone competitor - were not advertising the sale of genuine Rosetta Stone software" (page 36).
This seems to cut against Rosetta Stone's position. If Google's most experienced trademark counsel can't spot the ads for fakes, then how does Rosetta Stone expect lower-level employees or machines to do so?
In this respect, I'm reminded of the ludicrous arguments from Viacom about YouTube's ability to spot fake uploads. Viacom and its lawyers couldn't do it (recall that Viacom's lawyers TWICE withdrew its complaint about videos that it thought were illicit uploads but weren't); so how could Viacom expect YouTube to be more accurate than its lawyers? Ditto for Rosetta Stone.
Unfortunately, Google's opening appellate brief is similarly swiss-cheesed by redactions. I believe Paul Levy will be working to get those redactions revealed. Substantively, Google's brief covers predictable ground; I thought this paragraph nicely distilled Google's factual position:
The core facts relating to the alleged trademark infringement are undisputed. It is undisputed that Google operates an advertising program through which advertisers can bid for the opportunity to have their ads displayed next to search results in response to user queries that contain trademarks. It is undisputed that Google does not prohibit resellers and information websites from using trademarks in ad text to refer to genuine products. It is undisputed that advertisers are responsible for their selection of keywords and ad text and that Google contractually prohibits advertising counterfeit goods or otherwise infringing intellectual property. It is undisputed that Google takes substantial proactive and reactive efforts to enforce its policies. It is also undisputed that counterfeiters exist and sometimes violate Google’s policies and take evasive actions to further their own agendas. It is undisputed that Google has never suggested to any counterfeiter that it copy and sell fake Rosetta Stone software, or otherwise induced any counterfeiter to do so. And it is undisputed that Google responded to Rosetta Stone’s complaints about ads that were not in compliance with Google’s policies.______
The case library:
* Google's opening response brief
* UK Intellectual Property Law Society amicus brief in support of neither party
* Rosetta Stone's opening appellate brief: redacted and unredacted.
* INTA's amicus brief in favor of Rosetta Stone.
* Carfax et al amicus brief in favor of Rosetta Stone.
* Association for Competitive Technology et al amicus brief in favor of Rosetta Stone.
* ConvaTec et al amicus brief in favor of Rosetta Stone.
* Volunteers of America amicus brief in favor of Rosetta Stone.
* District court's main opinion granting SJ. My blog post.
* District court's opinion granting a motion to dismiss on the unjust enrichment claim.
* Rosetta Stone's initial complaint. My blog post.
December 04, 2010
Message Board Operator Fights Discovery Order Requiring Broad Disclosure [Update] -- Concerned Citizens for Crystal City v. City of Crystal City
[Post by Venkat]
Concerned Citizens for Crystal City v. Crystal City, No. ED94135 (Mo. Ct. App.; Nov. 30, 2010) (amended order)
I posted in October about a discovery dispute involving a message board operator who was subject to an overly broad discovery order. ("Message Board Operator Fights Discovery Order Requiring Disclosure of Identities and Private Messages.")
The trial court dismissed the lawsuit in response to the message board operator's refusal to comply with the order. Although the appeals court reversed, the previous post mentioned that the appeals court offered little by way of direction to the trial court, in particular regarding the private messages that the message board operator was ordered to produce.
The appeals court on its own motion issued a revised opinion, adding the following language:
In order to narrow the scope of discovery concerning private messages, Defendants will need similar access to the text or other information as to the content of those messages, with identifying information removed, as was provided concerning the public postings. This will enable the parties and the court to then determine which private messages and what identifying information about those messages is properly discoverable. [emphasis added]
It's nice to see the court (on its own motion) give a bit more clarity to the issue. Unfortunately, the order didn't cite the blog post, so I can't claim credit for this.
December 03, 2010
Court Admits Google Earth Evidence, But Only for Demonstrative Purposes -- State ex rel. J.B.
