Technology & Marketing Law Blog

June 09, 2009

May 2009 Quick Links Part 2

By Eric Goldman

Blogs and Boards

* WSJ: Bloggers, Beware: What You Write Can Get You Sued

* j2 Global Communications v. Zilker Ventures, CV 08-07470 SJO (AJWx) (C.D. Cal. April 22, 2009). A consumer review website can putatively qualify for anti-SLAPP protection, but not in this case because the plaintiff established its prima facie case.

* Biggs Cardosa Associates Inc. v. Bradbury, 2009 WL 1508703 (Cal. App. Ct. May 29, 2009). Here's another one for all of you Rip-off Report fans. A former employee lost a jury trial (and was hit with over $100,000 of damages) for breaching a "non-disparagement" clause in his separation agreement by posting negative comments about his former employer and colleagues on a variety of online fora, including numerous posts on the Rip-off Report.

* Houston Chronicle article on a lawsuit against a website operator for a user post saying that a woman has herpes when she, in fact, does have herpes. She is claiming public disclosure of private facts. [Stupid Houston Chronicle expired the article and moved it to its archives, breaking a number of links throughout the web. Here's a short recap of the article.]

* Stengle v. Office of Dispute Resolution, 2009 WL 1138119 (M.D. Pa. April 27, 2009). The contract of an independent contractor government "hearing officer" was non-renewed because she blogged on the topics of her hearings, raising questions about her impartiality. As the court says in dismissing the resulting lawsuit from the hearing officer:

To reiterate, this Court fully recognizes the cherished right of free speech, as well as the commendable goals of the RA. But these cannot wash away the bona fide concerns that arise when a judicial officer elects to disseminate her opinions in cyberspace with little or no restraint. Because of her position, Plaintiff's attempts to qualify her stances as solely her own were entirely ineffectual. With particular jobs come certain precise responsibilities. In Plaintiff's case, one of these included avoiding even the appearance of bias via extra-judicial comments. Plaintiff's deep concerns about the special education issues and the resulting creation of her blog ultimately caused her to face a dilemma that she alone created. The choices she freely made thereafter led to her non-renewal, and as aforestated we do not find any of the Defendants' conduct actionable under the circumstances.

This case reminded me some of Richerson v. Beckon from last year.

* JuicyCampus redux: People's Dirt. Let the angst over anonymous online forums begin anew.

* Doe v. Ciolli, 2009 WL 1204361 (D. Conn. April 30, 2009). In the AutoAdmit lawsuit, the court rejected Matthew Ryan's (aka ":D") motion to dismiss for lack of jurisdiction.

* Facebook v. Power Ventures, Inc., 2009 WL 1299698 (N.D. Cal. May 11, 2009). Largely following the troublesome Ticketmaster v. RMG case, Power Ventures' motion to dismiss Facebook's copyright and DMCA claims was denied. (Other claims survived too). Comments from Jeff Neuburger and Tom O'Toole.

Miscellaneous

* Colleen Chien, Of Trolls, Davids, Goliaths, and Kings: Narratives and Evidence in the Litigation of High-Tech Patents, North Carolina Law Review, Vol. 87, 2009

* Mazur v. eBay Inc., 2009 WL 1203937 (N.D. Cal. May 5, 2009) Class certification denied. My blog post on this case’s more troubling ruling about 47 USC 230.

* Riggs v. MySpace, Inc., 2009 WL 1203365 (W.D. Pa. May 1, 2009). Venue selection clause in MySpace user agreement upheld.

* Salter v. State, 2009 WL 1409484 (Ind. App. Ct. May 20, 2009). Saving pornographic photos of a minor to a CD does not constitute the "creation" of child porn, even though a new "copy" has been created.

* State v. Bell, 2009 WL 1395857 (Ohio App. Ct. May 18, 2009). MySpace chat sessions aren't MySpace "business records" for hearsay purposes.

* Forbes: the Hidden Costs of Privacy. This article has been written, and written again, many times in the last decade; yet the regulatory dynamics have not improved.

Posted by Eric at 10:35 AM | Content Regulation , Copyright , Derivative Liability , Patents , Privacy/Security , Publicity/Privacy Rights | TrackBack

June 08, 2009

May 2009 Quick Links Part 1

By Eric Goldman

Just a reminder that I'm posting some quick links exclusively to my Twitter account.

Trademarks

* Texas International Property Associates v. Hoerbiger Holding AG, 2009 U.S. Dist. LEXIS 40409 (N.D. Tex. May 12, 2009). Domainer loses ACPA claim over typosquatted domain name. The PPC advertising constituted bad faith intent to profit. Ryan Gile recaps the action.

* GunBroker.com LLC v. Heckler & Koch Inc., No. 09-cv-00051 (M.D. Ga. complaint filed May 14, 2009). Interesting lawsuit by an online auction site for guns seeking a declaratory relief action against a trademark owner who deployed an enforcement agency, Continental Enterprises, to send a driftnet takedown letter that apparently targeted used gun resales or compatible goods. Ryan Gile has more.

* Miranda v. Guerroro, 2009 WL 1381250 (S.D. Fla. May 14, 2009). Miranda is “Paola Morena,” a Latin singer. Her former manager convinced her to do some nude photo shoots in an effort to get a Playboy gig. The Playboy gig didn't materialize, and the manager stopped representing Miranda/Morena. After Morena's career took off, the manager then allegedly threatened to publicly post the photos unless she paid him $70k. Morena rebuffed the request, so the manager allegedly followed through with his threats by launching a website paolamorena.com [I got a nasty Google malware warning when I tried to visit the site], calling it her “official” site and posting some of the photos. The court enjoined the manager under trademark law. I'm a little confused how Morena had protectable trademark rights in her name. Did she make any use in commerce in the United States? Did her name achieve secondary meaning? This could be another case where trademark law is being stretched to stop bad behavior.

* Eric Menhart, the self-purported owner of a trademark in the term Cyberlaw, has gotten his very own personal gripe site.

Advertising and Marketing

* How much can Behavioral Targeting Help Online Advertising? HT Greg Linden

* Yingling v. eBay, 5:2009cv01733 (N.D. Cal. complaint filed April 21, 2009). A class action lawsuit alleging that eBay Motors overcharged merchants.

* IAB has issued its Click Measurement Guidelines designed to answer the Q “What is a Click?” See if their 28 page report actually answers the Q.

* A confusingly written LA Times article reports that 4 South Korean dissident bloggers are being criminally prosecuted for artificially inflating impression counts in order to game rankings of most popular pages.

* Perennially funny: unfortunate product names.

Copyright

* Solicitor General recommends against granting cert in Cartoon Network v. CSC.

* AV v. iParadigms, April 16, 2009. The Fourth Circuit says that the Turnitin system is fair use. My initial blog post on the district court ruling.

Security

* News.com: Interview with FBI cybercrime agent working undercover.

* Oddee: problematic CAPTCHAs. Funny.

Google

* Everyone wants to talk about whether Google is a monopolist
- In early May, I heard Susan Athey, Microsoft's Chief Economist, give a lunchtime attack speech on Google at a George Mason event
- Google is circulating a document explaining why it's good for competition
- Google is blanketing DC with lobbyists too.
- And Google says it's actually small potatoes.
- Wired: Will Wolfram Alpha forestall antitrust inquiry into Google? As I've argued before, we continue to see new entrants into the search business all the time—it’s just too big a market to ignore.
- NYT weighs in too. And the Washington Post discusses how Microsoft and others are complaining about how many Google folks are going into the Obama administration.

* Danny Sullivan: State Of Search: Google Will Stay Strong Despite Bing & Yahoo

* Wired: Secret of Googlenomics: Data-Fueled Recipe Brews Profitability

Posted by Eric at 04:03 PM | Copyright , Derivative Liability , E-Commerce , Licensing/Contracts , Marketing , Privacy/Security , Search Engines , Trademark | TrackBack

June 02, 2009

Web Developer Didn't "Convert" Website--Conwell v. Gray Loon

By Eric Goldman

Conwell v. Gray Loon Outdoor Marketing Group, Inc., 82S04-0806-CV-00309 (Ind. Sup. Ct. May 19, 2009)

This is a classic cautionary tale about interactions between a web developer/host and a customer. The customer retained the web developer to develop a website. The paperwork between the parties was not a model of clarity. Later, the customer orally asked the developer to modify the site; this time, there is only garbled conversations and no paperwork. The developer modified the site but the customer changed its mind and asked the developer to roll back to the earlier version. But the developer could not do so because it didn't keep a copy of the earlier version (what???), The customer stiffed the developer and the developer took the website offline. The developer sued for non-payment; the customer cross-sued for conversion on the theory that it had paid for the site and had been deprived of its property.

The Indiana Supreme Court wrestles with several questions, concluding that:

1) The relationship was governed by common law principles applicable to services, not the UCC Article 2 applicable to goods. This is a tricky area of the law, but I think this may be the more logical result for a combination web developer/host, especially one who never actually delivers any code to the customer.

2) Was there an enforceable agreement to amend? The trial court said yes, and the Supreme Court saw no reason to override that factual finding.

3) Did the developer convert the code/website by erasing the old version? The application of ancient doctrines of "conversion" to intangible bits always makes me queasy, and it's led to some confused jurisprudence. In this case, the court sidesteps all of that doctrinal messiness for the simple reason that the customer never obtained ownership of the code. This is really basic copyright law. Customers who want ownership of the work done by vendors need to spell that out in a written agreement. No written agreement specifying customer ownership, no customer ownership--it's that simple. The court says the customer didn't properly obtain ownership in the written customer-vendor agreement, so the vendor had retained copyright title to its developed code all along, and the customer never had title to be converted.

As usual, so many problems are completely avoidable through proper communication through written agreements and amendments between customers and vendors. Some other obvious observations here:

* it's hard to imagine many web development disputes that are worth taking to a state supreme court, especially one where the outstanding bill was about $5k.
* if you are a web developer's customer and you want to own the developed code, you have to say so in a written agreement
* and, if you want a copy of your website's code, make sure you say so in the contract AND actually get a copy!
* if you are a web developer, you might keep customers happier if you keep every version of their website's code instead of tossing old versions.
* this dispute would have be governed by UCC 2B or UCITA if either were the law of Indiana. I wonder to what extent the new ALI Principles on the Law of Software Contracts (acknowledged in the opinion) will help resolve future disputes like this.

This case reminded me a little of the New Mexico v. Kirby case from a couple years ago, where a customer's failure to pay its website developer while keeping the developed code led to an unexpected jail sentence. I offer more lessons about web developer-customer relationships in that blog post.

While the customer lost the battle here, the issue of when electronic records are subject to conversion doctrines is hardly going away. This court reaches the sensible result that a putative owner gets no protection from conversion unless he/she actually has title to the asset. Read literally, though, I wonder if this ruling could undercut claims over conversion of virtual world assets? After all, a virtual world asset holder may rarely have clear title to the asset; certainly the holder won't be the copyright owner of the asset. Perhaps the analysis will be different in situations where a third party (the virtual world operator) allocates "title" within its own titling system to users--it might still be possible to deprive an asset holder of "title" within that asset system even if the asset holder would have no conversion claim against the virtual world operator if the operator takes the exact same steps to deprive the asset holder.

Other comments about this case:
* Juliet Moringiello
* Eugene Volokh

Posted by Eric at 11:19 AM | Copyright , Licensing/Contracts , Virtual Worlds | TrackBack

May 20, 2009

EFF's Guide to Griping, Plus Some Recommendations of My Own

By Eric Goldman

The EFF has posted "Avoiding Gripes About Your Gripe (or Parody) Site," which includes 6 prophylactic recommendations to prospective gripers:

1) Be noncommercial — no ads, no links to commercial sites, no affiliate links, no Café Press T-shirt sales, no fundraising if you can help it.

2) Don't use the target's name alone in the domain name — adding "sucks" is good, but you can be creative.

3) Have a prominent disclaimer that explains that your target is neither affiliated with nor endorses your site.

4) Find a service provider with backbone.

5) If you borrow from the target's own materials, such as text or images from the target's own websites, be selective.

6) If a mark-owner challenges your use of a mark in a domain name, don't offer to sell it to the mark-owner without the assistance of legal counsel.

All excellent advice. I'd like to add a few suggestions of my own (all standard disclaimers apply--this is not legal advice, and you should consult your own attorney):

7) I would modify #1 to say don't have any outlinks from your gripe site, period. Courts sometimes engage in bizarre link-counting exercises to determine commerciality, including in some cases considering sites two or more links away. Keep it simple and skip outlinks altogether if you can.

8) I would modify #5 to recommend against using the target's logo at all unless it is absolutely essential to the gripe. Otherwise, courts can get hung up on the logo display even when if other aspects of a trademark claim are weak. See, e.g., BidZirk v. Smith and SMJ v. Lafayette Restaurants.

9) I would also modify #5 to say that if you recycle any graphics or photos from the target, consider presenting them as a thumbnail (with a link to the original source if necessary) rather than presenting them full-size. The thumbnail sizing may help with a fair use defense.

10) Never EVER include the target's trademarks in the site's keyword metatags. Some courts lose all sense of perspective the moment they see a trademark in the keyword metatag. Plus, the keyword metatag offers very little or no SEO benefit, and there are much more effective ways to spread the word about your site. It should be OK to include the trademark in the description metatag if the site description clearly communicates the griping nature of the website, but even then, be careful. Courts don't know how to evaluate description metatags either.

11) Think carefully before buying the target's trademark as a keyword for sponsored ads to promote your gripe site, Some courts are suspicious of keyword advertising and may unduly fixate on the ad triggering and not the underlying message.

12) Make sure every fact you say is 100% accurate and everything else is couched as your opinion. Plaintiffs will carefully read every word on your site text looking for anything that they can argue is inaccurate.

Posted by Eric at 11:13 AM | Copyright , Domain Names , Marketing , Trademark | TrackBack

May 18, 2009

Takedown Notice Sent to Parent Doesn't Affect Subsidiary's 512(c) Defense--Perfect 10 v. Amazon

By Eric Goldman

Perfect 10, Inc. v. Amazon.com, Inc., 2009 WL 1334364 (C.D. Cal. May 12, 2009)

This long-running case is working its way through the district court after the Ninth Circuit's 2007 remand. See my previous blog posts about the May 2007, December 2007 and post-remand July 2008 rulings.

Last week's ruling involves A9, Amazon's search subsidiary, that Perfect 10 sued for republishing allegedly infringing Google syndicated search results. Starting in 2004, Perfect 10 sent at least 8 takedown demands to A9's parent, Amazon, with the apparent intent that the takedowns apply to both Amazon and A9. However, Perfect 10 never actually sent a proper takedown notice to A9 until November 2008--well after its complaint was filed.

Judge Matz gives Perfect 10 no benefit of the doubt. Instead, the judge grants summary judgment to A9 based on the 512(c) safe harbor because Perfect 10 could not show that A9 knew of the copyright infringement (thus, Perfect 10's contributory copyright infringement claim failed; the other copyright claims had already been dismissed). The judge takes a formalistic approach (appropriately so, IMO) to 512(c)(3) takedown notices, concluding that:

1) The 512(c)(3) notices sent to the parent Amazon did not confer knowledge to the subsidiary A9.
2) The November 2008 notice sent to A9 are too late to support the allegations in the already filed complaint. Presumably, the November 2008 notice could now support a new complaint, but only if A9 hasn't expeditiously responded to it.
3) Amazon was not A9's agent for notice. This is complicated because Amazon's site disclosures could have been clearer about the Amazon-A9 relationship. However, A9 had its own 512 designation of an agent for service of process on file with the Copyright Office, and a search of the Copyright Office website would quickly reveal this. This is a good practice pointer for copyright owners: you need to research the 512 filings of every website you are targeting with 512(c)(3) notices. The search is free and super-simple, and a failure to communicate with the website's designated agent can kill a copyright claim when the website invokes the 512(c) defense. This is also a good reminder to websites seeking a 512(c) defense: if you plan to rely on the formalities, make sure your 512 designations are up-to-date and error-free!
4) Even if Amazon hosted the A9 website, it had no responsibility to communicate Perfect 10's 512(c)(3) notices to A9.
5) A9's designation of a web form for complaints, rather than the statutorily required email address, was an immaterial deviation from the statute.

I'm always amazed when copyright owners flub the fairly simple requirements of 512(c)(3). The statutory requirements are so easy to comply with! These omissions are especially perplexing in Perfect 10's case given that they've gone on a litigation frenzy and spent hundreds of thousands of dollars (probably millions) relying on mishandled facts. A little more care and investment upfront could have prevented an avoidable loss like this.

UPDATE: Plagiarism Today explores the meaning of this ruling.

Posted by Eric at 11:21 AM | Copyright , Derivative Liability , Search Engines | TrackBack

May 03, 2009

April 2009 Quick Links

By Eric Goldman

[Just a reminder that I am posting some “quick links” exclusively to my Twitter account, so if you want to keep up with everything, follow me at Twitter or subscribe to the RSS feed.]

Marketing/Spam

* Zango is dead (and so is adware), Ken Smith, Zango's CTO, conducts a post mortem: What Zango Got Wrong and What Zango Got Right. Mike Masnick's post-mortem.

* The FDA's instructions about pharmaceutical search marketing have led to lots of confusion. See Search Engine Land and the NYT.

* NYT: "Never Mind What It Costs. Can I Get 70% Off?"

* Tsan Abrahamson on social media and marketing law.

* Asis Internet Servs. v. Consumerbargaingiveaways. A district court diverges from Mummagraphics and says CAN-SPAM does not preempt CA's anti-spam law even if there is no common law fraud.

* Jackson v. American Plaza Corp., No. 08-8980 (S.D.N.Y. April 28, 2009), A Craiglist advertiser isn't a third party beneficiary of Craigslist's contract for purposes of stopping another advertiser from breaching the contract (in this case, spamming the forum).

Defamation

* Gardner v. Martino (9th Cir. April 24, 2009). I'm not a fan of talk radio, and the 9th Circuit apparently isn't either. The court upheld an anti-SLAPP dismissal of a defamation claim against the radio talk show host because "The Tom Martino Show is a radio talk show program that contains many of the elements that would reduce the audience’s expectation of learning an objective fact: drama, hyperbolic language, an opinionated and arrogant host, and heated controversy." Accord DiMeo v. Max. As Marc Randazza notes, rulings like this pose a challenge for those who think contextually ridiculous statements should be treated as "cyberbullying" or "cyber-harassment." Cf. the Finkel v. Facebook case involving asinine but clearly meaningless chatter on a private Facebook page.

* Some big defamation losses reported by CMLP:
- Blogger hit with $1.8M damage award.
- $12.5M defamation judgment against a gripe site.

* CMLP has a page organizing all of its 47 USC 230 material.

Intellectual Property

* Publicly republishing a private email leads to a default judgment of copyright infringement.

* Bryant v. Europadisk, Ltd., 2009 WL 1059777 (S.D.N.Y. April 15, 2009). In 2000, musicians authorized distributors to distribute their [hard copy] recordings, which the defendants ultimately ripped and allowed Amazon and Rhapsody to deliver via downloading. The resulting lawsuit turned on the interpretation of the license agreement term “internet sites.” The court says the term "is not ambiguous and does not extend to websites selling digital copies of songs. At the time the parties entered into the agreements, The Orchard sold physical copies only. As its Vice President explained by affidavit testimony, digital downloads of music did not become a “viable business” until iTunes was launched in approximately April 2004, long after Media Right and Gloryvision entered into contract."

* Octomom is seeking trademark registrations.

Miscellaneous

* GeoCities is shutting down.

* eBay will referee customer disputes.

* Wilson Sonsini's VC financing term sheet generator.

* Oddee: 10 Most Bizarre [Online] Gaming Incidents

Posted by Eric at 06:31 AM | Adware/Spyware , Content Regulation , Copyright , Derivative Liability , E-Commerce , Internet History , Licensing/Contracts , Marketing , Spam , Trademark , Virtual Worlds | TrackBack

April 23, 2009

Michael Savage Takedown Letter Might Violate 512(f)--Brave New Media v. Weiner

By Eric Goldman

Brave New Films 501(C)(4) v. Weiner, 2009 WL 1011712 (N.D. Cal. April 15, 2009). The Justia page.

In October 2007, radio personality Michael Savage (aka Weiner--hence the case caption) went on an anti-Muslim tirade on his radio show. This has become the source of at least 2 lawsuits.

The first lawsuit was brought by Savage against the Council for American-Islamic Relations, which posted 4 minutes of excerpts to its website as part of critical remarks about Savage. I previously mentioned that lawsuit here. In July 2008, the judge tossed Savage's lawsuit based on CAIR's fair use defense.

This ruling relates to a different critical video. Brave New Films created an 83 second video entitled "Michael Savage Hates Muslims," which included about 1 minute of audio from Savage's tirade (all of which had been in CAIR's post), some additional critical commentary and a promotion for the related site nosavage.com. In January 2008, BNF posted the video to YouTube. In September 2008, Savage's syndicator, Original Talk Radio Network, sent a "driftnet" takedown letter to YouTube covering 259 videos on YouTube, including BNF's "Michael Savage Hates Muslim" video. YouTube disabled both the video and BNF's YouTube channel. BNF filed a 512(g) counternotification and initiated a lawsuit against Savage and OTRN, seeking a declaratory judgment and alleging a 17 USC 512(f) violation that the takedown letter misrepresented the infringing nature of the video. This ruling deals with Savage's motion to dismiss the 512(f) claim.

Savage first argued that OTRN, not him, sent the letter, so he should not be liable for any misrepresentations in the letter. In fact, Savage has at least some copyright registrations to his show (including the episode containing his tirade) in his name only, so it is unclear what, if any, copyright interests OTRN could be asserting on its own behalf. However, the letter contained (consistent with 512(c)(3) notices generally) a declaration under penalty of perjury that OTRN was acting on behalf of the copyright owner. Indeed, by definition, every proper 512(c)(3) takedown notice creates apparent authority between the sender and the copyright owner (if they are different). This creates a possible conundrum. If OTRN was, in fact, a rogue independent contractor of Savage, it's a little unfair to Savage to hold him accountable for rogue acts. On the other hand, the court can allocate the financial responsibility between the principal and rogue agent.

Savage's second argument is that the takedown letter was not a 512(c)(3) notice and therefore did not satisfy 512(f)'s statutory requirements. For an analogous case (not cited), see the Dudnikov case. The court rejects the argument, saying that this takedown letter was substantially equivalent to a 512(c)(3) notice and therefore governed by 512(f).

Finally, Savage argued that the takedown letter was protected by statutory pre-litigation privileges. The court rejects this too, saying that the statutory privileges don't apply.

As a result, Savage remains potentially on the hook for a 512(f) violation. It will be interesting to see what the court does with the Lenz case, which seems relevant. If CAIR's use of the material had already been legally adjudicated as a fair use before OTRN sent the driftnet takedown letter for a clip containing a small fraction of the same material, there could be a good argument that OTRN did not adequately consider the fair use defense as required by Lenz.

Posted by Eric at 06:04 PM | Copyright | TrackBack

April 17, 2009

230 Doesn't Preempt State IP Claims--Atlantic Records v. Project Playlist

By Eric Goldman

Atlantic Recording Corp. v. Project Playlist, Inc., 2009 WL 766224 (S.D.N.Y. March 25, 2009). The Justia page.

This ruling addresses one of the known "circuit splits" in 47 USC 230 jurisprudence: does 230 preempt state IP claims based on third party content/conduct? The statute (230(e)(2)) says that "Nothing in this section shall be construed to limit or expand any law pertaining to intellectual property." In the surprising 2007 ccBill opinion, the 9th Circuit read this language to mean that 230 does not preempt FEDERAL IP claims, but all state IP claims were preempted. Then, in the 2008 Friendfinder case, a New Hampshire district court expressly declined to follow the ccBill opinion, concluding that state publicity rights claims weren't preempted by 230.

As I've said before, I think the Ninth Circuit's statutory analysis in ccBill was daft, so I am not surprised to find another court expressly rejecting it. (In fact, I doubt any court outside the Ninth Circuit will follow the ccBill case).

In this case, a consortium of music copyright owners sued Project Playlist, a website where users could create song "playlists" that linked to playable versions of the songs. I have serious reservations about the legitimacy of the plaintiff's efforts here, both doctrinally and normatively. However, this ruling focuses on Project Playlist's efforts to dismiss any claims based on state copyright laws.

[Note: as you probably know, federal copyright law expressly preempts most state copyright laws. However, sound recordings made before 1972 were protected only under state copyright law, not federal copyright law. The plaintiffs are suing to enforce those rights (among others).]

The court conducts a very sensible textual analysis of 47 USC 230 to conclude that it preempts neither state nor federal IP. Thus, the net result is that this court, like the NH Friendfinder court, votes against the Ninth Circuit's ccBill ruling. Personally, I think the Ninth Circuit's reading is untenable, in which case either the Ninth Circuit will have to revise its reading (which would require an en banc opinion) or the circuit split may potentially bubble up to the Supreme Court. Congress could also amend the statute, but the chance of 230 being amended to endorse the Ninth Circuit's rule is near-zero.

While the court says that Project Playlist can't avail itself of the 230 immunity based on the IP subject matter of the claims, it does address other elements of a 230 defense. Most interestingly, it addresses whether Project Playlist loses immunization due to the Roommates.com opinion. In what is effectively dicta, it concludes the answer is no. The court says:

In this case, unlike Roommates.com, Playlist does not itself supply the content to which plaintiffs object-the songs. Playlist merely provides the interface for accessing that content-by permitting users to listen to the songs on Playlist's Website-and provides links so users can download the songs on third-party websites. It is, in these respects, no different than Lycos, which provides chat rooms in which third-parties can voice their opinions, and Google, which provides users with lists of links responsive to user searches. At best, Playlist is guilty of "passive acquiescence in the misconduct of its users," and, even under Roommates.com, Playlist is entitled to immunity under Section 230(c)(1).

Yet more evidence that courts aren't embracing a broad reading of Roommates.com.

More on this ruling from Law Wire and MS&K.

Posted by Eric at 08:45 AM | Copyright , Derivative Liability | TrackBack

April 08, 2009

Q1 2009 Quick Links, Part 1 (Copyright Edition)

By Eric Goldman

[Note: for a couple of years, I have grouped items that didn't warrant a full blog post into a monthly "quick links" post. As you can infer, one month has now stretched to three months, which severely undercuts the currency of the information. This isn't tenable for me or all that useful for you. In the future, I still expect to do occasional quick links posts, but I am also going to exclusively post some of these current small items to my Twitter account instead. So if you want to see "everything" I'm tracking on Internet and IP law, sign up for my Twitter account or get the RSS feed. That said, I have a series of backlogged quick links posts that will be coming very soon for Q1 2009. I'll start with the copyright edition:]

* The US Supreme Court has asked the Solicitor General to provide a brief in the Cablevision case before it takes or denies cert. Somehow I don't see this as good news for the Second Circuit opinion.

* Jacobsen v. Katzer, No. C 06-01905 (N.D. Cal. Jan. 5, 2009). On remand from the Federal Circuit, the lower court dismissed the breach of contract claim for lack of alleged damages and on copyright preemption grounds. The court also denied a preliminary injunction for the copyright claims because of a lack of showing of future harm.

* Reed Elsevier v. Muchnick. The Supreme Court granted certiorari in the Tasini case again, this time to decide the issue "Does 17 U. S. C. Sec. 411(a) restrict the subject matter jurisdiction of the federal courts over copyright infringement actions?" In other words, can a settlement of a copyright class action lawsuit include unregistered copyrights? As a matter of statutory construction, I think the answer is no; as a matter of policy, I expect the Supreme Court will say yes.

* MDY Industries, LLC v. Blizzard Entertainment, Inc., 2009 WL 223631 (D.Ariz. Jan. 28, 2009). The latest ruling: "Plaintiff MDY is liable under the DMCA, that Donnelly is personally liable for MDY's tortious interference, copyright infringement, and DMCA violations, and that Blizzard is entitled to a permanent injunction against the continued sale and distribution of Glider." With all of the adverse rulings, it's hard to believe that WOW Glider is still fighting this case.

* US v. Dove. A judge finally understands demand curves and that demand when P = 0 is greater than when P > 0. I discuss this issue more in my warez trading article.

* Speaking of warez trading, a large-scale warez trading prosecution ends with no jail time for any of the defendants. To compare how favorable this is for the defendants, see my 2004 analysis of warez trading sentences.

* Apple v. Psystar, No. C 08-03251 WHA (N.D. Cal. Feb. 6, 2009). Psystar can allege copyright misuse as an affirmative counterclaim in a declaratory judgment (but presumably only for the "limited" remedy of declaring Apple's copyrights unenforceable).

* Capitol Records, Inc. v. MP3tunes, LLC, 2009 WL 637102 (S.D.N.Y. March 4, 2009). No 512(f) claim for any takedown notices that the service provider ignores. From a policy standpoint, this is completely screwed up--takedown notices ignored by the service provider pose the greatest legal risks to the provider and cause the most sleepless nights.

* In UMG v. Veoh, the judge limited UMG's claims against Veoh's investors and board members. Strike a blow against tertiary copyright infringement!

* Dahn World Co. Ltd. v. Eun Hee Chung (D. Md. Feb. 5, 2009). The court awarded the defendant attorneys fees in an unmeritorious 1201 anti-circumvention case.

* The GateHouse v. New York Times lawsuit settled. The press release and the settlement agreement. The NYT largely appeared to fold, but given that the NYT is de-integrating the links and turning off the traffic, can we really say that GateHouse won? BTW, check out UCLA law professor Doug Lichtman's lengthy (and very expensive) expert report in favor of the plaintiffs, arguing why fair use should not apply here (through an expert report...???).

* Arista Records LLC v. Usenet.com, Inc., 2009 WL 185992 (S.D.N.Y. Jan. 26, 2009). While in litigation, Usenet.com accelerated the expiration date of certain newsgroups, which prevented the plaintiff from getting data it had requested. The court held that this reconfiguration was a sanctionable spoliation of evidence, leading to adverse evidentiary inferences against Usenet.com and an obligation to pay the plaintiff's fees and costs.

* Viacom Intern., Inc. v. YouTube, Inc., 2009 WL 102808 (N.D. Cal. Jan. 14, 2009). Viacom's contractor Bay TSP is ordered to produce documents to YouTube.

* Mike Masnick on optimism and denial in the music industry.

* At the AALS Annual Meeting in January, there was a truly first-rate presentation on open source software (Heather Meeker's talk in particular was amazing). Rebecca's recap, or check out the podcast.

* Reminder about the 1909 Copyright Act celebration at SCU on April 30. Demand has been surprisingly strong, and we are getting close to the room's capacity. If this continues, we may need to establish a waiting list. If you want to make sure you can attend, register now.

Posted by Eric at 12:43 PM | Copyright | TrackBack

April 06, 2009

Ochoa on Golan v. Holder and Copyright Restoration

By Tyler Ochoa

[Eric's note: my colleague Tyler Ochoa is an expert on copyright law (among other things), and I've occasionally posted contributions from him before. This time, he weighs in on the Golan decision from Friday.]

The U.S. District Court for the District of Colorado has issued a decision in Golan v. Holder, No. 01-cv-01854 (D. Colo. Apr. 3, 2009), on remand from Golan v. Gonzales, 501 F.3d 1179 (10th Cir. 2007). Two years ago, the Tenth Circuit held that §514 of the Uruguay Round Agreements Act (codified at 17 U.S.C. §104A) “altered the traditional contours of copyright protection” by restoring copyrights in works of foreign origin that were previously in the public domain in the United States, and that the law was therefore subject to First Amendment scrutiny. The Tenth Circuit remanded the case to the District Court to determine whether §514 violated the First Amendment. The District Court has now held that §514 is unconstitutional.

The parties agreed that §514 was a content-neutral regulation of speech, which will be sustained “if it advances important government interests unrelated to the suppression of free speech and does not burden substantially more speech than necessary to further those interests.” The parties also agreed that compliance with Article 18 of the Berne Convention, which requires the restoration of foreign copyrights that were in the public domain for reasons other than expiration of the duration of protection, was an important governmental interest. Therefore, the question was whether §514 was “substantially broader than necessary” to serve that interest.

Although Article 18(1) of the Berne Convention requires restoration, Article 18(3) provides that “the respective countries shall determine, each in so far as it is concerned, the conditions of application of this principle.” The court read this provision as giving member nations discretion in how to implement Article 18(1). Thus, in implementing Article18, Congress had “broad latitude ... to protect reliance parties,” i.e., parties who relied on the public domain status of the works prior to restoration. The parties disputed, however, whether the provisions for “reliance parties” in 17 U.S.C. §104A were “narrowly tailored” to serve Congress’s interest in implementing Article 18.

Section 104A gives some protection to “reliance parties,” defined as “any person who ... with respect to a particular work, engages in acts, before [restoration], which would have violated section 106 if the restored work had been subject to copyright protection, and who, after [restoration], continues to engage in such acts.” (It also covers persons who owned one or more tangible copies of the work before restoration; or any successors, assignees, or licensees.) It allows reliance parties to continue infringing until the copyright owners serves a “notice of intent to enforce” a restored copyright. Once such a notice has been served, the reliance party has one year to dispose of all copies in its possession without liability. Finally, if the reliance party has created a derivative work, it may continue to exploit that derivative work for the duration of the restored copyright, provided it pays “reasonable compensation” to the copyright owner.

