* Deleted the Perfect 10 v. ccBill and Perfect 10 v. Visa cases. I have been struggling with how to teach the Ninth Circuit's Perfect 10 troika of cases for the last couple of years. The troika was over 100 pages of reading that nevertheless left students befuddled after all that work. But I felt constrained because the troika is the most definitive statement of Ninth Circuit law, and it is insightful to see the cases evolve. Nevertheless, I decided that the Amazon case was the most doctrinally significant, so I kept that and ditched the other 2.

* Added Io v. Veoh. To make up for taking out the Perfect 10 cases, I've added this case, which I think is a very clear exposition of a DMCA online safe harbor case.

* Added Parker v. Yahoo. I think this will be a good case to tie together some copyright doctrinal threads as well as provide a nice compare/contrast with the Ticketmaster v. RMG case.

Trespass to Chattels

* Replaced the Computer Fraud & Abuse Act statute with the most recently amended version.

* Included a slide that synthesizes the various trespass to chattel doctrines into a summary format.

Contracts

* Added the Harris v. Blockbuster case. It's a short case that efficiently makes several powerful pedagogical points--including perhaps most importantly, the perils of robo-drafting by copying language from other people's agreements.

Blogs and Social Networking Sites

* Replaced my old materials on blog law and social networking sites law with my most recent talk on both from February.

* Added my Third Wave of Internet Exceptionalism article

* Added the Moreno v. Hanford Sentinel case as an end-of-the-semester review case. As I said when I first blogged on the case, I think "this is one of the most interesting cases I've seen in a while," and I'm really excited about teaching it. I think it will be an excellent issue-spotting opportunity for students as well as a powerful reminder of the power of published words (and how those words can unintentionally affect the people we love).

Change to the Grading Options

My other big change this year is that I am giving students the option to write a wiki entry on a cyberlaw topic as part of their grade. This was inspired by my forthcoming paper on Wikipedia (which you'll hear more about soon). In connection with that paper, I was researching alternative labor sources that could power Wikipedia, and students working as part of a class assignment was one option I explore in the paper (with some reservations). As part of "eating my own dog food" (a terrible idiom that seems to be prevalent in the Silicon Valley), I figured I should give it a try myself. As you can see, the wiki-drafting is optional, not mandatory, so I'll be interested to see how many students choose the option. I'll also be interested to see what happens when the students actually try to submit their work to Wikipedia. I have a mental image of a massive buzzsaw, but perhaps I'm being too cynical.

Posted by Eric at 09:36 AM | Copyright , Derivative Liability , E-Commerce , Internet History , Licensing/Contracts , Search Engines , Trademark | TrackBack

August 06, 2009

State of the Net West Recap

By Eric Goldman

Yesterday, the High Tech Law Institute and the Advisory Committee to the Congressional Internet Caucus co-sponsored the Third Annual State of the Net West event at Santa Clara University. The featured participants were 3 members of Congress (Boucher, Goodlatte and Lofgren) and the White House CTO Aneesh Chopra, supplemented by 8 distinguished discussants. In a jam-packed morning, we covered a lot of interesting and important ground on broadband, privacy, antitrust, immigration and open government. This blog post recaps some highlights from the discussion.

Boucher on Broadband

Rep. Boucher emphasized the importance of broadband availability to economic activity and expressed concern that the US wasn't keeping up with broadband deployment (he said, "we can do better"). He offered three policy proposals for ways the federal government could help:

* revise the Universal Service Fund to allow dollars to be spent on broadband deployment; and require USF fund recipients 5 years from now to be offering broadband or be cut off from USF
* federally preempt state laws prohibiting municipal broadband offerings (which about 25 states have)
* get the FCC to develop a broadband deployment plan

He expressed disappointment with the guidelines that NTIA and the Department of Agriculture have adopted to give away the $7.2B broadband fund that was part of the stimulus package. It appears he will be encouraging both entities to rethink their guidelines.

My colleague Al Hammond was the broadband discussant. Al made a number of good points, including noting that broadband deployment is both a rural and low-income issue (Boucher appeared to be focusing more on the former) and raising concerns about municipalities not playing fair and the FCC overcounting actual broadband availability.