[Post by Venkat]
State ex rel J.B., Case No. A-2228-08T4 (N.J. Ct. App.; Sept. 27, 2010)
J.B., a juvenile, was convicted for burglary, robbery, and trafficking in stolen property ("a jar of coins, a samurai sword collection, and a laptop"). There was conflicting testimony as to J.B.'s whereabouts. His co-participants testified that he participated, but his mother supported J.B.'s alibi by testifying that he was at home and could not have participated in these acts.
To rebut the alibi, the State produced phone records from Verizon, which demonstrated that calls were made from J.B.'s mobile phone while he was in the vicinity of the burglary and not from near J.B.'s home. The Verizon representative also testified that a mobile phone call terminated "to the cell tower closest to the caller," which in this case were near the location of the burglary and not J.B.'s home. To demonstrate that the tower to which the calls at issue terminated were closer to the scene of the burglary, the prosecutor produced Google Earth satellite images.
J.B. objected to introduction to the Google Earth evidence for lack of foundation. The judge sustained the objection, noting:
although Google Earth is a tool a lot of people are using . . . I don't know that [its reliability has] been established at this point.
The prosecutor then introduced testimony from a detective who claimed familiarity with the locations of the cell towers, and that he had measured the distances between the locations with the odometer of his police cruiser. The prosecutor then provided the detective with Google Earth images which showed the locations of the cell towers relative to the scene of the robbery and J.B.'s home. J.B.'s counsel objected again, but this time the court overruled his objection:
The [c]ourt finds that other than very recently what would have happened is . . . that the State would have brought in an atlas map and ask[ed] somebody familiar with the area to point on the map where different locations are and how you would get there. And this is just an updated manner of getting the same information. If the [d]efense wants to show that the information is incorrect, they can certainly do it by either cross examination or they can do exactly what I just suggested and bring in an atlas map and show where the exhibit that the State is offering is incorrect.
On appeal, the court held that it was within the trial judge's decision to admit this evidence as a "demonstrative aid." The evidence shouldn't have been admitted by itself to show the distances in question, but given that the officer testified about the distances, the Google Earth images could be admitted as visual aids.
I ran a Lexis search and found 28 hits for "Google Earth" and 84 for "Google Maps." Although this was a surprisingly high number, none of the cases seemed to squarely address use of either for evidentiary purposes (many dealt with use of Google Maps to calculate witness fees based on the prevailing mileage rate).
It was interesting that the prosecutor did not try to use Google Maps instead of Google Earth. In any event, Google Earth and Google Maps are not the same as a random webpage or Wikipedia - in the case of Google Maps or Google Earth, the content is generated or controlled by Google. It may be fallible, but in the same way that an atlas may be. They're certainly not subject to the "anyone can put information on the web" argument that is aimed at Wikipedia and at websites of unknown origin.
The Google Earth evidence wasn't central to the case, and the prosecutor used testimony from a detective who testified as to the distances in question. What struck me even more is that the court didn't even discuss the admissibility of the cell site data to show J.B.'s approximate location. A quick Lexis search indicates that courts are willing to admit this evidence, provided that the proper foundation is laid. (See, e.g., United States v. Benford, 2010 U.S. Dist. LEXIS 56556 (N.D. Ind. June 8, 2010) (allowing the use of expert testimony along with cell site data to refute alibi).)