The government argued that any such accommodations for reliance parties had to be temporary in nature, and that any permanent accommodations for reliance parties would violate Article 18. The district court, however, disagreed. It pointed to the fact that the government’s own implementation of Article 18 had at least one accommodation for reliance parties — the provision for derivative works — that was permanent in nature, and that other countries had similar provisions. (Moreover, the plaintiffs’ brief points out that the U.K., Australia and New Zealand, all provide substantial protection for reliance parties on a permanent basis.) Therefore, in the District Court’s view, protection for reliance parties did not have to be temporary in nature. Accordingly, it concluded:

In light of the discretion afforded it by Article 18, Section 3, Congress could have complied with the Berne Convention without interfering with a substantial amount of protected speech — for example, by permanently “excepting parties, such as plaintiffs, who have relied upon works in the public domain,” see Golan, 501 F.3d at 1196.... Accordingly — to the extent Section 514 suppresses the right of reliance parties to use works they exploited while the works were in the public domain — Section 514 is “not tied to the Government’s interest” in complying with the Berne Convention.... Section 514 is therefore “substantially broader than necessary to achieve the government’s interest.”

The court considered and rejected two other proffered governmental interests. First, the government argued that if the U.S. limited the rights of reliance parties, other countries would similarly limit the rights of reliance parties (even though they were not obliged to do so under Article 18), therefore providing greater protection to U.S. authors in those countries. The court rejected this argument because the government did not provide any evidence that section 514 would have this effect, and the plaintiffs pointed to testimony in the original legislative history suggesting that such an effect was unlikely. Second, the government argued that section 514 served to correct a historic inequity by which foreign authors were deprived of U.S. copyrights. The court rejected this argument on the ground that “Section 514 extends protections to foreign authors that are not afforded United States authors, even in their own country.”

Of significant importance is the question of what type of relief will be granted. The court concluded that section 514 was overbroad, even though the court and the plaintiffs conceded that some type of retroactivity with broader protection for reliance parties would be constitutional, and that some type of retroactivity is required by the Berne Convention. Overbreadth is a facial challenge to a statute, which means that the ENTIRE statute will be held unconstitutional, unless it can be “saved” by merely striking the offending portion. That does not appear to be the case. Under the district court’s ruling, what offends the Constitution is that Congress has provided only very narrow protection for reliance parties, when it could have provided much broader protection for reliance parties while still complying with Article 18 of Berne. Thus, what is needed to “cure” the Constitutional infirmity is for Congress to enact broader protection for reliance parties. The court cannot simply excise a small portion of the statute while saving the rest. This means that Section 514 is unconstitutional on its face.

Assuming the ruling will be appealed, I can foresee two significant issues. One issue is whether the court properly interpreted the Berne Convention. The leading commentary on Berne agrees with the government’s position that Article 18 of Berne requires that provisions for reliance parties are transitional in nature and should be temporary, although it acknowledges a possible exception for cases where the reliance party has created a derivative work. 1 Ricketson & Ginsburg, International Copyright and Neighboring Rights, §6.123 (2d ed. 2005). On the other hand, if the plaintiff is correct that the U.K. and other Commonwealth countries have permanent protection for any type of prior use by reliance parties, the court may be reluctant to conclude that those countries are not in compliance with the Berne Convention.

The second significant issue will be whether the statute should be invalidated on its face as overbroad, or whether it should be invalidated only as applied. If the statute is invalidated on its face, that would allow these plaintiffs to use ANY work of foreign origin that is in the public domain, whether or not they had relied on its public domain status. Indeed, unless and until Congress acted to fix the statute, even non-reliance parties could use works of foreign origin in the public domain. If the statute is invalidated only as applied, that would allow these plaintiffs to use only those works that they were in fact using prior to the restoration, which would be a much narrower decision. In either case, because collateral estoppel does not apply to the government, a decision by the Tenth Circuit would be binding only on the parties and others within the Tenth Circuit; it would not be binding outside the Tenth Circuit. Parties in other circuits could still sued (or prosecuted) for infringing works of foreign origin that were in the public domain prior to restoration.

If the ruling is upheld by the Tenth Circuit, what would happen then? Congress would almost surely try to enact some version of copyright restoration again. Remember, the plaintiffs conceded that Article 18 of the Berne Convention requires some type of restoration. The plaintiff’s brief states: “Congress was ... plainly justified in believing that unless it enacted legislation to comply with Article 18, other nations would not adequately protect American copyrighted works.” The court’s ruling provides a path to compliance: Congress may restore copyrights in works of foreign origin, so long as it provides broader protection for reliance parties. Thus, any statute that ultimately emerges from Congress would probably allow for continued use of such restored works only by reliance parties, and not by the public generally. Accordingly, the definition of reliance party is very important. Are the plaintiffs reliance parties because they utilized particular works of foreign origin in the public domain, or because they generally utilized such works? A statute that protects only preexisting uses of specific works still provides very limited protection to reliance parties. There also would be the question of whether a new statute would apply only to parties that relied on the public domain status of a work before its INITIAL restoration (on January 1, 1996), or whether a new statute would also have to protect parties that relied on the public domain status of a work after that date, but before the effective date of the new legislation. If Congress is required to start anew, a party who is considering utilizing a work of foreign origin that is in the public domain for failure to comply with formalities might be well advised to begin using such a work right away, in order to ensure its continued right to use such a work after the next restoration.

The ruling also sets up a possible action against the U.S. under the dispute resolution mechanism of the World Trade Organization. Any country that thinks the U.S. is not complying with Article 18 of the Berne Convention could initiate proceedings against the U.S. under the TRIPS Agreement. If the WTO panel held that the U.S. was not in compliance with Article 18, we would once again be branded hypocrites on the world stage, and the WTO could authorize other countries to retaliate by imposing trade sanctions against the U.S. Such a ruling could also create a serious dilemma for the Tenth Circuit: the district court held that compliance with Article 18 still allowed the U.S. to provide substantially greater protection to reliance parties; but if the WTO holds that the U.S. is not in compliance with Article 18, would the Tenth Circuit defer to the WTO’s interpretation of Article 18, or would it interpret Article 18 de novo?

All in all, despite its limitations, this ruling is a significant victory for the plaintiffs and for the public domain. The court does not hold that Congress cannot restore copyrights in works of foreign origin; it only holds that this particular attempt to restore copyrights was unconstitutional, because it burdened substantially more speech than was necessary to comply with Article 18 of the Berne Convention. If the ruling is upheld on appeal, Congress will almost certainly try again; and any statute that results is likely to provide significant protection only to reliance parties, and not to others who might wish to begin utilizing public domain works in this category after restoration. However, on the plus side, the ruling demonstrates that Congress cannot restore copyrights willy-nilly; instead, it needs a substantial justification for doing so. That portion of the ruling is likely to survive appeal, making it less likely that Congress will attempt to revive long-dormant domestic copyrights, and more likely that Congress will limit any future restoration efforts to the minimum required by the Berne Convention.

Posted by Eric at 04:06 PM | Copyright | TrackBack

March 19, 2009

IEEE ComSoc SCV Talk: "Engineers' Role in Internet Law Development"

By Eric Goldman

Last week, I gave a talk at a meeting of the IEEE Communications Society, Santa Clara Valley chapter. I don't often get the chance to speak to a group of engineers, so I decided to go in a little different direction than my normal talks. I gave a procedure-oriented talk about how lawyers and engineers can work together to improve legal compliance. Along the way, I pointed to the Roommates.com and Cablevision cases as two case studies of how product design choices can influence the legal analysis (one good, one bad). My talk slides.

Posted by Eric at 10:25 AM | Copyright , Derivative Liability , Internet History | TrackBack

March 18, 2009

Perez Hilton Wins IP Lawsuit--Silver v. Lavandeira

By Eric Goldman

Silver v. Lavandeira, 2009 WL 513031 (S.D.N.Y. Feb. 26, 2009). The CMLP page.

I've lost track of Perez Hilton's multitudinous lawsuits, but in this case he gets a nice win. Silver is a rival blogger at "Perezrevenge.com." I'm not exactly sure how this site improves upon other celebrity gossip sites, but it claims to be different. Silver brought a pro se lawsuit against Perez for copyright infringement and related claims. (Perez fired back with Lavandeira v. Infuse, LLC, a cybersquatting and trademark lawsuit). In the most recent ruling, the district court accepts the magistrate report rejecting all of Silver's claims.

It's a little unclear why Silver thinks Perez committed copyright infringement, but it appears that Silver is claiming that Perez picked up facts from her blog and wrote those facts up for his blog. Applying very basic copyright law, the court says that republishing facts isn't copyright infringement. Further, even if Silver had a compilation copyright in the facts presented on her blog, Perez didn't infringe because his blog had a different arrangement, plus "his distinctive sarcastic and ironic tone constitutes a significantly different expression of the underlying facts."

The court also rejects Silver's hot news misappropriation claim. Because Silver was republishing facts that had been widely published before her posts, the court questions whether she had invested substantial costs in gathering the facts; and indeed questions whether she can have any proprietary interest in such extensively disseminated facts.

BTW, for those of you keeping score, this is the third time in the past month that I have blogged on hot news claims. See the AP and Scranton Times case. There must be something in the water.

Finally, the court rejects two DMCA claims. Silver claimed a 1201 violation, but not did allege a circumvention of a technological protection measure. Silver also claimed a 1202 violation because her name was in her posts but not referenced in Perez's posts, but (citing/misciting the goofy IQ case from 2006) the court dismisses the claim because she inserted her name into her posts manually and not on an automated basis. I think there are plenty of good reasons to dismiss the 1202 claim (such as the lack of copying), but the manual insertion of copyright management information is not one of them.

Although this case hardly breaks any important new ground, it does represent a nice validation that standard blogging practices of building upon someone else's newsy blog post does not give rise to legal claims.

Posted by Eric at 09:50 AM | Copyright | TrackBack

March 17, 2009

Newspaper Obituaries Aren't Hot News--Scranton Times v. Wilkes-Barre Publishing

By Eric Goldman

The Scranton Times, LP v. Wilkes-Barre Publishing Co., 3:08-cv-02135-ARC (M.D. Pa. March 6, 2009)

Oh man, how bad is it in the newspaper business? Rather than investing in building new and sustainable business models and relationships with their subscribers, newspapers are like dinosaurs trying to eat each other while the temperature rises. However, instead of eating each other, the dinosaurs are suing each other, squandering their valuable capital on low-merit newspaper v. newspaper lawsuits, such as the GateHouse v. NYT lawsuit over the republication of headlines.

Today's lawsuit is even more scoffable. The Scranton Times is suing the Wilkes-Barre newspaper for republishing obituary notices in its Scranton edition that were initially published in the Scranton Times. But the Scranton Times has a problem--funeral homes typically write and submit the obituary notices, so the Scranton Times has no copyright interest in the notices. Undeterred, the Scranton Times sued the Wilkes-Barre paper for a bunch of junky unfair competition-style claims in Pennsylvania state court.

This ruling deals with the Wilkes-Barre defendant trying to remove the case to federal court by showing that there is a federal question of whether the junky claims are preempted by federal copyright law.

The most interesting discussion relates to the hot news misappropriation doctrine. I just discussed the doctrine last month in the AP v. All Headlines News case, where the SDNY said that the AP's hot news claim against an online aggregator/syndicator survived a motion to dismiss. I've seen some breathy law firm announcements that this ruling revitalized the hot news doctrine, but not so fast, guys. Here, the court says that the obituary notices fail to qualify as hot news, and therefore the misappropriation claim is preempted by copyright law.

In particular, the court says that obituary notices can qualify as time-sensitive information, such as timing of memorial services. Further, even though the newspaper doesn't write the obituary notices, the court says that the newspaper bore all of the costs of collecting and distributing the notices, and the rival paper free-rode on those investments. However, the court said that the Scranton Times had failed to show that the free-riding would threaten the Scranton Times' publication of obituary notices. Thus, the hot news claim failed.

The court looks at the copyright preemption of other junky unfair competition claims, holding that the unfair competition claim was really a reverse passing off claim, which was preempted, as was the tortious interference and unjust enrichment claims. Oddly, the court said that the conversion claim wasn't preempted by copyright law, even though the only "converted" assets would be copyrighted intangible material (the obituary notices).

So a few of the junky claims survive the copyright preemption analysis, but there isn't much hope for this lawsuit. Then again, unless the Scranton Times realizes that fighting a rear-guard action against its competition does nothing to improve its future business prospects in a market disintegrating around it, there isn't much hope for the paper either.

HT: Tom O'Toole

Posted by Eric at 10:18 AM | Copyright | TrackBack

March 09, 2009

Conference on the 100th Anniversary of the 1909 Copyright Act, April 30, SCU

By Eric Goldman

Please come to a Conference on the 100th Anniversary of the 1909 Copyright Act, April 30, at Santa Clara University. The event is co-sponsored by the High Tech Law Institute, Santa Clara University School of Law and Berkeley Center for Law & Technology, University of California Berkeley School of Law.

My hope is that the speakers will look back at the last 100 years of the 1909 Copyright Act to see what worked and what didn't. Ideally, this might help us think more intelligently about developing copyright policy and drafting copyright provisions in the future.

I'm especially excited about this event because we are bringing together 2 dozen top copyright experts to spend a day geeking out on copyright law. If you're not a diehard copyright enthusiast, this may not be the event for you. But if discussing copyright policy and doctrine with other smart copyright experts sounds like your idea of a good time, we think we've scheduled a day of pure bliss.

The event is free to attend but registration is required. There is a small fee if you want 7 hours of CLE credit. You can register for the event here. Hope you can join us.

The scheduled list of speakers:

Keynote speakers:

David Nimmer, Of Counsel, Irell & Manella
William Patry, Senior Counsel, Google
Marybeth Peters, Register of Copyrights, U.S. Copyright Office

Participants:

Howard Abrams, University of Detroit Mercy School of Law
Jon A. Baumgarten, Proskauer Rose LLP
Oren Bracha, University of Texas School of Law
Michael Carroll, Villanova University School of Law
Julie Cohen, Georgetown University Law Center
Laura Gasaway, University of North Carolina School of Law
Daniel Gervais, Vanderbilt University Law School
Justin Hughes, Yeshiva University Cardozo School of Law
Peter Jaszi, American University Washington College of Law
Roberta Rosenthal Kwall, DePaul University College of Law
Marshall Leaffer, Indiana University School of Law
Jessica Litman, University of Michigan Law School
Joseph Liu, Boston College Law School
Lydia Pallas Loren, Lewis & Clark Law School
Tyler Ochoa, Santa Clara University School of Law
Ruth Okediji, University of Minnesota Law School
Tony Reese, University of Texas School of Law
Pamela Samuelson, Univ. of California at Berkeley School of Law
Christopher Sprigman, University of Virginia School of Law
John Tehranian, Chapman University School of Law
Elizabeth Townsend Gard, Tulane University School of Law
Alfred Yen, Boston College Law School

Posted by Eric at 10:09 PM | Copyright | TrackBack

February 19, 2009

AP Enforcement Action Against Syndicator Survives Dismissal Motion--AP v. All Headline News

By Eric Goldman

Associated Press v. All Headline News Corp., 08 Civ 323 (SDNY Feb. 17, 2009)

We've seen a lot of ruffled feathers over Internet republication of news headlines, ledes and snippets--the most recent being the GateHouse lawsuit and settlement, but we can easily go back at least a dozen years to the old Shetland Times lawsuit to find similar issues. Some of the teeth gnashing is due in part to the ambiguity and paucity of directly applicable law, so any new judicial ruling, even an opinion on a motion to dismiss, is noteworthy.

According to the opinion (which is a little cryptic), All Headline News either rewrites AP stories or copies stories in full, strips out the source identification in some cases, and republishes its version of the stories to a network of paying customers. To the extent All Headline News is a syndication service of real-time news, it appears to be at least a partial competitor of AP. AP alleged a number of claims against All Headline News, and this ruling addresses All Headline News' motion to dismiss the following complaints:

* Hot News. After concluding that All Headline News was subject to NY's law, it held that a hot news claim was properly pled. This makes sense in light of both the original INS v. AP case from 1918 (which addressed a not-dissimilar set of facts) and the more recent 1997 2nd Circuit Motorola case, which held that sports scores might be protectable under a hot news doctrine. While we have not seen a lot of viable hot news claims in the past dozen years, the hot news doctrine remains important because it exists independent of copyright. Accordingly, the republication of headlines and ledes could be a hot news misappropriation even if it isn't a copyright infringement. Because of the early procedural posture, the hot news claim might still fail, but the hot news doctrine's survival of the motion to dismiss isn't a favorable development for news aggregators and republishers.

* Copyright Management Information (17 USC 1202). We haven't seen much action under this portion of the DMCA, which protects against the removal or modification of "copyright management information" (such as a byline) from copyrighted works. It hasn't been extensively litigated, and the courts have interpreted the statute narrowly. Despite that, the court does not dismiss the claim. It will be interested to see if the AP can have any success with this claim given the narrow precedent supporting it.

* Trademark Infringement. The court dismisses the trademark infringement claim. The AP's pleading of both CMI violations and trademark infringement points to an interesting conundrum for content publishers/aggregators. Remove the source attribution and you create a potential 1202 problem. Preserve the source attribution and you might be committing trademark infringement. The court overcomes the damned-if-you-do/damned-if-you-don't situation by implying that citing your sources can't be a trademark infringement.

* Unfair Competition. The court dismisses the 43(a) false advertising claims but preserves the common law unfair competition claim.

Implications. if, in fact, All Headline News is paraphrasing or plagiarising AP stories to operate a competing business, this is a materially different factual scenario than the aggregation and republication of headlines/ledes/snippets that has been the primary focus of Internet legal angst for the past few years. Nevertheless, revitalized doctrines of hot news and 1202 copyright management information both pose significant risks to these aggregation and republication activities independent of the copyright analysis. At minimum, this is a good reminder that focusing purely on copyright infringement claims misses other important considerations.

HT: Marty Schwimmer

UPDATE: Joe Mullin has some interesting things to say about the hot news doctrine and this lawsuit.

UPDATE 2: Jeff Neuburger's comments.

Posted by Eric at 11:21 AM | Copyright , Trademark | TrackBack

February 06, 2009

2008 Cyberlaw Year-in-Review

By Eric Goldman

It's a sign of my schedule that I'm just now getting to this, and this post will be more pithy than I initially conceived. This post recaps some of the Cyberlaw highlights from last year. Frankly, the two biggest stories of 2008 were the financial markets meltdown and the ascension of President Obama, neither of which have a lot of Cyberlaw angles. In light of those big developments, Cyberlaw in 2008 was comparatively quiet. However, there is still plenty of interesting developments to revisit.

Broad Themes

A few broad themes emerged last year:

* Ludicrous trademark claims. 2008 hardly had a monopoly on dumb trademark claims; those are perennial. But 2008 certainly saw some asinine entries, including putative Cyberlawyer Eric Menhart's claim to own a trademark in the term "Cyberlaw," Jones Day's efforts to claim that a web page referencing its name as the employer of some homebuyers violated its trademark rights, and putative Cyberlawyer John Dozier's claim that if his name is used as anchor text, the link must go to his website or it violates his trademark right.

* This was a good year for expansive readings and applications of user agreements. Some examples:
- the Lori Drew prosecution, where Lori was convicted of violating an agreement that someone else clicked through.
- Jacobsen v. Katzer, where a user of copyrighted material is bound by a contract that he/she never clicked through at all.
- AV v. iParadigms, where kids were not allowed to void a user agreement despite their status as minors (and despite the fact that some of them had no meaningful choice about whether or not to consent).
- JuicyCampus enforcement action, where the New Jersey Attorney General's office tried to treat a negative user behavioral restriction in a user agreement as an affirmative marketing representation that such user behavior would not occur on the site.

* One of the long-standing Cyberlaw memes is that websites must either be passive conduits to avoid liability or active editors to manage their liability, but if a website chooses the latter, the website is liable for any editorial mistakes. That is, if the website edits its site but misses something, it's fully liable for what it missed. This simply isn't true under 47 USC 230, which allows websites to choose to be passive, active or anything in between without varying liability. In the IP context, this passive v. active meme has had more traction, but 2008 saw two solid cases suggesting that if a website tries to police its premises and fails, courts will be sympathetic and excuse any omissions. Example #1: Tiffany v. eBay, where the court gave eBay extra credit for its VeRO program as a basis to excuse any counterfeit goods that slip through. Example #2: Io v. Veoh, where the court was more willing to excuse Veoh because it had undertaken extra policing efforts than was required for the 17 USC 512 safe harbor. Finally, although not an IP case, the court in Cisneros v. Yahoo also lauded search engines for their affirmative efforts to block gambling ads, which the court acknowledged was a hard challenge.

* Despite some adverse rulings early in the year, punctuated by the Ninth Circuit's en banc ruling in Roommates.com, the 47 USC 230 immunization is still extremely robust. We saw a number of expansive and pro-defense rulings per 230 throughout the year, including Craigslist, Doe v. MySpace, Cisneros v. Yahoo and Goddard v. Google. Perhaps more importantly, in the three 230 cases I've seen since Roommates.com that cited to the opinion, all three cited the opinion in ruling for the defense.

* Battles over keyword advertising are hardly over, even though Utah officially backed off its attempt to ban them. The ABA IP Section tried to get into the act, and American Airlines sued Google, settled, and then sued Yahoo.

Top 11 Cyberlaw Developments of 2008

#11: Utah Trademark Protection Act repealed. The Utah Trademark Protection Act had the potential to throw the entire keyword advertising business into turmoil. Instead, now that it's repealed, it just remains as a dramatic reminder of the Utah legislature's incompetence regarding Internet legislation.

# 9 and 10: Fair Housing Council v. Roommates.com and Goddard v. Google. The Roommates.com en banc opinion makes the list based mostly on its potential consequences, not its actual effect. It remains one of the most significant pro-plaintiff incursions into the solidly defense-favorable interpretations of 47 USC 230, but it's so riddled with contradictory and ambiguous language that no one really knows what to do with it. I think Judge Fogel's reading of the case in Goddard v. Google has the potential to become the defining interpretation of the case, and his solidly defense-favorable reading of the precedent in excusing Google for ads placed by its advertisers may only reinforce how little Roommates.com changed the law.

#8: AV v. iParadigms. This case was a terrific win for online fair use enthusiasts because the for-profit commercialization of a database of third party copyrighted works was still deemed fair use. The upholding of the contract against the minors forced to enter into it was also significant. Before this ruling, my assumption is that any plaintiff trying to form a class action lawsuit in the face of an adverse user agreement could always form the class on behalf of any minors who had the right to void the contract. This case seems to shut down that loophole in user agreement protection.

#7: Io v. Veoh. The 17 USC 512(c) safe harbor has been law for over a decade and has produced a couple dozen rulings, but few are cleaner and more decisive for the defense than this one. It was a textbook example of a court rejecting the many different arguments plaintiffs make to kick a defendant out of the safe harbor, and as mentioned before, it was a great validation for Veoh's decision to do more than 512 required.

#6: Jacobsen v. Katzer. From a doctrinal standpoint, this case raises really difficult questions about how a copyright consumer can be bound to terms that he/she never "assented" to. Even so, this case had huge implications because it effectively validated that open source licenses can be binding on licensees, giving much more legal credibility to the entire multi-billion open source software industry. However, an odd footnote: on remand, the district court denied an injunction for the plaintiff, raising more issues about what exactly the plaintiff won at the Federal Circuit.

#5: Tiffany v. eBay. A fantastic validation of eBay's practices against a very serious and sympathetic challenger who had plenty of evidence that counterfeit goods were being sold on eBay's site. The case also shows that courts can grow tired of IP owners simply making up their own rules about how online sites should protect them and then suing the sites for breaching these artificial rules.

#4: Mazur v. eBay. A more scary case to 47 USC 230 defense enthusiasts than the Roommates.com opinion. The court says that eBay isn't protected by 230 for some of the marketing representations it makes, even if those representations are rendered untrue by third parties. While this makes a lot of doctrinal sense, it is also a green light for plaintiffs to mine a website's marketing representations as a way to bypass the otherwise-fatal consequences of 230 on a lawsuit triggered by user behavior or content.

#3: Google Book Search settlement. This makes the list for two independent reasons. First, many folks were hoping the case would establish solid precedent on online fair use, and the settlement ended that hope. Second, the proposed Book Rights Registry has the potential to reshape a number of major industries, including the book publishing business, the book retailing industry and the library industry.

#2: the Lori Drew prosecution. I think this may have been the most polarizing Cyberlaw development of 2008, exposing deep divides in people's appetite for punishing bad conduct online. It's hard to assess the overall implications of her conviction because no one rallied to praise Lori Drew's choices, and her case is still a ways from a final legal outcome. However, the possible implications of the case were so complex that it took a special three part series for me to explore its nuances (1, 2, 3).

#1: Cartoon Network v. CSC (the "Cablevision" case). Boy, the more I think about this case, the more important it becomes. The case upends our assumption that if we see it online, it's fixed, creating a new class of unfixed electronic works. Also, the court treats the users, not the service, as making the requisite copies, which reinforces the possibility that online providers can be just "dumb technology providers" for copyright law purposes and reinvigorates the possible defense that a service provider's copying is just done as a proxy for its users. However, the Supreme Court's ambiguous response to the cert petition--not yes, not no, but a request to the Solicitor General for comments--leaves this decision in a precarious position.

Other Developments of Special Note

47 USC 230

* Doe v. MySpace. The Fifth Circuit soundly rejects the argument that MySpace had an obligation to police its “premises.”

* Craigslist. Judge Easterbrook's language in Doe v. GTE had given plaintiffs some hope that the Seventh Circuit would provide a friendly venue to plaintiffs trying to overcome 47 USC 230. Judge Easterbrook may still love his language (which he quoted extensively in the Craigslist ruling), but his practical and no-nonsense ruling for the defense squelches the hope that the Seventh Circuit will become a plaintiff's haven.

* New Jersey's enforcement action against JuicyCampus. State AG offices HATE 47 USC 230.

Affiliate Liability

* Impulse Media. A jury thumped the FTC's overly expansive views of affiliate liability for spam.

* NY v. Direct Revenue. A state judge emphatically rejected the NY AG's office's expansive views of affiliate liability for adware.

Trademarks/Domain Names

* American Airlines' lawsuits against Google and Yahoo. No one I know fully understands why American Airlines sued Google for selling its trademarks for keyword ads. No one I know understands what concessions Google gave to American Airlines to settle the case. And no one I know understands why American Airlines decided to sue Yahoo after procuring the Google settlement. It's all a big mystery.

* NSI's grabbing of domain names in response to WHOIS queries. Is there any better example of ICANN's failings to police domain name retailers than to have one retailer selling a scarce good grabbing the good exclusively (blocking attempted sales by all other retailers) when a customer merely inquires about it?

* Kentucky's attempted seizure of 141 gambling-related domain names. As I wrote before, "Is a domain name property? Yes. See the Sex.com case. Can a plaintiff seize a domain name pursuant to a favorable judgment? Yes. Is it appropriate for Kentucky to seize domain names for gambling websites available in Kentucky? Of course not, because this would effectuate an extraterritorial reach by curtailing non-Kentucky residents from making possibly legal uses of the domain name."

* Eric Menhart, a lawyer who claims to practice Cyberlaw, doesn't know that Cyberlaw is a generic term.

* New gTLDs. Maybe I should reserve this development for 2009...if it happens.

Others

* McCain complains about 512(c)(3) notices taking down his YouTube videos. Surprise! 512(c)(3) notices are unforgiving. Sen. McCain, now that you've had a first-hand taste of their power, maybe you'd like to revisit the statute to see if it's producing the right incentives?

* FCC's bust of Comcast. The pro-regulatory forces were queued up to pounce on any examples where an IAP violated Net Neutrality principles, and Comcast's chicanery in forging reset packets was impossible for anyone to defend.

* NebuAd's flameout. Behavioral ad targeting is in our future unless regulators stop it. NebuAd won't be the winning provider of targeting services, but legislators will keep trying to regulate it further out of existence nonetheless.

Posted by Eric at 05:50 PM | Adware/Spyware , Copyright , Derivative Liability , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Publicity/Privacy Rights , Search Engines , Spam , Trademark | TrackBack

January 28, 2009

Web Host Faces Potential Contributory Trademark Liability--Louis Vuitton v. Akanoc

By Eric Goldman

Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., C 07-03952 JW (N.D. Cal. Dec. 23, 2008)

This is one of countless anti-counterfeiting actions by luxury brands against allegedly infringing websites—but the twist is that the brand owner is going after the sites' web host. In Tiffany v. eBay, the big brand got very little traction against eBay based on eBay hosting auctions for allegedly infringing goods. This case doesn't turn out as well for the web host. The court, without citing Tiffany, leaves open the possibility that the web host could be liable for its customers' infringing activities. Why the difference?

Contributory Copyright Infringement

The court starts with contributory copyright infringement. The court doesn't clearly specify the direct copyright infringement taking place. It discusses evidence that the defendant's customers are selling counterfeit goods, but it doesn't connect the dots to show that the counterfeit goods are actually protected by copyright law. (It's not automatic that counterfeit goods infringe copyright).

Also, the DMCA online safe harbors are not mentioned, which makes sense if the copyright-infringing behavior is the actual sale of the counterfeit goods instead of publishing information about those goods. However, as we saw in the Tiffany case, the web host cannot determine if the goods being sold are actually counterfeit. Nevertheless, the court says a jury could find the web host had actual knowledge of the infringement due to a series of defendant emails and demands from the plaintiff. From my review, it appeared that the referenced emails involve the web host relaying the plaintiff’s takedown notices to the hosted customers, so I'm not sure how these emails could evidence knowledge of the counterfeiting.

With respect to material contribution, the court references the confusing language from Perfect 10 v. Amazon and the archaic Napster precedent to say that failure to take simple measures to stop infringement can qualify as a material contribution (a standard referenced in Amazon), and the web host here could easily disable the IP address of the putatively infringing website. As a result, its failure to take such simple steps could constitute material contribution.

All told, the contributory copyright infringement analysis in this case is heavily plaintiff-favorable. It appears that the plaintiff’s prima facie showing is (1) allegedly counterfeit goods being sold outside the host's purview (the direct infringement), (2) demand letters plus emails from the host to customers relaying takedown notices (knowledge), and (3) the host’s ability to turn off accounts or disable IP addresses (material contribution). This is a disconcerting standard, because just about every web host could satisfy this test.

Contributory Trademark Infringement

The court references the contributory trademark infringement standard from the Ninth Circuit's 1999 Lockheed v. Network Solutions case, requiring knowledge of the infringement plus “[d]irect control and monitoring of the instrumentality used by the third party to infringe the plaintiff’s mark.” In practice, it appears the court equates the contributory trademark and contributory copyright analysis. The court does so expressly for the knowledge prong, where the judge simply references its prior copyright discussion.

As for the host’s control, the court analogizes the host to an offline swap meet (just like Tiffany did), shoots down some of the defendant's arguments and then says that, per Fonovisa, the defendant cannot remain willfully blind to infringement on its servers. This sounds a lot more like a contributory copyright infringement analysis than the Lockheed “direct control and monitoring” requirement.

I was disappointed that the court (like so many others) does not address the web host's eligibility for the printer/publisher defense. This might very well be apropos to web hosts.

Other Claims

The court dismisses the vicarious copyright infringement claim because there was no evidence that the web host's profits varied with the infringing activity. The court also dismisses the vicarious trademark infringement because the web host lacked the requisite agency relationship with its customers (why do apparently smart IP lawyers routinely allege vicarious trademark infringement when there is no agency???).

Implications

I think the contributory trademark infringement ruling is entirely consistent with the obvious hole left open by the Lockheed case, which excused a domain name registrar for selling allegedly infringing domain names but implied that web hosts might be treated differently. More surprising, perhaps, is that in the decade since the Lockheed case, we've had almost no cases mapping out the boundaries of web host liability for contributory trademark infringement. It's remained one of those known Cyberlaw frontiers. While it's nice to get a case addressing that frontier, I wish it were more favorable to web hosts.

Posted by Eric at 10:11 PM | Copyright , Derivative Liability , Trademark | TrackBack

January 15, 2009

Cautionary Tale of Website Co-Ownership--Mikhlyn v. Bove

By Eric Goldman

Mikhlyn v. Bove, 2008 WL 4610304 (E.D.N.Y. Oct. 15, 2008). The Justia page.

In my Co-Blogging Law article, I discussed the potentially ugly legal consequences of "blog divorces" when co-bloggers fall out of love with each other and start fighting. I wrote:

Whether a limited liability entity or a private agreement is the better choice depends on the bloggers’ specific circumstances and goals. However, either choice is preferable to co-bloggers doing nothing proactive to override the default rules.

When I wrote the article in 2005, I didn't have any dramatic examples of how bloggers got screwed by the default rules, nor I was able to say with confidence exactly how a judge would resolve a blog divorce. I still don't know the latter, but if I were writing the article today, I would discuss Mikhlyn v. Bove as the cautionary tale. The case involves an e-commerce website divorce that involves cousins, embroidery, alleged drug use, a scramble for website passwords, and the current denouement, a hailstorm of litigation (with both groups suing each other for about a dozen causes of action each) that will surely cost each side more than the business was ever worth. If you are a co-blogger or a co-operator of a website and you don't have a documented exit strategy, take note!

(Please note that the parties contest just about every fact, so my recitation of what happened is based on the court's opinion as best as I could read it, and I've omitted a lot. You have to read the whole opinion if you want the complete story).

This case reinforces the maxim that you should never do business with family members. The case involves Israeli neighbors Ana and Polina (Group 1), who in 2002 established an e-commerce business selling embroidery designs through eBay and their website. The business ultimately expanded to include embroidery supplies in addition to designs. Over time, Ana's cousin-in-law Inga and cousin Vadim, both from Brooklyn, got involved in the business (Group 2). Group 1 says they hired Group 2 as employees; Group 2 says that Groups 1 and 2 were all partners in the venture. Uh oh.