Boucher on Privacy

Rep. Boucher also gave a preview of the privacy bill he is planning to introduce next month. He started off by saying he likes ad targeting, especially first party targeting (he said he buys items based on customized recommendations). So he wants to encourage "appropriate" ad targeting, not eliminate it. His bill is expected to contain the following elements:

* websites collecting data will be required to post a prominent privacy policy
* users can opt-out of first party targeted ads. This also includes data sharing necessary to enable first party ads
* websites that want to share data with unaffiliated third parties will need opt-in. However, behavioral ad networks can proceed on an opt-out basis if they allow users to see and edit their behavioral profile, except for sensitive information categories that would always be opt-in
* both the FTC and state AGs would have enforcement authority

To the extent that the mandatory privacy policy and opt-out options codifies existing industry practices, this proposal generally seems benign but not worth the effort--the costs of the inevitably poor statutory drafting outweighs any benefit we might get from regulatory codification. Requiring opt-in would likely eliminate third party behavioral ad networks, which (as I've discussed before) is more likely to be a detriment than a win.

I was especially intrigued by the proposal that behavioral networks can flip from opt-in to opt-out by letting users access a user profile. I need to see more details about Boucher's thinking, but doesn't this superficially sound crazy? The most obvious problem is authentication of the user before seeing his or her profile. How would this be done? The networks usually don't know the identity of the specific individuals they are profiling, so they can't authenticate identity. And just tying profile access privileges to a cookie or machine sounds like a recipe for disaster for all shared computers. Plus, a web interface seems to increase the security risks that the bad guys can see profiles they shouldn't be able to see. On first blush, it sounds like this part of Boucher's proposal may need a complete rewrite, with unknown consequences for the entire structure of his proposal.

Mike Hintze of Microsoft was the privacy discussant. He espoused Microsoft's standard line that there should be a comprehensive privacy law.

In the Q&A, Boucher appeared willing to consider concurrent privacy enforcement authority by self-regulatory organizations, so long as they enforced the law's minimum requirements. But any self-regulatory effort wasn't a substitute for other aspects of his bill.

Lofgren on Antitrust

Rep. Lofgren said that if the Bush administration did too little on antitrust enforcement, the Judiciary committee is now concerned that Obama and Varney will do too much. Lofgren is particularly focused on the chilling effects of the mere threat of antitrust scrutiny, not just the actual successful prosecution in court of cases. Thus, an "informal" DOJ expression of interest can deter innovative activity by high tech companies.

She also expressed skepticism that antitrust laws remain effective at protecting technology markets, which are marked by fast innovation and low barriers to entry. (I believe her exact words were "traditional antitrust measures of marketplace behavior might no longer work.") At minimum, any technology-related antitrust enforcement actions should be focused on improving innovation rather than trying to manage current marketplace prices.

Finally, she said that copyright restrictions should be considered in antitrust inquiries. Mike Masnick has more to say on this.

Michael Katz of UC Berkeley was the most colorful respondent. He shared Lofgren's concern that antitrust law may be counterproductively squelching innovation, especially when companies try to capture antitrust enforcers to hassle competitors. He had especially harsh words for the FCC, calling it much less disciplined than the DOJ and observing how the FCC can blackmail companies using its leverage. He also complained that the FCC's review of mergers takes too long, and as an example of their lack of discipline, the FCC will impose merger conditions that have nothing to do with the merger.

Tim Bresnahan of Stanford and my colleague Cathy Sandoval were the other respondents.

At the end of her talk, Lofgren praised the Google Book Search settlement, saying that in some ways it lowers barriers to entry. She also said she was grateful that Google appears to have found a back-door way to liberate orphan works given that she wasn't able to pass an orphan works bill. I'm all in favor of orphan works reform, but a class action settlement seems like a weird way to get there.

Chopra on Open Government

Aneesh Chopra is the new White House CTO, a role that never existed before, which puts Chopra at Obama's elbow on all technology issues. This was Chopra's first Silicon Valley trip since he undertook his new role. His first talk was on Tuesday night at a Churchill Club event; we were his second. Lots of people were very interested in learning more about him. He was the big draw for the press, and we got an unprecedented number of walks-in based in part (we think) on his talk. He was also mobbed before and after his talk--everyone seemed to want a piece of his attention (then again, I'd love to have a chance to kick some stuff around with him one-on-one myself!).

It's easy to see why Chopra sparks such curiosity. My impressions were that he was genuinely affable, smooth without being slick, substantive without being bookish, a big fan of crowdsourcing and an even bigger fan of assessment and measurement of outcomes.

He started off by discussing the importance of technology and how the US's rate of technological performance is lagging against other countries. He then identified three ways to "turn the ship around":

1. invest in innovation building blocks, such as a smart/secure infrastructure, more R&D and improved workforce expertise
2. healthcare reform, especially improvements to the information technology side of healthcare delivery
3. an improved education system, including distance learning and more emphasis on lifelong learning

He then discussed open government issues and gave examples of ways technology can facilitate participatory governance.

