May 09, 2008
Ripoff Report Responds re. Xcentric Ventures v. Village Voice
By Eric Goldman
Last week I blogged about a lawsuit that some of the Ripoff Report folks brought against the Phoenix New Times and its reporter, Sarah Fenske, for defamation based on quotes attributed to attorney Christopher Sharp in an article published in February 2007. In my post, I pointed out some potentially ironic aspects of the lawsuit. Thomas Duffy, general counsel of Xcentric Ventures (the company that operates the Ripoff Report), was kind enough to send me a reply, which I am republishing below with his permission. (Note: I don't plan to let this blog become a new battleground to litigate the case in public, but I thought this response deserved airtime). I don't have much commentary to add to this response but I gratefully welcome thoughts from those of you who have faced similar litigation choices. In all cases, I sincerely hope the parties can find a prompt solution that doesn't involve wasted litigation expenses.
TEXT OF LETTER -----------------------------------------
Dear Professor Goldman:
Your analysis of the New Times suit is, as usual, very insightful. Rip-off Report not only saw the irony of a suit against New Times, but actually was loathe to even file the suit. In fact, we still have not even served it on the New Times. Here's the catch-22 that led to filing the suit: Sharp (the attorney quoted in the New Times) keeps saying he was taken out of context and the quote might not have been accurate. I am sure you have heard of the "empty chair" defense -- when a defendant points to someone not there to say it is their fault. Even with Sharp's statements that the quote was not accurate, we still did not want to involve New Times in a suit so we sent them a subpoena asking for the recording of the interview (if it exists), for any notes of the interview or to take Ms. Fenske's deposition. The answer we got was no, no and no. We will be filing a motion to compel. In the meantime, the statute of limitations would have run if we did not at least file the suit. Imagine if Fenske's testimony eventually is, "That's not what Sharp said at all and I intentionally misquoted him." Neither litigation counsel nor I wanted to explain to Ed nothing could be done because the statute of limitations has run. I am sure you understand this "in the trenches" litigation dilemma.
Even with all these litigation considerations, Rip-off Report would not have filed the New Times suit if they had simply published a retraction that what Attorney Sharp said was not supported by any evidence OR if New Times had proven to us that Sharp did actually say what was attributed to him. As you know, people assume newspapers have been fact checked and Ed and Rip-off Report just wanted a simple statement that Sharp's statement was unverified or, in the alternative, proof that Sharp was actually responsible for the statements in question.
As you point out, the irony was not lost on us that this situation is very similar to the usual attempt to get around Section 230 by claiming that Ed wrote the Rip-off Report in question. Proving that negative is never easy given that we guaranteed the report writer's anonymity. There are no such concerns here: there is a statement which has been attributed to Sharp and there may be a tape of the interview. There is no reason to keep a tape or notes private: the Shield Laws do not apply (Sharp was not an anonymous source and specifically waived any privilege), it is extremely relevant and, sooner or later, it is going to have to be produced. Given this doubt about who actually uttered the statements in question, I must respectfully point out that, even if New Times were solely an online provider, the suit against them would still be in exactly the same posture. There is an unfair dichotomy between print and online providers but this is not a case that shows the dichotomy: online or off, Ed and Rip-off Report will leave New Times alone if shown New Times is not responsible for the quote. Similarly, if New Times misquoted Mr. Sharp as he claims, there would be liability for both print and online media. Simply put, this is not a derivative liability case but Ed does want to get to the bottom of the issue of who made the statements.
I wish we could just assume that New Times had properly quoted Mr. Sharp. Unfortunately, there are some questions about New Times' motives in this. New Times knows Ed runs a legitimate site: they had listed Rip-off Report as the best consumer website in the past and Ed had assisted all the New Times newspapers around the country including the Village Voice before and after New Times purchased it. We have our suspicions about why New Times decided to do a hatchet job on Ed but we will leave that for another day. What I can tell you for sure is that Ed's contacts at several government agencies, such as the IRS, and members of the Corporate Advocacy Program independently told Ed that Ms. Fenske was only looking for dirt on Ed. When they had nothing but praise for Ed and Rip-off Report, she was not interested in what they had to say.