It sounds like business did well financially for a while. Then the relationships turned south in 2007 and into 2008. Ana relocated from Israel and moved in with Inga and Vadim, but they allege Ana started abusing drugs and scaring the kids, which may have prompted them to kick Ana out of the house. Starting in Spring 2008, the parties brought in the lawyers, thus commencing the formal legal fight over the venture's assets. And it turns out there were a fair number of assets to fight over, including several websites under the "ABC" brand (including domain names and the website design/text--Ana obtained a (contested, of course) copyright registration for the latter), an eBay storefront, a registered trademark in "ThreaDelight" (held in the name of all four parties), embroidery designs by Ana (but no copyright registrations in them), and various trademark rights in the name "Anna Bove" (note 2 "N"s instead of 1).

Ana brought an unsuccessful UDRP to get the ABC-based domain names. However, because co-defendant Polina was the listed owner for some of the domain names, Ana was able to assume technical control over those domain names. Doing so apparently split the technological empire, such that Group 2 is running certain websites and Ana or Group 1 is running other websites. This is an unstable allocation of the business, so in August, Group 2 sued Group 1, which prompted counterclaims from Group 1.

What a mess. WHAT A MESS!

Just how messy is it? Check out how the court resolves the partnership v. employees dispute at the core of the lawsuit. The court says that Groups 1 and 2 were neither partners nor employer-employee. OK...so what were they? I don't know, and the court doesn't seem to know either, but it hypothesizes--without concluding--that the parties may co-own certain copyrights and trademarks of the venture. As I explain in my Co-Blogging article, IP co-ownership can come with numerous unexpected pitfalls, so I suspect no one is happy with the co-ownership resolution. Ugh.

Ana also tried to stop Group 2 from using her name (the modified "Anna Bove" mark) as part of their business. The court rejects the effort, saying that both groups have been using the Anna Bove mark in parallel with each other for a number of years, and thus Ana's claim is barred by acquiescence or laches. Accordingly, it looks like Ana has effectively lost control over her own name because Group 2 can continue to operate an "Anna Bove" business that she can't stop or restrict. Double ugh.

As should be obvious, the current resolution is complex, ugly and unsatisfying to everyone. The good news is that the parties are going to mediation. Maybe they can do some horse-trading and find a mutually improved outcome than the one the court's opinion leaves them in. If mediation doesn't work out, I could see the groups being locked in a death struggle where no one other than the lawyers emerges with anything of value.

I'm sure the parties wish they could go back in time and make a nice, clean agreement documenting their relationship that would avoid all of this heartache. If you are a co-blogger or co-operator of a website without such an arrangement, what are waiting for?

Posted by Eric at 11:06 AM | Copyright , E-Commerce , Trademark | TrackBack

January 08, 2009

December 2008 Quick Links, Part 2

By Eric Goldman

Social Networking Sites/Cyber-Bullying/Sexual Predation

* More on the Lori Drew conviction:
- Wired has a tough behind-the-scenes look at the Lori Drew jury deliberations.
- The jury instructions
- In case you missed it, my special three part series on implications of the Lori Drew conviction: Part 1, Part 2, and Part 3.

* Yet more fallout from the Lori Drew prosecution and conviction. Wired has a story on the cyberbullying litigation frenzy. The Washington Post has a recap on the proliferation of state anti-cyberbullying laws.

* U.S. v. Morris, 2008 WL 5101636 (7th Cir Dec. 5, 2008). Judge Posner talks about the difference between entrapment (not OK) and vigilantism (OK) in the context of a mom who created a fake MySpace persona to chat with an alleged sexual predator who had contacted her underage daughter.

* Facebook's policy on breast-feeding photos has sparked protests both online and off (1, 2, 3). It reminds me a bit of one of my first challenges as Epinions' general counsel. (search for Epinions).

Google

* Barry Schwartz: is Google getting desperate for ad revenue?

* The Register: "Google this week admitted that its staff will pick and choose what appears in its search results." However, I don't think the article supports this aggressive statement. Instead, it appears the article is getting excited about the fact that Google manually tweaks the algorithms when they produce goofy results--something we've known for years.

* Updates on Axact v. Student Network Resources, the case involving alleged copyright infringement of term papers. Axact allegedly has been trying to get its domain name registrars to release its domain names for transfer, and SNR is trying to cut them off. Apparently Google also balked at the instructions to kick the subject domain names out of its index, but SNR and Google resolved their differences enough to reach a stipulation. Finally, I've received numerous threats and requests from Axact to modify my original post, which has prompted me to make some minor changes.

Marketing

* IMS Health v. Ayotte. New Hampshire passed a law restricting the use of a doctor's past prescribing practices (i.e., behavioral information) for personalized/targeted sales calls. This opinion upholds the NH law against a First Amendment and dormant Commerce Clause challenge.

* Australian advertisers are cookie-ing users at high CPM sites so that they can show the users targeted ads when those users appear at lower CPM sites.

* Sony busted for COPPA violations.

* New advertising medium: school exams.

Miscellaneous

* Good article on the Sprint v. Cogent peering fight.

* And a good article showing limits to the Long Tail theory.

* U.S. v. Grober, 2008 WL 5395768 (D. N.J. Dec. 22, 2008). Grober pleaded guilty to uploading and downloading child porn over the Internet. The judge rejects the 19 1/2 year minimum sentence specified by the Sentencing Guidelines and instead sentences Grober to the 5 year statutory minimum. This opinion poignantly explains why this judge, like several others, rejects the Sentencing Guidelines in Internet child porn cases because the dictated sentences are too severe.

* BusinessWeek is still amazed that people actually--get this--provide their time and efforts over the Internet without getting paid!

* Lior Strahilevitz, Reputation Nation: Law in an Era of Ubiquitous Personal Information, 102 Nw. U. L. Rev. 1667 (2008). Lior explores the cross-elasticities of demand for types of reputational information and shows that if some information isn't available (due to, say, privacy laws), decision-makers will consult less credible or pernicious sources. For example, if a landlord can't get good credit information about a prospective tenant, the landlord may resort to discriminatory considerations (like race) to decide whether or not to rent to the tenant. Good article.

* I have previously written about New York v. Synergy6, Inc., 404027/03 (N.Y. Sup. Ct. Jan. 6, 2006), where the court soundly rejected the New York Attorney General's office regarding a marketer's liability for allegedly illegal emails sent by downstream affiilates (i.e., not in direct privity). I have not been able to find a copy of the opinion electronically, but over the holidays I found my hard copy and scanned it to a PDF. Check it out, especially in combination with the 2008 New York v. DirectRevenue opinion, which soundly rejected the NYAG's affiliate liability arguments in the adware context.

Posted by Eric at 07:44 AM | Content Regulation , Copyright , Domain Names , Marketing , Privacy/Security , Search Engines | TrackBack

January 07, 2009

December 2008 Quick Links, Part 1

By Eric Goldman

Copyright

* Stockwire Research Group, Inc. v. Lebed, 577 F .Supp. 2d 1262 (S.D. Fla. Sept. 18, 2008). $2.5M default judgment for violation of anti-circumvention provisions.

* The RIAA announced that it is shifting away from suing its customers to putting more pressure on Internet access providers to do their dirty work. Fred at EFF and Mike Masnick weigh in. But Mike wonders if the RIAA is really changing its practices?

* Capitol Records v. Thomas, No. 06-1497 (MJD/RLE) (D. Minn. Dec. 23, 2008). In the Jammie Thomas case, the judge refused to certify the "making available" theory for an interlocutory appeal.

Trademarks/Domain Names

* Nerds on Call (Indiana) v. Nerds on Call (California), 1:07-cv-00535-DFH-TAB (S.D. Ind. Dec. 22, 2008):

The court realizes that a simple internet search for "nerds on call" could return the Nerds/California site. If a person has lived in Indiana and used Nerds/Indiana's services before, the person might be confused momentarily. Given trademark law's explicit approval of concurrent uses of marks in different geographic areas or product markets, see 15 U.S.C.A. §1052(d), this momentary confusion on the internet is not a sign of intentional targeting. The internet is available worldwide. Use of a locally established trademark on a website may cause momentary confusion among consumers. The solution to that problem is not to require that all trademarks be given worldwide effect even if their non-web use is limited to a narrow geographic area. Instead, users of the web simply need to understand that a worldwide web search may turn up results from distant businesses.

* Saint Louis University v. Meyer, 2008 WL 5412263 (E.D. Mo. Dec. 24, 2008). SLU allegedly threatened to close the student newspaper, so the paper's faculty advisor registered a new non-profit organization with the secretary of state under the name "The University News, a Student Voice Serving Saint Louis University Since 1921" in case the students wanted to go independent. The university and the students worked out a deal, and the faculty advisor promptly dissolved the organization without ever having done anything with it. Still, the university sued the advisor for trademark infringement, dilution and other claims. In this ruling, the court rejects most of the claims because the advisor never made a "trademark use in commerce." Why was the university suing its own tenured faculty member for forming and then promptly dissolving a non-profit organization without ever using it? Makes no sense to me.

* 1-800 Contracts, Inc. v. Lens.com, Inc., 2008 WL 5191705 (D. Utah Dec. 10, 2008). In a trademark lawsuit over keyword purchases, Lens.com is hit with sanctions for discovery abuses.

* The EFF has collected amicus briefs in the Tiffany v. eBay appeal to the Second Circuit.

* WSJ on the growth in numerical SLDs.

* Paul Levy shines the spotlight on yet more questionable marketing practices by Lifestyle Lift.

Linking

* GateHouse v. New York Time. The CMLP page. Another silly anti-deep linking and headlines-as-copyright infringement lawsuit, this time between two media companies. Some of the claims are clearly off-base, like the trademark claims. Note to dilution plaintiffs: it is almost impossible by definition to be both a hyper-local business and a famous trademark. Also oxymoronic is the allegation that the sites are competitors when a competitor is prominently promoting the website and apparently passing PageRank. If you are my competitor and would like to pass me some PageRank, I would be happy to chat. The most novel part is the plaintiff's attempt to use the Creative Commons license as an affirmative contract to claim breach of contract. I can't recall a similar allegation in the past where the Creative Commons license was used as a sword instead of a shield. Finally, the complaint doesn't mention anywhere that the plaintiff's website apparently offers RSS feeds, which raises a bunch of problems for its arguments.

* McVey v. Day, 2008 WL 5395214 (Cal. App. Ct. Dec. 23, 2008). This is a dispute between rival members of the teacher's union. Among other activities, the defendant sent an email linking to a website that had allegedly defamatory statements about the plaintiff, but the website's statements were authored by third parties. In this ruling, the court grants the defendant's anti-SLAPP motion, saying that the defendant wasn't liable for the emailed links per 47 USC 230. This is another nice anti-SLAPP win for Internet content, following on December's Higher Balance case.

Some Personal Notes

* I'll be at AALS and plan to attend the blogger's get-together Thursday night. If you're going to be around, hope to see you there!

* If you're in the Sacramento area on January 13, come to this free event!

* Most of you know that I maintain my personal blog for posts that don’t really belong on this blog. But you may not know that I’ve also been Twittering with some regularity. Check it out!

* Good news: this blog is a finalist for Best Law Blog from Weblog Awards.

Posted by Eric at 09:48 AM | Copyright , Derivative Liability , Domain Names , Marketing , Search Engines , Trademark | TrackBack

January 06, 2009

Oracle v. SAP Updates--Third Amended Complaint, Motion to Dismiss Ruling, SAP's Latest Answer

By Eric Goldman

There have been some recent developments in the high-stakes and complicated Oracle v. SAP lawsuit.

In October, Oracle filed its third amended complaint whereby it expanded its efforts to show that SAP America and SAP Germany were both responsible for the actions of SAP America’s TomorrowNow subsidiary, which SAP has already admitted engaged in impermissible practices. The third amended complaint is supported by lots of facts that only millions of dollars of discovery can buy. The complaint a long read and still has too much PR hyperbole about how Oracle is so much better than SAP, but I thought the complaint did a good job arguing that the parent companies were more involved with the rogue subsidiary than mere stockholdership. At the same time, Oracle does look like it will have a damper on some of its copyright claims—it acknowledged that it lacks copyright registrations for many of the copied files, and it made some copyright filings as part of the lawsuit that probably will be too late to create eligibility for statutory damages. This probably means that Oracle won’t get to inflate the final damages calculation as much as it would like.

On Dec. 15, the judge ruled on SAP’s partial motion to dismiss. The ruling cleans up the case a bit but doesn’t really affect the substance of the case. Personally, I was a little confused about the ruling on copyright preemption of the breach of contract claim. The court denied the motion to dismiss the contract claim “except as to the extent that the state law claims are based on the alleged copyright infringement – in which case the parties agree they are preempted by the Copyright Act. SAP does not dispute plaintiffs’ assertion that the TAC alleges other actions (fraud, unauthorized use, and harm to private contractual rights and expectations) that form the basis of the state law claims, and which are not preempted by the Copyright Act.” Did the court say that a breach of contract can’t be based on acts that would constitute a copyright infringement? We know that would be wrong.

On Dec. 30, SAP filed its answer to the third amended complaint. Just like it did with its first answer, which it released so that the news would effectively break on the obscure newsday of the July 4 holiday, SAP once again tried to bury its news by releasing it so that the news would break on a holiday (this time, New Years). Oh please! You’re not fooling anyone with your bogus PR shenanigans, SAP.

Not surprisingly, SAP is blaming its TomorrowNow subsidiary for all misconduct--which is convenient, because SAP has already shuttered TomorrowNow, so it has nothing more to lose if it can contain the lawsuit to the subsidiary.

I must say that the overall picture doesn't look good for SAP. I am skeptical that they will emerge unscathed from this lawsuit. However, I’m still not clear what Oracle wants from SAP. It’s in the driver’s seat, so it should be able to dictate terms. What would it take for Oracle to move on? It may be that keeping the case open is hurting SAP in the marketplace, such as by spooking SAP's potential customers, so Oracle may be happy to let the case linger. Otherwise, it seems like Oracle should have enough information to state a price, and I’d like to think SAP would be prepared to write a reasonable check.

Posted by Eric at 10:12 AM | Copyright , Licensing/Contracts | TrackBack

January 05, 2009

Veoh Gets Another Nice 512(c) Win--UMG v. Veoh

By Eric Goldman

UMG Recordings, Inc. v. Veoh Networks, Inc., 2008 WL 5423841 (C.D. Cal. Dec. 29, 2008)

Last year, in Io v. Veoh, online video sharing site Veoh got a significant win under the DMCA online safe harbors (17 USC 512(c)). That opinion makes my list as one of the top 10 cyberlaw cases of 2008, and I'm considering teaching it in Cyberlaw next year.

Last week, Veoh--a site where users upload and share video--got another nice 512(c) win. UMG claimed that the following activities by Veoh did not constitute "storage at the direction of a user":

"(1) automatically creating “Flash-formatted” copies of video files uploaded by users; [the Io court had already ruled that this didn't block a 512(c) defense]
(2) automatically creating copies of uploaded video files that are comprised of smaller “chunks” of the original file;
(3) allowing users to access uploaded videos via a technology called “streaming”;
(4) allowing users to access uploaded videos by downloading whole video files"

UMG's statutory reading is novel, but this is partially due to the fact that it's a really goofy way of reading the statute. Accordingly, the court rejects UMG's argument that any of these technological manipulations of user-uploaded videos disqualify Veoh from coverage under 512(c). This does not mean Veoh will qualify for 512(c)--the court wasn't opine on that issue--but the court's opinion is a strong signal that Veoh will qualify.

I don't expect the ruling to have much bearing on the Viacom v. YouTube case. I don't recall Viacom making the goofy statutory argument that UMG made here, so this ruling should be tangential to the arguments in that case. On the other hand, the ruling adds another defense-favorable interpretation of 512(c) as applied to online video sites and gives another data point that the courts just aren't buying the copyright owners' arguments. Maybe that will help nudge Viacom and YouTube to settle.

Posted by Eric at 07:25 AM | Copyright , Derivative Liability | TrackBack

December 02, 2008

November 2008 Quick Links

By Eric Goldman

Trademark

* NYT: "A handful of new Web sites with names like Typo Bay and Typo Buddy are out to help shoppers save money by searching eBay for misspelled brand names." In 2005, I blogged that typographical errors are a significant issue for eBay's search engine.

* It's a bull market for Obama-related trademark filings and Obama merchandise.

* Domain name tasting down 84%?

* Wired: "Think Godzilla's Scary? Meet His Lawyers"

Copyright

* Reuters: "Instead of triggering the usual take-down notices, copyright-infringing footage of select MTV Networks programing uploaded by MySpace subscribers would be automatically redistributed with advertisements that would generate revenue for the companies." I'm interested to see how this system applies to fair uses of the works!

* Arista Records LLC v. Usenet.com, Inc., 2008 WL 4974823 (S.D.N.Y. Nov. 24, 2008). The court dismisses USENET.com's counterclaims for declaratory relief that it doesn't violate 17 USC 512 because the claims duplicate its affirmative defenses.

* James Grimmelmann does an excellent job parsing the Google Book Search settlement agreement and makes some sage recommendations for how it should be modified before court approval.

Advertising/Marketing

* The Google-Yahoo ad syndication deal is dead. Some behind-the-scenes discussions.

* I'm not sure about the implications of this, but Google is expanding its efforts to allow website and ad targeting based on automatic geographic detection. See my prior post about the future of geolocation and a bordered Internet.

* Good news: entrepreneurs want to authenticate children's ages to keep them out of online trouble. Bad news: entrepreneurs might use age authentication to hit the kids with targeted marketing.

* Classmates.com sued for misrepresenting that former school chums were actually looking to reconnect. Yet more pushback on bogus "X is looking for you!" ads.

47 USC 230

* The Supreme Court denied cert in Doe v. MySpace, 2008 WL 4218722. According to Tom O'Toole, this is the seventh time that the Supreme Court has denied cert in a 47 USC 230 case.

* It appears that Children of America v. Magedson has settled.

* The Santa Clara University community is having a catharsis about Juicy Campus.

* Dan Solove and I chatted with Doug Lichtman about social networking sites (asynchronously--I spoke with Doug after Dan had), with most of my conversation focusing on 47 USC 230. Doug edited the conversations together into a one-hour podcast entitled "Privacy in the Networked World." An added bonus for listening--you may be able to earn one hour of CLE FREE!

Spam

* Facebook v. Guerbuez. Facebook wins $873M default judgment under CAN-SPAM. Now, if Facebook could only collect any of this, they would have finally figured out a way to make money!

* Gordon v. SubscriberBASE Holdings, Inc., 2008 WL 4809833 (E.D. Wash. Oct. 31, 2008). Serial anti-spam plaintiff lost again on whether he has standing under CAN-SPAM.

* Evan Brown: Government spam filters do not deprive citizen of right to petition the government.

* Venkat: Unsolicited Marketing Extravaganza in the Ninth Circuit.

Miscellaneous

* eHarmony settles claim that it discriminates against gay singles.

* NYT: "almost five years into its expansion into Europe...Google is getting caught in a web of privacy laws that threaten its growth and the positive image it has cultivated as a company dedicated to doing good."

Posted by Eric at 09:47 AM | Copyright , Derivative Liability , Domain Names , Privacy/Security , Search Engines , Spam , Trademark | TrackBack

November 27, 2008

Google Book Search Settlement Comments (A Little Late)

By Eric Goldman

The Google Book Search settlement sparked plenty of discussion, but the coverage was suppressed by the high entry barriers to commenting--specifically, 300 pages of dense slow-reading legalese in the settlement agreement. Some of you may be faster readers than I am, but it would take me at least a full day to read everything. As a result, I still haven't made my way through the thick stack, and I'm not sure if/when I will actually do so.

In light of that, I will make only three high level points about the settlement:

1) Did Google make a good business decision to enter this market? If the settlement gets final approval, Google will get a clear path to republishing book content. However, this was an expensive market to enter. To get this result, Google will pay the $125M settlement fee, plus all of the litigation costs (which were undoubtedly enormous), the costs to construct the technology and scan the books to date, and the future construction and scanning costs. Further, Google's future book-related revenues will be taxed 63% (which may sound like a high percentage, but I'm sure Google has done higher splits in other context).

So how long will it take for Google, earning 37 cents on the dollar, to recoup its investment of well over $125M? More to the point, what is the implicit ROI on this investment, and how does that compare to other investment choices that Google could have made with the money? My guess is that if, at the beginning, Google knew that it would cost so much to enter the business, the rational decision would have been for Google to put the investment dollars in higher yielding investments.

(Note: I know that Google is awash in cash and doesn't need to maximize its return on every investment, so Google can afford to make lower-yield investments to make other socially important points. I'm glad they can, and I'm glad they do. Even so, I'm still struck by the size of their investment to enter this market.)

2) This deal has the potential to reengineer a number of industries. Part of the settlement agreement's length is due to the fact that the agreement creates a new collective rights organization, the Book Rights Registry, and articulates a command-and-control approach to govern how Google will interact with the Book Rights Registry. Personally, I think this overall architecture has a high risk of failure--no matter how long the contract, it's impossible to anticipate everything by contract to ensure successful competition over time. In fact, I suspect that anyone who picks up the contract 20 years from now will think the agreement is filled with anachronisms that reflect current assumptions about the technology and the book industry that won't make sense then.

I am especially interested in the potential effects of this deal on the library market--a huge market that drives a number of publishing industry sectors. Harvard Library's reversal notwithstanding, my initial assumption is that many/most libraries will be very desirous of obtaining a license to the electronic book database for two reasons. First, the database will have a lot of good stuff, and this may be a cost-effective way of expanding their collections. Second, libraries are literally running out of physical space, so an electronic database of books may solve a problematic and expensive facilities problem. But the dollars libraries spend on the database are going to come from somewhere, presumably either from money spent on print publications or from existing electronic licensees. Either way, this will create some winners and losers.

Creating a collective rights organization by contract has other major risk factors, most obviously antitrust concerns. There are a number of reasons to question the competitive effects of this deal, but the agreement waves the red flag in front of antitrust regulators by containing some provisions where Google and the Book Rights Registry are supposed to agree on downstream prices to customers. Sure looked like vertical price restraints to me. It may be no accident that collective rights organizations typically operate under Congressional authorization or an antitrust consent decree.

Because of these problems, it will be interesting to see who objects to the deal. Among the candidates:

- the DOJ, who might be still spoiling for a fight over Google's market power after successfully tanking the Google/Yahoo ad syndication deal.
- entrenched interests in the library supplier market, such as Baker & Taylor or existing electronic database licensees
- individual authors or publishers who feel screwed by the opt-out system
- other major players in the book industry whose market niche could be reengineered. Amazon is an obvious candidate.

3) If the deal goes through, this arrangement could represent a discontinuous step up in the overall knowledge that benefits our society. One of the most problematic aspects of book publication is that the content isn't searchable (one of the reasons I much prefer writing law review articles that get into Westlaw/Lexis than book chapters that become effectively unsearchable). If this database makes book content globally and easily searchable, massive quantities of human knowledge become newly findable and more usable. What a huge win for all of us! It remains to be seen if we'll realize this theoretical promise, but I remain hopeful we will.

The deal needs approval from the judge (it has already received preliminary approval sufficient to solicit opposition), and it will be interesting to see who lines up in opposition. The deal also could be attacked by the antitrust regulators and others. So I may try to defer investing the time to read the agreement in total until we see what happens.

There were a lot of articles on the settlement. Some of the ones that caught my attention:

* Mike Masnick: Will Others Now Line Up To Get Paid From Google?
* Fred von Lohmann: Google Book Search Settlement: A Reader's Guide
* Mike Masnick: Short Term Profits Over Long Term Principles; Google's Caving On Book Scanning Is Bad News
* David Drummond's official Google blog post

My 2005 comments on Google's efforts.

UPDATE: I've since learned that James Grimmelmann did a lot of the hard work that I've been trying to avoid. His analysis and list of recommendations is excellent.

Posted by Eric at 07:42 AM | Copyright , Search Engines | TrackBack

November 13, 2008

October 2008 Quick Links, Part 1 (Copyright Edition)

By Eric Goldman

* Happy (?) 10th birthday, DMCA. The EFF birthday cards (1, 2).

* Speaking of the DMCA, Sen. McCain got a first-hand experience with it when his lawyer complained to YouTube that YouTube was taking down campaign videos in response to 512(c)(3) notices too quickly. Really…what a shock. We’ve documented problems with 512(c)(3) notices and 512(f) lawsuits repeatedly on this blog (see, e.g., 1, 2, 3, 4, 5, 6, 7), and yet it only becomes a problem when the legislators personally experience the consequences of the laws they passed. Ironically, Sen. McCain’s response wasn’t to seek legislative solutions that ameliorate the incentives that service providers have to take down content on notice. Instead, Sen. McCain looked for favoritism treatment just for politicians, perhaps hoping that his candidacy for the position as leader of the free world might intimidate YouTube into doing his biding. No such luck (1,2). Maybe YouTube decided McCain was too far behind in the polls. Now that Sen. McCain has a little more time on his hands, maybe he will draw upon his first-hand experience with the tyranny of 512(c)(3) notices to seek out legislative solutions. Paul Levy made some good suggestions.

* Google is having legal problems with Image Search in Germany.

* Universities are bearing the cost of fighting copyright infringement, and it’s not cheap (1, 2).

* Redbox v. USHE. Redbox is an in-store kiosk for renting DVDs. According to Redbox, Universal Studios ordered Redbox to give it a cut of its action or Universal would cut off its wholesale supply of DVDs. See EFF story. Universal Studios may simply be trying to clear the DVD kiosk market of competitors so that it can enter the market itself.

* Mygazines was a website that enabled users to post magazine articles to share them with their peers. It was sued for copyright infringement, settled the lawsuit (1, 2), And then promptly went out of business.

* A recap of the latest in Oracle v. SAP. Separately, the judge has asked Oracle to name its price.

* H.R. 6531: Vessel Hull Design Protection Amendments of 2008. After a few years of trying, Congress amended the vessel hull protections to include copying of boat decks.

* S. 3325, the "Prioritizing Resources and Organization for Intellectual Property Act of 2008." Congress keeps ratcheting up the penalties for civil and criminal infringement, a process I describe more here. The statute also creates an “Intellectual Property Enforcement Coordinator.” It will be very interesting to see who Obama appoints for this position. The position cries out for an IP maximalist, but wouldn’t it be wild if Obama appointed one of his law prof supporters instead?

* Lenz v. Universal Music Corp., 2008 WL 4790669 (N.D. Cal. Oct. 28, 2008). Judge Fogel denied a motion to certify an interlocutory appeal in the Lenz case.

* There is a CRS report on the Cablevision case. Is this a leading indicator of potential Congressional action?

* Due to a copyright dispute with the artist, California will be getting a new "whale tail" design for its custom license plates. Did California really put the whale tail design on 175,000 license plates on a handshake?

Posted by Eric at 08:52 AM | Copyright , Derivative Liability , Search Engines | TrackBack

November 07, 2008

Rip-off Report Back in Court

By Eric Goldman

It's been a few months since I've blogged on new Rip-off Report litigation. For many companies, a blog hiatus might signal good news, but in Rip-off Report's situation, it merely reflects that I've been falling behind in tracking all of the new lawsuits. I don't blog all of their cases, but two relatively new lawsuits caught my attention:

Certain Approval Programs v. Xcentric Ventures, 2:08-cv-01608-MHB (D. Ariz. complaint filed Aug. 29, 2008).

Among the plaintiff's allegations are that automatically putting the words "Rip-off Report" into a user report page's title tag is defamatory and not covered by 230. The complaint has some useful screen shots depicting how Rip-off Report works.

Xcentric Ventures, L.L.C. v. Opinion Corp. dba Pissed Consumer, 2:08-cv-01841-JAT (D. Ariz. complaint filed Oct. 7, 2008).

Rip-off Report is on the plaintiff's side (again), this time suing a putative competitor and its web host for copyright and trademark infringement. Among the interesting tidbits:

(1) Rip-off Report successfully sent three DMCA 512(c)(3) takedown notices to the web host but is suing the web host anyway for failing to terminate the hosting relationship.

(2) if Rip-off Report has ownership or an exclusive license to the user-supplied reports sufficient to have standing to sue, would this alter its ability to disclaim responsibility for the content of the reports? I think the answer should be "no"--see Schneider v. Amazon and Blumenthal v. Drudge--but exclusive control over user content for copyright enforcement purposes but without concomitant responsibility for other purposes will strike most people as counter-intuitive.

(3) the putative competitor allegedly infringed the Rip-off Report's trademarks by creating and using the URL "http://rip-off-report.pissedconsumer.com" and putting "Rip-off Report" in the site metatags. Hmm...does Rip-off Report really want to establish the precedent that these activities infringe???

Posted by Eric at 09:40 AM | Content Regulation , Copyright , Derivative Liability , Trademark | TrackBack

November 02, 2008

Student Term Paper Website Brings a Lawsuit; Instead Gets Nailed With $700k Award Against It--Axact v. Student Network Resources

By Eric Goldman

Axact (Pvt.) Ltd. v. Student Network Resources, 2008 WL 4754907 (D. N.J. Oct. 22, 2008). The Justia page. Axact's initial complaint. A letter from defense counsel to the judge recapping some of the sad story.

I'm always fascinated when plaintiffs initiate a lawsuit but end up owing the defendants money. I understand that litigation inherently involves uncertainty about the outcomes. However, when the plaintiff ends up owing money, the plaintiffs appear to have made a major miscalculation. Certainly they should have just stayed home rather than mixing it up in court.

Today's case involves the apparently brutal and cutthroat (perhaps literally?) business of student term paper websites. You may recall that Google blacklisted all term paper websites from its AdWords program. I've also blogged on Blue Macellari's complaint against some term paper sites she thought had ripped her off (the case settled). The Turnitin lawsuit is also relevant.

The litigants in today's case are competitors in the student term paper business. Axact, a Pakistan-based IT services company, initiated the lawsuit by alleging that SNR was trying to steer business away from Axact through defamatory statements at the home page and user forums of a website operated by SNR. The complaint cites some pretty strong allegations by the defendants beyond just selling bogus term papers, including purported accusations that the plaintiffs are a "crime syndicate," run a "prostitution ring" and threatened reporters with murder. [Note: I have received legal demands from Axact regarding this paragraph. To make sure there's no confusion, the last sentence refers to the allegations, all of which Axact has denied.]

The defendants fought back with counterclaims alleging that Axact was ripping off SNR by buying term papers and then republishing them through the Axact website. The defendants then sent a Rule 11 letter asserting that the complaint's allegations lacked merit. After the letter, plaintiff's counsel withdrew, saying "Dreier discovered information which, if known at the time the complaint was filed, would have caused Dreier to refuse to file the complaint in this matter on behalf of Axact." This left Axact without counsel, and apparently it had difficulty finding new counsel because it asked the court if it could proceed pro se. The court predictably denied the lawsuit because companies can't appear pro se in court. As a result, the litigation went to default judgment on defendants' counterclaims.

In the Oct. 22 opinion, the court awards damages of $300k and attorneys' fees of $36k for the copyright infringements, plus regular damages of $2.5k and punitive damages of $350k under the NJ unfair competition act. All told, an award of nearly $700k to the defendants in a lawsuit that the plaintiffs should not have brought.

Axact may have defaulted, in part, because it is pursuing a parallel lawsuit in Pakistan. Assuming it can win in its home court, it's still not clear how Axact can collect on a Pakistani judgment against the defendants. At the same time, it will be interesting to see if the defendants can get paid themselves.

Posted by Eric at 07:05 PM | Copyright | TrackBack

October 16, 2008

Search Engine "Cache" Function Covered by Implied License--Parker v. Yahoo

By Eric Goldman

Parker v. Yahoo, Inc., 2008 WL 4410095 (E.D. Pa. Sept. 25, 2008).

Gordon Roy Parker is a serial pro se Internet law plaintiff and putative owner of copyrights in seemingly misogynistic works such as "Outfoxing the Foxes" and "Why Hotties Choose Losers." A quick review of Parker's website reminded me a little of the cute date-movie Hitch, but without any of Will Smith's charm.

Last year, the Third Circuit dismissed Parker's copyright infringement lawsuit against Google over Google Groups. In this ruling, the district court rejects most of his copyright infringement claim against Yahoo and Microsoft over the "cache" option in search results.

[Side rant: I once again protest that calling these copies "cached" copies is a serious bastardization of the term. Despite the mislabeling, the search engines present archival copies, not cached copies, and treating them as equivalent creates significant legal doctrinal tension.]

This lawsuit squarely revisits the ground covered in the Field v. Google case, which Google won for 5 different reasons--including that anyone who posts content to the web knowing that search engines display cached copies impliedly licenses the search engines to do so. Here, the search engines apparently obtained the copyrighted works from Parker's site (instead of from some third party infringing site), and Parker admits he knew of the cache function. As a result, Yahoo and Microsoft can claim an implied license for their cached copies.

However, implied licenses are a weak defense because they can be trumped by express restrictions (see, e.g., Ticketmaster v. RMG). As a result, Parker's claim survives to the extent that Microsoft and Yahoo retained their cached copies after learning of his objection through the complaint filing.

Along the way, the court also says that Parker cannot complain about the search engines' initial robotic collection of the copyrighted works for index inclusion because the Third Circuit's ruling in Parker v. Google implicitly rejected the claim, leading to claim preclusion here. That struck me as a pretty liberal reading of the breezy and brief Third Circuit opinion.

Parker also claimed that individual web users downloading the cached copies are direct infringers. However, the court extends the implied license to them as well. The court offhandedly says that the search engines lack both direct financial benefit from the cached copies and knowledge of the infringement, thus giving further reason to dismiss the secondary infringement claims.

Finally, the court breezily dismisses a breach of contract and negligence claim as being preempted by copyright law. I think the preemption of the breach of contract claim is plainly wrong and should be reversed if the case is appealed.