Other coverage: "Court Finds Google Earth Images to Be Admissible Evidence" (E-Discovery Law Alert)
Loosely related: "Nicaraguan Invasion? Blame Google Maps" [Wired]
December 02, 2010
Court Finds That Threatening Video Posted to YouTube and Facebook Can Constitute a "True Threat" -- US v. Jeffries
[Post by Venkat]
US v. Jeffries, 10-CR-100 (E.D. Tenn) (Report and Recommendation; Oct. 22, 2010)
Background: The defendant was charged with transmitting a video through interstate commerce which contained a threat to kill or injure a Knox County Chancellor. The chancellor was overseeing a custody dispute between the defendant and his ex-wife, and the video centered around the defendant's dissatisfaction with the treatment he had received so far in the family law court system. The video did not mention the chancellor by name. It was uploaded to YouTube, made its way to defendant's sister's Facebook account, "where it was directed to persons with knowledge of the circumstances surrounding the custody dispute." In the video, the defendant sings, plays guitar, and talks about "being alienated from his daughter by judges, lawyers, and his ex-wife." He goes on to say that "he does not care if he has 'to kill a judge or a lawyer or a woman . . . this sh*t needs to stop cause you're gonna lose your job/ And I guarantee you, if you don't stop, I'll kill you.'" Defendant rants further, and closes the video by staying "You better keep me on God's side. Do the right thing July 14th."
Procedural Issue: The court first addresses the procedural issue of whether the case can be properly resolved via a pre-trial motion to dismiss. The court's discussion of whether it was proper to resolve the case at the motion to dismiss stage was confusing, but the court concludes that defendant is not entitled to dismissal of the indictment because the essential facts relevant to the case were disputed. Most importantly, "[a]lthough the parties appear[ed] to agree that the defendant loaded the [video] onto the YouTube website on the Internet, it [wasn't] clear to the Court that particular action was his only means of disseminating the video." Defendant focused on the fact that the chancellor would not be likely to encounter the video since he would have to search through some "100 million videos" in order to find it (and unless he was searching through all of the videos posted by litigants who appeared in front of him, he would have no reason to watch this video, since the chancellor was not named in the video) or it would have to be forwarded to the chancellor by someone, and there was no allegation that defendant forwarded the link to the commissioner. The court found that the defendant's contentions were contradicted by some preliminary evidence - primarily, the testimony of the defendant's sister that she first saw the video on her Facebook page (and not on YouTube). The court concludes that the manner in which the video was disseminated would clearly affect the court's analysis and based on this concludes that dismissal is not appropriate at the pre-trial stage.
Was the Video a True Threat?: In an abundance of caution, the court goes on to resolve the issue of whether the video constituted a true threat and was punishable under 18 USC section 875(c). The court finds the following facts for purposes of the analysis:
(1) The Defendant created the video “Daughter’s Love[;]”
(2) the video contains statements about killing and bombing judges;
(3) the threatening statements in the video are directed toward Chancellor Moyers, although he is not named, as shown by the overall context of the words in the video, including the Defendant’s opening statement that “[t]his song’s for you, judge” and closing command to “[d]o the right thing July 14[;]”
(4) the Defendant posted the video to the Internet website YouTube.com;
(5) the Defendant or someone else who viewed the video linked it to the Defendant’s sister’s Facebook page, thereby bringing it to the attention of the Defendant’s sister and all of her “friends” on Facebook;
(6) neither the Defendant, nor his sister, directly communicated the Defendant’s video or a link to the video to Chancellor Moyers; and
(7) Chancellor Moyers eventually saw the video.
The statute had two elements according to the court's reading of relevant Sixth Circuit precedent: whether a reasonable person (not necessarily the intended victim) would perceive the statement as (1) a "serious expression of intention to inflict bodily harm" and (2) being made to "effect some change or achieve some goal through intimidation."
Defendant argued that a reasonable person would not view the video as being made to effect a particular result "because the nature of YouTube makes it extremely unlikely that the video would ever be viewed by [the chancellor]." Defendant analogized the YouTube posting to "writing a threat on a piece of paper that is then placed in a bottle and thrown into the ocean or posted on the bulletin board of a public library in another city." The government responded that it was irrelevant as to whether the chancellor actually received the video, and the key question was whether "a reasonable person would perceive [that] the [d]efendant intended the video to intimidate." In the judge's view, a better analogy would be that defendant "shouted his message to a crowd of people who had knowledge about the circumstances of his custody dispute . . . [thus increasing] the likelihood that someone would report the threat . . . ." (None of the analogies were particularly satisfying, but that's neither here nor there.)