Goodlatte and Discussants on Immigration

Rep. Goodlatte laid out the Republican's high tech agenda, which includes:
* skilled workforce, including immigration reform
* patent reform
* trade issues
* taxation, including efforts to define when activity in a state triggers tax obligations
* net neutrality (don't regulate but improve antitrust enforcement)
* privacy (opt-out except for sensitive information)

The panel then drilled down on immigration reform. I was really excited to have this panel because workforce issues are so central to the Silicon Valley's "secret sauce" and yet I couldn't recall a time that the HTLI had sponsored a discussion about them. Obviously immigration issues are age-old and are well-trodden, but I nevertheless found the discussion helpful--with the one caveat that everyone on the panel agreed with everyone else, so there was a lot of preaching to the choir. I learned an interesting factoid that both Reps. Goodlatte and Lofgren were formerly immigration attorneys, so they have some front-line domain expertise in this area.

First discussant was AnnaLee Saxenian of UC Berkeley. She talked about how skilled immigrants have fueled innovation in this country. She gave a number of stats in support of this, including that a majority of Silicon Valley engineers are foreign-born, and a high percentage of technology entrepreneurs and patent applicants are foreign-born individuals. She also noted that foreign-born skilled works create net new jobs and also help build better ties to their home country.

We benefit from the best and the brightest from around the world, who come to the US because of our higher education system and historically have chosen to stay. However, she is concerned about this retention because of bureaucratic barriers. She is also concerned that companies, frustrated by their lack of access to development talent, will offshore their R&D.

Finally, she pointed out that immigration discussions kludge together the issues of skilled and low-skilled workers, even though their issues are very different.

Keith Wolfe of Google reinforced many of AnnaLee's points from Google's specific experiences.

My colleague Deep Gulasekaram was the last discussant. He pointed out that free marketplaces may require free movement of labor, which isn't consistent with our current immigration policy. He raised concerns about state and local anti-immigration policies and the negative consequences of tying foreign workers to specific jobs (by linking their visa to the job).

Rep. Lofgren added a few remarks:
* Obama told her that it's time for comprehensive immigration reform. [This led to a polite back-and-forth between Lofgren, who favors comprehensive reform, and Goodlatte, who would settle for piecemeal immigration reform]
* Immigration reform is not a substitute for educating the US workforce
* We should give permanence to people we want to keep (i.e., not keep them on some treadmill with the possibility of a forced exit, which prevents their long-term life planning)
* We need to address the family of skilled immigrants, not just the immigrants themselves

More Coverage of the Event

* ABC 7 News
* KCBS radio
* Zusha Ellison of the Recorder
* Joyce Cutler of BNA (BNA subscription required)
* Mike Masnick
* Joel West
* Colette Vogele
* Warren's Washington Internet Daily also ran a story (not web-linkable) "Boucher Promises Online Privacy Bill Draft Soon"
* The extensive Twitter discussion at hashtag #sotnw. Twitterers included @ipolicy, @caminick, @persistance, @miss_eli, @techpolicygirl, @cathygellis, @mmasnick, @nextgenweb, @marianmerritt, @larrymagid, @christinela, @mblatkin, @seangarrettnow, @vogelelaw (who didn't always use the hashtag--we will try to publish a standardized hashtag at future events). Whew! Apologies if I missed anyone. I can't recall seeing more Twitterers in an audience--everyone seemed to have their Twitter page up constantly. As usual, I didn't turn on my computer at the conference (I take notes by hand and blog them later), so my comments seem woefully out-of-date already!

We plan to post the event audio soon so you can listen for yourself. I'll announce the audio posting at my Twitter account when it's live.

UPDATE: Audio now available: Download (item 27) or Stream

Posted by Eric at 10:54 AM | Adware/Spyware , Copyright , E-Commerce , General , Internet History , Marketing , Patents , Privacy/Security | TrackBack

July 28, 2009

Biosafe-One v. Hawks Dismissed

By Eric Goldman

Biosafe-One, Inc. v. Hawks, 2009 WL 2170150 (S.D.N.Y. July 25, 2009)

I previously blogged about this case in 2007. The parties are competitors in the septic system cleaning products business. The plaintiff alleged that the defendant ripped off its business concept through improper means. As part of the effort to shut down its competitor, the plaintiff sent 512(c)(3) notices to defendant's host to get the defendant's website offline. In the previous ruling, the court enjoined the plaintiff from issuing more 512(c)(3) notices during the litigation pendency--an extraordinary remedy I haven't seen before or since.