In summation, the problem here is New Times' lack of cooperation leaving us no choice in the particular (and, perhaps, peculiar) factual situation. For the sake of media accuracy, we hope New Times can show the statements are solely attributable to Mr. Sharp but, until they do, we have a client to protect.
Thank you for your commentary and for all your work keeping us all up to date on the latest in Internet Technology, Marketing and First Amendment Law.
END OF LETTER TEXT ----------------------------------
Sincerely,
Thomas B. Duffy,
General Counsel to Xcentric Ventures, LLC
Posted by Eric at 09:40 AM | Derivative Liability | TrackBack
May 08, 2008
Third Party Liability Presentation
By Eric Goldman
Last week I spoke at the "Center for Creativity and Commerce Symposium: New Media, New Markets, New Rights" at Georgia State University in Atlanta. This event was sponsored by four different departments within GSU (law, business, communications, digital media), which created an unusually heterogeneous audience that was heavy on content creators and their vendors (like their lawyers). As a result, after I did the audience assessment, I decided the most useful direction was a practice-oriented talk focusing on how rights owners can enforce against third party intermediaries. Of course, this topic should strike regular readers as odd/ironic: first, a law professor talking about practice issues, and second, a defense-side guy talking about bringing enforcement actions...?! With those caveats, my slides.
Posted by Eric at 04:49 PM | Copyright , Derivative Liability | TrackBack
May 06, 2008
CDT Files Amicus Brief in Zango v. Kaspersky
By Eric Goldman
The Center for Democracy and Technology has authored a brief, for itself, anti-spyware vendors and other advocacy groups, in favor of Kaspersky in the Zango v. Kaspersky case. I thought this brief was a useful contribution to the discourse. The brief focuses heavily on the issue of empowering users' control over their desktops, which is the critical issue but a complicated one when users give instructions that may conflict with each other. The brief addresses this issue squarely:
Two scenarios illustrate the interplay of “consent” in the anti-spyware context. First, assume that a user did consent to the installation of Zango software, but later concluded that the software and resulting advertisements were harassing and objectionable. Kaspersky Lab (and most anti-spyware services and tools) offers the ability to disable Zango software, and for a user to choose to install Kaspersky software to block Zango’s advertisements is fully consistent with the user’s true choice (notwithstanding the assumed initial consent to install the Zango software).
Second, if the Kaspersky Lab software is installed on a computer before someone attempts to download and install the Zango software (and Kaspersky software blocks the Zango installation), that is quite possibly also fully consistent with the wishes of the user. By installing anti-spyware software, the user is asking to be protected from spyware even if the user does not immediately recognize certain downloaded software as spyware. Moreover, it may well be that the owner of the computer (such as a parent or an employer) decided to install anti-spyware software such as Kaspersky Lab’s, and then some other users (such as a child or employee) attempts to install Zango software (and that installation is blocked). In that scenario, the anti-spyware software is in fact doing precisely the job that it was asked to do.
I think both of these examples tell a story of how a user's putatively inconsistent instructions could be reconciled. But these examples are also pretty stylized, so minor changes in the facts would expose situations where the reconciliation might be tougher.
The case library:
* Kaspersky's answering brief [warning: 5MB file].
* National Business Coalition on E-Commerce and Privacy amicus brief in favor of Zango
* Zango's appeal brief [warning: 2.1MB file]
* The district court's dismissal and my commentary
* TRO Denial and my commentary
* Kaspersky's Response to TRO Motion
* Zango's TRO motion
Posted by Eric at 05:35 PM | Adware/Spyware , Derivative Liability | TrackBack
April 30, 2008
Ripoff Report Folks Sue Newspaper and Reporter for Defamation--Xcentric Ventures v. Village Voice
By Eric Goldman
Xcentric Ventures v. Village Voice Media, CV 2008-02416 (Ariz. Superior Ct. complaint filed Jan. 31, 2008). The case history.
I've lost count of the number of times I've blogged on lawsuits involving Ed Magedson and related entities Xcentric Ventures, the Ripoff Report, badbusinessbureau.com and others. Certainly they seem to get sued a lot, especially for defamation, as Sarah Bird documented here. If I spent that much time in court, the last thing I’d want to do is bring a lawsuit. But as Sarah Bird’s report enumerates, Magedson and his group have gone on the offensive a few times. Some people just seem destined to spend their lives litigating.
