December 16, 2011
Does the House Judiciary Committee Debating SOPA Know What's Going On In the Courts?--Philip Morris v. Jiang
[Post by Venkat Balasubramani, with comments from Eric]
This is yet another case where a court orders broad remedies to a rightsowner who alleged that various foreign domain names were selling infringing products. See our recent blog posts on the Chanel and True Religion cases.
The plaintiff in this case is Philip Morris, who alleges that an investigator purchased products from various websites. The investigator forwarded the products to a Philip Morris representative, who alleged that "what appeared to be Marlboro cigarettes were in fact counterfeit." Additionally, the representative
reviewed and visually inspected the internet websites operating under each of the subject domain names, as well as pictures of items bearing the Philip Morris USA Marks offered for sale on the internet websites, and determined that the products were not genuine and/or authorized Philip Morris USA products.
The court issues a TRO that is similar in scope to the Chanel TRO. (The same lawyer was involved in both cases on the plaintiff's side, so this is probably more of a function of the fact that Chanel and Philip Morris sought similar relief.) The TRO contains the following:
- Defendants are enjoined from using any Philip Morris marks, in websites, domain name extensions, links to other websites, search engine databases.
- The domain name registrars are directed to transfer the domain name certificates to plaintiff (for deposit with the court).
- The registrars are directed to transfer the domain names to GoDaddy, who will "hold the registrations for the . . . domain names in trust . . . during the pendency of [the] action."
- GoDaddy shall also update the DNS data so it points to a copy of the complaint, summons, and court documents (<http://servingnotice.com/jiang/index.html>).
- Finally, Western Union is directed to "divert" transfers made by US consumers to three named individuals
The court later extends the TRO and enters a preliminary injunction with substantially similar terms. The orders in this case don't order any sites de-listed, but are still pretty extraordinary in scope. The fact that the court orders the complete disabling of websites and orders registrars to transfer domain names to GoDaddy based solely on the strength of the declarations Philip Morris's investigator and representative is really surprising. Of course, ordering (on an ex parte basis) the diversion of funds transmitted through Western Union is extreme.
As with the Chanel and True Religion cases, the same questions remain. Is there a relationship between the various defendants and the domain names? What type of notice of the lawsuit did defendants actually receive? Was there actually infringement or counterfeiting? The plaintiffs in these cases end up convincing the court of a key fact: immediate, ex parte relief is necessary because defendants will hide assets and shift operations. Courts seem to take this allegation at face value. (The court does authorize service via alternate means and Philip Morris filed affidavits of service in accordance with the court's directive, but this seemed like an afterthought.)
Yesterday's SOPA hearings caused many observers to cringe (see, e.g., Mike Masnick's horrifying recap). I think it's worth revisiting the question of how courts appear already open to remedies people think are objectionable in legislative proposals that are being considered.
If You Dislike SOPA, You'll Dislike This Case Too--True Religion v. Xiaokang Lei
Court OKs Private Seizure of Domain Names Which Allegedly Sold Counterfeit Goods--Chanel, Inc. v. Does
Why I Oppose the Stop Online Piracy Act (SOPA)/E-PARASITES Act
In our True Religion post, I asked just how many similar cases are in the system. Unfortunately, there's not an easy way to quantify the litigation activity. For example. in the True Religion case, the entire action was sealed for a couple of weeks. Even without the seal, I don't know how to find these ex parte rightsowner enforcement cases against foreign rogue websites other than laboriously reviewing every federal filing, having readers tip us off or serendipity.
However, with today's case representing the third foreign rogue website enforcement case we've found in the past month, I'm going to guess that more enforcement actions are out there today or are coming imminently. This seems to suggest that rightsowners have figured out a way to work with the current system without any additional legislation.
The fact that rightsowners are making progress on their own without help seems quite relevant to the debates about SOPA taking place right now in the House Judiciary Committee. Unfortunately, those debates are so ungrounded from reliable fact-based deliberation that the unpersuadable committee members wouldn't care if we found a million of these cases. In contrast, if they were willing to consider the facts on the ground, the possibility that courts are giving rightsowners what they want is a strong indication that SOPA doesn't need to be slammed home on the fast track without proper deliberation.
From my perspective, the three cases demonstrate the problems with ex parte judicial oversight. Only hearing one side of the story isn't enough to trigger the kind of draconian remedies the courts are granting. In particular, in this case, interdicting money being sent via Western Union is quite troubling. Basically, the court says that money being sent by customers who may have done nothing wrong goes into a holding tank--the customers don't get their money back now (and maybe never?) even if the transaction didn't consummate. It seems like rejecting the money transfers, rather than interdicting the money, would have a lot fairer to the buyers caught in the middle. But they aren't in court to defend their interests, and no one else is speaking up on their behalf, so the rightsowner can make a pure cash grab from potentially innocent buyers. That kind of result wouldn't happen with real due process.
Instead of insulting each other on Twitter or reading the sports pages, what the House Judiciary Committee should be doing is putting the existing legislative proposal to the side, taking a close look at what's going on in these cases, figuring out how much relief rightsowners are getting today from the courts, and then deciding if any incremental legislation is necessary to fill any gaps or--equally importantly--curb any rightsowners' abuses of the ex parte process. Instead, sadly, the House Judiciary Committee will continue its bizarre form of political theater until the rightsowners get what they paid for.
Meanwhile, I would be interested in trying to curb the ex parte abuses in court, but I don't know how. We are finding out about these orders after-the-fact, and I don't know how to get ahead of the curve. If the affected domain name owners aren't complaining after-the-fact, perhaps that's a sign that the rightsowners are truly hitting only the bad guys. On the other hand, if the process remains ex parte, inevitably rightsowners will make some serious mistakes that will have terrible consequences for legitimate players. I wish I could figure out a way to sensitize the judges about those risks before they rotely accede to the rightsowners' requests.