The court finally resolves the "merits" of the parties' cross-litigation in this ruling. I put "merits" in quotes because clearly Judge Chin wasn't impressed with the plaintiff's driftnet complaint. As he says in a footnote politely communicating his irritation, "Attorneys representing plaintiffs should realize that the pleading of numerous causes of action--here, twenty-five--is not a sign of strength. To the contrary, a kitchen-sink approach is often a sign of weakness, an admission that no claim has merit." Ouch!

The opinion would be more interesting if the judge wasn't so clearly trying to clean his docket quickly. The most interesting piece is the dismissal of the defendant's 512(f) counterclaim because the defendant didn't introduce evidence that plaintiff was aware of the non-infringing status of defendant's website. Still, anticipating some potential abuse by the plaintiff, the court says in a footnote: "I note that plaintiffs would have no good faith basis to file a new DMCA notice, as all of their claims have been dismissed. The Court will retain jurisdiction over this case, however, and in the event plaintiffs do file a new DMCA notice, defendants may turn to this Court for relief." Glad to see the judge is keeping an eye out for future tomfoolery.

Posted by Eric at 09:37 PM | Copyright | TrackBack

July 27, 2009

Griping Blogger Gets Fair Use and Anti-SLAPP Win--Sedgwick v. Delsman

By Eric Goldman

Sedgwick Claims Management Services, Inc. v. Delsman, 2009 WL 2157573 (N.D. Cal. July 17, 2009). The Justia page.

Delsman had a big issue with Sedgwick. The details of his gripes aren't all that important. To make his point, Delsman set up several griping blogs (e.g., 1, 2) and mailed out postcards styled as "WANTED" posters featuring photos of two Sedgwick executives. Delsman cut-and-paste those photos from the Internet. Sedgwick called out the big litigation guns to smush Delsman, who defended himself pro se. Fortunately, Delsman drew a sympathetic judge (Judge Brown) who clearly wasn't interested in wasting time on Sedgwick's overreaction to a small-time griper. Thus, she liberally construed Delsman's imprecise filings to dismiss the case early.

Judge Brown concluded that the republication of the photos on the "WANTED" postcards was fair use. She summarized her analysis:

Defendant's uses of the photographs of North and Posey are highly transformative and serve an entirely different function than originally intended. It was reasonable for Defendant to use the entire photograph in order to evoke the image of a "WANTED" poster. His use could not have had impacted the market for the photographs because no such market is alleged to have existed. But even if it did, Defendant's use was sufficiently transformative that it could not be deemed to be a substitute for the original. Allowing Defendant to use the photographs in the context of publicly criticizing and warning the public regarding Sedgwick's business practices is precisely the type of activity the fair use doctrine is intended to protect.

As Eugene Volokh says, the "fair use analysis strikes me as quite right."

Judge Brown then tossed the rest of the claims on anti-SLAPP grounds. This isn't the first time a blogger has won an anti-SLAPP motion (see, e.g., GTX v. Left), but it's still nice to see.

Posted by Eric at 05:45 PM | Content Regulation , Copyright | TrackBack

July 22, 2009

AP Gets It Right and Then Overreaches--AP v. AHN

Faced with an allegedly cut-and-dried case of someone systematically copying and reusing its news articles, the Associated Press brought what should have been an easy copyright suit. Unfortunately, it also tried to lever these sympathetic facts to stretch the scope of the DMCA's CMI-stripping provisions and revive the dead dog legal doctrine of 'hot news misappropriation.'

By Ethan Ackerman

The Associated Press generates a very large number of copyrighted works. This means it is often involved in legal tussles surrounding copyright law. Last year my post on this blog covered an incident where the AP took a very debatable stance over whether news headlines were copyrightable, and many other blogs have covered a more recent case where the AP has asserted copyright infringement over a news photo it may not even own the copyright to. So when the AP filed suit against competitor All Headline News, it was refreshing to see the AP asserting plausible copyright infringement claims.

Unfortunately, the AP levered the facts of this case to breath some life into the moribund 'hot news misappropriation' doctrine, and even secured an unfortunate opinion on one of the rarer provisions of the DMCA - section 1202's copyright management information provision. In February of this year, in the Southern District of New York, Federal District Court Judge Castel denied AHN's motions to dismiss on these two claims, and granted dismissal on some related trademark-stripping claims. Eric Goldman's earlier post on the opinion covered all these legal issues in thorough detail. Denying AHN's motion to dismiss doesn't carry the same weight as a final opinion endorsing the AP's legal theories, but it was a court ruling nonetheless, and a clear win for the AP.