While Parker's lawsuit (barely) lives to fight another day, overall this is another great opinion for search engines. Once again, courts are finding broad legal protection for basic search engine operations. This lawsuit also reiterated how pro se plaintiffs can be very helpful to an Internet defendant seeking to establish favorable low-cost legal precedent.

More on this case from Jeff Neuburger.

Posted by Eric at 10:31 AM | Copyright , Derivative Liability , Search Engines | TrackBack

October 11, 2008

September 2008 Quick Links, Part 2

By Eric Goldman

Copyrights

* In the Harry Potter fair use case, the court declared that the Lexicon encyclopedia isn't fair use.

* The judge declared a mistrial in the Jammie Thomas case.

* Designer Skin v. S&L Vitamins has reached its denouement. Previous blog coverage of the case (1, 2). In the prior ruling, the judge denied the plaintiff damages for the copyright infringement. In the final ruling, the court enjoins cutting and pasting product shots but allows the defendant to recreate the product shots. Ronald Coleman has more here and here (noting that the court says that, per MercExchange, an injunction does not automatically follow from a finding of copyright infringement).

* Wired's 5 year retrospective on the RIAA's litigation campaign against file sharing.

Social Networking Sites, Blogs and Online Publishing

* J.S. ex rel. Snyder v. Blue Mountain School Dist., 2008 WL 4279517 (M.D. Pa. Sept. 11, 2008). Upholding student discipline for creating a fake MySpace page of principal. The school initially based the discipline on the student infringing copyright (by cutting and pasting the principal's photo) but this aspect of the case wasn't mentioned at all in the court’s reasoning.

* O.Z. v. Board of Trustees of Long Beach Unified School Dist., 2008 WL 4396895 (C.D. Cal. Sept. 9, 2008). Two seventh graders make a video about killing their teacher, described as:

The slide show is essentially a dramatization of the murder of Mrs. [redacted]. The first slide photo states, "Mrs. [redacted] dies." Throughout the slide show there are photos of Plaintiff dressed up in a costume, depicting a woman meant to resemble Mrs. [redacted]. There is red text on each slide photo that describes the scene. One slide says, "Jelly Donut's knife: haha fat bastard. here i come!" In this same photo, the viewer can see a butcher knife lunging at Mrs. [redacted] character from the camera's point of view. The butcher knife is then laid on the fallen victim while the text reads, "hehehe. i'm a shank yoooooooooo!" At the end of the slide show, it reads, "your [sic] dead, BITCH! :D".

I think they thought it was funny, but no one else did. One of them posted the video to YouTube. It's unclear what happens to the poster, but the co-content creator was suspended and forced to transfer to another school for her eighth grade. In this case, her TRO request is denied, even if she didn't intend the video to be publicly distributed and even if the video was not a "true threat."

* Spanierman v. Hughes, 2008 WL 4224483 (D. Conn. Sept 16, 2008). Teacher who was fired for inappropriate MySpace communications with students can't sue the school.

* An encouraging update on the Lori Drew prosecution.

* Bill McGeveran on Facebook Beacon and legal liability.

* Good NYT article on the sociology of Facebook and Twitter.

* Sam Bayard on an interesting but confusing ruling from Montana on its shield law applied to anonymous online posters.

* Verdana Partners v. Giles. Online newspaper wins anti-SLAPP claim.

* Jardin v. Datallegro, Inc., 2008 WL 4104473 (S.D. Cal. Sept. 3, 2008). A litigant's taking down a blog post and its comments is not destruction of evidence.

* Nemet Chevrolet has appealed its 230 loss. Previous blog coverage.

* Do Facebook's anti-spam policies overregulate Facebook's power users?

Posted by Eric at 07:49 AM | Content Regulation , Copyright , Derivative Liability , Internet History , Spam | TrackBack

September 30, 2008

Licensing a Work, and When Licensing Doesn't Work--Reuters v. GMU

A timely Exhibit A in the argument that contract law is being used as a back-door wedge in expanding copyright.

By Ethan Ackerman

Just as Bruce Boyden seriously asks, "is the case for contracts somehow expanding copyright rights vastly overstated?" along comes a fairly conclusive 'No' in the form of Reuters v. GMU.

James Grimmelmann has an excellent summary of the Virginia-filed breach-of-contract case, noting that a George Mason University History professor developed an open-source Firefox extension called Zotero that worked with Thompson/Reuters' EndNote software. Apparently the development involved some reverse-engineering of the EndNote files or software structure. It's this act that leads to the suit, as reverse-engineering is prohibited by the EndNote site license that GMU held.

Mike Madison also notes the case and parses out the timing of the suit, filed in anticipation of a significant interoperability feature coming in an update to the Zotero software. He also sees much potential for mischief in Reuters' demands for an injunction that would apply to other Zotero users who imported data files from EndNote. Professor Madison's spot-on conclusion: "Reuters is transparent in its effort to use a software license to suppress a competitor in a product market."

Professor Michael Froomkin sees some interesting lawyering and one actual non-trivial legal question in the choice of filing a suit against a university over actions by its professors. To what extent can a state university bind its employee professors? Professor Froomkin points out that the professor in question is probably not a party to the site license agreement, and likely agreed to no such terms, so any privity comes from the fact that the professor is an employee of the university. My own brief searching on the web leads me to suspect the same thing. An academic site license end-user likely clicks on, at most, a much-reduced terms-of-service along the lines of this U.Georgia page before installing the software.

Further developing the 'privity-of-contract-through-employment-status' theory, does it matter that the development of this software by the professor was most likely outside the scope of his employment? I ask, only partially tongue-in-cheek, will this complex 'copyright-or-not, enforceable-terms-or-not, enforceable-license-or-not, injunction-or-not' case turn on the professorial field of the Zotero developer? Would it have been different if this were a computer science professor? A grad student?

So if this is a state law contract case, why all the Copyright Act talk anyway? Reverse engineering can be a fair use of a copyrighted work, something even the Federal Circuit will admit. Bringing an infringement suit against a reverse engineering that focused on something (the data file formatting) with such a thin copyright seems like a quick way to an adverse ruling. Professor Grimmelman, noting the utter inadequacy of the possible trademark claim pleading as well, suspects incompetence. Professor Madison, however, suspects an intentional end-run around reverse engineering fair use law by intentionally asserting only state-law contract claims, copying the proceedings in Bowers v. Baystate Technologies. Both see problems with the injunctive relief sought.

My only gloss on this case, otherwise excellently dissected by Profs. Grimmelmann, Froomkin and Madison, is to point out this is a great answer to Prof. Boyden's initial question about contract law being used as an expanding wedge for rights holders. This case is not even the only recent case tackling the issue, and several other recent cases would have had to face it if courts hadn't mooted the issue by finding a sale rather than a work made available subject to license.

So in summary, yes, there's an open, ongoing and unsettled problem with parties attempting to reverse, by contract clause, an issue that is addressed and settled by federal copyright law.

Posted by Ethan Ackerman at 12:05 PM | Copyright , Licensing/Contracts | TrackBack

September 22, 2008

Perfect 10 v. Google on Remand, and 230 as an Affirmative Defense

By Eric Goldman

Perfect 10, Inc. v. Google, Inc., 2008 WL 4217837 (C.D. Cal. July 16, 2008)

You recall this case involving Perfect 10's allegations that Google and Amazon (and, in a subsequent complaint, Microsoft) are infringing its rights by indexing third party posts of Perfect 10's photos. You may also recall the 9th Circuit issued an important but confusing ruling in this case in May 2007, which the 9th circuit corrected in an amended opinion in December 2007. The 9th Circuit rulings sent the case back to the district court for further proceedings, and this opinion (which just came through Westlaw--not sure why it took so long) is part of those proceedings.

Perfect 10 sought to file a second amended complaint making new factual allegations, including extending the lawsuit to include Google's Blogger service and claiming nearly a thousand new infringed copyrights, and pleading new causes of action, including California and common law unfair competition, unjust enrichment, and misappropriation. Google tries to knock out the amendment on a variety of grounds, but all of Google's arguments fail, and the court lets Perfect 10's second amended complaint through.

I was most interested in Google's attempt to knock out the unfair competition, unjust enrichment and misappropriation claims as moot due to 47 USC 230. The court rejects the argument because it says that 230 is an affirmative defense that does not support a 12(b)(6) motion. I remain surprised that this meme has taken root so deeply, because my guess is that well over 50% of the 230 defense wins have been in a 12(b)(6) motion or its state law equivalent, like a demurrer. (The percentage is reduced by cases where the defendant didn't try for 12(b)(6) and instead raised the 230 motion in the first instance in summary judgment). In other words, the vast weight of caselaw supports that 230 can be used for a 12(b)(6) dismissal, so this court's breezy refusal to do so is disappointing.

Perfect 10 also argued that Google is the content creator of the tortious content. I wonder how Perfect 10 will factually support that assertion, but it also was enough for the court to reject the 12(b)(6):

The question whether any of Google's conduct disqualifies it for immunity under the CDA will undoubtedly be fact-intensive. Neither party has proffered evidence sufficient for the Court to determine at this stage whether Google is entitled to CDA immunity. Although it is highly likely that P10 will encounter difficulty in establishing that Google engaged in the “creation or development in whole or in part” of unlawful content, see Fair Housing Council, 521 F.3d at 1168-69, it would be improper for the Court to resolve this issue on the pleadings and the limited evidentiary record before it.

Also interesting is that the court lets Perfect 10 add 650+ new infringed copyrights that were unregistered at the time of filing the complaint. In my opinion, 17 USC 411(a) is fairly clear (as statutory language goes) that copyright plaintiffs can sue only on registered (or pre-registered) copyrights, which should make this an easy dismissal. However, some courts have found the statutory language ambiguous and thus have allowed plaintiffs to proceed on copyright applications while they are pending with the Copyright Office--and this court does so as well.

Posted by Eric at 09:05 AM | Copyright , Derivative Liability | TrackBack

September 09, 2008

August 2008 Quick Links, Part 2

By Eric Goldman

Net Neutrality

* The FCC gets on Comcast’s case for deceptively blocking BitTorrent connections without disclosure. While I don’t know anyone who has defended Comcast’s behavior here, at the same time there is an undercurrent of concern about the FCC’s authority to regulate Internet activities. Could this be the FCC camel's nose in the Internet's tent? We will learn more about the FCC's authority because Comcast has appealed the FCC's decision.

* A topic I haven't seen discussed very much: how the doctrine of trespass to chattels intersects with net neutrality principles. The only article I found in a 60 second search on the topic was a couple of paragraphs in J. Gregory Sidak, A Consumer-Welfare Approach to Network Neutrality Regulation of the Internet, 2 J. Competition L. & Econ. 349 (2006).

Contracts

* Jacobsen v. Katzer (Fed. Cir. Aug. 13, 2008). This ruling has been hailed as a validation of open source licenses, but I’m not sure what to make of this opinion. If the opinion merely says that breach of a copyright license can support copyright infringement, that’s no big deal. However, among other conspicuous omissions, the court does not discuss how the licensor formed a contract in this case. Thus, if the court’s conclusion is that copyright owners can impose conditions on licensees’ enjoyment of their copyright without properly forming a contract, then this opinion could undo the entire scheme of online contract formation. For example, it could support a conclusion that browsewrap-style “contracts”/terms of use should be enforceable as conditions on the accessing of copyrighted web pages. See, e.g., Ticketmaster v. RMG.

* Interactive Retail Management, Inc. v. Microsoft Online, L.P., 2008 WL 3851691 (Fla. App. Ct. Aug. 20, 2008). This is a click fraud case I hadn't heard about previously. Microsoft won at the trial court on jurisdiction grounds. This court revives the lawsuit for more jurisdictional investigation.

* Jeff Neuburger on a Wisconsin case saying that the UCC governs contract formation via email instead of UETA.

* Request for your guidance. Wikipedia has some photos that simultaneously say they are released under both a Creative Commons license and the GFDL. See, e.g., this photo. The license terms are irreconcilably inconsistent. If someone wants to use such a photo, now what?

Competition Restrictions

* Edwards v. Arthur Andersen (CA Sup. Ct. Aug. 6, 2008). The Ninth Circuit was wrong to create a narrow restraint exception to B&P 16600, the California statute voiding non-compete clauses.

* XPEL Technologies Corp. v. American Filter Film Distributors, 2008 WL 3540345 (W.D. Tex. Aug. 11, 2008). Rebecca on an odd case involving (once again) the DMCA anti-circumvention provisions as an anti-competition tool.

Miscellaneous

* Two interesting studies recently about people’s response to spam. Despite the animosity, a quarter of consumers have responded to cellphone spam and 30% say they have made purchases in response to spam. For more complementary statistics and my attempt to explain this seeming dichotomy, see here.

* The First Circuit issued an interesting DMCA 1201 case that I haven’t seen discussed. The BNA summary: “District court properly granted summary judgment to plaintiff cable television service provider on claim that defendants violated Digital Millennium Copyright Act by selling low-frequency signal filters, within plaintiff's service area, that were capable of bypassing plaintiff's pay-per-view billing mechanism, since plaintiff's pay-per-view delivery and billing system is technological measure that effectively controls access to copyrighted works, and digital cable filter allows subscribers to "avoid" or "bypass" that technological measure (CoxCom Inc. v. Chaffee, 1st Cir., 8/4/08)”

* AP v. Moreover settles. My initial post on the lawsuit.

* Funny YouTube video: "Here Comes Another Bubble," set to the tune of Billy Joel's "We Didn't Start the Fire"

Posted by Eric at 08:49 AM | Content Regulation , Copyright , Licensing/Contracts , Marketing , Search Engines , Spam | TrackBack

September 01, 2008

Io v. Veoh Comments--a Terrific 512(c) Defense-Side Win

By Eric Goldman

IO Group v. Veoh Networks, Inc., 5:2006cv03926 (N.D. Cal. Aug. 27, 2008)

We spend so much time thinking about and debating 17 USC 512(c) that it's easy to lose sight of how few cases really interpret the statute. As a result, a clean and thorough opinion like this one makes a significant contribution to the precedent and teaches us a lot.

There are two architectural features of this ruling that make it particularly defense-favorable. First, the question of whether 512 trumps secondary liability or secondary liability trumps 512 is one of the most important frontiers in online copyright law because the statute is inherently ambiguous on this key point, and the cases have been erratic on this topic. Here, the court doesn't dwell on the issue and instead assumes (without any real discussion) that 512 trumps secondary liability. As a result, the court dismisses the case without ever reaching the plaintiff's prima facie case; meaning that even if the plaintiff could establish a prima facie secondary infringement, Veoh still wins. If the court in Viacom v. YouTube reaches the same conclusion, then YouTube will win.

Second, Veoh took a number of steps to suppress user-caused copyright infringement, including some steps that were not required to satisfy 512(c). The court recognizes that it's impossible to eliminate user-committed copyright infringement but instead rewards Veoh for trying so hard. As the court says, "far from encouraging copyright infringement, Veoh has a strong DMCA policy, takes active steps to limit incidents of infringement on its website and works diligently to keep unauthorized works off its website." In this respect, the opinion reminded me of the Tiffany v. eBay ruling, where that court also lauded eBay for going beyond what the law required and excusing the infringement that slipped through the cracks. I think these two opinions put a huge exclamation mark to reject the notion that courts will only tolerate passive conduits (who do nothing to police their network) or perfect editorial control, with no middle ground for courts to excuse omissions by good faith actors. As with my first point, if the Viacom court adopts this philosophy, then YouTube will win.

A few other noteworthy aspects of this ruling:

* a website's failure to prevent terminated users from re-registering under alternative credentials does not preclude 512(c)

* 512(c) is not lost even if employees spot-check user submissions after publication and make minor edits to the metadata

* 512(c) still applies even if the website automatically extracts some metadata (in this case, some still previews of the video) and uses that metadata for promotional purposes. 512(c) even applied to the screenshots.

* The court rejects Io's argument that Veoh should change its business operations to do a better job of infringement suppression. The court recaps Io's argument as:

plaintiff contends that, if Veoh cannot prevent infringement on its site given the current volume of its business, then Veoh should be required to either hire more employees or to decrease its operations and limit its business to a manageable number of users (whatever that number might be). Its not-so-subtle suggestion is that, if Veoh cannot prevent infringement from ever occurring, then it should not be allowed to exist.

This change-your-business argument is popular among copyright plaintiffs, but the court emphatically rejects it:

Declining to change business operations is not the same as declining to exercise a right and ability to control infringing activity...Moreover, as discussed above, the DMCA does not require service providers to deal with infringers in a particular way...Further, plaintiff’s suggestion that Veoh must be required to reduce or limit its business operations is contrary to one of the stated goals of the DMCA. The DMCA was intended to facilitate the growth of electronic commerce, not squelch it.

While this ruling is very good news for the defense, there are plenty of reasons why it may not portend a similar result in the Viacom v. YouTube lawsuit, including:

* different courts (9th Cir. v. 2d Cir.). In particular, the Veoh court makes numerous references to Ninth Circuit precedent, and the Viacom court could simply say that Second Circuit law is different

* Io did not send any 512(c)(3) notices before suing. Viacom did. This is significant because the Io judge had little reason to be sympathetic to Io if they didn't take advantage of the non-litigation recourse mechanism specified in the statute. Then again, the Viacom court could simply expect Viacom to continue using the 512(c)(3) mechanism as well rather than looking for a court-imposed workaround.

* The Io court notes that the user-uploaded videos did not have a copyright notice in them. I'm sure Viacom can find examples where its copyright notice was included in the uploaded videos.

* Io is a pornographer. Their copyrights are as good as anyone else's, but courts might feel less sympathy towards pornographers.

* Veoh had gotten out of the porn business, and this mooted the injunction. However, Viacom could get an injunction against YouTube with significant bite. Most people misassume that 512(c) eliminates all liability for user-caused copyright infringement, but it only eliminates damages and limits the scope of injunctive relief in 512(j)--but a court can still issue an injunction. 512(j) is, as far as I know, not been litigated, and frankly I don't understand all of its provisions. But the bottom line is that an injunction is possible in the Viacom lawsuit even if 512(c) applies, and the Io ruling doesn't shed any light on that possibility.

Despite all this, YouTube has to be heartened by this ruling.

One final point: this is such a nice clean discussion about 512(c) that it may be a useful pedagogical tool. As a result, I am considering adding it to my Cyberspace Law reader in the future.

Posted by Eric at 09:54 PM | Copyright , Derivative Liability | TrackBack

August 21, 2008

Fair Use - It's the Law (for what it's worth)--Lenz v. Universal

DMCA notice & takedown provisions upheld in Lenz v. Universal

By Ethan Ackerman

A recent ruling in Lenz v. Universal shows just how far being right about something can get you - barely past a motion to dismiss. It just may force a bit of change, too.

Wednesday's ruling in Lenz v. Universal is being characterized by most press coverage as "requiring copyright owners to consider the fair use doctrine before issuing takedown notices." For most purposes, that's an accurate summary of the ruling.

The statute requires it, right?

What the court gets right in Lenz is its conclusion that the statute means what it says. More specifically, Lenz upheld the statutory requirement that a notifier have a "good faith belief that use of the material in the manner complained of is not authorized by ... law, as stated in 17 USC 512(c)(3)(A). One of Lenz's core claims in the case was that her use of Universal's music was a fair use, and thus "authorized by law." The fact that it was authorized by the fair use provision of copyright law made Universal's assertion otherwise a misrepresentation, Lenz contended.

Judge Jeremy Fogel agreed, holding that "an activity or behavior 'authorized by law' is one permitted by law or not contrary to law" and since "fair use is a lawful use of a copyright,...in order for a copyright owner to proceed under the DMCA with 'a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law,' the owner must evaluate whether the material makes fair use of the copyright."

Faced with such clear statutory language, Judge Fogel found Universal's arguments, roughly that 'fair use is hard to figure out' and 'fair use isn't really law so much as an exception to the law,' were lacking.

So how's this not a win for Lenz?

While the opinion so far seems a pretty cut-and-dried win for Lenz (and her attorneys at the EFF,) Judge Fogel looks to the next step of this litigation and points out that being right on the law isn't enough. There are facts that must be proven too. In a complex judicial process called 'telegraphing an opinion and dropping hints,' Judge Fogel states that "the Court has considerable doubt that Lenz will be able to prove that Universal acted with the subjective bad faith required...."

These DMCA notice provisions are a two-edged sword, and 9th Circuit precedent has further narrowed the provisions such that the other edge is sharp indeed. The notice provision requiring a "belief" that the post isn't authorized by the owner or the law merely requires that the notifier have a "good faith belief," not a legal certainty. Additionally, Judge Fogel points out under a prior case, Rossi v. MPAA, that "subjective bad faith" must be shown to disprove good faith. In other words, Lenz has to show that Universal (roughly) knew, or possibly should have known, the use was fair and sent the notice anyway. While EFF has made a point of lining up an impressive array of facts that may push this particular case over the edge, bearing the evidentiary burden of proving the actions and intentions of an adversary is a heavy burden indeed.

But wait, what if this letter wasn't even under the statute?

Another unsettled issue in this case may pop up on appeal or in similar cases. As detailed above, Lenz came out this particular way because the judge followed the clear wording of the DMCA provisions. An unaddressed part of Universal's argument, and one likely to pop up again in similar cases or possibly on appeal, seems like it may well moot this holding. Universal argued (albeit just in a footnote) that the DMCA statute didn't apply from the get-go because Universal didn't send a DMCA notice. Universal argued that it shouldn't be held to the particulars and penalties of the DMCA because its letter to YouTube wasn't a DMCA notice, just a request letter.

Judge Fogel's order simply doesn't address this argument. It's a good one (or a particularly bad one, depending on one's view) too, especially in light of other recent litigation developments and the procedural history of the DMCA notice provisions. These DMCA provisions make up a regime for take-down notices and copyright safe harbors, but they likely aren't the only regime in town.

Even before the DMCA was enacted, an ISP was often not liable for the infringements of its users. Similarly, pre-DMCA a content owner could ask that an ISP remove content via a nice (or not) letter to the ISP. The DMCA legislation created a structured system to give more legal certainty in this area, but it is likely not the exclusive way in which content owners can notify ISPs - at the very least no court, including Lenz, has yet said it's the exclusive way.

The Lenz judge treated Universal's letter as a DMCA notice, even though it said on its face it wasn't. A good argument could be made on the facts of this case that it had to be treated as one, but that may not always be the case. Content owners increasingly seem to be making similar claims outside of the DMCA process, or even arguing that DMCA safe-harbor compliance isn't enough, and at some point a court might well accept such an argument.

[Eric's addition: I think Ethan is onto something regarding the types of takedown notices that trigger 512(f). For example, would an inappropriate NOCI under the eBay VeRO program be governed by 512(f)? This issue was sidestepped in prior litigation over 512(f) and eBay NOCIs. See Dudnikov v. MGA Entertainment. However, in the future, as Ethan points out, 512(f) defendants might claim that their C&D or other takedown request wasn't made under 512(c)(3) to try to escape liability under 512(f).]

Posted by Ethan Ackerman at 03:45 PM | Copyright | TrackBack

August 05, 2008

July 2008 Quick Links, Part I (IP Edition)

By Eric Goldman

Copyright

* Granger v. Gill Abstract Corp., 2008 WL 2791264 (S.D.N.Y. July 18, 2008). A title company admitted infringing the defendant's copyrighted "rate calculator" by posting it to the title company's website. The plaintiff demanded actual damages of $766 MILLION on the theory that the title company's entire revenues were attributable to the rate calculator on the website. The court dismisses this argument as "preposterous." Instead, the plaintiff admitted that its licensing rate is $500/year, so the court awards a maximum of $1,500 for three years of infringement, an amount that the defendant surely would have happily paid to settle before going to court if the plaintiff would have accepted it. Instead, this is great example of a dispute that had no chance of settling because the plaintiff’s demands were so out of this universe. For another example of irrational plaintiff damage demands faring poorly in court, see the Gregerson case.

* An update on Designer Skin v. S&L Vitamins. You may recall that S&L Vitamins lifted product shots from Designer Skins, and in the previous ruling, the court said that such copying isn't fair use. However, in a July hearing, the court subsequently concluded that Designer Skin suffered no actual damages from the copying when S&L marketed legitimate Designer Skin goods using the images, netting the plaintiff zero dollars. An injunction may still be possible. Of course, plaintiffs in the future will try to register their product shots on a timely basis, positioning themselves for statutory damages and attorneys' fees, so this ruling is helpful only in the cases where the registration isn't timely.

* Chronicle of Higher Education: "When Web Sites Post Test Answers Online, Professors Worry"

* 11th Amendment geeks will be interested in the CRS on Infringement of Intellectual Property Rights and State Sovereign Immunity, July 23, 2008.

Trademark

* Nothing spoils a good birthday party like trademark concerns.

* Paul Levy informs us that the ABA IP Section has finally given up their pointless quest to opine on the keyword advertising issue.

* CafePress has settled a trademark infringement lawsuit by Hustler magazine.

* This month, several interesting trademark academic articles emerged:

1) Margreth Barrett, Finding Trademark Use: The Historical Foundation for Limiting Infringement Liability to Uses 'In the Manner of a Mark' Prof. Barrett does some historical sleuthing to determine the scope of trademark use in commerce” doctrine, and she offers a suggested multi-factor test for defining use in commerce in the future. I previously blogged on one of Prof. Barrett's earlier papers on this topic.

2) Bill McGeveran, Rethinking Trademark Fair Use. Prof. McGeveran discusses trademark rules vs. standards and the interplay between the plaintiff’s prima facie case and the defenses.

3) Ken Port, Trademark Extortion: The End of Trademark Law. Prof. Port marshals some empirical evidence to argue that the quantity of trademark lawsuits is dropping but more trademark demands are settling on extortionate terms prior to a lawsuit being filed.

Posted by Eric at 06:59 AM | Copyright , Trademark | TrackBack

August 04, 2008

"DVR as a Service" Isn't Copyright Infringement--Cartoon Network v. CSC Holdings

By Eric Goldman

The Cartoon Network LP v. CSC Holdings, Inc., No. 07-1480-cv(L) & 07-1511-cv(CON) (2d Cir. Aug. 4, 2008)

The Second Circuit has issued an interesting and potentially important ruling that Cablevision's DVR as a service does not infringe copyright law. This ruling reverses the district court's summary judgment for the plaintiff and opens the way for Cablevision to roll out its DVR service offering in the Second Circuit.

The good news is that the opinion eliminates the odd regulatory distinctions between DVRs as a device and DVR as a service. The bad news is that to reach this conclusion, the Second Circuit has to override a lot of adverse precedent, and I'm not sure that other circuits will find this panel's arguments entirely convincing. As a result, it will be interesting to see if Cablevision interprets this opinion as a greenlight for a national rollout.

Thus, while the opinion is good news for DVR service offerings, the opinion leaves open a lot of questions that will have to be answered in the future. I think it's safe to say that this opinion is hardly the last stop in our journey.

Buffering Isn't Infringement

Cablevision's DVR service splits a broadcast feed into two streams, including a "buffer" copy that goes to a router where it is stored for no more than 1.2 seconds as the router looks to see if any consumers have asked for the program to be recorded for them. If yes, the data goes into their private storage areas; if no, the stream is discarded. The court holds that this buffer copy isn't fixed because it's not embodied "for more than a transitory duration."

To reach this conclusion, the court has to fight against a lot of precedent, especially the MAI v. Peak holding that a copy into RAM is fixed, even though that copy may be embodied for even less time than the buffer copy at issue here. The court says that MAI v. Peak stands for the proposition that these short-duration RAM copies can be fixed but are not automatically fixed. The court says that in MAI (without citing any actual facts from the MAI case), the software surely was resident in RAM for "at least several minutes" while in this case the copies exist for only 1.2 seconds, and this factual difference explains the different conclusion regarding fixations.

There is a major slippery slope problem with this conclusion. Is 3 seconds fixed? 10 seconds? I could keep going, and the court deftly side-steps this problem. Nevertheless, this holding offers some promise for certain types of web activity. First, this ruling might excuse copies made by scrapers/robots who download copyrighted pages to extract unprotectable information on the page. This case suggests that the copies made to download the page and perhaps to process it are not fixed, at least so long as they are flushed really quickly (1.2 seconds or less would be good). Second, this case seems to provide another defense to the otherwise problematic argument that web browsing is infringement; so long as the user hits the back button (and kills any local cache) really fast, no fixation of the web page. The opinion deliberately limits itself to Cablevision's system of overwriting the data, so that may limits its overall applicability, but this case creates a new category of copies that are embodied in a medium but are not fixed, and this offers some hope for defendants.

Users, Not Cablevision, Make the Other Copies

Even if the buffer copies aren't fixed (and therefore cannot support an infringement claim), Cablevision still stores a copy of the broadcasted works in its storage area, where users can download the programs. There's no fixation problem with these, so plaintiffs challenge these copies as both impermissible copies and public performances. The court rejects these arguments, concluding that Cablevision is a sufficiently passive entity that the users and not Cablevision are doing the legally significant activity. Thus, Cablevision is at most exposed to contributory liability for these user activities. Because the plaintiffs had waived allegations of contributory infringement, Cablevision gets summary judgment.

To reach this conclusion, the court ignores Cablevision's active role in setting up its systems and providing ongoing services, including selecting which broadcast channels are DVRable in its system. Instead, the court sees this fact pattern as identical to DVR as a device, where the DVR manufacturer isn't directly liable for how the DVR is used. This is consistent with the uncited Field v. Google case, but it conflicts with numerous copyright cases where the service provider's hosting of files gives the provider more legal responsibility over the system usage than a device maker would have. Similarly, the court distinguishes the coursepack cases on the basis that a human employee of the copyshop presses the "copy" button, because here the system works automatically without manual intervention from Cablevision.

Note, of course, that the court didn't discuss contributory liability, which also raises the ugly and risky question of whether Cablevision users are directly infringing by using the DVR as a service. I think there is helpful language in the Sony Betamax case about DVRing as a fair use, but I doubt anyone wants to see that battle relitigated.

Similarly, with respect to the argument that the distribution of the files from Cablevision's storage area is a public performance, the court says that Cablevision isn't "transmitting" as required by the statute because the user is making the legally significant action.

Further, Cablevision's delivery of the file isn't "to the public" as required by the statute. This latter conclusion is totally fine with me as a matter of common sense interpretation of those words, but it runs contrary to numerous messy and analytically questionable precedents regarding the central serving of copyrighted works to private spaces, such as Redd Horne and On Command. The court deftly tries to evade those, but after 2 readings I still can't figure out what the court said. Maybe the third time will be the charm. I think it has something do with the fact that Cablevision encoded each file delivery to its consumers so that each file delivery could be consumed only by a single playback machine. Let me know if you can figure out what the court was saying here and how it might apply to anyone else. Because the ruling seems to let Cablevision freely broadcast third party content to potentially all of its subscribers without constituting a public performance, I think there may be some exploitable holes here.

One more open question: this opinion makes me wonder if the MP3.com opinion from SDNY is still good law. I'd need to go back through that opinion, but as I recall, a lot turned on the fact that MP3.com tried to act as a proxy for its users. Here, the court treats such proxy activities as passive, and perhaps that analysis would fit the MP3.com facts as well.

Conclusion

I'm excited about this opinion because it eliminates some of the legal anomalies between DVR as a device and DVR as a service. In many situations, DVR as a service will be a better consumer experience, and it is unquestionably better for the environment, so I'm happy that this opinion tries to get copyright law out of the way to enable this result. At the same time, the appellate court set up enough conflicts with other precedent, and sufficiently caveated its opinions to address the narrow facts in Cablevision, that I expect this case resolved nothing definitively. That will have to wait the many cases in our future.

Even so, I remain amused (in a cynical way, not a funny way) that the broadcasters are still fighting against giving consumers what they really want, which is to consume their content at the time and place of the consumer's own choosing. Eventually, broadcasters are going to have to bite the bullet and post their content onto the Internet for viewers to enjoy at their convenience. There always will be consumers who want to consume the content upon first release, but after that, content that's unavailable to consumers is just wasting away instead of continuing to make money for the broadcasters.

Posted by Eric at 05:44 PM | Copyright , Derivative Liability | TrackBack

July 31, 2008

Still Not Copyright: Para-Copyright Revisited--Blueport v. US

Another friendly reminder that not everything related to copyright is copyright.

By Ethan Ackerman

The Copyright Act is a curious critter. Litigants seem to keep finding ways to get unexpectedly drawn into it when they don't want to and ways to fall short of it even when they want its cover.

This blog previously focused on one such near-but-not-copyright situation, Prince's record album's take down notice of a bootleg performance. The post pointed out that the take down notice was likely improper as there was probably no copyright infringement occurring, only the related para-copyright no-bootlegging right.

A Federal Circuit opinion, Blueport v. U.S., has basically affirmed that line of thinking, deeming the DMCA anti-circumvention provisions as a para-copyright. In a suit by a software development company against the Air Force, it held a para-copyright right (in this case, the anti-circumvention provisions of the DMCA) is not part of or the same thing as the Copyright Act, and thus can't take advantage of the government's copyright sovereign immunity waiver.

While news editorials are tempted to dismiss the case as "Maybe Congress just likes free software too," William Patry's ongoing coverage of the case digs a bit deeper. He points out both that the DMCA is outside of and not a part of the Copyright Act, but also the astute policy observation - it's hypocritical to heavily push similar "copyright-plus" provisions abroad while not even complying with them domestically.

[Eric's additional comment: On that point, I remember the 1990s debates over "softlifting," the installation of software on more computers than the license permits. When the SPA (now the SIIA) would go to Congress to lobby against softlifting, they would routinely harp on the fact that the US government was one of the biggest softlifting abusers.]