This lawsuit relates to a lengthy and in-depth article on Magedson and the Ripoff Report written by Sarah Fenske that published in February 2007. (I mentioned this article in a blog post here.) To minimize my risk of being the next defendant, I won't restate the allegedly defamatory language, but it involves a purported quote of Christopher Sharp, a Florida attorney representing Whitney Information in their lawsuit against the Ripoff Report group. See pages 3-4 of the complaint. Not only did the plaintiffs sue the story's publisher (the Phoenix New Times and its parent the Village Voice), but they sued the reporter Sarah Fenske and her husband (as a Doe to be named later) as well.
On the one hand, I understand why the Ripoff Report group sued over these quotes. I suspect the Phoenix New Times article already has been cited in various plaintiffs' briefs, and I'm sure that future plaintiffs will continue to do so unless the Ripoff Report group clears their names and establishes the falsity of Mr. Sharp's allegations.
On the other hand, I thought this lawsuit was rich with irony. In earlier drafts of this post, I had a long list of ironies, many of which I ultimately decided were too snarky even for me. You'll have to use your imagination. Instead, I've decided to focus on just two odd aspects of this lawsuit.
Why Sue the Intermediary?
According to Sarah Bird's report, Magedson filed a lawsuit against Sharp in February 2007. I haven't seen the complaint or other case documents, but given the timing I suspect that the lawsuit involves his article quotes (and maybe other issues). The complaint says that Mr. Sharp now "contends that the quotes attributed to him were taken out of context and/or were improperly quoted," so perhaps the plaintiffs now feel that Sharp has adequately recanted. Either way, a lawsuit against Sharp should be adequate to clear the Ripoff Report's name.
As a result, unless the Phoenix New Times completely fabricated the statement (which the complaint didn’t allege), the plaintiffs should be satisfied pursuing only Sharp. Indeed, if a company has a problem with a user-supplied report published on Ripoff Report, the Ripoff Report folks say to take it up with the user and leave the Ripoff Report out of it. When the shoe is on the other foot, why did the plaintiffs go after the intermediaries as well?
Cyberspace Exceptionalism
Ripoff Report owes its existence to 47 USC 230. Without that immunization, Ripoff Report almost certainly would have been sued to oblivion. But 47 USC 230 is an exceptionalist statute available only to online media companies. Offline media companies don't get the same protection, creating a regulatory imbalance that puts offline print publishers at a competitive disadvantage. See Randy Picker’s comments on this point.
So if the Phoenix New Times had published the allegedly defamatory third party quotes only in its online edition, it should have been clearly and fully insulated by 47 USC 230 (as the plaintiffs well know because they helped create some of the expansive 230 precedent that would apply). In contrast, the plaintiffs can bring this lawsuit only because the Phoenix New Times also chose to publish the exact same article in its dead trees edition. I understand that 230 creates this medium-specific dichotomy in defamation law, but if it were my decision, I wouldn’t want to take advantage of it.
UPDATE: I've posted the complaint in Magedson v. Sharp.
UPDATE 2: See the response from Ripoff Report's general counsel.
Posted by Eric at 10:53 AM | Derivative Liability | TrackBack
April 29, 2008
Kaspersky Files Answering Brief in Zango v. Kaspersky
By Eric Goldman
Continuing my coverage of the Zango v. Kaspersky litigation over 230(c)(2), Kaspersky has filed its answering brief (warning: 5MB file). If you want to save time, the actual argument starts on page 32 of the PDF.
The case library:
* National Business Coalition on E-Commerce and Privacy amicus brief in favor of Zango
* Zango's appeal brief [warning: 2.1MB file]
* The district court's dismissal and my commentary
* TRO Denial and my commentary
* Kaspersky's Response to TRO Motion
* Zango's TRO motion
Posted by Eric at 05:53 PM | Adware/Spyware , Derivative Liability | TrackBack
April 28, 2008
47 USC 230 Trifecta of Cases--Friendfinder, e360insight, iBrattleboro
By Eric Goldman
47 USC 230 cases have been coming at such a rapid clip that I've fallen behind. In this blog post, I'll catch up on three recent cases:
Friendfinder
Doe v. Friendfinder Network, Inc., 2008 WL 803947 (D.N.H. March 27, 2008)
This case involves the publication of a false user-supplied profile on adult dating/hook-up services operated by AdultFriendfinder and Various. Fake dating profiles have been the source of a fair amount of 230 litigation; see, e.g., the Anthony v Yahoo, Landry-Bell v. Various, Doe v. SexSearch, Barnes v. Yahoo, and of course the Carafano case. The Friendfinder case involves two allegations we haven't seen before: (1) when the plaintiff complained, the sites removed the profile but displayed the following message on the profile page: "Sorry, this member has removed his/her profile," which allegedly implied that the plaintiff in fact had authorized the page initially, and (2) portions of the fake profile had been displayed on third party sites as "teasers" to advertise the adult dating services.