Now, AHN has sensibly settled. (For a bit of journalistic humor, read AHN's own, slimmer coverage of the settlement here.)

The settlement is notable for two things: money changed hands and AHN is subject to an injunction. As far as the settlement's impacts on the validity of AP's legal theories, well... settlements don't validate legal theories, court opinions do. That said, part of the settlement required AHN to pseudo-admit the viability of the hot news misappropriation doctrine.

The excellent bloggers at the Citizen Media Law Project have gone over the narrowness of the 'hot news misappropriation' doctrine before, and the Copyright Litigation Blog also takes some time focusing on choice of law issues, important since the doctrine's viability is strongest in the 2nd Circuit. In this post however, I wanted to highlight an under-discussed issue - 17 USC 1202. 1202 is the provision of the DMCA prohibiting removal or modification of Copyright Management Information, or CMI.

At issue is the scope of section 1202's prohibition on removing CMI. Does 1202 apply only to digital or metadata-like CMI, or does it extend to analog information on tangible goods like newspaper bylines, book flyleaves and painting signatures as well? When section 1202 was enacted, as part of the Digital Millenium Copyright Act, clearly the former were contemplated, but the plain words of the statute could include the latter as well. David Johnson artfully details the split in cases that have developed over the scope, so I'll just point to his post. Interestingly enough, David's post suggests that the AP earlier found itself on the other end of byline-stripping accusations, and was presumably arguing for a narrower reading of section 1202. Eric Goldman's earlier comments on the 1202 issue pointed out a potential copyright/TM catch-22 as well.

Finally, Fred von Lohmann at the EFF has an excellent post on a strategic reason why 1202 claims are often made - potentially big statutory damages, much larger than infringement damages, may incent settlement. Fred also spends some time on the weaknesses in expanding 1202 beyond digital CMI to tangible examples.

Posted by Ethan Ackerman at 09:44 AM | Copyright | TrackBack

July 14, 2009

Republishing Third Party Ratings in Marketing Material Might Be Copyright/Trademark Infringement--Health Grades v. Robert Wood Johnson Univ. Hospital

By Eric Goldman

Health Grades, Inc. v. Robert Wood Johnson University Hospital, Inc., 06-CV-02351-JLK (D. Colo. June 19, 2009)

A Colorado judge has reached the remarkable conclusion that a hospital publicizing its star ratings and other recognition from a third party rating service in its marketing material might be committing copyright and trademark infringement. This is a little like saying that it could be copyright and trademark infringement for a law school to include its US News rankings in its marketing material or for a book publisher to issue a press release announcing its ranking on the New York Times bestseller list. CRAZY.

Although I suspect there are messier facts than were described in the opinion, the situation as described in the ruling is pretty straightforward. Health Grades [great TM, guys] publishes "objective" ratings of hospitals, doctors and other healthcare providers, including 1-3-5 star ratings and "provider awards." The ratings are published on Health Grades' website behind a clickthrough agreement. Health Grades earns revenues by licensing the ratings and awards to evaluated providers for their promotional use. This business model is rarely a recipe for credible ratings. RWJ University Hospital apparently liked its Health Grades' ratings and awards so much that it republished them in press releases and on its website without paying a licensing fee to Health Grades. Health Grades sued, and this ruling is a response to the hospital’s motion to dismiss.

(Note: In PACER, I saw Health Grades was a plaintiff in at least 5 other pending or closed lawsuits in Colorado federal court since 2004. I didn’t investigate these to see if they were IP enforcement claims like this lawsuit or something else altogether, but Health Grades is a more active plaintiff than I would have anticipated for a company I had never heard of).

Copyright

Let me start with a basic proposition. A single numerical value can never be copyrighted. Ever. I don't care what formula produced the value; I don't care how many digits the number has; I don't care what explanatory text is used to describe the value. I know cases occasionally have reached the absurd result that individual numerical values can be copyrighted, including one of my least favorite copyright cases of all time, the CDN v. Kapes Ninth Circuit case. They are wrong wrong WRONG.

Courts can reach this erroneous conclusion by treating a numerical output as a "compilation" of underlying data values. If you squint, you can almost see how this makes sense. The publisher chooses the underlying values to include, uses editorial judgment to build the algorithm crunching those values, and sometimes layers subjective judgments on top of the algorithm's output. However attractive this logic is, I think fundamentally misreads the copyright statute’s definition of "compile." Under the copyright act, a compilation must represent a "collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged." When a single number distills but obscures the underlying numerical values, the single number cannot reflect a selection, coordination or arrangement of the underlying numbers. Thus, according to my argument, numerical values cannot be compiled unless the reader can see those underlying values directly.

