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'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. RMS was one such gamer. They developed software that helped its customers beat other buyers in the rush to get hot tickets. Ticketmaster sued RMS to stop their gaming activities; the court issues a preliminary injunction:
Copyright
The court says that RMS 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 RMS'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 RMS is indirectly infringing based on a Grokster inducement theory because RMS'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 consist