The court quickly dismisses the defamation, intentional infliction of emotional distress and various soft tort claims per 230, even if the defendants affirmatively reposted the profiles and even with respect to pull-down menus used to help profile building. This opinion came out before the Ninth Circuit en banc ruling in Roommates.com, but taking Kozinski's disclaimers at face value, the discussion about pull-down menus should have survived Roommates.com.
The court also says that 230 protects the site-authored announcement on the removed profile because "the allegedly tortious nature of those statements proceeds solely from the association they create between the plaintiff and the content of the profile." This might be an important standard to help future courts determine when 230 governs allegations of false marketing representations predicated on bad user info.
The court takes a less defense-favorable direction regarding the right of publicity claim. In direct conflict with the Ninth Circuit's ccBill ruling, this court says that 230 does not preempt state IP claims. Personally, I think this court got the statutory construction right and the Ninth Circuit got it wrong. As this court correctly explains, a court cannot interpolate the word "federal" into 230(e)(2) if it uses intellectually rigorous statutory interpretation.
Having left open the state IP claims, the court (also correctly, IMO) says that a right of publicity claim is an IP claim while any other invasion of privacy claim (i.e., the other three prongs of Prosser's four privacy torts) is not.
The court also survives the plaintiff's allegation of a Lanham Act false designation of origin claim with respect to the use of the false profile in the advertising teasers. But why didn't the court examine the application of 230 to this Lanham Act provision, which arguably isn't an IP claim? I think the court considered the false designation of origin claim, as applied to a false endorsement, to be equivalent to a right of publicity claim, but it would have been nice for the court to unpack this assumption.
The litigation over teaser content raises a question that's been bothering me for some time--when is republication of user-supplied editorial content (in this case, the dating profile) as teaser content on third party websites legally governed as commercial advertising? Teaser editorial content is ubiquitous, but it also serves a marketing function that could (should?) be regulated by commercial advertising restrictions such as the right of publicity. Hey, if you're looking for a paper topic, I think this issue (use of user content in teaser content as a right of publicity issue) is a good one.
More discussion about this case: CMLP, Rebecca, Jeff Neuburger, John Leonard
e360Insight
e360Insight, LLC v. Comcast Corp., 2008 WL 1722142 (N.D. Ill. April 10, 2008)
e360 is an email marketer/alleged spammer. Comcast blocks their emails from getting to Comcast subscribers. e360 sues Comcast for a variety of torts. The court sweeps all of the claims away on a judgment on the pleadings per 230(c)(2), saying that spam filtering constitutes the blocking of objectionable content contemplated by the statute. Further, agreeing with the Kaspersky case, the court says that any good faith requirement in the statute is subjective, not objective, and e360 didn't plead any evidence of subjective bad faith. Case dismissed.
This opinion adds to the burgeoning caselaw under 230(c)(2) showing that it will crunch claims by anyone upset that their communications are being filtered. As applied to an IAP like Comcast, I think this raises an interesting angle in the net neutrality debate. If you're looking for a paper topic, it seems like it would be timely to recap 230(c)(2) jurisprudence and analyze its interplay with other speech-preserving doctrines (must-carry laws, Constitutional free speech restrictions, net neutrality, consumer protection requirements of disclosure, etc.).
iBrattleboro
Mayhew v. Dunn, 580-11-07 (Vt. Superior Ct. March 18, 2008)
This is a simple and clean opinion. The defendants operate the iBrattleboro.com website. A third party posted material to the website that allegedly harmed the plaintiff. The website operators get a judgment on the pleadings. Case dismissed. This is a nice illustration of 230 working exactly as it should. Some useful color on the case from CMLP.