In this case, the judge gets led astray by contemplating the idea/expression dichotomy as a spectrum with "discoveries" on one end and "expression" on the other. Because the ratings aren't discoveries, the court concludes they should qualify as expression. But the court’s dichotomy is fatally incomplete. Instead, the inquiry is whether a single numerical value can represent an original work of authorship because it expresses an idea. A single numerical value cannot express an idea any more than a single word ever could.

Even if one reaches the incredible conclusion that a single numerical value is an original work of authorship, then surely it is preempted from copyright coverage by the merger doctrine, which says that if there are a limited number of ways to express a fact or idea, then the idea and expression merge into a single uncopyrightable whole. It seems like the star ratings in a 1-3-5 star rating system would, by definition, be subject to merger. Sorry to state the obvious, but how many ways are there to express that someone is rated one star??? Nevertheless, this court distorts the merger doctrine by saying the idea being expressed here is the rankings of healthcare providers. This is too high a level of conceptual generality. If every judge used this level of abstraction, the merger doctrine always would be a null set.

The court doesn't rule on the fair use defense at this early stage of the lawsuit (this opinion just addresses the hospital's motion to dismiss), but any guess where this judge is going to come out on fair use?

Trademark

Having butchered copyright law, the judge then makes a mess of trademark law as well. The ratings provider claimed that referencing its name as the source of the ratings in the marketing material constitutes a trademark infringement. Again, the analogy is that saying "US News" when publicizing a US News rankings constitutes an infringement of US News' trademark.

There are many reasons why this argument should be clearly wrong, but on the motion to dismiss, the hospital emphasized the nominative use defense. That seems like as good a ground as any for the court to kick out the trademark claim. For example, in the Terri Welles case from 2002, the Ninth Circuit said that nominative use permitted Terri Welles to publicize that she was "Playboy Playmate of the Year 1981" when, in fact, Playboy had bestowed that title upon her.

Unfortunately for the hospital, it drew a judge who apparently HATES the Ninth Circuit's articulation of the nominative use defense. The court says that the "nominative fair use doctrine as stated and applied by the Ninth Circuit is…at odds with recent Supreme Court precedent" and that the "Ninth Circuit's 'nominative fair use' analysis has not been widely adopted. In fact, all of the circuit courts that have considered it to date have either rejected the Ninth Circuit's approach outright [cite to the 6th Circuit PACCAR decision]...or modified it in some fashion to allow likelihood of confusion to be determined based largely on the traditional multi-factor analysis of this element." Just to clarify the latter point, the nominative use defense doesn't really do anything useful if defendants already can show a lack of consumer confusion, nor does looping the nominative use defense back into the standard likelihood-of-consumer-confusion test help judges end unmeritorious cases quickly. But that's exactly what the court does here, reserving the nominative use inquiry as a question of fact to be evaluated in conjunction with the multi-factor test. As a small bone to the defendant, the judge says that the defendant has the burden to show likelihood of consumer confusion, which in turns means that the plaintiffs implicitly must overcome a nominative use claim.

However, I wouldn't be too excited about that the forthcoming review if I were the hospital. The court goes on to say "the very nature of Health Grades' product, its rankings of healthcare providers, carries with it at least the possibility that consumers will consider RWJ's use of the Health Grades' marks to communicate Health Grades' ratings and awards for RWJ an implied endorsement by Health Grades of RWJ and the services it provides." Well, yes. By definition every "objective" rating of third party goods and services communicate the rater's assessment of quality—that’s the whole point. But to assume an "endorsement" seems like a wholly different matter. That's kind of like saying that US News "endorses" law schools by ranking them. Thus, the judge made a major cognitive leap by equating a quantitative assessment with an endorsement, and this subtle shift seems to extend trademark law into places it should not go.

One more point. Some trademark wonks believe that we can rely on doctrines like nominative use to do a lot of the heavy doctrinal lifting of segregating meritorious from unmeritorious cases. To those folks, I say—read this opinion! After you see how this court mangles the nominative use doctrine to effectively eliminate it, let me know if you still think the nominative use doctrine is a reliable safety valve for socially beneficial speech.