Posted by Ethan Ackerman at 04:37 PM | Copyright | TrackBack

June 14, 2008

When breaking news breaks copyright

Community blog Drudge Retort receives DMCA notices from the Associated Press for links, quotes.

by Ethan Ackerman

Rogers Cadenhead is a blogger. A prolific one in fact, with a personal blog and the role of editorial director at the commenter-driven political commentary blog Drudge Retort. The latter blog has recently drawn the ire (read: multiple take-down notices) of the Associated Press' legal department for linking and quoting AP content.

Multiple DMCA notices happen daily, and many make questionable legal assertions, but these, well, they're interesting....

UPDATE 6/17

The New York Times covers the Associate Press' 'partial apology but still take-down request' in more detail here, as does Scott Rosenberg. Kudos to the NYT for acknowledging it is an owner of the AP. For follow-up reporting, Mr. Rosenberg's blog definitely aggregates coverage better than the NYT. In short, the AP still considers the Drudge Retort's posts to be infringing and demands they be removed, but was sorry it came across badly in saying so and won't issue any more blog DMCA notices (other than this one) until it has released guidelines on acceptable quoting and linking.

Guidelines, we don't need no stinkin' guidelines.
The notion of quotation guidelines seems to be a non-starter for many bloggers. As (former attorney) Michael Arrington points out, the real guidelines in this situation are the fair use provisions of the Copyright Act, and guidelines can't shrink or expand those. Absent some type of contractual agreement with the AP, no one would be constrained by the guidelines in any way.

That said, the notion of guidelines are at least legally interesting, and puzzling. Regardless of any fair use considerations, to the extent any AP 'guidelines' purported to allow some linking and quoting of AP stories, they would function as an express license to bloggers. Express licenses are an entirely different legal beast than a fair use defense - and they aren't exclusive. For one thing, any sued blogger could probably get a judicial resolution of a suit a lot quicker - whether an alleged use is within the scope of a license can be determined as a matter of law, possibly on the pleadings or at least in a motion for summary judgement. A fair use defense often requires further discovery and motions proceedings.

Unless I'm missing something, it would seem like AP offering guidelines effectively gives some bloggers a 'safe harbor' but doesn't touch those who exercise the full scope of their fair use rights.

The fallout - The Internet sees censorship as damage and routes around it.
That Internet truism looks to be applicable to AP's takedown actions, with fairly widespread negative blogging responses and boycott promises from quite a few prominent blogs.

[Author's comment. Normally I'd be sceptical of anything with the word 'web-based' and 'boycott,' but in this case, authors are choosing not to cite to AP - an almost effortless choice. It's not like someone foregoing gasoline. This may be a classic example of the Colbert response to IP over-enforcement.]

It's just a discontinuity in the path of money.
As Mike Markson points out, at the end of the day, this conflict boils down to a weakness in the business plan and structure of the Associated Press. Its business structure makes it adverse to its customers' customers. AP's licensees see the traffic and get the linking and page-viewing, exactly what they want, but AP gets nothing in this. Perhaps AP could restructure its business model to better benefit AP with one central content site, or this could be one of many examples of a shift in relative power between parties.

The law in all of this.
As a starter, the degree to which headlines and factual news is even protected by copyright is, well, thin to nothing. Unfortunately, most of the blog coverage misses that point, running to the more nebulous (but still important and applicable) fair use defense. David Aradia at Harvard's Citizen Media Law Project does an excellent job at laying out the fair use aspects. He also details the legally fuzzy issue of "hot news misappropriation," a pseudo-copyright issue that may or may not have a place in state law or copyright law. Read his excellent coverage there of why, if it even exists and isn't preempted, 'misappropriation' doesn't matter.

Is there copyright here? Is there relevant law here? News events (and the facts that make them up) aren't protected under copyright law. Neither are any other factual compilations that don't have the requisite minimum creative writing to separate the creativity from the underlying facts. That almost certainly means news headlines aren't protected - they're too intertwined with the facts they convey. I say almost certainly because there's nothing but hints to that effect in copyright cases - no recent rulings squarely address the issue. The holy grail for many copyright scholars on this exact issue could have been Agence France-Presse v. Google. Unfortunately for copyright law clarity, but probably fortunately for all parties involved, that case settled in 2007. So, while counsel for Google may have served their client well, they deprived copyright scholars from having something to write about.

Posted by Ethan Ackerman at 03:17 PM | Copyright | TrackBack

June 09, 2008

Rights in Copies vs. Copyright

Prince's entanglement with Radiohead, YouTube, and a video bootlegger leads to much debate over just what's in copyright law and a YouTube nightmare scenario.

By Ethan Ackerman

Copyright bloggers were privileged to a few laughs recently when Prince's music label, NRG, requested a DMCA take-down of a bootleg YouTube video of his live performance of Radiohead's hit song, Creep. NRG was asserting rights over a song it didn't write, and a video it didn't make. At first blush, unless he had secured a performance license, Prince may have been the only person infringing copyright laws. Bloggers snickered at the irony, and the EFF even helpfully highlighted the lack of checks in the DMCA process that allowed this to happen.

The snickers quickly turned to head-scratching the more bloggers thought about it. A post by Sam Bayard, at the excellent Harvard-based Citizen's Media Law Project blog, exemplified these difficulties and second thoughts. Sam Baynard pointed out that another provision of Title 17, the anti-bootlegging statutes, might apply. Eric Goldman pointed out on the same post that maybe NRG could have made a recording itself that was being copied - and so the Copyright Act would apply.

The anti-bootlegging statute in Title 17, 17 USC 1101, squarely addresses unauthorized recordings of live musical performances. This provision was included in the 1990s to comply with trade treaty obligations (Article 14 of TRIPS.) As Sam points out however, it's not immediately clear that a DMCA take-down notice is appropriate for an alleged sec. 1101 violation. After all, the DMCA is for "for infringement of copyright."

What exactly is "infringement of copyright" for DMCA purposes? While it's clearly not appropriate to use the DMCA notice-and-take-down provisions for things like "infringement of trademark" or "infringement of publicity rights," is a section 1101 anti-bootlegging violation an "infringement of copyright?"

No, it's not. While the definitions section has no entry, and no other portion of the Copyright Act says exactly what is "an infringement of copyright," 17 USC 501 provides a helpful starting point in noting who is an infringer - "anyone who violates any of the exclusive rights of the copyright owner as provided by section 106..."

But the anti-bootlegging rights aren't in Section 106 of the Copyright Act - they're not even in the Copyright Act at all. At best, section 1101's anti-bootlegging rights are in the same title (Title 17) as the Copyright Act. They weren't added to the Copyright Act, but were listed after it, much like the semiconductor chip mask works and boat hull protection acts. This distinction between "Acts" and "Titles" of US Code is often missed by attorneys (and judges) who haven't worked extensively with legislation, but it matters. To see just how much this distinction matters, read a post by former professor (and former Legislative Counsel) William Patry, to whom it matters a lot.

As Professor Patry detailed, the anti-bootlegging statute was enacted outside the Copyright Act, without limitations that the Copyrights Clause would require, and covering some subject matter that wouldn't be subject to the Copyright Act at all. While some might argue over whether the anti-bootlegging statutes are themselves unconstitutional, they clearly aren't part of the Copyright Act, and clearly aren't addressed by the DMCA.

If there's clearly an applicable law (17 USC 1101), and a clearly unauthorized recording, who cares where definitions are, which Title's in which Act and vice versa?
While everyone should care about laws being used correctly, in this case YouTube likely cares - a lot. Remedies for a Section 1101 violation are literally identical to those for a copyright violation - injunctions, damages, impoundment, fees, etc. Additionally, the scope of any secondary liability for a section 1101 violation is unclear - there are no mounds of case law on secondary liability like there are in copyright infringement cases. Piling things on even more for YouTube, while the DMCA notice-and-take-down process doesn't apply, neither does its handy, litigation-preventing safe-harbor.

Posted by Ethan Ackerman at 11:24 AM | Copyright , Derivative Liability | TrackBack

June 03, 2008

May 2008 Quick Links, Part 2

By Eric Goldman

Copyright

* Google says it isn't settling the Viacom lawsuit (I don't believe it).

* Interesting juxtaposition: (1) Chronicle of Higher Education: How It Does It: The RIAA Explains How It Catches Alleged Music Pirates and (2) BusinessWeek ran a lengthy retrospective on Tanya Andersen's battle against the RIAA, including her beefs against the RIAA’s investigation and enforcement tactics.

* A music warez trader was convicted by a jury of criminal copyright infringement.

Online Contracts

* Juanda Lowder Daniel. Virtually mature: examining the policy of minors' incapacity to contract through the cyberscope. 43 Gonz. L. Rev. 239-269 (2007/08). This article addresses the very important issue of contracting capacity of minors. See my most recent post on that topic.

* Adelman v. Sparks Network (Cal. App. Ct. May 20, 2008). The Jdate online dating service allegedly failed to include required language (such as notice of a mandatory cooling-off period) in its user agreement. The court dismisses the plaintiff's lawsuit nonetheless because he was a happy customer who didn't suffer any damage.

* Tom O'Toole surveys some recent online contract cases. He offers the following conclusions: (1) Contract Terms Should Be Available for Review, (2) Clickable Buttons/Links Should Clearly Signal Assent, and (3) Humans Are Not Helpful.

* I realize this point would be better explored in a full blog post, and I suspect this point has been made in the academic literature (if so, I'd appreciate some cites so I can pass them along). The issue: how might the endowment effect explain consumer antipathy towards EULAs? Wikipedia says the endowment effect means that "people value a good or service more once their property right to it has been established." This observation occurred to me when I attended a ridiculously stacked panel at the ION Game Conference on "user rights" in virtual worlds. Many of the gripes/grumbles related to very common EULA provisions that simply overrode default law. It occurred to me that maybe part of the problem was that consumers assume the defaults are appropriate rights allocations granting them the "property" right, in which case they suffer a greater psychological loss when those defaults are varied than if different defaults were set. One obvious policy consequence: as part of the considerations when setting defaults, policy makers should include the psychological costs of varying the defaults. If the interaction between EULAs and the endowment effect hasn't been written about, it would make an excellent paper topic.

Other Topics

* A military court has said that distributing a hyperlink to child porn does not constitute criminal distribution of child porn. Tom O'Toole explains the situation.

* A.B. v. State, 2008 WL 2031388 (Ind. May 13, 2008). It seems like the digital age recipe for guaranteed trouble: 8th grader + hatred towards a school principal + MySpace. How many judicial cases are we going to see with this combination? This one involves some mean-spirited and profanity-laced comments about her principal made by a 14 year old girl on a private MySpace page accessible only by 26 students. The principal saw it only because one of the students gave a printout to the principal. The court concludes that posting to a private MySpace page doesn't satisfy the criminal standards of "intent to harass, annoy, or alarm" via the Internet.

* Doe v. Friendfinder Network, Inc., 2008 WL 2001745 (D.N.H. May 8, 2008). The court denied the plaintiff's motion for reconsideration on Friendfinder's 230 eligibility for the statement "Sorry, this member has removed his/her profile."

* Another "where are they now?" retrospective on dot com boom companies, ironically running in the Industry Standard (which wiped out in the dot com bust itself).

Posted by Eric at 11:56 AM | Content Regulation , Copyright , Derivative Liability , Internet History , Licensing/Contracts , Privacy/Security , Virtual Worlds | TrackBack

May 19, 2008

Content Generation and the Law

By Eric Goldman

Last week I participated on a panel at the ION Game Conference in Seattle to discuss UGC in virtual worlds and online games. You can see a reasonably faithful transcript of the discussion here. Here's a recap of the main points I made:

The Interface Between Content Generation and the Law: Game providers should think about how to generate both more UGC and the right kind of UGC. There are three main sources of law governing the UGC content generation choices:

* the site's EULA. Most EULAs give providers maximum flexibility to manage UGC as they see fit, but if I were researching the issue, I'd start with the EULA to see how the provider may have restricted itself.
* 47 USC 230. Many people operate under the outdated myth that a site must choose to be either a publisher or a passive conduit. Fortunately, the law facilitates heterogeneous approaches to UGC. Per 230, a VW isn't liable for third party content with limited exceptions. Ownership doesn't matter; editing doesn't matter, prescreening/policing doesn't matter. Most VW providers remain unaware of 230's power and import. Due to 230, providers have the choice of various UGC generation strategies, all of which have the same legal treatment.
* 17 USC 512. 512 doesn't go as far as 230 at enabling different content generation approaches, but it still provides some insulation from liability for user-caused copyright infringement.

In addition to these sources, many sites develop their own adjudicatory systems, including ways for users to report problems with other users, expedited takedown procedures (such as VeRO), and customer support representatives (CSRs) as private adjudicators.

How to Increase UGC: Obviously, users can be motivated through incentives/disincentives (carrots and sticks). For example, at Epinions, we used both cash and credit. There is also value in supporting and empowering a site's meta-community (the offsite interaction of power users).

Working with Power Users. I'm often amazed at just how much work users will do for a site for free if you just ask them/empower them. However, in asking users to do more work, sites should be cognizant of the amorphous boundary between independent contractors and employees. Recall the class action lawsuits against AOL and About.com over their volunteer labor force.

Site Responses to UGC Problems: I talked about the problem of "rule proliferation": in response to a new test case involving user behavior, a site often promulgates a new restrictive rule. This may happen infrequently, but even if it happens only 1X/week, that adds up to 50+ new rules/year. The collective effect is a burgeoning body of code and common law that eventually becomes unwieldy and unmanageable. To avoid this code creep, sites should promulgate new common law reluctantly.

What Works with UGC/What Doesn't: Sites should try to address two partially contradictory forces. Most users want to do the right thing, so sites should make it easy for them to do so. At the same time, sites need to build systems that are robust enough to squash the inevitable vandals and bad actors.

If you want a little more on the topic of this panel, I also did an interview for ION's pre-conference newsletter.

Posted by Eric at 12:01 PM | Content Regulation , Copyright , Derivative Liability , Virtual Worlds | TrackBack

May 08, 2008

Third Party Liability Presentation

By Eric Goldman

Last week I spoke at the "Center for Creativity and Commerce Symposium: New Media, New Markets, New Rights" at Georgia State University in Atlanta. This event was sponsored by four different departments within GSU (law, business, communications, digital media), which created an unusually heterogeneous audience that was heavy on content creators and their vendors (like their lawyers). As a result, after I did the audience assessment, I decided the most useful direction was a practice-oriented talk focusing on how rights owners can enforce against third party intermediaries. Of course, this topic should strike regular readers as odd/ironic: first, a law professor talking about practice issues, and second, a defense-side guy talking about bringing enforcement actions...?! With those caveats, my slides.

Posted by Eric at 04:49 PM | Copyright , Derivative Liability | TrackBack

May 07, 2008

April 2008 Quick Links

By Eric Goldman

Anti-Gaming

* Even though Ticketmaster won its lawsuit, Minnesota overreacted to the Hannah Montana ticket crush by banning software to circumvent an online ticket allocation process. See Sec. 609.806. Check out the hyperbole in this press release! What's next? Are legislators going to make SEO a crime?

* Google modified its relevancy algorithm 450 times in 2007. And yet courts still cite to Brookfield for how search engines operate!

* The UK cracks down on shill marketing online. ClickZ: "Under the new [UK] Consumer Protection from Unfair Trading regulations, it will be illegal to "Falsely claim or create the impression that the trader is not acting for purposes relating to his/her trade, business, craft or profession," or to "falsely represent oneself as a consumer."" See also AdAge.

IP

* Speaking of SEO....the latest pathetic attempt to grab a generic term and trademark it? "SEO." Sarah Bird is on the job.

* Do student notes of a professor's lecture constitute copyright infringement? We may find out.

* Atlantic v. Howell. More on the "making available" theory of copyright infringement.

* Sarah Bird on registering copyrights in websites and blogs.

* A for-profit T-shirt listing the names of deceased Iraq soldiers sparks a publicity rights lawsuit.

General

* Bowen v. YouTube, Inc., 2008 WL 1757578 (W.D. Wash. April 15, 2008). The court upheld the forum selection clause in YouTube's user agreement.

* eBay is ending its promotion of third party live auctions. Maybe because of this loss?

* Rebecca blogs on SuccessFactors, Inc. v. Softscape, Inc., 2008 WL 906420 (N.D. Cal.), an odd case involving the Computer Fraud & Abuse Act and an "attack PowerPoint" allegedly sent by a competitor to its prospective customers.

* Kate Kaye writes about the new Internet industry lobby group, the "State Privacy and Security Coalition," designed to fight laws like the Utah Trademark Protection Act.

* Kevin Werbach, The Centripetal Network: How the Internet Holds Itself Together, and the Forces Tearing it Apart, UC Davis Law Review, Forthcoming. An interesting paper applying "network formation" theory to show how the Internet came together as a unified network and how those unifying forces are under constant stress.

Posted by Eric at 08:52 PM | Content Regulation , Copyright , Internet History , Licensing/Contracts , Marketing , Publicity/Privacy Rights , Search Engines , Trademark | TrackBack

April 22, 2008

March 2008 Quick Links, Part II

By Eric Goldman

Copyright

* A lot of action on whether “making available” a file in a P2P share directory is copyright infringement, including Elektra v. Barker and London-Sire v. Doe. Patry summarizes the action.

* Ticketmaster L.L.C. v. RMG Technologies, Inc., 2008 WL 649788 (C.D. Cal. March 10, 2008). Copyright misuse is not an independent cause of action; it's only a defense. HT Evan Brown.

* A student asked me a good Q that I couldn't answer. Given that copyright work transfers are subject to the risk of a non-waivable termination of transfer 35-40 years after the transfer, how do companies account for that risk on their financial statements?

* A man whose Youtube video was taken down by lawyers for Van Morrison strikes back with a new video: "The Lawyers Pulled My Video Down."

Trademark

* The Utah governor signed SB 151, the repeal of the Utah Trademark Protection Act.

* Wilson v. Yahoo! UK Ltd., No. 1HC 710/07, Feb. 20, 2008. A UK court says that buying the broad-matched keyword "spicy" does not constitute an actionable use in commerce of the trademark "Mr. Spicy." In response, Google liberalized its keyword policy in the UK and Ireland to match its US and Canada policy.

* Vulcan Golf, LLC v. Google Inc., 2008 WL 818346 (N.D. Ill. March 20, 2008). This is another interesting development that I just didn't have time to blog (see my earlier post when the lawsuit was filed). In a lengthy opinion, the district court rejected most of the significant motions to dismiss, saying that she wanted to let the case develop. Ironically, she also complained about the workload in the case--perhaps this is obvious, but granting some motions to dismiss would help clear your docket queue! Unfortunately, most of the opinion isn't insightful because so many issues were reserved for further development. Perhaps the most interesting discussion relates to the "use in commerce" question, and the court rejected a motion to dismiss on that basis: "The plaintiffs have alleged that Sedo and the other Parking Defendants transacted in and improperly profited from domain names that are deceptively similar to the plaintiffs' trademarks. Such statements sufficiently allege the "use" of a domain name to allow the infringement claims against Sedo and Oversee to move forward on this issue." Some other commentary on the case: Sarah Bird and David Fish.

* American Airlines loves Google (except for the part where it's suing Google). HT Search Engine Land.

State Regulation of the Internet

* Some state legislators are becoming privacy entrepreneurs about behavioral targeting. Venkat does a recap. But Zachary Rodgers points out that some of the operative provisions track NAI's self-regulatory guidelines. More angst about deep packet inspection by IAPs.

* Ewert v. eBay, Inc., 5:07-cv-02198-RMW (N.D. Cal. March 31, 2008). eBay isn't an "auctioneer" or an "auction company" as defined by California's Auction Act.

* The Tennessee legislature is considering a goofy response to the Hannah Montana ticket furor.

* Ken Magill at Direct wrote an article entitled "Psychotic Law Clowns in Utah at it Again." A highlight: "Whenever I think of Utah's state legislature, I envision a room full of Jack-in-the-Boxes straight out of a never-made Twilight Zone episode. Every fall, when it's time for the next legislative session, their cranks begin to turn, a chorus of "Pop Goes the Weasel" begins, and on the note for "pop" the lids fly open and dozens of psychotic clown heads spring out of the boxes chanting: "New Internet Law! New Internet Law!""

Other Stuff

* The Economist: The Battle for Wikipedia's Soul. "To create a new article on Wikipedia and be sure that it will survive, you need to be able to write a "deletionist-proof" entry and ensure that you have enough online backing (such as Google matches) to convince the increasingly picky Wikipedia people of its importance. This raises the threshold for writing articles so high that very few people actually do it. Many who are excited about contributing to the site end up on the "Missing Wikipedians" page: a constantly updated list of those who have decided to stop contributing. It serves as a reminder that frustration at having work removed prompts many people to abandon the project." See a similar article in the NY Times Review of Books.

* FTC busts Goal Financial for inadequate security practices.

* The DOJ is busting people who click on a link that purportedly offered child porn, prosecuting them for attempted downloading of child porn.

* Orin Kerr, "Criminal Law in Virtual Worlds," University of Chicago Legal Forum (forthcoming). Orin sensibly argues against virtual world exceptionalism with respect to criminalizing activities in virtual worlds.

Posted by Eric at 10:09 AM | Content Regulation , Copyright , Domain Names , Marketing , Privacy/Security , Trademark , Virtual Worlds | TrackBack

March 24, 2008

Clickthrough Agreement Binding Against Minors--A.V. v. iParadigms

By Eric Goldman

A.V. v. iParadigms, 2008 U.S. Dist. LEXIS 19715 (E.D. Va., March 11, 2008),

I previously blogged that the judge was going to dismiss this case. The judge finally issued an opinion explaining his reasoning, and it's quite an interesting read.

At issue is iParadigms' Turnitin plagiarism detection service. It works as follows: a professor adopts the Turnitin service for a class. Students then submit class papers directly to the Turnitin database. Turnitin compares the submitted papers against its database, which includes Internet content, previously submitted student papers, and various commercial databases. Turnitin then provides the professor with an "Originality Report" assessing the likelihood that the paper was original to the student and not copied from one of the sources in the database. At the same time, Turnitin adds each student-submitted paper to its proprietary database so those papers create matches if submitted again.

Personally, I've never used the Turnitin service. I'm lucky enough that when I've taught "paper courses," I've been able to work closely enough with each student that a plagiarized paper would be useless. However, not every professor or teacher can interact with students enough to make these individualized assessments, and there are plenty of courses where students basically dump a paper onto professors in a relatively impersonal exchange. In those cases, I could see why Turnitin is an important or even essential tool to combat student efforts to game the grading system.

Even so, I remain troubled by some aspects of the Turnitin service. Most of my concerns relate to the implicit coercion of students to use Turnitin. Some students may not be aware that the professor will require Turnitin use at the beginning of the semester when (in theory) objecting students could freely drop the course, in which case the student is effectively required to use Turnitin to pass the class regardless of student consent. Even more problematically, students might be required to take a Turnitin-mediated course--such as when the course is a mandatory prerequisite and there aren't multiple professors teaching the course, or when students are assigned to a course without any choice (such as in high school). In those cases, students are forced to participate in the Turnitin scheme whether they want to do so or not. This isn't the biggest travesty in the world, but I'm not sure it's fair either.

The plaintiffs in this case--a group of four high schoolers--mount a solid attack on the Turnitin system for copyright infringement based on Turnitin keeping copies of their papers and occasionally republishing the papers to other professors when the papers trigger matches in future Originality Reports. iParadigms defends based on its mandatory clickthrough agreement, which every student must agree to as part of the submission process. The clickthrough was properly formed, so there's no question that it superficially demonstrates mutual assent.

However, student consent is illusory in at least two ways. First, as I mentioned, many students don't have a meaningful choice about consenting to the clickthrough agreement because they will fail their courses if they don't submit. The students attack this as duress, and the court correctly notes that Turnitin is not the source of duress; instead, the schools are the source, and the court tells the students to take it up with them. While the court is right that duress doesn't apply directly here, I could have seen other courts using the school-supplied duress as part of an unconscionability attack on the contract.

Second, the plaintiffs were minors, and well-settled law is that incomplete contracts with minors are voidable. The court sidesteps this issue by saying that the students had received the complete benefit of the Turnitin contract relationship when their papers were cleared by the Originality Report, and therefore they could not "return" the benefits conferred on them by Turnitin.

This is a ruling of potentially large significance. I've long believed that courts would struggle with dismissing claims by minors against websites because of the voidability issue, which seemingly left a large class action hole against all websites with minors as users. That hole may still exist--it depends on whether the contract is complete or not, and in many cases both parties will have incomplete obligations in a standard website EULA. Despite this, it's clear that this judge wasn't going to entertain any bypass that threatened the integrity of the Turnitin service, and I wouldn't be surprised if many other courts would reach the same conclusion in other circumstances.

The court dismisses the copyright infringement claim on the alternative ground that Turnitin's copying is fair use:
* storing the copy of the paper for plaigarism purposes is highly transformative
* the court twists the nature of work factor to weigh in favor of Turnitin, saying that Turnitin doesn't use the papers for their creative meaning
* the court also twists the amount/substantiality of the portion taken to weigh in favor of Turnitin. Even though Turnitin takes 100% of the work, it doesn't really publish the entire work (except in the occasional cases where a professor requests a copy after a match in the Originality Report) to others but simply flags the match.
* the court dismisses the effect on the market value of the work. Most student papers have no commercial value. The papers would have commercial value if resold to the term paper websites, but the plaintiffs conceded that they wouldn't authorize this usage because that would be cheating.

While I can't really quibble with the conclusion that Turnitin's use is fair, especially given the laudable objective of plagiarism suppression, other judges would have reached the opposite conclusion because Turnitin forces students to put their papers into a database that iParadigms mines for its profit.

In any case, this fair use ruling may augur well for search engine fair use cases, most obviously Google's book search and Google News--both of which pump third party copyrighted works into a for-profit database but republish only a limited portion.

The opinion also has some interesting discussion about iParadigms' counterclaims against the students. iParadigms initiated a very aggressive counterattack against the students (the words "scorched earth" came to mind). I guess iParadigms wanted to send the message--don't screw with us, because we'll make your life heck. I don't think iParadigms expected to get any meaningful payoff from their counterclaims, but they got nothing. In some sense they are lucky that it wasn't worse; I could see some judges taking such umbrage at iParadigms' tactics that they could have backfired.

iParadigms sought indemnity from the students based on a clause in its usage policy. The problem is that the usage policy wasn't presented as a mandatory clickthrough (whoops!) and the court refuses to extend the Register.com v. Verio bailout here.

One of the students obtained false credentials to log into the system at one point, but the court rejects iParadigms' claim that such a login was a trespass to chattels, Computer Fraud & Abuse Act violation or Virginia Computer Crimes violation because iParadigms couldn't make any showing of damages from this unauthorized login. This is the right result (at least with respect to trespass to chattels) per Intel v. Hamidi, but we've seen plenty of courts ignore the damages requirement from the Hamidi case.

Other comments on this case:
* Tom O'Toole
* Rebecca Tushnet
* Siva Vaidhyanathan
* Georgia Harper
* William Patry

UPDATE: According to the Chronicle of Higher Education, the students plan to appeal. Given the many conflicting norms associated with this case, I would be surprised if the appellate ruling was as decisively favorable for Turnitin as the district court opinion was.

Posted by Eric at 10:41 PM | Copyright , Licensing/Contracts , Privacy/Security | TrackBack

March 10, 2008

47 USC 230 Day at the Technology & Marketing Law Blog

By Eric Goldman

Today is 47 USC 230 Day at the Technology & Marketing Law Blog as we catch up on a hat trick of recent 47 USC 230 opinions.

1) Gregerson v. Vilana Financial, Inc., 2008 WL 451060 (D. Minn. Feb. 15, 2008)

The defendants repeatedly infringed plaintiff's photos. After the defendants did not pay up in response to a demand letter, the plaintiff posted some griping material to his website and included a section inviting comments about the defendants. Third parties subsequently posted potentially defamatory comments. In a rather perfunctory and typical analysis, the court says that per 47 USC 230 the plaintiff isn't liable for these third party comments, even if the plaintiff received notice about them.

Beyond the 230 discussion, the case touched on some other interesting issues:

A) The defendant's principal claimed that he had a conversation with a guy in a public sauna who recreated the photos and then granted legitimate licenses to the defendants. Unfortunately, alibis based on business deals arranged with strangers in public saunas are always a tough sale for judges.

B) The plaintiff's demand letter quoted his standard license fee for the photos but, as a penalty, demanded 3X that amount and said the settlement price would increase 10X if the plaintiff wasn't paid in 2 weeks. This type of escalating demands is fairly typical with freelancers, who often overestimate the value of their work both in the market and to particular defendants. The court scoffs at the 10X demand, rejecting its legitimacy as a measure of copyright damages, and instead awards the plaintiff its license fee without any gross-ups. I hope this opinion encourages freelancer photographers to make settlement demands based on a realistic assessment of damages, not based on fantastic artificially inflated license fees.

C) The plaintiff gets damages under 17 USC 1202 because the defendants cropped some copyright management information from the photos. This is one of very few plaintiff wins under 1202.

2) Global Royalties, Ltd. v. Xcentric Ventures, LLC, 2008 WL 565102 (D. Ariz. Feb. 28, 2008)

I previously blogged on this case here. As I noted then, Ripoff Report got a defamation claim dismissed (with leave to amend) per 47 USC 230 even though the original poster had repudiated the post and requested its removal. The plaintiff filed an amended complaint, but the court rejects it again, concluding that the poster's request to remove his posting doesn't change the 230 analysis: "liability based on an author’s notice, workable or not, is without statutory support and is contrary to well-settled precedent that the CDA is a complete bar to suit against a website operator for its “exercise of a publisher’s traditional editorial functions—such as deciding whether to publish, withdraw, postpone or alter content” [cite to Zeran]."

The court also rejects the plaintiff's arguments that (1) the Ripoff Report should drop out of 230 coverage because it allegedly runs an extortion racket, (2) Ripoff Report's supplying of category tags matters, and (3) the Roommates.com case has any bearing on this case (the Ninth Circuit opinion was vacated with the en banc hearing, so there's nothing precedential at the moment). The court also refused to stay the case pending the en banc opinion.

3) John Doe Anti-Terrorism Officer v. City of New York, No. 06-cv-13738 (S.D.N.Y. Feb. 6, 2008) [hat tip Jeff Neuburger]

The plaintiff is an Arab-American police officer in the NYPD. He is suing the NYPD and Tefft for racial discrimination principally based on invective-filled emails sent by Tefft, who was a third party contractor (an antiterrorism consultant) to the NYPD. Tefft defends on 47 USC 230 because he claims he simply forwarded third party content (such as articles) in his emails. However, Tefft also added his own commentary to that third party content, such as introductory statements to the articles, and the court rightly says that 230 doesn't provide any protection for the material added by Tefft.

The court goes on to say that Tefft can't qualify as a "user" of an ICS, a determination that the court apparently didn't research very well because the caselaw has repeatedly reached the opposite conclusion.

Posted by Eric at 09:49 AM | Copyright , Derivative Liability | TrackBack

March 02, 2008

Feb. 2008 Quick Links

By Eric Goldman

Advertising

* BusinessWeek: Monetizing social networking sites isn't as easy as everyone had hoped, clickthrough rates are through the floor (0.04%!), and ad proliferation on the sites is driving users away.

* Wilbur, Kenneth C. and Zhu, Yi, "Click Fraud" (January 2, 2008). This paper appears to argue that search engines can increase their profits by failing to disclose the true rate of click fraud on their network.

* In re Miva, Inc. Securities Litigation, 2008 WL 450037 (M.D. Fla. Feb. 15, 2008). This lawsuit alleges that Miva and some associated individuals understated or misreported Miva’s reliance on click fraud, spyware and third party distributors in its public statements and thus inflated the company's stock price. Last year, the court dismissed many of the allegations but let a couple survive. In this ruling, the court dismisses a few more defendants from some statements and lets the rest of the case proceed.

* Going-out-of-business sales are often just another scam. (HT ContractsProf). Note this is completely consistent with economists’ theoretical predictions of final-period behavior of trademark owners.

Google

* Google's stock has lost $70B in market cap in 7 weeks. Oh darn. Clickz offers some theories about why Google's clicks are declining. Could lower rates of click fraud be part of it?

* Hal Varian, Google's Chief Economist, argues that Google's marketplace success is solely due to its "secret sauce" (i.e., the advantage of learning by doing) rather than any defects in the marketplace.

Spam

* Jaynes v. Virginia (Va. Sup. Ct. Feb. 29, 2008). By a 4-3 vote, the Virginia Supreme Court upheld Jeremy Jaynes' 9 year sentence for violating Virginia’s spam law.

* Silverstein v. Experienced Internet.com, 2008 U.S. App. LEXIS 3364 (9th Cir. 2008). Ninth Circuit dismissed a CAN-SPAM lawsuit for lack of jurisdiction when the defendants attest that they didn't send the message and aren't local.

Domain Names

* NSI has been sued for its practice of grabbing pre-registration domain names based on WHOIS searches. The complaint. Good luck defending those practices, NSI!

* Two more breathy articles about the economics of domaining from the New York Times and Network World.

47 USC 230

* Johnson v. Barras, 2007 CA 001600 B (DC Superior Ct Feb. 1, 2008). Court dismisses a lawsuit against a website for republishing a defamatory story per 47 USC 230.

* Yet another doomed lawsuit against MySpace for facilitating communications between an adult male and an underage female that led to sex. Sam Bayard's comments.

Pornography

* NY Lawyer (login required): "Defense Bar Sees Growing Practice in Internet Sex Crimes"

* A federal obscenity prosecution for publishing graphic short stories (without pictures) on the Internet? As Tim Wu says, "astonishing."