Posted by Eric at 10:27 AM | Derivative Liability , Publicity/Privacy Rights , Spam | TrackBack
April 23, 2008
Online Advertising Conference Recap
By Eric Goldman
Last Friday, the High Tech Law Institute and the Berkeley Center for Law & Technology co-sponsored the Law & Business of Online Advertising conference. We had first-rate panelists and an enthusiastic audience of over 100 attendees. Rebecca blogged the event (tutorials, consumer issues, publisher issues, advertiser issues) and Sarah Bird posted her own recap. My understanding is that BCLT will post the audio from the conference to the conference website in the near future.
I'm going to focus my recap on just three of the talks.
_____
Joel Winston from the FTC (speaking for himself, not on behalf of the commission) spoke on the consumer issues panel. He said that consumers have a feeling of lack of control on the Internet. He thinks that consumers are generally aware of online tracking, but the tracking process is opaque, and consumers don't understand the future implications for use and disclosure of the tracked data. Surveys say that most consumers think tracking shouldn't be done at all or should be governed by an opt-in or opt-out process. Many people like targeted ads but they are worried about other uses of the data, such as security breaches, government misuse and secondary uses.
So consumers want transparency and control, and trust is the key. Adults are concerned about posting data online but kids will post very intimate details online. People don't understand the privacy tradeoffs, such as the connection between targeted ads and free content. And transparency isn't working when consumers don't read privacy policies. Self-regulation is the right approach, but the FTC will step in to protect consumers.
The FTC's behavioral principles:
* transparency and control
* reasonable security and limited data retention
* express consent for material changes to a privacy policy
* express consent to use sensitive data.
_____
Mark Cooper spoke about an interesting new paper he's working on. He starts with the premise that everyone hates "interruption marketing" such as TV ads: consumers hate TV ads (interruptive) and advertisers hate TV ads (can't measure efficacy). In contrast, he thinks newspaper ads are clearly better because they are easy to skip, easy to store and contain more useful information. [Eric's note: Mark is making a highly stylized argument. I explored the relative merits of different ad media in this paper.]
He thinks online advertising can improve on interruption marketing because the Internet is a two way conversation, not push marketing. He outlined 4 dimensions to measure the acceptability of advertising:
* influence. Online advertisers don't create audiences, they chase audiences created for them.
* intrusiveness. Online advertising isn't in the "middle of content." [Sounds like Mark has never experienced an unconsented adware install...and I'm not sure how he'd explain spam in one's in-box...] But he worries that data collection may be more intrusive than other media.
* ubiquity. I think he argued that online advertisers don't devote as much on-the-page real estate to ads as newspapers do. [Sounds like he's never been to a domainer's website...]
* efficiency (delivery of useful information). The cost of online advertising is less than TV, which expands the market for advertisers. This also facilitates the creation of hyper-niche content sites.
Despite some of the benefits of online advertising, he worries about how much information he needs to give up to get these improvements. He thinks behavioral targeting and tracking is inherently deceptive but in-session contextual advertising is OK, and maybe informed consent may be OK.
[Eric's comments:
* I'm not sure the four dimensions he uses are the right dimensions to measure advertising
* His arguments relied on a number of assumptions that aren't very robust, which limits the extensibility of his analysis.
* I think the statement that behavioral tracking is inherently deceptive must be overstated for rhetorical emphasis. Otherwise, I don't think that statement stands up to critical scrutiny.
* I argue (in great/excessive detail) that some types of behavioral targeting are both good and inevitable in this paper.]
_____
Rebecca Tushnet spoke on intermediary liability. She made two main points:
1) Intermediaries aren't good representatives of the speakers who they facilitate because the intermediaries are adverse to their users. Ex: the 512 notice-and-takedown provisions, Google's policy on TMs in ad copy.
2) There is pressure to move away from a robust interpretation of 47 USC 230. Ex: Roommates.com, the recent Adult Friendfinder case (which I hope to blog on soon) and the Quiznos case.
She thinks there may be merit to looking at the New York Times v. Sullivan case, which people sometimes forget is an advertising case (i.e., the plaintiff was trying to hold the newspaper liable for ad copy supplied by an advertiser). The newspaper wasn't liable in that case unless it had actual malice about the definition--a very high scienter bar. Perhaps the actual malice standard could be more widely used in the online context; among other benefits, notice alone wouldn't create liability.