Ultimately, the court rejects the defendant's motion to dismiss.
This is an interesting case.
The court cites to a previous case (US v. Alkhabaz, 104 F.3d 1492 (6th Cir. 1997)), where the Sixth Circuit held that the defendant's private email exchange (with a friend) of violently misogynistic stories did not fall under section 875(c) because a reasonable person would not view the stories as being made to "effect some change or achieve some goal through intimidation." One judge dissented from Alkhabaz, advocating a different standard (which did not require an intent to effect some change or result through the threat) and arguing that there was no First Amendment bar to prosecution based on a private email exchange. (Here's a post by Susan Brenner discussing the Alkhabaz case ("Fantasy"). The post presciently asks about a hypothetical that is closely analogous to the facts of this case.)
The difference between Alkhabaz and this case is that in this case, the message was not a private communication between friends - the message was posted to the internet. Nevertheless, it was not directed at the commissioner specifically, and did not mention his name. On the one hand, you could have a communication that is directed at (or which would reasonably find their way to) the person that the speaker seeks to intimidate. On the other hand (as in Alkhabaz) you could have a private communication with a totally unrelated third party - for example, the defendant could have just sung the song in question in person to his sister. Depending on the context, this type of a communication may or may not satisfy the statute. Finally, there's this case. The communication was sent into the social stream. What are the chances that someone would have forwarded a link to the video to the commissioner? Would a reasonable person believe that this was likely, or probable? Would an objective viewer think that defendant intended to influence the outcome of his family law case by posting the video on YouTube? Would it matter if defendant shared the video on Facebook?
Oddly, the judge's order adopting the magistrate's recommendation (which you can access at Scribd here) contains a footnote indicating that the government issued a superseding indictment. The key changes between the old and the new indictment is that the superseding indictment alleges that video was uploaded to "YouTube[,]Facebook, [and] to KnoxCounty Chancellor Micahel W. Moyers." Originally, the government argued that the video was uploaded to YouTube but shared to the defendant's sister's Facebook page. These seem like significant changes, and I'm surprised the order just footnotes this without discussing their relevance.
There's obviously a significant First Amendment issue lurking in the background. In Alkhabaz, the Sixth Circuit avoided the First Amendment issue by narrowly construing the statute and finding that the defendant's conduct in that case did not violate the statute (since the email exchanges were made in furtherance of a [warped] friendship), but this case seems to more squarely present the First Amendment question. The U.S. Supreme Court has held that true threats ("those statements where the speaker means to communicate a serious expression of an intent to commit an act of unlawful violence to a particular individual or group") are not entitled to First Amendment protection, but determining exactly what constitutes a true threat that can be criminalized is easier said than done. It would seem that someone would have to have reasonable fear or apprehension as a result of the communication, and a casual statement among friends would not satisfy the standard. To complicate matters, courts have struggled with the appropriate standard for the statute in question (and with threats in general). Some courts employ an objective standard, some a subjective standard, and require that the prosecution satisfy both an objective and a subjective standard (where the defendant must intend to communicate a threat that is reasonably perceived as one). (See United States v. White, 2010 U.S. Dist. LEXIS 9603 (W.D. Va. Feb. 4, 2010) for a discussion of the various standards.)
Here, given the restrictive Sixth Circuit precedent - that requires an intent to effect a result as an element of the crime - it looks like the court will have to address the issue of whether posting to YouTube and/or Facebook is sufficient to satisfy the element. I'm not even sure what standard the court will use - whether a reasonable person would think it was likely that the video would have been forwarded to the commissioner? Whether the commissioner would have been likely to encounter the video while surfing the web or accessing Facebook? That seems like an awfully loose standard, and potentially inappropriate, given the First Amendment interests involved.
All this said, the video was strongly worded and very specific and detailed. It's tough to imagine why the defendant posted the video other than as a threat. On the other hand, if he wanted to threaten the commissioner and influence the outcome, he could have taken some additional simple steps, like naming the commissioner in the video.