* The Utah legislature is considering entering the marketplace again, this time through a certification mark program for Internet access providers who are willing to combat porn. See HB407. Of course, the Utah legislature has had terrific success in the past creating successful new business opportunities that the marketplace has overlooked.

User-Generated Content

* Nick Carr: "What we've seen happen with self-regulating communities, both real and virtual, is that they go through a brief initial period during which their performance improves - a kind of honeymoon period, when people are on their best behavior and rascals are quickly exposed and put to rout - but then, at some point, their performance turns downward. They begin, naturally, to decay." Like, I think, Wikipedia.

* Slate on the top-heavy nature of contributions to Wikipedia and Digg.

* Christian Science Monitor: Teachers Strike Back at Students' Online Pranks.

* Sam Bayard on a motion to quash in the AutoAdmit case.

Reputation

* eBay no longer lets sellers leave negative/neutral feedback for buyers. This putatively stops sellers from retaliating against buyers who leave legitimate complaints, but it also skews the database towards only positive reviews, which ultimately undercuts its credibility.

* In India, where courtships remain very brief by US standards and grooms can be paid dowries by the bride's families, there is an emerging trend for brides to hire "wedding detectives" to ferret out the scoop on grooms and whether their representations are correct.

* Funny article on being a secret shopper for Consumer Reports.

* Dan Solove's book, The Future of Reputation, is now available online for free. Ethan's review of the book.

Patents

* Six years later, eBay finally buys it now: eBay v. MercExchange settles with eBay buying out some of MercExchange's patents and licensing others.

* Mike Masnick: "Psst! Patent Examiners Do Not Scale"

Copyright

* Mike Masnick: “Why We Should All Want Politicians Who Plagiarize.”

* Do Not Resuscitate...My Copyrights (funny).

Miscellaneous

* Citizen Media Law Project has a useful discussion on getting insurance for cyberlaw risks.

* People v. Fernino, 2008 WL 382348 (N.Y. City Crim. Ct. Feb. 13, 2008) (woman violated a no-contact order when sending a MySpace message to the person).

* Mike Masnick: "We Need A Broadband Competition Act, Not A Net Neutrality Act"

* A retrospective on some of the leading dot-coms from the 1990s.

Posted by Eric at 05:32 PM | Content Regulation , Copyright , Derivative Liability , Domain Names , E-Commerce , Internet History , Marketing , Patents , Privacy/Security , Search Engines , Spam , Trademark | TrackBack

February 15, 2008

Turnitin Lawsuit to Be Dismissed--AV v. iParadigms

By Eric Goldman

A.V. v. iParadigms, LLC, No. 07-0293 (E.D. Va. removal from trial docket Jan. 9, 2008)

iParadigms, the operators of the Turnitin plagiarism detection tool, issued a confusing press release earlier this week announcing that the lawsuit against them was going to be dismissed. To make sense of the press release, I pulled the applicable court filing--see it here. The main operative provision says:

"It appearing to the Court that Plaintiffs' Motion for Summary Judgment should be granted as to the counterclaims and Defendant's Motion for Summary Judgment should be granted as to the Complaint, it is hereby ORDERED that the this [sic] case is removed from the Court's trial docket, and a Memorandum Opinion and Order will be forthcoming."

It is unusual for a judge to foreshadow an opinion like this. I'm guessing the judge was trying to schedule another trial and needed the space, so the judge issued this order before he had time to write up his thoughts. As of this morning, the opinion still hadn't been posted to PACER. I'm not sure why iParadigms waited a month to issue this press release but then decided to release it now prior to the actual opinion. In any case, I'm sure the opinion will be an interesting read on the contract or copyright topics (or both), but we'll have to wait to see the judge's thinking.

Posted by Eric at 09:32 AM | Copyright , Licensing/Contracts | TrackBack

February 13, 2008

Jan. 2008 Quick Links (IP Edition)

By Eric Goldman

Trademarks and Domain Names

* Adidas America, Inc. v. Payless Shoesource, Inc., 2007 WL 4482201 (D. Oregon Dec. 21, 2007). This case (1) discusses whether advice of counsel is a defense against willfulness in the trademark context, and (2) concludes that Oregon's state anti-dilution law is preempted by Bonito Boats.

* More evidence that price does affect brand perceptions: "A $90 wine tastes better than the same wine at $10."

* Visa Int'l Service Assoc. v. JSL Corp., No. 2:01-CV-00294, 2007 U.S. Dist. LEXIS 95334 (D. Nev. Dec. 27, 2007). The domain name "evisa.com" actually dilutes the Visa brand because it will disappoint people who enter the domain name looking for Visa. That's SO 1997!

* Salle v. Meadows, 6:07-cv-1089-Orl-31DAB (M.D. Fla. Dec. 17, 2007). A rare case interpreting 15 USC 1129, the law restricting the registration of domain names incorporating a person's name.

* The "Surf City" USA lawsuit between Huntington Beach and a Santa Cruz retailer has settled.

* I've seen this issue come up a few times now. Trademarks 1 and 2 are similar. A Google search for TM1 includes the question "Did you mean: TM2?" How might this prompt affect an infringement analysis?

* There has been a lot of domain name craziness in the past few weeks, and unfortunately I couldn't keep up with all of it. So a few brief remarks on two of the more interesting developments:

- First, NSI has admitted that it grabs domain names that people are researching, preventing the potential customers from using any other domain name registrar for 5 days and potentially helping swipers grab the domain name thereafter. NSI's practice is completely sleazy because of the unique retailing environment for domain names. Domain names are a single-item good that is being simultaneously and competitively sold by multiple retailers (the registrars)--but through this practice, NSI expands its inventory and simultaneously shrinks the inventory of competing retailers before NSI has actually made the sale. ICANN needs to shut down this type of inventory abuse NOW.

- Second, Google has announced that it will not provide AdSense ads (through its domain name parking program) to domain names that may be kited (i.e., repeatedly reregistered during the free 5 day trial period). That's great, Google, but why don't you simply say that you won't display ads on any domain names in the first 5 days of their registration? That policy change would kill domain name tasting, but Google's foot-dragging here makes me wonder just how much money Google is making from domain name tasting. C'mon Google, I think you can do better.

Copyright and File-Sharing

* Virgin Records v. Thompson (5th Cir. Jan. 4, 2008). Man improperly sued by the RIAA dragnet can't recover his attorneys' fees. This turns on the fact that he didn't respond to the pre-litigation contacts to turn over his adult daughter who did the file-sharing.

* Atlantic Recording Corp. v. Serrano, 2007 WL 4612921 (S.D. Cal. Dec. 28, 2007). The court rejects the trespass to chattels and CFAA claims of a P2P file sharer against the parties investigating him by checking out his share directory.

* Lots of action over takedown notices:

- The 10th Circuit says that a bogus takedown notice (in this case, an eBay NOCI under its VeRO program) supports jurisdiction in the targeted vendor's home court. Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 2008 WL 217724 (10th Cir. Jan. 28, 2008). See related litigation from the same eBay vendor.

- For a contrary ruling, see Doe v. Geller, 2008 WL 314498 (N.D. Cal. Feb. 4, 2008).

- Colon v. Innovate! is a lawsuit initiated by an eBay seller that claimed an IP owner was misusing eBay's VeRO program to shut down his auctions (which were priced below the IP owner's minimum pricing program although the seller wasn't bound to the program). Innovate made an interesting tactical move (blunder?) to implead eBay into the lawsuit; eBay then countersued Innovate for sending bogus NOCIs.

* In a bizarre press release issued almost 2 months after the applicable ruling, John Dozier of the Dozier Internet Law Firm extolled the ruling in the 43sb.com case (a case the Dozier firm wasn't involved with) where the court suggested that cease-and-desist letters were copyrightable. This sparked yet another blogswarm on this topic; see, e.g., Paul Levy, Marc Randazza, Eugene Volokh, Frank Pasquale, Joe Gratz, 43sb.com, Ron Coleman, Overlawyered. It's clear this issue needs a more definitive resolution by the courts or the legislature. Fortunately, a number of people would welcome the opportunity to help Dozier test if his legal theory will fly in court. If you've been contacted by John Dozier threatening you for infringing the copyright in his firm's cease-and-desist letters and would be interested in help arranging an appropriate defense, please contact me.

Posted by Eric at 11:29 AM | Copyright , Domain Names , Trademark | TrackBack

January 30, 2008

State of the Net Conference Recap

By Eric Goldman

Today I attended the State of the Net conference, sponsored by the Congressional Internet Caucus Advisory Committee. This event has become the "go-to" event for Internet policy wonks. Well over 300 people attended, including many well-known folks. If you deal with Internet policy, you should be at this conference.

A few notes from the event:

The morning keynote was delivered by Mary Bono Mack, who delivered one of the most true believer IP-maximalist talks I've heard in a long time. It was almost cartoonish. Based on the fire-and-brimstone talk, I imagine she would support just about any expansion of IP rights proposed to her. In response to a Q&A, she said that she had been previously misquoted and that she doesn't support a perpetual copyright duration. But she thought the Eldred opinion vindicated Congress' previous term extension as a reasonable policy; she must have read a very different opinion than the one I read. See Anne Broache's writeup of Mary's talk.

I've now heard a few different suggestions that server-level filtering by IAPs would drop them out of 512(a) coverage. (Today, Gigi Sohn raised this issue). This arises in response to AT&T's proposal to filter for copyrighted material, but it's also a subtext of the net neutrality discussion. I'm not sure if this is an accurate reading of 512(a), though. 512(a) says it applies only if the "the transmission, routing, provision of connections, or storage is carried out through an automatic technical process without selection of the material by the service provider." (Emphasis added). What does it mean for a service provider to select material? In context, I think the statutory language means that the user, instead of the service provider, selects the particular file moving over the IAP's network. I don't see how this exclusion was meant to cover automated filtering. In contrast, if the language is read to apply to filtering; would any type of filtering, including spam and virus filtering, knock out IAPs from 512(a)? If so, then no one could ever qualify for 512(a). It's not beyond Congress to draft a safe harbor that describes a null set of activity (see, e.g., 512(d)), but I suspect the courts will be more flexible in their reading than this.

The always-entertaining Federal Trade Commissioner Jon Leibowitz spoke about social networking sites. He implied that if Facebook hadn't backed down on Beacon, he was going to encourage the FTC to investigate it. He also wondered how online speech could receive the same level of protection as offline speech, and specifically referenced Marsh v. Alabama (the company town case) in suggesting that some online sites might be analogized to essential facilities. I'm not really sure what to make of this, as every court that has reviewed these state action arguments as applied to private online sites have rejected them squarely. But I'm sure virtual world exceptionalists will be thrilled to know that an FTC Commissioner might be sold on weighting player rights over provider rights.

At the post-event technology exhibition, I had the most remarkable demo from a woman at Quova, the geolocation company that claims 97% accuracy to the state level and 95% accuracy to the city level. I don't feel comfortable repeating some of the things she said because I haven't been able to validate them, but suffice it to say that all of you privacy advocates who freaked out about ChoicePoint may have a new company to freak out about. Among the questions that I'd like to see answered about Quova:

* what websites supply them with IP address data based on their users' activities? If it's the companies she named, then I'm pretty confident that at least some big Internet brands have been regularly violating their privacy policies.
* what government agencies are Quova's customers? And what are they doing with the data?
* what kinds of subpoenas is Quova getting from private plaintiffs, and how are they handling those subpoenas? Based on what I heard, it sounded like plaintiffs have been wasting their time tendering subpoenas to individual websites when Quova may offer some interesting one-stop-shopping.

If you have any insights into any of these Qs, I'd welcome your thoughts.

Posted by Eric at 11:14 PM | Copyright , Privacy/Security , Virtual Worlds | TrackBack

January 09, 2008

1-800 Contacts Sues LensWorld for Keyword Advertising

By Eric Goldman

1-800 Contacts, Inc. v. LensWorld.com, Inc., 2:08-cv-00015-SA (D. Utah complaint filed Jan. 8, 2008)

My my, look who's decided to go back into court! It's none other than 1-800 Contacts, the online retailer with a lousy trademark and a love-hate relationship towards keyword advertising. This time their target is their chums LensWorld.com for buying "1800Contacts" as a keyword.

You may recall 1-800 Contacts for their decisive loss in the Second Circuit on the keyword advertising issue, in which the court emphatically shut down their trademark claims against WhenU because WhenU didn't make the requisite trademark use in commerce. This ruling has become a major precedent that has spawned no less than a half-dozen Second Circuit-based court rulings that keyword advertising isn't a trademark use in commerce.

Ironically, 1-800 Contacts also has routinely bought third party trademarks as keywords. They admitted to this in the WhenU litigation (a point that the Second Circuit noted sharply). They also were so concerned when Utah legislators banned using third party trademarks for keyword advertising that they helped push the legislators to back down. Hey 1-800 Contacts, maybe I'm missing something, but if you wanted to bring a keyword advertising lawsuit like this one, maybe you shouldn't have badgered your legislators to remove a law that would have ensured your success in court!

So it looks like 1-800 Contacts has a somewhat duplicitous attitude towards keyword advertising--good when they do it, bad when their competitors do it. Hmm. Then again, maybe we shouldn't be surprised; this isn't 1-800 Contacts' only example of marketing duplicity.

In any case, the LensWorld lawsuit is a garden-variety advertiser-vs.-advertiser keyword advertising lawsuit. Based on the limited data we have, I'm guessing the Utah federal court will deem keyword advertising a trademark use in commerce, but after that, who knows? The only twist here is that 1-800 Contacts claims that LensWorld aped their FAQs, prompting a tossed-in copyright infringement claim as part of the package. Also I can't help but note that there appear to be many other possible defendants who are buying 1800contacts as a keyword (see the screenshot in para. 22/page 6)...is a 1-800 Contacts litigation frenzy imminent, or is LensWorld uniquely positioned for 1-800 Contacts' enmity?

Finally, for those of you who purchase contact lenses and other eyecare items online, I trust you've noted 1-800 Contacts' affinity for using legal processes to shut down pro-competitive behavior. Personally, I'm voting against their regressive and duplicitous attitudes towards IP by taking my business elsewhere!

HT Evan Brown.

UPDATE: Tom O'Toole explains why Utah is a great venue for 1-800 Contacts.

Posted by Eric at 11:39 AM | Copyright , Search Engines , Trademark | TrackBack

December 28, 2007

December 2007 Quick Links

By Eric Goldman

Marketing

* I've blogged about Various, which operates AdultFriendFinder.com, before. They made the news recently in two ways. First, they sold to Penthouse for half-a-billion dollars. Second, they settled with the FTC for "pelting" users with unwanted sexually graphic pop-up ads. Do you think these developments are linked in any way... ? Could it be that Various was willing to settle up with the FTC on any terms so that they could get a half-billion dollar check? In this respect, I'm reminded of the MySpace/Intermix $7.5M settlement with the NY Attorney General's office in a dubious enforcement action that was immediately followed by MySpace's sale to News Corp. for $580M. Hey government enforcement agencies--if you can spot hot dot-coms that are negotiating mergers and bring an enforcement action, you can name your price!

* Abrams v. Facebook, the lawsuit over Facebook sending text messages to old phone numbers, has settled. See Michael Erdman and the AP.

* Newsday circulation fraud case (involving inflated circulation numbers) nets $83M restitution, $15M criminal settlement, and nine criminal convictions.

* Texas AG Abbott is prosecuting two companies under COPPA. As far as I know, this is the first state-level enforcement action under COPPA.

* Florida AG Michael Palecki looks to be targeting online advertisers for ads placed by their affiliates.

* The Do-Not-Call registry has become an even less dynamic reflection of preferences.

Copyright

* The Second Circuit kicked out the settlement struck in Tasini's aftermath because it covered unregistered copyrights. Rebecca makes some good points.

* Perez Hilton drops YouTube because they took down one of his videos in response to a takedown notice. On the one hand, this shows that there can be marketplace mechanisms that give feedback to intermediaries based on the restrictiveness of their takedown policies. On the other hand, YouTube was a free service; what did you expect?

* Michael Savage, a radio personality, is suing a website for posting audio clips of his rants as part of the website's criticism of him. See the NYT and CMLP.

* A special master has been appointed in the Grokster case to determine the possible filtering options available to Streamcast. I'm actually amazed that this case is still going!

Reviews and Ratings

* WSJ: Restaurants are giving away free meals to online reviewers to try to get improved consumer ratings.

* BrokerCheck, a regulator-sponsored website for consumer gripes about securities brokers, deletes negative gripes if the complaint settles.

* Retail store signage ("shelf talkers") routinely overstate the Wine Spectator ratings assigned to wine on the shelves.

Best of Mike Masnick

Mike Masnick of Techdirt is a terrific blogger who is smart, prodigious and opinionated. This month he had some noteworthy posts (even by his standards), including:

* Some wise words about Fark's trademark application for NSFW.

* “Noncompete Agreements Are The DRM Of Human Capital.”

* "Anything Goes Wrong Online? Yell 'Net Neutrality' As Loud As Possible!"

Search Engines

* Google appears to have categorically wiped out PageRank for bloggers participating in PayPerPost.

* Danny's sensible remarks on the role of humans in Google's algorithmic search results.

* Search engines pay $31.5M to settle up for running gambling ads. A significant share of this settlement amount is actually public service ads, not cash. Note that enforcement of federal criminal gambling laws is one of the few exceptions to 47 USC 230; if this had been an enforcement of state anti-gambling criminal laws or a civil action, it should have been preempted.

General

* "Like the proverbial tree falling in a forest, the unauthorized use of a trademark that is never perceived by anyone cannot be said to create a likelihood of consumer confusion." Custom Manufacturing and Engineering Inc. v. Midway Services Inc. (11th Cir. Nov. 21, 2007). This statement was made in the context of a counterfeit component part, but it sounds like a good reason to reject liability for including trademarks in keyword metatags.

* Todd Hollis is suing DontDateHimGirl.com a second time. Last time the court sidestepped 230. This time, I hope the court will use 230 to terminate the lawsuit permanently.

* Mark Radcliffe's "2007 Top Ten Free and Open Source Software Legal Issues"

* A nice recap on "location-based mobile services," the delivery of services predicated on GPS devices in cellphones. UPDATE: It looks like mobile marketing/privacy is the topic du jour (or, at least, a topic worthy of end-of-the-year recaps). AP weighs in on the same topic.

* Kaspersky flags Windows Explorer as a virus and then reverses itself, calling this a false positive. Then again, many people consider Microsoft software "malicious code," so maybe the positive wasn't so false after all.

Posted by Eric at 09:39 AM | Adware/Spyware , Copyright , Derivative Liability , Marketing , Search Engines , Trademark | TrackBack

December 18, 2007

Co-Blogger Identity Isn't Disclosed via 512(h), but Takedown Letters Are Copyrightable

By Eric Goldman

In re Subpoena Issued Pursuant to The Digital Millennium Copyright Action To: 43SB.Com, LLC, 2007 WL 4335441 (D. Id. Dec. 7, 2007)

We have long known that the DMCA expedited subpoena procedures for identifying copyright infringers (17 USC 512) could be abused. Even so, it is disturbing to see this particular example of abuse.

The background: A pseudonymous co-blogger ("Tom Paine") blogged a post containing some critical rumors about Melaleuca and its CEO to the 43rdstateblues.com blog. Melaleuca's lawyer sent a takedown letter to a blog administrator. Through an unknown process, another of the 43rdstateblues' pseudonymous co-bloggers, "d2," got his/her hands on the takedown letter. Like any good blogger, d2 posted the takedown letter to the blog.

Along the way, Melaleuca's lawyer obtained a copyright registration for the takedown letter. The lawyer sent a series of DMCA takedown notices predicated on the fact that the blog was hosting the copyrighted takedown letter. This takedown spam succeeding in forcing the blog's host to remove the takedown letter, and at some point the original Tom Paine post was redacted as well. Melaleuca now is seeking defendants to sue for infringing the takedown letter and sent a 512(h) subpoena to the blog operator, 43SB.com, LLC, seeking identifying information for d2 and Tom Paine. The LLC responded by trying to quash the subpoena on two grounds (among others): (1) the letter isn't protected by copyright, and (2) 512(h) does not apply to Tom Paine.

Melaleuca's choices here are troubling in at least two ways.

First, enforcing the copyright in the takedown letter is bogus. Takedown letters can satisfy the technical requirements for copyrightability under the statute, but this letter is so completely pro forma that it should barely clear the copyrightability hurdle (if it does at all). Further, republication of demand letters is so strongly infused with public interest that it should be clearly covered by fair use. Most problematically, the primary target all along appears to be Tom Paine, but because 230 may insulate other bloggers from liability for Tom Paine's post (a point I explore in this article), the plaintiff appears to be using copyright law to pressure the co-bloggers to turn over the griper. It's sad to see a plaintiff desperately deploy a junk copyright claim for these purposes.

Second, using copyright as the tool, the plaintiffs tried to sweep the griper Tom Paine into the subpoena that targeted d2 for the alleged copyright infringement of the takedown letter. The plaintiffs cannot connect Tom Paine to the infringement other than noting that d2 is a co-blogger, but they still tried to piggyback off the copyright infringement to force the identity disclosure. Fortunately, the court rejected this attempt to use the copyright subpoena as a backdoor to unmask the griper. This doesn't mean that Tom Paine's identity is safe; it just means the plaintiffs will have to work harder to get it.

(It caught my attention that an LLC operated the blog--a relatively rare risk management strategy for co-bloggers. See my Co-Blogging article for more on this).

The news is less favorable on the copyrightability front. The court treated the plaintiff's copyright registration as fully satisfying the 512(h) requirements. I understand why the court did this--after all, copyright registrations are prima facie evidence of copyrightability--but the court was overly deferential to the copyright registration. After all, this is a motion to quash the subpoena, and this letter is on its face thinly copyrightable. The court should more aggressively police the underlying merits of the plaintiff's claim.

One more interesting legal quirk: this ruling assumes that 43SB.com, LLC is covered by 512(h) at all. The procedure applies to "service providers," which includes all "providers of online services," and that should include a blog as well. However, 43SB.com, LLC does not appear to be seeking protection under the 512 safe harbors because they do not appear to have made the requisite filing with the Copyright Office. So can a service provider not seeking 512 protection be obligated to fork over information in response to the expedited subpoena procedure of 512(h)? This court assumes the answer is yes, and the statute facially appears to support that answer. However, I think this should be explored further given the lack of any quid-pro-quo for the service provider.

While the court didn't conclude that reposting the takedown letter constituted an infringement of the letter's copyright, this ruling surely will send chills down the spines of some bloggers. It's become standard for threatened bloggers to repost demand letters for the world to see. In fact, these repostings have social merit. In the modern era, copyright law is not "made" in the courtroom; it's made in the field when recipients make choices like deciding how to respond to demand letters. And with weak rights under 512(f) for bogus takedown notices, public scrutiny often is the only practical tool available to small players to fight back against widespread takedown notice abuse. But if demand letters are copyrightable, bloggers will keep those letters off the Internet and away from public scrutiny. As a result, this case threatens to curtail an important tool that bloggers had to fight back against abusive takedown demands.

For more commentary on this case, see Sam Bayard's thoughtful comments on this ruling and the Citizen Media Law Project's very helpful page on this incident with links to the underlying source material.

Some other discussion about IP rights in cease-and-desist letters:

* My blog post about cease-and-desist letters that claim to be "confidential" and copyrighted; I argue that courts should provide little copyright protection to such letters. Dan Solove's response.

* Greg Beck on the risks of posting a demand letter. This arose in the context of DirectBuy's claim of copyright in its demand letter. In response, Patry wrote about the assertion of copyright interests in demand letters as a copyright misuse. Sam Bayard's response to Patry.

Posted by Eric at 11:28 AM | Copyright , Derivative Liability | TrackBack

December 14, 2007

Oct.-Nov. 2007 Quick Links, Part 2

By Eric Goldman

Marketing/Branding

* To stimulate demand for its services, the British postal service is pointing out that snail mail is a good way to use olfactory marketing. Try to keep up with THAT, spammers! But doesn't this give new meaning to the observation that “junk mail stinks”...?

* Dunlop Tires offered a free set of tires to people who would get a tattoo of the company's logo. This tops a past promotion where they gave free tires to anyone who got tire tracks shaved into their hair. As a promotion, tattoos have an obvious advantage over hair-shaving because hair grows back. See my comprehensive post on tattoo advertising.

* As the Internet increases price competition and reduces margins in the jewelry market, diamond manufacturers are trying to prop up prices by branding their diamonds.

* Another lawsuit over the scorching-hot Hannah Montana concert tour—this time, alleging that the Hannah Montana fansite overpromised priority access to tickets.

* Anthony v. Yahoo, which involved a claim that Yahoo misled consumers of its dating service, has settled for $4M.

* I enjoyed this YouTube Video, Mr. Spam Man. Brought to mind the Spam-Free-or-Die video, which is still funny today.

Copyright

* William Patry on crazy copyright rulings against the “segOne,” a device that allows retailers showing broadcast TV to their patrons to substitute in ads sold by them instead of the ads sold by the broadcasters.

* Textile Secrets International, Inc. v. Ya-Ya Brand, Inc. (C.D. Cal. Oct. 31, 2007). 17 USC 1202 (the restriction on modification/removal of “copyright management information”) has been rarely interpreted, so this is a noteworthy case on that basis alone. This case involved the removal of CMI in offline activities. The court concludes "Court nevertheless cannot find that [1202] was intended to apply to circumstances that have no relation to the Internet, electronic commerce, automated copyright protections or management systems, public registers, or other technological measures or processes as contemplated in the DMCA as a whole."

* The Copyright Office has (finally) updated its electronic copy of Title 17.

Blogging

* David Hoffman discusses some considerations when structuring a group blogging LLC's operating agreement.

* U.S. v. Citgo Petroleum Corp., 2007 WL 4116066 (S.D. Tex. Nov. 19, 2007). An attendee at a trial blogs some of her observations about the jury. Her reward? One of the litigants can depose her as having potentially relevant information about jury impartiality. See my first-hand experience with potentially being deposed due to a blog post.

E-Commerce

* College students are ordering tires, pool tables and Winchester rifles online.

* The Canadian taxing authorities have won a victory allowing them to order eBay’s US company to disclose vast amounts of transactional data that presumably will be cross-checked against Canadian PowerSeller tax returns.

Miscellaneous

* Express Media Group, LLC, v. Express Corp., No. C 06-03504 WHA (N.D. Cal., May 10, 2007). Martin Samson's summary: "Court finds defendant, who claimed to have purchased plaintiffs' Express.com domain for $150,000 from someone who purported to be, but was not, the domain's Administrative Contact, guilty of conversion and directs defendant to return the domain to plaintiffs."

* Fallout from the Oracle v. SAP case: SAP may sell TomorrowNow, and several TN executives have been axed.

* A good use for a geolocated cellphone-mediated information service: the location of the nearest public toilet.

* Declan rallies against a federal "Do Not Track" list.

* NYT: US News & World Reports is getting into the consumer review business by aggregating third party opinions. According to the NYT, "The magazine has searched the work of dozens of automotive reviewers at newspapers and magazines, assigned a numerical value to each review (a process U.S. News describes as complex, rigorous and top secret), and then aggregated those into final scores. The Web site offers a description of each vehicle, sprinkled with snippets of quotes from those reviewers, so that it reads as much like a Zagat's restaurant blurb as something you might find in Consumer Reports."

* Don'tcensorme.com: a website for commenters who believe that their comments have been deleted by moderators on hubris overload.

* BusinessWeek: 101 Best Web Freebies.

Posted by Eric at 08:20 AM | Copyright , Domain Names , E-Commerce , Marketing , Privacy/Security , Spam | TrackBack

December 06, 2007

Copyright Owner Enjoined from Sending DMCA Takedown Notices--Biosafe-One v. Hawks

By Eric Goldman

Biosafe-One, Inc. v. Hawks, 2007 WL 4212411 (S.D.N.Y. Nov. 29, 2007)

This case involves competitors in the septic system cleaning products business (a topic of apparent personal interest to William Patry). Defendant acted as the plaintiff's mortgage broker and then, 18 months later, launched a competing business. The correlation is a little suspicious on its face, and the plaintiff believed there was causality: the plaintiff alleges that the defendants impermissibly used data from the mortgage application (and supporting documentation) to help launch the rival. Unfortunately for the plaintiff, the court concluded that this argument wasn't credible.

The plaintiff also claimed that the defendant cut and paste content from the plaintiff's website to the defendant's website. The defendant admitted to copying some text, but that text has been removed, and the court deemed it inconsequential, so the court denied the plaintiff's preliminary injunction request. Patry and Brown discuss this in a little more detail.

As part of its attack on the defendants' competing website, the plaintiff sent DMCA takedown notices to the defendants' web hosts, both of whom complied. In response, the defendant moved its hosting offshore (thus out of reach of the takedown notices, but at a higher cost), and as a counterclaim brought a 512(f) claim for false takedown notices. The court rejects that claim because the plaintiff had some justification for the takedown notices; after all, the defendant had copied some material. As the court says: "Defendants have not submitted any evidence that plaintiffs were aware or understood that they were misrepresenting the fact that defendants' website was infringing when they filed their notices. Plaintiffs have submitted ample evidence in their moving papers and by Jorgensen's testimony that they believed, and continue to believe, that defendants' website violated their copyright when they filed the notices."

In addition to the 512(f) claim, the defendants sought an injunction against future takedown notices and an order that one of the web hosts restore service. The court granted both. With respect to the injunction, the court says "if plaintiffs continue to send DMCA notices defendants will be burdened, financially and otherwise, with arranging for alternative companies to host their website outside the country. A preliminary injunction barring plaintiffs from sending additional DMCA notices, absent court approval, however, would impose little or no burden on plaintiffs."

To my knowledge, this is the first time a court has enjoined the delivery of future takedown notices (please email me if I'm forgetting something). Removing the plaintiff's ability to seek extra-judicial recourse is a pretty powerful remedy, making it a potentially very useful tool to combat takedown notice abuses. Perhaps this will become standard relief sought by defendants--at least during the pendency of an action, when the court is being asked to evaluate the merits of the copyright complaint. In this sense, I'm reminded a little of how UDRPs go on hold once a case goes to court; the extra-judicial process is no longer appropriate once the parties are squaring off in court.

Posted by Eric at 02:47 PM | Copyright , Derivative Liability | TrackBack

December 04, 2007

Perfect 10 v. Amazon Opinion Amendment--Ninth Circuit Does 180 on Fair Use Burden for Preliminary Injunction

By Eric Goldman

In the Perfect 10 v. Amazon case, the Ninth Circuit has reversed itself on who has the burden of establishing fair use in the context of a preliminary injunction motion. See the revised opinion. In the original Ninth Circuit Perfect 10 v. Amazon ruling, the court put the burden on the plaintiff to disprove fair use as part of its PI obligations. Now, in an amended opinion, the Ninth Circuit has put the burden on the defendant to establish fair use to defeat the PI. This is a pretty big reversal of a key holding from the initial opinion (at the time, I said that aspect of the ruling was "significant and could have widespread effects on copyright cases, both online and off"). Interestingly, it doesn't change the results in this case--the original injunction issued by the district court is still dissolved--but fair use will be a hotly contested issue in many future PI cases, and the Ninth Circuit just made plaintiffs' jobs easier.

The original text from the May 2007 opinion:

Because Perfect 10 has the burden of showing a likelihood of success on the merits, the district court held that Perfect 10 also had the burden of demonstrating a likelihood of overcoming Google’s fair use defense under 17 U.S.C. § 107. Perfect 10, 416 F. Supp. 2d at 836-37. We have not previously ruled on this issue, see Napster, 239 F.3d at 1014 n.3 (cataloguing conflicting authority), and we now agree with the district court’s ruling. In order to demonstrate its likely success on the merits, the moving party must necessarily demonstrate it will overcome defenses raised by the non-moving party. This burden is correctly placed on the party seeking to demonstrate entitlement to the extraordinary remedy of a preliminary injunction at an early stage of the litigation, before the defendant has had the opportunity to undertake extensive discovery or develop its defenses. Our conclusion that a party seeking a preliminary injunction in the copyright context bears the burden of showing its likely success in overcoming a fair use defense is consistent with decisions of the Federal Circuit purporting to apply Ninth Circuit law. See Atari Games Corp. v. Nintendo of Am. Inc., 975 F.2d 832, 837 (Fed. Cir. 1992) (“[F]ollowing Ninth Circuit caselaw [for review of a district court’s grant of preliminary injunction], this court must determine whether Nintendo has shown a likelihood of success on its prima facie case of copyright infringement and a likelihood that it will overcome Atari’s copyright misuse defense.”); see also H.H. Robertson, Co. v. United Steel Deck, Inc., 820 F.2d 384, 387-89 (Fed. Cir. 1987) (requiring a patent holder seeking preliminary injunctive relief to overcome the defense that the patent is invalid even though the patent is presumed valid at trial), overruled on other grounds by Markman v. Westview Instruments, Inc., 52 F.3d 967, 977-79 (Fed. Cir. 1995).

However, entitlement for preliminary relief “is determined in the context of the presumptions and burdens that would inhere at trial on the merits.” H.H. Robertson, 820 F.2d at 388. Because the defendant in an infringement action has the burden of proving fair use, see Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 590 (1994), the defendant is responsible for introducing evidence of fair use in responding to a motion for preliminary relief. See Dr. Seuss Enters., L.P. v. Penguin Books USA, Inc., 109 F.3d 1394, 1403 (9th Cir. 1997). The plaintiff must then show it is likely to succeed in its challenge to the alleged infringer’s evidence.