Posted by Eric at 09:06 AM | Derivative Liability , Marketing , Privacy/Security | TrackBack
April 21, 2008
March 2008 Quick Links, Part I
By Eric Goldman
It's a sign of my busy March/April that I am just now postinng these...
Reputation/47 USC 230
* I have a lot to say about the JuicyCampus story (AP, MSNBC, Chronicle of Higher Education). Unfortunately, I ran out of time to write a full blog post on the subject. For now, some quick thoughts about this interesting and complex situation:
- Taken to its logical conclusion, 47 USC 230 naturally enables sites to do absolutely nothing to restrict harmful speech. (I'm not saying that accurately describes JuicyCampus--I don't have enough facts to make that claim). However, that's not an unexpected failure of the statute--it's the natural consequence of the statute's design. Any concerns about the costs of unrestricted speech fora need to compared with the costs of more regulated systems. It's not clear that one result is automatically better than the other, and certainly there are costs implicit in all solutions. Sam Bayard explores this issue more.
- Sites that lack credible information will face marketplace responses regardless of any legal rules. In JuicyCampus' case, the marketplace responses include consumers deeming the site not credible, plus intermediaries (in this case, universities) may simply block access by its core users.
- Any possible legal action by the New Jersey Attorney General over JuicyCampus' facilitation of harmful speech should be unambiguously preempted by 47 USC 230--even after Roommates.com.
- The attempted legal bypass to 47 USC 230--trying to convert a negative covenant from the users in the user agreement into an actionable affirmative marketing representation by JuicyCampus--is analytically corrupt. It's also not the law, and it's been rejected in several 230 cases (Noah v. AOL comes immediately to mind). Rebecca has more to say on this issue.
- If negative behavioral covenants by users in a user agreement are actionable affirmative marketing representations that such behavior isn't occurring, then the Internet is a target-rich ecosystem because I imagine that just about every Internet company is eligible for enforcement actions.
- Isn't it typical of an enforcement action to go after the target's vendors (in this case, JuicyCampus' ad networks) and watch them instantly fold?
- This issue reminds us that a website can't promise its users anonymity if it allows anyone else (such as an ad server) to serve up portions of its page and thereby have the ability to collect the same server log data.
* Ciolli v. Iravani: The AutoAdmit lawsuits spill over into a new battleground. As I said when I first blogged on the case, this is a "very messy situation" that has only gotten messier.
* Nemet v. ConsumerAffairs.com. Another lawsuit against an online consumer review site for publishing allegedly defamatory negative critiques.
* Steinbuch v. Cutler, 2008 WL 596747 (8th Cir. Mar. 6, 2008). Steinbuch's lawsuit against Hyperion, the publisher of the Washingtonienne book, can continue in Arkansas. His other claims must proceed in Washington DC if at all.
* Washington Post: Due to the speed at which gossip moves over the Internet, "compared with the pre-Internet era, politicians are less likely than ever to survive a sex scandal with their careers intact."
* H. Brian Holland, In Defense of Online Intermediary Immunity: Facilitating Communities of Modified Exceptionalism, 56 U. Kan. L. Rev. 369 (2008). Prof. Holland wrote a paper I had been meaning to write! He explains how 47 USC 230 enables online communities to use a variety of self-governance structures, while a different liability regime would give communities fewer choices and thereby inhibit community formation and management.
Search Engines
* A Canadian web network called Geosign received $160M of VC money but the company was rendered worthless overnight when Google changed its policies and cut off traffic. Domainers beware!
* New book worth checking out: WEB SEARCH: MULTIDISCIPLINARY PERSPECTIVES (Amanda Spink & Michael Zimmer, eds.) (Springer 2008). A nice cross-section of essays on search engine issues from multiple disciplines.
* Need some original content to improve your SEO? You can automatically generate it through splogging, or you can pay actual humans a small amount of money to write short articles. If the cost is low enough and the SEO credit for truly original content is high enough, the latter may end up being a better economic deal.