Breach of Contract

After having laid waste to big chunks of copyright and trademark law, the judge still had one more doctrinal surprise up his sleeve. The court says that the rating service's contract, which restricted licensees' republication of ratings, was preempted by copyright law because it lacked an extra element from the copyright infringement claim. Now, I freely confess that copyright preemption befuddles me, and I think it befuddles a lot of other copyright geeks, so it's a little hard to say with confidence that any copyright preemption decision is clearly wrong. But this result certainly contravenes oodles of precedent that have held that copyright and breach of contract claims can co-exist harmoniously. In my opinion, the breach of contract claim seemed way more promising than either the copyright or trademark claims.

Conclusion

For those of you keeping score, you may have noticed that I think the results should have been exactly opposite to the judge's conclusions. The copyright and trademark claims should have been easy dismissals, and the breach of contract claim should have survived. Opinions like this make me question my knowledge sometimes.

Opinions like this also make my blood boil. At one level, the opinion is almost correct if you apply the most tendentious reading of legal doctrines at each and every decision-point. (Although, this opinion also expressly turned its nose up at significant amounts of adverse precedent). On the other hand, the opinion is so clearly incorrect if one steps back and looks at the problem from a holistic common sense standpoint. Asking the question as "Can IP law prevent a company from telling others how a third party service has rated it?," the answer should be clearly and unequivocally "no," and it shouldn't even be close.

Ironically, the court even tangentially acknowledges the value of product ratings as a tool to facilitate consumer decision-making. As the court says, "Health Grades' individual ratings and awards also advance learning by providing consumers with a more concise and accessible evaluation of these providers than the consumers could obtain by reviewing the underlying data sources themselves." Yet, somehow, the judge lost sight of the fact that regressive copyright and trademark protection for numerical ratings makes the ratings less accessible, thereby hindering their value to help consumers make good decisions in the marketplace. From that perspective, the judge really whiffed.

As a result, if other courts follow this judge's "logic," the potential for mischief from cases like this is enormous. Think of every reputational system that spits out a numerical assessment of the subjects it evaluates. Now, assume each and every one of those numbers is copyrighted. Individual eBay feedback scores? Individual FICO scores? Individual Billboard rankings of songs and albums? All possibly copyrighted and requiring the initial publisher's consent to republish. Add in potential trademark claims, and the crazy-o-meter goes off the charts.

UPDATE: Bill Patry has posted on this case as well.

Posted by Eric at 04:08 PM | Copyright , Licensing/Contracts , Trademark | TrackBack

July 08, 2009

Mixed Ruling on Damages in Premier League v. YouTube

By Eric Goldman

The Football Association Premier League Ltd. v. YouTube, Inc., 07 Civ. 3592 (S.D.N.Y. July 3, 2009)

This is a ruling about potential damages in one of the copyright infringement lawsuits against YouTube. It's a pretty technical ruling interpreting some arcane aspects of copyright law, including the "live broadcast exception" in 17 USC 411(c) (which until a year ago was 411(b)). I'll confess that I had never given any thought to the 411(c) exception, and I don't even know who to call who is guaranteed to have expertise in it. (When in doubt, I always take my tough copyright questions to my colleague Tyler Ochoa). And like you, my eyes glaze over when I see "Berne" and "TRIPs" in a legal opinion.

The substantive rulings in the case can be understood even if 411(c), Berne and TRIPs all go over our collective heads. The court says:

1) Unregistered foreign copyrights are not eligible for statutory damages...
2) ...except for some broadcasts of live events if the copyright owner complies with some statutory formalities, including a requirement that the copyright owner send what is effectively a pre-event prospective "take-down" notice.
3) Punitive damages aren't available in copyright claims.

[Note: the ruling only addressed foreign copyrights, so potential damages on domestic copyrights are unaffected by this ruling. However, domestic works should follow an identical formula.]

#3 is not news; “no punitive damages” has been well-accepted copyright doctrine for as long as I can remember. #1 was perhaps a little more contestable as applied to foreign works but was also pretty well-accepted. #2 is new ground for me and probably for lots of other copyright lawyers who don't normally deal with copyrights in live events, but the result is fairly intuitive from a fresh reading of the statute. So although I'm not sure how often the precise issues have come up, overall this ruling seemed to be a fair and straightforward reading of the statute.