The amended language:

Because Perfect 10 has the burden of showing a likelihood of success on the merits, the district court held that Perfect 10 also had the burden of demonstrating a likelihood of overcoming Google’s fair use defense under 17 U.S.C. § 107. Perfect 10, 416 F. Supp. 2d at 836-37. This ruling was erroneous. At trial, the defendant in an infringement action bears the burden of proving fair use. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 590 (1994). Because “the burdens at the preliminary injunction stage track the burdens at trial,” once the moving party has carried its burden of showing a likelihood of success on the merits, the burden shifts to the nonmoving party to show a likelihood that its affirmative defense will succeed. Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 429 (2006); see also Abbott Labs. v. Andrx Pharms., Inc., 473 F.3d 1196, 1201 (Fed. Cir. 2007) (to defeat a motion for preliminary injunctive relief in a patent infringement case, the non-moving party must establish a likelihood of success in proving its defenses of invalidity or unenforceability); PHG Techs., LLC v. St. John Cos., 469 F.3d 1361, 1365 (Fed. Cir. 2006). Accordingly, once Perfect 10 has shown a likelihood of success on the merits, the burden shifts to Google to show a likelihood that its affirmative defenses will succeed.

In any case, this self-reversal reminds me a little of the Ninth Circuit's struggles with Kelly v. Arriba Soft, also a search engine framing/linking case. In that case, 18 months after the initial ruling, the Ninth Circuit issued an amended opinion where it retracted about 1/2 of its original opinion that had resolved an issue that neither party had asked the Ninth Circuit to adjudicate. For now, it looks like the Ninth Circuit judges are having a tough time getting everything right in these complex Cyberlaw cases.

UPDATE: I've noticed some of the coverage (apparently distracted by this confusing LA Times article) seems to think that the amended opinion is a new win for Google. No--that occurred in May. Instead, this is a small amendment of a technical but important legal point.

Posted by Eric at 05:55 PM | Copyright , Derivative Liability | TrackBack

December 02, 2007

Taxonomies and Commercial Reputations

By Eric Goldman

This coming Saturday, the Information Society Project at Yale Law School is sponsoring a very attractive event entitled "Reputation Economies in Cyberspace." I'm especially excited about this event because I think my next big project will focus on reputation topics, so this should be a fantastic learning experience. I'm on the last panel, which is a precarious time because of the high preemption risk. As a result, I've picked a less-than-mainstream topic with a low preemption risk, although I may move into more mainstream topics depending on what gets discussed earlier in the day. Here's the short summary I provided to the conference organizers:
_____________

Taxonomies and Commercial Reputations

A “taxonomy” is a structure for organizing content. It provides the anchors that allow topically relevant content to be grouped together in a logical fashion. Among other benefits, taxonomies can provide a system for designating unique identifiers for marketplace offerings. These unique identifications are crucial for the development and management of commercial reputations. For reputational mechanisms to work properly, objective and subjective data about offerings need a place to be associated uniquely with the offering. Without this, the data has no place to attach, distorting the reputational mechanism.

Proprietary rights threaten the ability to optimally taxonomize marketplace offerings in at least two ways. First, taxonomy developers can assert a proprietary interest in their taxonomies. Second, trademark owners can use their proprietary rights to distort the taxonomy or content attached to it.

Taxonomy Developers’ Rights

Taxonomy developers may be able to claim copyright in their taxonomies. See American Dental Association v. Delta Dental Plans Association, 126 F.3d 977 (7th Cir. 1997); but see Southco, Inc. v. Kanebridge Corp., 390 F.3d 276 (3d Cir. 2004); ATC Distribution Group, Inc. v. Whatever It Takes Transmissions & Parts, Inc., 402 F.3d 700 (6th Cir. 2005). Even if they cannot, online taxonomy developers can restrict access to their taxonomies through server protection doctrines (such as trespass to chattels, Computer Fraud & Abuse Act, computer tampering doctrines, etc.).

Excludable taxonomies create two problems. First, competitors need to recreate taxonomies. This leads to duplicative efforts that are socially wasteful, and implicitly it increases barriers to entry by new intermediaries. Second, and perhaps more importantly, it hinders consumers’ abilities to do apples-to-apples comparisons between marketplace offerings, because consumers must do extra research to determine if taxonomical nodes in two different taxonomies are the same offering. As a result, consumers miss valuable reputational information because they cannot find it.

There is a licensing market for taxonomical data in many (but not all) product verticals. These licensing programs can be expensive for new entrants. Some licensors provide unique identifiers that can enable consumers to make apples-to-apples comparisons, but in other cases, catalog standardization/normalization remains a challenge. Furthermore, if there are competitive licensors in a particular vertical and they use different identifiers, then consumers may face a cacophony of identifiers.

This could be solved through a comprehensive and non-excludable product taxonomy with unique identifiers for all marketplace offerings. The exemplar is the ISBN taxonomy, which has done a remarkable job of allowing consumers to find and compare books. Because this economy-wide taxonomy hasn’t developed via private efforts, and because any developer will likely assert proprietary interests in the taxonomy in ways that would hinder its functioning, government sponsorship may be necessary (and appropriate) to develop the uniform taxonomy.

Trademark Owners’ Rights

By definition, trademarks should act as unique identifiers for marketplace offerings. Presently, trademarks provide the main taxonomical structure for marketplace offerings in most industry verticals. However, the proprietary interests of trademark owners limit the utility of trademarks as a taxonomy in at least two ways.

First, trademark owners can use trademark law to limit the use of their trademarks as a taxonomical node. Retailers can generally use trademarks for the products they sell under the trademark exhaustion doctrine. However, other intermediaries (such as product review sites) have no such defense, and their usage may qualify as a trademark use in commerce, meaning that any trademark inquiry becomes messy and unpredictable. Furthermore, search engines provide consumers with access to unstructured databases and use user-initiated search keywords—which may be trademarked—as a type of “dynamic taxonomy,” and this has exposed search engines to potential trademark liability as well.

Second, trademark owners may also use trademark law to strip out content that has been anchored at the trademarked taxonomical node. For example, in a group of product reviews, trademark owners could attack negative reviews as violating their trademarks. Once again, those reviews might satisfy the trademark use in commerce doctrine, leading again to messy and uncertain analysis. Indeed, trademark owners have every incentive to use trademark law to produce “lopsided databases” where favorable opinions remain and unfavorable ones are excised.

Some solutions to address these problems include:

1) We should provide a legislative safe harbor allowing search engines to use trademarks to create dynamic taxonomies for unstructured databases.

2) We should use the innocent printer/publisher safe harbor (15 U.S.C. §1114(2)(A)-(C)) more extensively to curb efforts to produce lopsided databases.

3) We should categorically exclude all referential trademark uses (i.e., uses of a trademark for its referential value), even if made by commercial actors in commercial settings, from trademark scrutiny. I build this argument out here.

Posted by Eric at 08:03 AM | Copyright , Derivative Liability , E-Commerce , Trademark | TrackBack

October 21, 2007

Ticketmaster Wins Big Injunction in Hannah Montana Case, But Did the Public Interest Get Screwed?--Ticketmaster v. RMG

By Eric Goldman

Ticketmaster L.L.C. v. RMG Technologies, Inc., 2007 WL 2988403 (C.D. Cal. Oct. 16, 2007)

You may remember Ticketmaster's multi-year battle against Tickets.com over data aggregation and deep linking. Ticketmaster never got a solid win in that case, but here Ticketmaster successfully advances the same legal theories against someone gaming its allocation of tickets. Hannah Montana fans might cheer this ruling, but some of the court’s analysis makes this a troubling Cyberlaw development.

Introduction

This case involves what I'll call "ticket sniping"--the practice of quickly snapping up highly-sought-after tickets when they first go on sale and then reselling them at higher prices. When it comes to hot concerts--such as the upcoming Hannah Montana tour--Ticketmaster's price may be well below the prices people are willing to pay in the secondary market. Why don't event promoters use auctions or other dynamic pricing scheme to capture this upside on the first sale? I'm reminded of the odd pricing systems for IPOs--just like that market, perhaps Ticketmaster (as an intermediary) deliberately underprices below the market-clearing price to increase its profits.

In any case, initial ticket buyers from Ticketmaster can get an economic windfall, which naturally motivates people to game the initial first-come, first-served ticket allocation system. RMG was one such gamer. They developed software that helped its customers beat other buyers in the rush to get hot tickets. Ticketmaster sued RMG to stop their gaming activities; the court issues a preliminary injunction:

Copyright

The court says that RMG directly infringed Ticketmaster's copyright in its web pages by browsing them to test the operation of its software tool. Effectively, then, the court says that web browsing is copyright infringement. This isn't the first time a court intimated as much, but it's troubling every time we see it.

The court overlooks any implied license to browse because Ticketmaster's "browsewrap" on its home page (which says "Use of this website is subject to express Terms of Use which prohibit commercial use of this site. By continuing past this page, you agree to abide by these terms") acts as an express restriction on browsing, so any access in contravention of those terms constitutes copyright infringement.

One of the key Qs is how RMG's software differs from other search engine robots. The court skirts this Q, simply pointing to Perfect 10 v. Amazon as excusing the cache copies made by web users who follow search engine links. Of course, search engine robots make lots of other copies, and we think these copies are excused because the final presentation (the display of search results snippets) doesn’t infringe. The court doesn't address this at all.

The court also says that RMG is indirectly infringing based on a Grokster inducement theory because RMG's marketing said it's offering "stealth technology [that] lets you hide your IP address, so you never get blocked by Ticketmaster." This is a pretty expansive interpretation of copyright inducement because the marketing references IP address blocks, not copyright infringement, but it's very consistent with the court's moral condemnation of RMG's behavior.

Anti-Circumvention

The court says that website pages are protected by copyright, and the website used a CAPTCHA to restrict access to these copyrighted works. Thus, distributing the software tool designed to circumvent the CAPTCHA to access the copyrighted website violates 1201(a)(2) and 1201(b)(1). Not only does this give unexpected copyright protection for CAPTCHAs, this ruling seems inconsistent with several precedents holding that bypassing a password protection system doesn't violate 1201.

Breach of Contract

As indicated above, the court upholds Ticketmaster's browsewrap. Admittedly, Ticketmaster has improved its contract formation processes since it litigated against Tickets.com, but I'm not sure this was as easy as the court treated it.

Computer Fraud & Abuse Act

Surprisingly, the court denies relief for this claim because Ticketmaster couldn't allege $5,000 of loss. I tell my students that if they can't construct $5,000 of loss under the CFAA, then they aren't thinking creatively enough.

Conclusion

It's easy to point at RMG and its customers as the bad guys. After all, they are trying to get an unfair advantage in the first-come, first-served allocation of scarce tickets for their economic benefit, with the result that later comers have to pay more to get the same tickets.

But what about Ticketmaster's role in this situation? They haven't designed a technologically gaming-resistant allocation of tickets, so they need legal help to solve that deficiency. I also remain suspicious about Ticketmaster's incentives here, both in setting prices and in policing against ticket allocation gaming. Their motives may not be nearly so consumer-friendly as they try to portray.

And this opinion is hardly pro-consumer either. This ruling won't be a problem if future courts limit this ruling solely to a company's efforts to legally protect a competently designed anti-gaming strategy. But some of the more dramatic rulings are anything but consumer-friendly, such as the implicit holding that browsing is copyright infringement and the upholding of Ticketmaster's browsewrap. If other courts apply these principles more broadly, Hannah Montana concertgoers may have gotten a benefit at the expense of us all.

Posted by Eric at 03:45 PM | Copyright , Derivative Liability , E-Commerce , Internet History , Licensing/Contracts , Privacy/Security | TrackBack

October 11, 2007

AFP v. Google News Redux--AP v. Moreover

By Eric Goldman

Associated Press v. Moreover Technologies, Inc., 07 CIV 8699 (SDNY complaint filed Oct. 9, 2007)

I don't understand Moreover. From their website, they describe themselves as:

the premier provider of real-time news, current awareness and business information, pioneering the way online news is gathered, refined, categorized and delivered. Moreover products are trusted by hundreds of leading organizations to deliver real-time current awareness and actionable news intelligence that drives informed business decisions.

Huh? Someone needs to rein in the marketing department. In any case, I glean that Moreover is a news aggregator, building a real-time news database in a manner not dissimilar to Google News--they send robots to collect information in near real time, index the content and then publish extractions. However, it looks like Moreover is focusing on B2B solutions rather than Google's consumer-facing B2C service. I'm not sure if that will make a legal difference.

After a failed licensing negotiation (see complaint para. 55), the AP decided that it would rather make war, not love, and sued Moreover for gathering and republishing AP content. The AP claims the following causes of action: hot news misappropriation, copyright infringement, removal of CMI (17 USC 1202), Lanham Act 43(a) false association, NY trademark infringement, and trespass to chattels. These are generally the appropriate claims (although I'm surprised they couldn't find a breach of contract to allege), but there are a few odd claims, like the false association/trademark claim based on the fact that Moreover publicizes that it indexes AP content (this is a little like truthfully announcing third party branded ingredients--see Mark McKenna's post on that topic); and the claim that VeriSign is responsible for the acts of its wholly-owned subsidiary and data supplier.

In most respects, this lawsuit raises the same issues as the AFP v. Google News lawsuit filed in 2005 and settled in April. However, unlike the AFP case, the AP put the hot news claim front and center. Also, the AP may have selected a more favorable venue than AFP did. By filing in a 2nd Circuit jurisdiction, this case will be governed by the Second Circuit's rulings in Register.com v. Verio (trespass to chattels) and Motorola (hot news), both of which may be more favorable to AP's case than the law of other circuits. On the other hand, as I've noted before, the AP makes its news available via RSS feeds, and this could raise some interesting questions about the scope of explicit or implicit consent granted by providing RSS feeds.

More generally, this case is yet another battlefront in the war between content producers and content aggregators over the scope of permissible aggregation. I'm not sure if this case will provide the last word on that topic, but we would significantly benefit from more clarity about what constitutes legitimate aggregation.

Posted by Eric at 10:45 AM | Copyright , Search Engines , Trademark | TrackBack

October 10, 2007

Pandora Founder Westergren Speaks at SCU

By Eric Goldman

I *love* Internet radio. I typically listen to it all day long while I'm pounding out emails, articles and blog posts (like this one). I've tried a number of services, including Accuradio, Sky.fm and Last.fm. However, now I listen exclusively to Pandora, which in my opinion is the best of the bunch. Pandora really does get better based on the feedback I give it, which gives me enough incentive to customize it to my tastes. (I won't embarrass myself by exposing my idiosyncratic music preferences here, other than to say that I don't think I've seeded Pandora with any band that started after 1990. Hey, I'm a product of my time.)

In any case, when the High Tech Law Institute was contacted by the Santa Clara University's Center for Innovation and Entrepreneurship to co-sponsor a talk by Tim Westergren, one of Pandora's founders, we jumped on the opportunity. Tim gave an outstanding talk last night to an enthusiastic audience of at least 200 people.

Pandora was founded in 1999 and raised $1.5M in early 2000. That money ran out in 2001 when no more VC money was available. For the next 2 1/2 years, the company went on 300+ VC pitches with no luck, but was able to run on fumes in large part by mostly deferring employee salaries (a total of $1.4M deferred). This is an amazing feat for a number of reasons, including the fact that most employees need to put food on their table, plus I don't think the labor laws really tolerate employee salary deferrals. In any case, in 2004, the company raised new money and revamped the business model. In October 2005, the company launched a consumer-oriented Internet radio, and the rocket ship took off.

This roller-coaster ride was partially tied to the company's search for a viable business model. Pandora first thought it would be an online music retailer (typical thinking circa 1999). Then, it focused on B2B licensing of its services to other online retailers (typical thinking circa 2001). By 2004, there had been enough external changes to contemplate a consumer radio service--broadband had become more widespread, and the webcasting license fees were set at a more palatable level. In their October 2005 relaunch, they first started with a consumer subscription model but quickly realized the futility of getting people to pay for Internet radio. Now, they are effectively ad-supported, and Tim thinks that they can reach profitability at the end of next year assuming the webcasting royalty rate will be reset. (After the tribunal issued the new webcasting rate, the company held a board meeting to decide if they should just fold up their tents and give the remaining money back to investors--instead, they pushed for a listener grass-roots campaign, which was wildly successful).

Pandora's main competitive differentiator is its "Music Genome Project." 50 trained musicians with at least a college degree in music (called "music analysts") listen to songs all day long and rate each song on 400 different musical attributes. See the 2005 WSJ article discussing them. By profiling songs this way, the system can predict that a person who likes an artist's song might like other songs with similar musical attributes. From listening to Pandora for many, many hours, IMO the system isn't perfect, but it does a pretty good job, and it has definitely hooked me on music that I wouldn't have listened to otherwise.

However, the human capital required to build this database is significant and expensive. Sure, the supply of people with a music degree willing to be paid to listen to music all day long should be favorable, but still, a low salary multiplied by 50 people is still a big number. As Tim acknowledged, this is the opposite of scalability--a song can take up to 1/2 hour to catalog--which reduces Pandora's ability to comprehensively catalog the "long tail." On the other hand, they already have a database of 500,000 profiled songs, and they are adding 15,000 songs a month. Plus, having found a way to survive while building such a large database, the database is now a big barrier to entry, because any competitor seeking to take a similar approach (patents permitting) would have to incur serious upfront costs to replicate a competitive system.

Pandora does a little search engine marketing, but principally they rely on viral marketing--build a better product and let the customers evangelize it to their friends. They claim 8.5M registered listeners, growing at the rate of 500k new registrants per month. Listeners interact with Pandora on average 7-8 times per hour to give feedback or configure things (that sounds about right from my personal experience), which is remarkable as a stickiness measure. The result of this interaction is a database of 1B thumbs up/down opinions, a gargantuan database of user preferences. Tim said that Pandora uses this database for some collaborative filtering, but it sounds like this database is could be a globally important resource if made available more widely. (I'm sure the privacy folks are running through all the ways this data could be misused.)

A couple of other interesting factoids:

* at peak hours, Pandora's traffic represents 1.5% of global Internet data
* they block International users because of the lack of Internet webcasting statutory licenses parallel to the rights enacted in the DMCA
* 94% of their database of 500,000 cataloged songs are played every day--powerful evidence of the long tail effect that consumers will enjoy otherwise obscure content if the transaction costs are low enough
* Tim said Pandora's biggest competitor is ClearChannel. Clearly, they want to own the entire radio industry, not just the Internet radio market.

Check out Pandora and see what you think. If you want a jump start and you promise not to laugh at my tastes, I can email you my heavily customized stations.

Posted by Eric at 06:00 PM | Copyright , Internet History | TrackBack

October 08, 2007

Yet Another NY Court Says Keyword Ads & Metatags Aren't TM Use in Commerce--S&L Vitamins v. Australian Gold

By Eric Goldman

S & L Vitamins, Inc. v. Australian Gold, Inc., 2:05-cv-1217 (E.D.N.Y. Sept. 30, 2007)

If it wasn't so painful for all involved, I would enjoy watching the legal contortions of companies whose outdated business models are being destroyed by the Internet. Typically, these companies go into a litigation frenzy to suppress Internet-mediated activity that is good for consumers and bad for profit-maximization. Most of these lawsuits can't and don't fix the architectural problems of the business model, so at best they are a futile last stand.

I don't know much about the products of Australian Gold (I now live in the land of perpetual sun anyway), but the Internet appears to be ripping apart their business model. Australian Gold distributes its various tanning products exclusively through tanning salons, and they try to keep these products from leaking out of that channel so that they can support very high salon prices (according to the S&L case, Internet prices are 50% of salon prices). But with ridiculous overpricing like this, it's inevitable that products will leak out of the chain and consumers will get the exact same products for less dough. But this is bad for profits, which has led to the courthouse. Australian Gold now has been involved in at least 2 enforcement actions against Internet resellers, including this ruling and last year's big but analytically deficient win against one of the resellers. See Australian Gold v. Hatfield.

Keyword Ads, Metatags and Trademarks

In this case, S&L initiated a declaratory judgment against Australian Gold. By bringing a DJ, S&L kept the case in a Second Circuit jurisdiction--where courts recently have regularly rejected trademark lawsuits over keyword advertising and metatag inclusion. S&L's move paid off when the court says that buying keyword advertising and using metatags, without more, doesn't constitute a trademark use in commerce. This is now the fifth consecutive opinion in a NY federal court saying that advertisers don't make a trademark use in commerce when buying keywords, joining the Merck, Hamzik, Site Pro-1 and FrangranceNet courts (a sixth NY federal court opinion, the Rescuecom case, reached the same conclusion with respect to keyword sales).

Other Issues

The remainder of the opinion includes lots of other interesting discussion, including:

* S&L took its own product shots of Australian Gold's products. The court rejects Australian Gold's claim that S&L declaring "All Rights Reserved" with respect to those product shots constituted false advertising.

* The "Australian Gold" trademark lacked sufficient fame to support a dilution claim.

* Australian Gold claimed that S&L violated its copyrights in its labels by taking the product shots. This is an obviously spurious claim because after-market product shots are exactly what 17 USC 113(c) was designed to permit--and Australian Gold's effort to invoke copyright to restrict product shots shows its desperation to restrict legitimate after-market activities (as the court says, "AG is attempting to force a claim with facts that do not really fit"). Unfortunately, the court sidesteps 113(c). Fortunately, the court nevertheless finds that S&L's product shots were fair use of the labels' copyrights.

Conclusion

It's not hard to see why Australian Gold is trying to control its channel--if it can get its retailers (tanning salons) to sell its products at 2X the price that would be charged in an open market, Australian Gold is minting some big profits for its retailers, which seems like it would motivate salon salespeople to push those products hard. Enjoy the ride while it lasts, guys, because the Internet will destroy this model, despite any regressive attempts to use IP rights to put the genie back in the bottle. If nothing else, the Internet has demonstrated how Australian Gold products are overpriced when sold through salons, and loyal buyers are probably going to be pretty mad when they realize just how much they've overpaid.

UPDATE: Matthew Sag also questions the 113(c) reading and discusses the fair use aspects in more detail.

Posted by Eric at 04:49 PM | Copyright , Trademark | TrackBack

October 06, 2007

September 2007 Quick Links Part I

By Eric Goldman

Marketing

* From the NYT: There are 200+ auto repair shops in the "Iron Triangle" area in New York, and apparently they compete fiercely with each other, shouting out price quotes as cars needing repairs drive by. But according to one business owner, "Competition is fierce, but we got ground rules here for pulling in customers...For one, you got to stand in front of your own business. You can’t come and stand in front of my shop and steal my customers."

* Cowan v. Hotwire, LASC Case No. BC328621 (Los Angeles Superior Court complaint filed Feb. 10, 2005). I just found out about this case because apparently I'm a potential class member. The gist of the lawsuit is that Hotwire overpromised the hotel quality based on the star ratings assigned to specific hotels. Whether or not this lawsuit is meritorious, it's another reminder that companies need to precisely characterize their rating systems.

* You may recall the lawsuit over James Frey's A Million Little Pieces, a non-fiction story that was a little fictional. The case settled with a class remedy of a refund for book purchasers who went through a fairly complicated process. Care to guess how many purchasers tendered claims? Try 1,345--meaning about $20,000 of actual cash will go into the hands of "harmed" class members. Transaction costs to award this $20,000 of relief? Lawyers want almost $800,000, plus the costs to communicate with the class were about $335,000--in total, about $56 for every $1 of relief.

* In this article, I discussed how intermediaries would seek to mine a person's various methods of communication as source material for ad targeting (that is, unless the law restricts the intermediaries' ability to mine such data sources). The latest example? Pudding Media, which provides free Internet-based calls for the opportunity to deliver contextually relevant ads triggered by the contents of the phone call.

* The "perfect schwag"? One obvious option that didn't make the list...slinkies!

Intellectual Property

* We usually assume that copyright owners won't license their content to critics seeking to disparage them; hence, fair use is needed to permit such critical secondary uses. But a counterexample from the NYT: Naomi Klein licensed the Canadian "National Post" to display excerpts of her book alongside a critical review. There is some evidence Klein didn't know the hatchet job was coming, but even if she did, would it have been a bad choice on Klein's part? Not necessarily. See this study showing that even a critical New York Times book review lifts sales.

* Chang v. Virgin Mobile USA (D. Tex). See the NYT article on this case. Virgin Mobile allegedly downloaded photos from Flickr to use in an advertising campaign without getting publicity consents from the individuals depicted. This is a lawsuit by one of the depicted individuals. I'm very surprised by this apparent oversight because most ad agencies are thoroughly aware of publicity rights issues. Maybe someone mistakenly thought that Flickr's Creative Commons license extended to publicity rights?

* Freecycle Network, Inc. v. Oey (9th Cir. Sept. 26, 2007). Defendant does not make a trademark "use in commerce" when his actions were not "made to promote any competing service or reap any commercial benefit whatsoever."

* WSJ: "Web-Address Theft Is Everyday Event"

* WSJ: Some franchisors are loosening restrictions on franchisees’ ability to make independent choices.

Posted by Eric at 10:10 PM | Copyright , Domain Names , Marketing , Publicity/Privacy Rights , Trademark | TrackBack

October 04, 2007

"Making Available" as Copyright Infringement--Capitol v. Thomas

By Ethan Ackerman

Capitol v. Thomas has been widely covered (even simul-blogged) as the first RIAA copyright lawsuit against an individual P2P downloader to reach a jury trial. But, to poorly paraphrase Stephen Sondheim, "a funny thing happened on the way to the jury room..." Despite all the trial theatrics and pre-trial preparations and motions, both sides' counsel and the judge forgot to decide on the relevant law until the last minute.

Jury instructions are statements of law given to juries so they can apply "the law" to the facts they just heard and saw during the trial to come to a decision. The instructions are decided by the judge with the input of both counsel. Since jury instructions are just "legal" issues controlled by a judge, ideally there will be no disagreement over them at trial, as "legal" issues can usually be decided by various pre-trial motions. But in reality, jury instructions are often the focus of continuing disagreements and are fertile grounds for appeal. With marked protests from counsel and last-minute-reversals by the judge, the jury instructions in this case looks to be no exception.

The legal dispute focuses on whether "making available" an electronic file constitutes an infringement of the Copyright Act's exclusive "distribution" right, independent of any other copying. The Copyright Act prohibits illegal "copying" and illegal "distribution," but is mostly silent as to what constitutes distribution of an electronic file and whether "making available" a file electronically is enough to infringe that right. Complicating the issue is history -- the right was written into the Copyright Act at a time when distribution necessarily did require a transfer or copying of some physical object. This blog has tackled the legal issue before (see here and here and here), and the issue doesn't look like it's going away any time soon. The "making available" issue is being similarly litigated in several other P2P infringement cases and has implications for emerging technology products such as satellite radio and remote DVRs. As a result, this case is just the latest addition to an increasingly crowded horserace of pending cases wrestling with the "making available" issue.

10/4 UPDATE: Using the disputed "making available" jury instructions, the Duluth jury returned a verdict in favor of Capitol records and its co-plaintiffs, finding Ms. Thomas infringed the 24 files in dispute. The jury assessed a total of $222,000 in damages. The defendant's attorney was quoted as saying that amount will increase with the inclusion of plaintiffs' attorneys' fees, an amount he stated (contrary to fairly clear and controlling law) "are automatically awarded such judgments under copyright law." Although no major news coverage I could find has addressed the defendant's intention to appeal or seek a verdict reversal, an admittedly interested legal blog predicts both will shortly follow.

UPDATE 2 (from Eric): Ethan gets some nice coverage and makes some interesting points in this Internet News article.

UPDATE 3 (from Eric): According to Wired, the jury may have found her guilty even with a different jury instruction because they thought she was a "liar."

Posted by Ethan Ackerman at 10:58 AM | Copyright | TrackBack

September 06, 2007

August 2007 Quick Links, Part I

By Eric Goldman

Search Engines

* Google extended its ad serving technology to consider a user's past search phrases in addition to their current search term.

* Greg Linden: "Google is teasing too many lions."

* BusinessWeek: Some VCs are cranky that Google is competing with them by actively investing in start-up deals.

* From Answers.com's press release in August: "Answers Corporation (NASDAQ: ANSW) announced today that, due to a search engine algorithmic adjustment by Google, Answers.com has seen a drop in search engine traffic starting last week. As a result, overall traffic is currently down approximately 28% from levels immediately prior to the change...This change only demonstrates the sound business rationale behind our agreement to purchase Dictionary.com, because it underscores a primary motivation for the deal: to secure a steady source of direct traffic and mitigate our current dependence on search engine algorithms."

Intellectual Property

* Question: Any theories why the Copyright Office hasn't yet issued "final" regulations for the DMCA 512 registration of an agent for notice...9 years after the DMCA passed?

* From the EFF: RIAA v. the People: Four Years Later. A terrific overview/recap of the RIAA's campaign against online dissemination of music. I'm planning to assign this report to my Cyberlaw students when we discuss file-sharing.

* New York Mercantile Exchange v. Intercontinental Exchange, No. 05-5585-cv (2d Cir. Aug. 1, 2007). Second Circuit says that mercantile exchange settlement prices are not protectable due to the copyright merger doctrine. It would have been better if the court had said that prices aren’t copyrightable, but perhaps we should take our victories where we can find them. HT Patry.

* Bensbargains.net, LLC v. XPBargains.com, 2007 WL 2385092 (S.D. Cal. August 16, 2007). Plaintiff aggregated various "deals" into a website and claimed a copyright in the aggregation. Defendant took the deals and integrated them into its website. Copyright infringement? The judge sets an arbitrary cutoff: "there is insufficient similarity to survive summary judgment where either the percentage of Plaintiff's deals that were copied or the percentage of Defendants' deals that were derived from Plaintiff's website is less than 70%." Evan has more.

* Lennar Pacific Properties Management, Inc. v. Dauben, Inc., 2007 WL 2340487 (N.D. Tex. August 16, 2007). Trademark owner gets an ex parte TRO against a domainer. More from Evan.

* WSJ: The KSR case has noticeably improved prospects for patent defendants.

* The EFF is challenging UMG's practice of stamping a "promotional use only, not for resale" label on promotional CDs.

Marketing/Advertising

* NYT on car ad-wrapping. See my previous post where I proclaimed ad wrapping as a relic of the dot com boom. It looks like the practice still lives! Open invitation: anyone who would like to pay me $800/mo to wrap my car, please call me! For that amount of cash, I'll drive the ugliest ad imaginable.

* There was a new ruling in NetQuote v. Byrd, which I styled as the “lead fraud” case. Rebecca recaps the action.

* Apparently, in Florida, a lot of senior citizens dining out at restaurants will ask for some lemon wedges and a glass of water, then add a few Sweet-and-Low packets to create their own tableside-brewed lemonade for free instead of ordering a drink off the menu. One restaurant owner got fed up and charged a diner $1.29 for the unadvertised menu item of self-brewed lemonade. Now, the sparks are flying!

* More unfortunately placed ads.

Contracts

* Cohn v. TrueBeginnings LLC, No.B190423 (Cal. Ct. App. July 31, 2007). Another court upholds a mandatory clickthrough even when the actual terms are hyperlinked. Tom O'Toole comments and provides screenshots.

* Ken Adams demonstrates, step-by-step, how he edits a contract.

Lexicon Watch

* New word alert: "bacn" = transactional email from websites you have a relationship with. Personally, I think we need to get off the meat metaphors.

* William Gibson says the prefix "cyber" is passe.

Posted by Eric at 04:27 PM | Copyright , Domain Names , Licensing/Contracts , Marketing , Patents , Search Engines , Trademark | TrackBack

August 21, 2007

Search Engine Strategies Copyright and Trademark Panel

By Eric Goldman

Today I participated in the Copyright and Trademark panel at Search Engine Strategies in San Jose, along with Clarke Walton, Eve Chaurand-Fraser of Ask, Mary Berk of Microsoft and Debra Wilcox of Baker & Hostetler. As usual, Jeff Rohrs was our moderator. Some interesting tidbits I learned:

* Microsoft is loosening its search engine trademark policy somewhat. They will still allow trademark owners to block competitive purchases of their trademarks as keywords. However, Microsoft will reduce the documentation necessary for resellers and affiliates to purchase trademarks because Microsoft isn't in a position to arbitrate rights under a third party contract. Further, to reduce advertiser frustration, they will not require verification from advertisers seeking to purchase a third party trademark (assuming the TM is otherwise available for purchase). It seems like Microsoft's policy is regressing just a bit to look more like Google's. This should also have the effect of increasing Microsoft's ad revenues a little and reducing their administration costs.

* Eve Chaurand-Fraser said that Ask receives about 10 take-down requests each week, split about equally between copyright, trademark and personal names. I was a little surprised the number was this low.

* I learned that the 800-JR Cigar v. GoTo.com case quietly settled in October 2006.

Other write-ups of the panel:
* Barry Schwartz
* WebProNews wrote up the following talks: Mary Berk, Debra Wilcox
* RB Digital Rodeo (with a photo!)
* Navneet Kaushal
* DM News (misattributing a statement to me)
____________________________

Here are my notes for my brief remarks at the panel. My main goal was to provide a contrarian view to all of the plainitff-oriented discussion that had taken place in the rest of the panel.

1. Don’t be duplicitous.

• Ex: if you collect third party data using robots, don’t complain if people bot your site
- Solution: for an aggregator, we used robot exclusion headers plus a generous API license
• Ex: if you don’t like third parties buying your trademarks as keywords, don’t buy theirs.
- Ex: Buying for the Home v. Humble Abode. BFTH sued HB for buying its TMs as keywords (among other things). HB countersued because BFTH bought its keywords (and some other reasons). Parties settled with a $10,000 check going from BFTH to HB. Whoops!

2. Invest in IP protection/enforcement wisely.

• If you see an infringement, DON’T FREAK OUT
- If a two-bit splog uses snippets of your content, so what?
- Never assume anything, but preserve evidence
• Dollars invested in protection/enforcement instead can be invested in buying more marketing. Which is the better investment?
- Ex: 800-JR CIGAR v. GoTo.com over GoTo’s sale of TMs as keywords. 800-JR CIGAR litigated this case 6+ years at a cost of hundreds of thousands of dollars in lawyer fees. GoTo’s gross revenues from the sale of the keywords? $345! Can you imagine how much better they would have been pouring their litigation costs into proactive marketing?
- A lawsuit can get you into a worse position than you started. Ex: 512(f), anti-SLAPP, Rule 11 sanctions (KinderStart), American Blinds sued Google and ended up losing some of its trademarks.
• If you think a problem warrants enforcement, plan on using extra-judicial options to maximum extent possible (DMCA, search engine trademark policies)
• If you want to enforce your copyrights:
- register within 3 months of first publication to be eligible for statutory damages. At Epinions, timely copyright registration was difference between a check and being blown off
- Be very careful with Creative Commons licenses—they are a trap for the unwary

Posted by Eric at 02:07 PM | Copyright , Search Engines , Trademark | TrackBack

August 15, 2007

Lemley on Online Safe Harbors

By Eric Goldman

Mark Lemley, Rationalizing Internet Safe Harbors

Mark Lemley has weighed in on an topic near and dear to my heart--secondary liability online. He advances two principal arguments in his paper. First, it would make sense to harmonize the disparate legal treatment between secondary liability for copyright law (basically, the notice-and-takedown scheme) and secondary liability for just about everything else (which has no liability under any circumstance per 47 USC 230). Second, the right harmonized model would use, as its starting point, trademark law's safe harbor for innocent publishers/printers (15 USC 1114(2)). As with Mark's other work, his arguments warrant careful consideration.

The abstract:

Internet intermediaries - service providers, Web hosting companies, Internet backbone providers, online marketplaces, and search engines - process hundreds of millions of data transfers every day, and host or link to literally tens of billions of items of third party content.

Some of this content is illegal. In the last 12 years, both Congress and the courts have concluded that Internet intermediaries should not be liable for a wide range of content posted or sent through their systems by another. The reasoning behind these immunities is impeccable: if Internet intermediaries were liable every time someone posted problematic content on the Internet, the resulting threat of liability and effort at rights clearance would debilitate the Internet.

While the logic of some sort of safe harbor for Internet intermediaries is clear, the actual content of those safe harbors is not. Rather, the safe harbors actually in place are a confusing and illogical patchwork. For some claims, the safe harbors are absolute. For others, they preclude damages liability but not injunctive relief. For still others they are dependent on the implementation of a “notice and takedown” system. And for at least a few types of claims, there is no safe harbor at all. This patchwork makes no sense. In this article, I suggest that it be replaced with a uniform safe harbor rule. A single, rationally designed safe harbor based on the trademark model would not only permit plaintiffs the relief they need while protecting Internet intermediaries from unreasonable liability, but would also serve as a much needed model for the rest of the world, which has yet to understand the importance of intermediaries to a vibrant Internet.

Posted by Eric at 03:16 AM | Copyright , Derivative Liability , Trademark | TrackBack

August 13, 2007

2007 Cyberspace Law Syllabus

By Eric Goldman

I've posted my 2007 Cyberlaw syllabus. Unlike the past few years, which were a little slow cyberlaw-wise, the past 12 months saw a lot of important developments. Let me recap some of changes I made to my reader reflecting these developments:

Additions

Copyright: I added the Cablevision case (after editing out some of the mind-numbing description of cable technology), which provides an interesting exposition on how the source of bits matters in copyright law (we'll reinforce that message with the Amazon.com "server test"). I companioned the Cablevision with the Field case to show a very different philosophy about "volitional" server activity, so I'll ask the students to see if they can reconcile the two cases.

I struggled with how to handle the Ninth Circuit's troika of Perfect 10 opinions. The opinions are long, complicated and irresolute, but it's hard to discuss one without discussing the other two. I decided to include all three but I don't feel great about that decision, given that it takes 115 pages (about 1/6 of my total reader) to work through the three cases, and I'm not sure students will come away any smarter about Ninth Circuit online copyright law after reading all three.

Trademark. I substituted the FragranceNet case for the 1-800 Contacts v. WhenU case. The 1-800 Contacts case remains a very important keyword law precedent, but as a teaching case it was just so-so. The adware subject matter increased the complexity, and it punted on the most interesting question of search engine liability. However, most of the other recent keyword law cases have been even less teachable. Fortunately, the FragranceNet case does a pretty job of recapping the 1-800 Contacts case as well as other recent decisions, and it frames the policy issues nicely. I've paired it with the Playboy v. Netscape case, which will make a good compare/contrast. However, if the Second Circuit gets off its duff, I'd be thrilled to substitute in the court's opinion in the Rescuecom appeal. (I'd be even more thrilled if the court reaches the "right" result!).

I also updated my materials to reflect the Trademark Dilution Revision Act.

230. I continue to stick by the seminal Zeran case, which remains both powerful precedent and a colorful teaching case. However, this year I added the Ninth Circuit hairball Roommates.com opinion. I really didn't want to--it's such a messy opinion--but I think for now the case represents a vitally important incursion into 230 law that any good Cyberlawyer needs to know about it (even if they don't know what to do about it). If we're lucky, perhaps the Ninth Circuit will rehear the case en banc and issue a new and more lucid opinion before I have to teach the existing opinion.

In addition, I created a new module on "blogs and social networking sites" and added the Doe v. MySpace case, a great opinion for exploring the differences between online and offline "premises."

Spam. I teach spam at the semester's end, when time is running out, so we'll see what I'm actually able to cover this year. I've added two recent cases: the Mummagraphics case, which wiped out a lot of state anti-spam laws and has a nice interplay with trespass to chattels, and the MySpace v. theglobe.com case, which has an odd contrast with Mummagraphics on the state anti-spam statutory analysis; plus it shows how online contracts can substitute for legislative rights.

Other. I added some explanatory material, including my standard dog-and-pony CLE presentations on keyword law and blog law and my brief distillation of social networking site law. I also updated the CRS on Spyware.

Other Changes

* I eliminated my standalone section on "search engines" and folded the material into the rest of the reader. I think there's pedagogical value to isolating and deeply exploring search engine issues, which is why I initially segregated the material. However, search engine issues crop up throughout the foundational material, so I'm not sure that segregation worked.

* I deleted the following material:
- Corbis v. Amazon. This was an excellent case to teach 512, but I think the ccBill case superseded it in a number of respects.
- the district court opinion in Perfect 10 v. Google, which was superseded by the Perfect 10 v. Amazon Ninth Circuit opinion.
- 1-800 Contacts v. WhenU (as discussed above)
- Alaska SB 140, which I ran out of time to discuss last year.

Deliberately Excluded

* The Utah anti-keyword advertising law represents one of the most important statutory changes of the year, but I omitted it because I anticipate Utah will modify it, and there's no point teaching a moot law.

* I skipped the Unlawful Internet Gambling Enforcement Act. I've generally shied away from teaching online gambling in Cyberlaw; the topic requires a lot of time to teach, making it hard to squeeze into a semester-long survey course. Plus, the new law is an analytical mess, so I'm not sure what the students would get out of the discussion.

* We were so excited to get the California Supreme Court's Barrett v. Rosenthal ruling, but the actual opinion doesn't add much to Zeran, so I thought it wasn't worth the time.

Posted by Eric at 07:57 AM | Adware/Spyware , Copyright , Derivative Liability , Internet History , Search Engines , Spam , Trademark | TrackBack

August 04, 2007

Taking Intangible Electronic Files is Criminal Fraud--NM v. Kirby

By Eric Goldman

New Mexico v. Kirby, 2007-NMSC-034 (N.M. June 13, 2007)

This is a very confusing case, so maybe you can help me figure out what it means. At minimum, this case highlights the problems that can be arise when a web design/development relationship goes sour. More broadly, it also contributes to the already confused case law about when intangible electronic records can be "stolen," but this lesson comes at a high cost--in this case, 18 months of jailtime for the defendant.

Facts

According to the Supreme Court's statement of facts, Kirby retained Collett, a website designer, to "develop[] and/or improv[e] a World Wide Website to be installed on the client's web space on a web hosting service's computer." I believe the site at issue is environmentalbenefits.com. The agreement specified that Collett retained the copyright "to the finished assembled work of web pages" and Kirby would be "assigned rights to use as a website the design, graphics, and text contained in the finished assembled website" after Kirby paid the contract price of $1,890 plus tax.

But Kirby never paid Collett--although, according to this site, Kirby paid with an allegedly bum check. Kirby also changed the password for the designed website, which effectively cut off Collett's ability to access those files--the files that, per the contract, Collett still owned.

If Kirby stiffed Collett, it seems like Collett had several legal options, including breach of contract and copyright infringement. Instead, this case went to state prosecutors, who prosecuted Kirby for criminal fraud based on Kirby having taken "a Website Design belonging to Loren Collett, by means of fraudulent conduct, practices, or representations." The jury convicted Kirby, and the Supreme Court affirmed. According to this site, Kirby was sentenced to 18 months in jail.

Questions

This case raises some tough issues, including:

* Why did NM prosecutors pursue this case? On its face, this looks like a garden-variety $2000 commercial dispute. Heck, it could have been handled in small claims court. Instead, Kirby get a felony conviction and jailtime. Huh?

* Did Collett retain a duplicate copy of his files in his possession? If so, how did Kirby "take" non-rivalrous electronic files?

* In that vein, why isn't this crime preempted by copyright law? Copyright preemption is inherently confusing, so I don't feel too bad about being confused here. Indeed, on its face, a commercial fraud crime should be sufficiently removed from copyright law to avoid preemption easily. But in this case, Kirby was prosecuted for converting Collett's intangible files. This sounds a lot like copyright infringement to me. Of course, this ruling isn't completely unprecedented: cases like Kremen v. Cohen and Thyroff have held that intangible electronic records can be converted, though I think the copyright preemption analysis in these cases is hardly satisfying (plus, the recent Utube case held that an intangible asset could not result in trespass to chattels). Though the case talks about copyright a lot, there's no reference at all to preemption--perhaps it wasn't raised by the public defender?

Lessons

1) This case reminds us of the importance of drafting a website development agreement properly. For example, the contract's provision that Kirby would be "assigned rights to use" the website is fatally ambiguous. I wrote a lot on the issues associated with web development agreements in the 1990s; see, e.g.,
* A Fresh Look at Web Development and Hosting Agreements (1998) with sample web development agreement
* Top 10 legal issues for clients of Web developers (1996)
* Pitfalls in Outsourcing Your Website (1996)

In particular, the excerpted contract language indicates that the parties were struggling with defining their respective ownership interests. This is a typical area of confusion; I racked up a fair amount of billable hours in the late 1990s on this very point with people (including opposing lawyers) who didn't get it. Even when the deal value is low, a savvy lawyer can add significant value, at relatively low cost, helping the parties understand this topic.

2) This case reminds us that, unless the contract specifies otherwise, the web designer owns his/her web development work product even if the retaining party pays for the work. This isn't new either (web development lawsuits from the 1990s addressed this point), and here the parties actually expressed addressed ownership in their contract. Nevertheless, caveat emptor!

3) This case extends the meme that intangible electronic records are just as tangible as chattel for conversion purposes. I remain concerned in general about this trend. We may benefit from a careful rethinking about the implications of rivalrousness on conversion doctrines.

4) I'm trying to figure out how broadly this case could apply. For example, would it apply in other circumstances where a party cuts off another party's access to electronic files by changing a password? With little effort, I can think of two: (1) divorcing spouse cuts off spouse's access to shared account containing copyrighted works, and (2) website terminates customer by changing the password, cutting off access to copyrighted material stored in the account (I'm assuming the contract doesn't expressly grant this right). Each fact pattern appears indistinguishable from the elements at issue in this case, although there may not be the requisite scienter to find fraud. if there were (for whatever reason), this case could expand the realm of criminality much further than we might have anticipated.

5) No matter what, the Supreme Court opinion and some of the source materials at this site strongly indicate that the New Mexico judicial system still doesn't understand Internet technology very well. If this were a typical civil case, that would be a shame; if this technological confusion directly led to jailtime for the defendant, it may have produced a travesty.

Posted by Eric at 04:05 PM | Copyright , Internet History , Licensing/Contracts | TrackBack

July 31, 2007

July 2007 Quick Links, Part I

By Eric Goldman

Search Engines

* According to this study, up to 40% of search queries are "re-finding queries" (i.e., the searcher is trying to re-find previously viewed information). The implication: "Because people repeat queries so frequently, search engines should assist their users by providing a means of keeping a record of individual users' search histories, perhaps via software installed on the user's own machine." As I've said before, search engines necessarily will need client-side software to see more consumer behavior if they want to improve relevancy for consumers. HT Greg Linden.

* People are spoofing the Googlebot.

* Hal Varian, a first-rate scholar at Berkeley's SIMS, is now Google's chief economist. I don't know how many other Internet companies have economists-on-staff, but I could see this as a growth area.

Intellectual Property

* Prediction: at least one person will go to jail for prereleasing the new Harry Potter book. It's just too conspicuous for the feds to ignore. Indeed, at this point, it seems unavoidable that every launch of an eagerly anticipated copyrighted work will also involve criminal prosecutions for unauthorized prereleasing (see, e.g., this post). Meanwhile, BusinessWeek is marveling at how many websites are now cooperating with copyright owners rather than fighting them.

* Capitol Federal Sav. Bank v. Eastern Bank Corp., 2007 WL 1885134 (D. Kan. June 29, 2007). Kansas TM owner lacks jurisdiction in Kansas over New England bank allegedly committing TM infringement, even though the New England bank bought keyword ads on the trademark (but, those ads were geo-targeted to Massachussetts). Along the way, the court (as usual) cites to Zippo but rejects the "website doing business" prong, instead requiring the plaintiff to show that the website was doing business in the forum jurisdiction.

* Masterson Marketing, Inc. v. KSL Recreation Corp., 2007 WL 1975425 (S.D.Cal. April 13, 2007). Oh man, what a crazy lawsuit. Freelancer takes product shot of hotel and licenses photo to hotel. Hotel then provides photo to third party websites (such as Expedia) as a way of promoting the hotel. The freelancer claims the hotel breached the license and proceeds to sue what seems like every website in the travel industry. This case is now going on 5 YEARS...over a product shot. (Disclosure note: I worked a little on the case when I was affiliated with Epinions, which is one of the defendants. Yes, it's that old). This ruling deals with the hotel's attempt to recreate the product shot with a different photographer. The court grants SJ to the defendants on the copyright infringement of a recreated shot (per ETS-Hokin). The court also makes it clear that the plaintiff isn't going to get any of the plaintiff's profits, which I assume means the plaintiff is going to get bubkus damages (plaintiff isn't eligible for statutory damages).

* From the NY Times: Mr. Skin is a website that provides subscribers with access to pictures and videos of naked actresses taken from movies. Mr. Skin doesn't normally get permission from copyright owners, seemingly making it a prime target of a business-ending copyright lawsuit. It tries to justify the wholesale republication of clips and stills under the guise of fair use because it claims to be a movie review site, but I doubt that many judges would find that argument very persuasive. However, movie studios have realized that promotion via Mr. Skin increases demand for the movies ("sex sells"), even if Mr. Skin is already showing the "money shot" on its site. As a result, instead of getting lots of C&D letters, Mr. Skin gets lots of promotional copies from movie studios.

* Microsoft is trying to patent what Ars Technica describes as the "mother of all adware." Microsoft is also trying to patent a system for tracking people to deliver relevant advertising. People may find these patents a little creepy, but I see them as both inevitable and ultimately a good thing.

* Washington Post: a new website is trying to position the purchase and resale of exclusively branded fashion items (e.g., Birkin purses) as an investment. And to stabilize the investment decisions, the website screens out the knock-offs and certifies authenticity.

* Domaining to become a $4B/year industry?

Posted by Eric at 12:40 PM | Copyright , Domain Names , Internet History , Patents , Search Engines , Trademark | TrackBack

July 12, 2007

Third Circuit Bounces Lawsuit Over Google Groups--Parker v. Google

By Eric Goldman

Parker v. Google, Inc., No. 06-3074 (3d Cir. July 10, 2007)

Parker v. Google was one of the troika of district court opinions involving Google and copyright from Q1 2006 (along with the Perfect 10 and Field cases). Parker appealed his loss to the Third Circuit. Unfortunately, the Third Circuit didn't spend a lot of time writing up a thorough opinion (probably because of the pro se plaintiff), so the opinion is unhelpfully conclusory and designated "not precedential." Despite these defects, the opinion illustrates that at least some appellate courts will give wide deference to search engines.

Parker is a copyright owner. He claims that third parties infringed his copyright by posting his work to USENET, which Google then made accessible via its Google Groups service. He further claims that some people bashed him online and Google committed defamation by indexing and linking to these allegedly defamatory sites. The court efficiently rejects Parker's claims:

* Google isn't liable for direct copyright infringement via its Google Groups service because it makes USENET content available without any volitional conduct.
* Google isn't liable for contributory copyright infringement because Parker didn't allege the requisite knowledge of third party activity. The court doesn't reference 512 in this discussion, but it does note that Parker sent some C&D letters that didn't reference his specific copyrighted work.
* Google isn't liable for vicarious copyright because Parker didn't allege that Google gets a direct financial benefit from the infringing USENET posts.
* Google isn't liable for defamation (and related claims) because of 47 USC 230.
* The court also rejected a trademark claim based on indexing a third party site that Parker claimed searchers would think came from him.

Posted by Eric at 09:43 AM | Copyright , Derivative Liability , Search Engines , Trademark | TrackBack

July 10, 2007

Seventh Circuit Opinion Cites Infringing YouTube Video--Stoller v. Brett

By Eric Goldman

Central Manufacturing, Inc. v. Brett, 2007 WL 1965673 (7th Cir. July 9, 2007)

Leo Stoller, the notorious trademark gadfly, lost another case, this time at the Seventh Circuit. Among other denigrations, the Seventh Circuit said that "were there a Hall of Fame for hyperactive trademark litigators, Stoller would be in it."

Judge Evans weaves lots of baseball lore into the opinion because the defendants include baseball great George Brett. In fact, the mere presence of George Brett appears to make Judge Evans swoon, because he spends almost half the opinion gratuitously reliving the story of George Brett's famous "pine tar" incident. As part of this, the opinion says:

The whole colorful episode is preserved, in all its glory, on YouTube, at http://www.youtube.com/watch?v=4Cu1WXylkto (last visited June 6, 2007)

Well, not exactly. The video WAS there earlier today, but the page now has the dreaded red legend "This video is no longer available due to a copyright claim by MLB Advanced Media." In fact, anyone who watched the video had no doubt that it was 7 1/2 minutes of MLB's copyrighted work...but the Seventh Circuit opinion nevertheless encouraged readers to view it. Whoops! Let's hope for the Seventh Circuit's sake that such encouragement isn't contributory copyright infringement...

Too bad the MLB couldn't find it in its heart to leave the video alone to preserve the cite from a Seventh Circuit opinion (the MLB official site linked above does have the radio broadcast, but not the video). Then again, realistically, the MLB isn't known for being magnanimous about IP law. Meanwhile, I suspect the Seventh Circuit will have an internal dialogue about the perils of promoting infringing YouTube videos in their opinions.

FWIW, the rest of the opinion is also entertaining. John Welch of TTABlog is on the case.

Posted by Eric at 09:19 PM | Copyright | TrackBack

July 09, 2007

Credit Card Providers Aren't Liable for Third Party Infringement--Perfect 10 v. Visa

By Eric Goldman

Perfect 10, Inc. v. Visa International Service Association, No. 05-15170 (9th Cir. July 3, 2007)

The Ninth Circuit has completed a hat trick of appeals involving Perfect 10's litigation frenzy over online infringement of Perfect 10's copyrighted photos. The resulting troika of opinions has important implications for cyberlaw and IP law, but the aggregate effect is hardly clear. The Ninth Circuit is visibly struggling to define and justify the boundaries of liability online, making it very hard to sort through the tangled mess of opinions.

Despite the problems with the specific details, the Ninth Circuit generally reached the right results in all three opinions. Financial service providers (FSPs) got a complete victory (12b6 dismissal), other support service providers (like ccBill) got significant protection, and Amazon/Google avoided direct copyright infringement but could be contributorily liable if they have sufficient involvement in the infringement (this liability is a little dicey, but we'll see on remand). The opinions generally make a lot of sense if we focus only on the results.

In contrast, wading through the details shows just how problematic Ninth Circuit cyberlaw jurisprudence has become. The Ninth Circuit has chunked a few major Internet cases--Napster and Brookfield are two conspicuous examples--which has produced a long list of tortured subsequent precedent. The Ninth Circuit should bite the bullet and wipe those cases (and their progeny) off the books. Otherwise, the Ninth Circuit will torture itself each time it tries to reconcile new opinions with those erroneous opinions.

FSP Control Over Infringement

Online secondary liability cases generally struggle to define how much control over third party behavior is required to find secondary infringement. Here, the majority (Smith and Reinhardt) and dissent (Kozinski) philosophically disagree over FSPs' ability to control infringing websites. FSPs have various rules prohibiting payment for illegal activities, and they do a lot of work to police their network. They could be made legally responsible for online gatekeeping (just like Congress did with respect to online gambling).

At the same time, the majority in this case sees FSPs as attenuated from the ultimate infringing acts. Like power companies, FSPs are behind-the-scenes vendors that don't touch the flow of infringing bits. To the majority, that's dispositive in this case. In contrast, Kozinski thinks FSPs may be no different than bagmen for an illegal deal, and they should take responsibility accordingly.

Like so many courts before it, this court cannot reconcile its competing characterizations--nor does it even hint at a doctrinal framework for developing a shared agreement on the matter. As a result, I think the law is still being decided case-to-case, substantially undercutting the precedential utility of this case.

The Legal Discussion

A few interesting aspects in the legal analysis:

* The court helpfully acknowledges the proliferation of contributory infringement tests and tries to harmonize them, saying prior articulations are "noncontradictory variations on the same basic test, i.e., that one contributorily infringes when he (1) has knowledge of another’s infringement and (2) either (a) materially contributes to or (b) induces that infringement." I think this properly states the legal standard, including making it clear that inducement is a subset of contributory liability, not a separate test. Courts would be well-served to start with this language rather than the many other variants.

* The majority distinguishes the precedent by saying FSPs aren’t liable for contributory infringement because they "do not help locate and are not used to distribute the infringing images." Kozinski's dissent hammers the majority for its view, pointing out that payment systems are much more of a "sine qua non" for infringing websites than search engines. (He doesn't use the Latin phrase, instead saying that "If cards don’t process payment, pirates don’t deliver booty"...which reminds me of another court's judicial notice that booty is slang for buttocks). The majority's response--websites could find alternative payment mechanisms--is true in theory but laughable based on current practices.

* The state claims, per ccBill, should be wiped out due to 47 USC 230, but 230 isn't mentioned at all. Instead, the court rejects liability based on California common law precedent insulating FSPs from aider/abettor liability.

Where Are We? And Where Are We Going?

I wish I knew. We're stuck in a legal limbo; as Kozinski concludes his testy dissent, "the opinion will prove to be no end of trouble." I couldn’t agree more. The Ninth Circuit should take a very hard look at its entire body of cyberlaw if it wants to provide the type of useful guidance we expect from appellate courts.

On the other hand, I go back to the fact that the Ninth Circuit reached mostly sensible results in all three Perfect 10 cases, suggesting that maybe intuition is more useful at predicting the law than the court’s specific words. Relying on common sense isn't very comforting, and the Ninth Circuit can and should do better, but perhaps common sense still plays a role in Ninth Circuit cyberlaw jurisprudence.

Posted by Eric at 05:09 PM | Copyright , Derivative Liability , Trademark | TrackBack

July 03, 2007

SAP Has Bad News in Oracle Lawsuit, But Tries to Bury It

By Eric Goldman

Oracle Corp. v. SAP AG, Case No. 07-CV-1658 MJJ (N.D. Cal. answer filed July 2, 2007)

You're an international corporate giant with some bad news in a high-profile case that you want to bury. What do you do? One possibility: hold a press teleconference for 11 pm Pacific on July 2--just late enough to miss the newspaper deadlines for July 3, so the news will effectively break on the July 4th holiday. Genius!

But SAP does have lots of bad news in its Oracle lawsuit, and it substantially undercuts SAP's initial claim that it was going to defend this lawsuit aggressively. After all, it's hard to be aggressive when your hand has been caught in the cookie jar, and SAP admits that its wholly-owned subsidiary TomorrowNow (TN) engaged in some unambiguously rogue downloading.

Worse, with respect to the downloads that SAP claims weren't rogue, SAP's main defense is doomed to fail as well. SAP argues that TN's customers authorized it to download the materials on their behalf--what I call a "proxy defense," i.e., we were just a proxy for our customers' legitimate behavior. Unfortunately, there is typically no proxy defense for most types of claims--certainly not for claims like trespass to chattels or the Computer Fraud and Abuse Act, and usually not for copyright infringement either. In other words, Oracle can control the manner and means by which people access its servers, so even if it permits its customers to access the site, that permission isn't automatically extensible to third parties acting on the customers' behalf. Indeed, Oracle expressly precluded such behavior in some cases.

As a direct-on-point example, see the lawsuit by Facebook against ConnectU for grabbing data from Facebook's servers. ConnectU said that Facebook's users gave their credentials to ConnectU and asked them to get the data on their behalf. This permission did not change ConnectU's relationship to Facebook, which had expressly said that third parties couldn't use its servers to engage in the behavior ConnectU was doing. Thus, the court held that ConnectU trespassed Facebook's chattels. I could cite dozens of other examples where the proxy defense fails. It isn't likely to succeed here either.

Even worse still, SAP announced that the DOJ is probing the matter. As I said earlier, this could be a serious criminal matter. There remains a serious risk that people will be prosecuted here.

From my perspective, given SAP's admissions, the only open Qs are:

1) How big of a check will SAP/TN write to Oracle?
2) After checks are written and injunctions are issued, will TN survive this lawsuit? Or, will SAP "burn" its limited liability subsidiary to insulate the larger enterprise?
3) Will this lawsuit degrade SAP's ability to position itself as an ethical competitor?
4) Will anyone be going to jail?

Some other observations:

* I find it remarkable that some analysts have downplayed--and continue to downplay--the import of this lawsuit. Oracle's allegations go far beyond day-to-day ethical competition.

* On that front, SAP's materials implicitly suggest that SAP knew of TN's behavior but tried to insulate itself from information gathered by TN. At best, this suggests SAP engaged in willful blindness. As a result, even if no SAP employee took the rogue actions, SAP may not be able to avoid responsibility.

* In an effort to provide faux transparency, SAP launched a lawsuit portal. It's nice to have this resource, but a real portal would provide a complete repository of the relevant documents, including Oracle's complaint. And if SAP wants to foster real transparency, it should provide explain in full detail exactly what behavior it admits was rogue.

UPDATE: TN appears to be losing business from the lawsuit. And SAP's CEO seems to think this whole problem could have been handled with a phone call from Oracle to him instead of a lawsuit.

Posted by Eric at 08:22 AM | Copyright , Licensing/Contracts | TrackBack

July 02, 2007

June 2007 Quick Links

By Eric Goldman

Email

* Spam cases are coming at a regular clip, and it's tricky divining the latest state of the law. Two recent cases that caught my attention:
- US v. Impulse Media Group, 2007 WL 1725560 (W.D. Wash. June 8, 2007). This case involved a porn site that used affiliate marketers who didn't comply with the porn spam labeling requirements. The government argued that the advertiser should be strictly liable for this breach, but the court fairly emphatically rejected that (same as Cyberheat). But the news isn't all good for the defense, as the court also rejected its SJ motion, showing that the question of scienter about affiliate behavior remains a tough one for courts. Venkat's writeup.
- Kleffman v. Vonage Holdings Corp., No. 07-2406 (C.D. Cal. May 22, 2007). A nice complement to the Facebook v. ConnectU case, each holding that aspects of California's anti-spam laws are preempted by CAN-SPAM. In this case, the targeted behavior was the fact that the emailer may have used multiple email addresses to bypass electronic spam filters, but there wasn't anything false/deceptive about each email itself. See the BNA write-up and Venkat's writeup. I've lost track of the preemption cases, but it seems like state anti-spam laws are really getting munched after the Mummagraphics case.

* NYT on the pros/cons of captchas.

* Goodmail has expanded its pay-to-email system to Comcast, Cox, Roadrunner and Verizon.

Intellectual Property

* In Explorologist v. Sapient, involving the posting of a video deconstructing Uri Geller's act, the defendant is arguing (per CCBill) that 47 USC 230 preempts British copyright law.

* A rushed high school yearbook editor downloads lots of Facebook photos and adds them to the yearbook to fill space. Not a good idea!

* Techdirt: Who owns the right to license the design of military weapons to toy manufacturers?

* Marty on intellectual property protection for sexual activity.

Contracts

* A California man claims he bought a Gateway computer that never displayed text properly. Is he bound to the clickthrough agreement displayed on bootup? If this is the only way Gateway presented its contract, the answer should be no.

* At a conference at Southwestern Law School, I heard Prof. Lon Sobel talk about "idea submission" law. He illustrated the phenomenon that "where there's a hit, there's a writ": he suggested that hit TV shows produce an average of 6 "you stole my idea” demand letters. The great 1980s movie Coming to America produced 12 such letters, which resulted in 7 actual lawsuits. Interestingly, Prof. Sobel made the case (implicitly, not explicitly) that there is no separate law of "idea submissions," but rather any such doctrines are subsumed within standard contract law.

eBay

* eBay has changed its stance towards fighting counterfeiters, and it now does more policing itself.

* eBay shill bidder pays $400k to settle with NY AG.

Social Networking/Blogs

* The NCAA kicked a reporter out of the stadium for live-blogging the event. Tip to NCAA: It’s neither possible nor wise to control the flow of real-time information. Get over it. HT: Techdirt.

* Just came across this article: Stacey Schesser, MySpace on the record: The admissibility of social website content under the Federal Rules of Evidence, First Monday, volume 11, number 12 (December 2006).

* Wired: 7 MySpace sex offenders busted.

Marketing/Advertising

* AMCO Ins. Co. v. Lauren-Spencer, Inc., 2007 WL 1795970 (S.D. Ohio June 20, 2007). Insured offers jewelry from a website. Third party claims that the insured's jewelry constituted copyright infringement. Insured tenders the lawsuit to her insurance company under the advertising injury policy. Insurance company seeks a DJ of no coverage. The court says that the website constitutes advertising for the products, and so the policy applies to photos of the allegedly infringing jewelry items, even if the photos themselves were created by the insured. Observation #1: The advertising injury policy is very helpful to web businesses. Observation #2: Due to cases like this, I suspect insurance companies are reducing their willingness to offer advertising injury coverage to web businesses.

* Taylor v. XRG, Inc., 2007 WL 1816142 (Ohio App. Ct. June 21, 2007). The defendant was a vendor retained by bulk fax senders that handled consumer responses, including opt-outs from future faxes. Court held that the vendor wasn't liable for any TCPA/state anti-junk fax laws allegedly broken by the fax sender.

* Newish ad format: ads running 2 seconds in duration.

Search

* It's taken me a while to digest some of Google's new efforts. First, Google released two tools (a new toolbar button and a new personalized tab) to anticipate searchers' needs based on their past searches. Second, Google expanded its search history to incorporate all aspects of a user's searching through its services (what it calls "web history"). Meanwhile, Google has reduced its storage of personalized search data from 18-24 months to 18 months before that data gets anonymized. FWIW, I've been using Google personalized search since November 2005 (presumably, some of my data will be flushed any time now). Google has now captured almost 12,000 searches (with a high so far of 255 searches in a single day). Despite this, Google still doesn’t do a good job making predictions for me.

* Another great study from Jim Jansen (see the last one I blogged about). This one presented identical search results branded from different search engines and found that consumer ratings of relevancy varied based on the brand (Yahoo and Google came out on top). The logical inference--branding does matter to perceptions of relevancy. HT: SEL.

* Matt Cutts on the various ways humans affect Google search.

Domain Names

* Denmark's .dk TLD registry has enacted rules targeted at wiping out domainers. See here (Sec. 8.3.6).

* What's hotter than iPhones? iPhone-related domain names.

Adware/Spyware

* Declan on the latest legislative rally against spyware, the Senate's Counter SPY Act.

* The FTC issued final approval for the DirectRevenue settlement of $1.5M. Commissioner Leibowitz dissented, saying the cash payment was too light.

Online Reputations

* Avvo has filed a motion to dismiss the lawsuit over its ratings of attorneys. The motion is very heavy on the 1st amendment and very light on 230. HT: WSJ Law Blog.

* The Washington Post gushes about Reputation Defender and its competitors, without really acknowledging the value of reputational accountability or the potential for takedown/pushdown abuse.

* Entrepreneurs figured out a way to game FICO scores. Fair Isaac will try to close the loophole.

* Ed Magedson of Rip-Off Report was the victim of a vicious harassment campaign demanding that he remove complaints from the site.

* Lengthy NYT article on Wikpedia. Not much new there, but it does hint at the young age of Wikipedians, and it talks about how "pride of ownership" motivates Wikipedians.

Other

* June 26 was the 10 year anniversary of the classic Reno v. ACLU Supreme Court opinion.

* The NYT has launched a new technology blog called BITS.

Posted by Eric at 02:37 PM | Adware/Spyware , Content Regulation , Copyright , Derivative Liability , Domain Names , Internet History , Licensing/Contracts , Marketing , Search Engines , Spam , Trademark |