It's less straightforward declaring who "won" this ruling. Ignoring the claim for punitive damages, an argument which struck me as never having a chance in the first place, the ruling is a mixed bag for the parties--YouTube won #1 and the plaintiffs won #2. As a putative class action, though, #1 seems more important. Considering the overall class of copyrighted works potentially eligible for coverage under the class action, the court has said that some of those works are now eligible only for actual damages. My guess is that actual damages are less valuable than statutory damages for those works. The plaintiffs may be to show actual damages for some infringing YouTube clips, such as if the plaintiffs can establish a bona fide market rate for licensing short clips (a meaningful possibility in some cases). However, I think most works will have zero actual damages from YouTube infringements. If so, this ruling implicitly knocks most foreign unregistered copyrighted works out of the lawsuit.

YouTube still faces potential statutory damages for foreign live broadcasts that complied with the requisite formalities. The ruling cites a declaration by plaintiffs that there are at least 340 such works. While YouTube would have preferred to knock out statutory damages for all unregistered foreign works, I think this ruling should effectively reduce the parties' overall dollar value assessment of the case's worth. Unfortunately, I doubt the ruling reduces that dollar value enough to enable meaningful settlement discussions.

Posted by Eric at 07:51 AM | Copyright , Derivative Liability | TrackBack

July 06, 2009

June 2009 Quick Links, Part 1

By Eric Goldman

Just a reminder that I post some items to Twitter that don’t make it into these monthly recaps. If you want even more, you can track a superset of my online activities at Friendfeed.

Search Engines

* All Things Digital had an interesting 3 part series on the role of humans in configuring Google's algorithms: Scott Huffman; Matt Cutts; Amit Singhal. My initial 2005 blog post on the topic.

* More evidence of the deleterious consequences of latency on users' enjoyment of search results pages.

* Google is stumping in favor of its book search settlement deal and putting on the "charm offensive."

* Wired on niche search engines competing around the edges of Google.

* Google has dropped its feature that allowed quoted sources to reply in Google News.

* First, kosher phones. Now, kosher search engines.

Trademark

* Wendy Davis on a trademark lawsuit against Craigslist for allegedly infringing ad copy supplied by one of its users.

* Rookie mistake: Tony LaRussa publicly announced a settlement deal in his trademark lawsuit against Twitter before the papers were signed. Guess what....NO DEAL! UPDATE: A deal was struck subsequently.

* Speaking of which...the WSJ on Twittersquatting.

* WSJ: Europe's High Court Tries On a Bunny Suit Made of Chocolate. The EU struggles with trademarkability of chocolate bunnies.

* Productive People, LLC v. Ives Design (D. Ariz. May 29, 2009). TRO against a domainer.

* Oddee: 10 of the Worst Restaurant Names ever.

Copyright

* Supreme Court declined certiorari in the Cartoon Network v. CSC case.

* Arista Records LLC v. Usenet.com, Inc., 2009 WL 1873589 (S.D.N.Y. June 30, 2009). Usenet service provider committed (1) direct copyright infringement (because it “actively engaged in the process so as to satisfy the “volitional-conduct” requirement for direct infringement”) as well as contributory infringement, vicarious infringement and inducement of infringement. This case was colored by defendants’ evidence spoliation and the lack of a viable 512 defense; in situations like this, courts smack down defendants hard. The court’s analysis would be troubling for many online service providers if this case isn’t an outlier. Mike Masnick has more on the import (or lack thereof) of this case.

* Brave New Films 501(C)(4) v. Weiner, 2009 WL 1622385 (N.D. Cal. Jun 10, 2009). BNF was denied summary judgment on its declaratory judgment request because (a) Savage never threatened BNF directly, and (b) ORTN, which did threaten BNF directly, isn't the copyright owner. My previous coverage of this case.

User Agreements

* In the Matter of Sears Holdings Management Corporation. The FTC busted Sears for installing tracking software/spyware, even though Sears (1) asked all users to expressly opt-in, (2) paid users $10 to install the software, and (3) made full disclosure of the thorough tracking function of the spyware in the user agreement, albeit late in the installation process and in a buried fashion.

* Universal Grading Service v. eBay Inc., No. 08-CV-3557 (E.D.N.Y. June 10, 2009). eBay venue selection clause upheld.

* McMillan v. Wells Fargo, 2009 WL 1686431 (N.D. Cal. June 12, 2009). Wells Fargo asks some customers to agree to four different documents with differing governing law/venue selection clauses, leading to massive judicial confusion about how to determine governing law and venue.

* I’m using EFF's new "TOSBack" tool to track changes to major online services' user agreements. For my commentary on an article by Becher/Zarsky predicting the development of tools like this, see my writeup.

Posted by Eric at 04:54 PM | Adware/Spyware , Copyright , Derivative Liability , Domain Names , Licensing/Contracts , Marketing , Search Engines , Trademark | TrackBack

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 summ