Spam
* The FTC has lost a jury trial against Impulse Media on its theory that Impulse Media is liable for the spam sent by its affiliates. This is a pretty important decision because (1) the FTC/DOJ rarely lose at trial, (2) their expansive theories about liability for affiliate behavior may be legally incorrect, and (3) the FTC has strong-armed numerous defendants into settlements based on its theory, and future defendants now be willing to fight back.
* On that topic, Cyberheat won an early round in litigation with the FTC over its affiliate practices but has now settled up with the FTC. The settlement gives some guidance about the FTC's thoughts of how marketers should police affiliates, but the Impulse Media jury loss may undermine the teaching of this settlement.
Posted by Eric at 08:32 AM | Derivative Liability , Licensing/Contracts , Marketing , Search Engines , Spam | TrackBack
April 09, 2008
Pro-Zango Amicus Brief in Zango v. Kaspersky
By Eric Goldman
The National Business Coalition on E-Commerce and Privacy has filed an amicus brief supporting Zango in Zango v. Kaspersky, the lawsuit over an anti-spyware vendor's classification of third party software as "spyware." I'm not familiar with this coalition and I couldn't find a website for it. If you have any information about them, please let me know. The brief itself conducts a very run-of-the-mill statutory and legislative history analysis, so it doesn't give much color about the coalition or why it cares about this case.
UPDATE: "Among its members are Experian, Fidelity Investments, the Investment Company Institute, Charles Schwab & Co., Inc., Deere & Company, Inc., JP Morgan Chase, General Motors Corp., Vanguard Group, UPS, CheckFree, Eastman Kodak, Bank of America, and The Assurant." This makes me even more curious why these companies would be interested in the issue.
UPDATE: Wendy Davis at MediaPost reports: "The coalition's members operate Web sites that place cookies on users' computers when they visit the site. The group is concerned that the trial judge's decision would immunize spyware removal companies that market software that deletes their members' cookies." Hmm...are they planning to sue CookiePal or any web browser software vendor that sets a default to reject all cookies?
The case library:
* Zango's appeal brief [warning: 2.1MB file]
* The district court's dismissal and my commentary
* TRO Denial and my commentary
* Kaspersky's Response to TRO Motion
* Zango's TRO motion
Posted by Eric at 10:17 AM | Adware/Spyware , Derivative Liability | TrackBack
April 03, 2008
Roommates.com Denied 230 Immunity by Ninth Circuit En Banc (With My Comments)
By Eric Goldman
Fair Housing Council of San Fernando Valley v. Roommates.com, LLC, 2008 WL 879293 (9th Cir. April 3, 2008)
The Ninth Circuit has issued its en banc ruling in the Fair Housing Councils v. Roommates.com case upholding the prior ruling of the three judge panel. The opinion concludes that Roommates.com does not qualify for 47 USC 230 immunization for some of its activities and sends the case back to the trial court for further litigation on other substantive questions, such as whether Roommates.com's behavior actually violated the Fair Housing Act.
The en banc panel voted 8-3 to reverse the district court. Judge Kozinski wrote the majority opinion, which was not surprising given that Kozinski had also written the lead opinion in the three-judge panel ruling. Judge McKoewn wrote the concurring/dissenting opinion.
Before I get into the opinion’s substance, I want to note that the new opinion shows that the en banc process worked well here. Although I don't think that Kozinski's opinion is as clear as he thinks it is (for example, in FN 39, he says “there can be little doubt that website operators today know more about how to conform their conduct to the law than they did yesterday”), this opinion is more careful and has less ambiguity than his prior opinion. I still don't agree with Kozinski’s conclusions or arguments, but this opinion was written with a lot more precision and, as a result, probably will have fewer adverse collateral consequences than his prior opinion. Kudos to Judge Kozinski for responding to the feedback he got and to the Ninth Circuit for using the en banc process to improve the clarity of its legal rules.
Substantively, Kozinski says that Roommates.com does not qualify for 230 immunization for (1) the questions it poses to users (such as asking racial preferences), (2) users' profile answers made using pull-down menus (at least to the extent that the site required answers before the user could proceed), and (3) its search system and personalized email system that display profile results (and, by implication, suppressed other results) based on impermissible criteria. However, 230 immunized Roommates.com’s unstructured "Additional Comments" data field, even if impermissible sentiments were expressed in it.
There is lots of interesting language and examples in both the majority and the dissent, and it’s worth the read. I’m focusing this post on a few themes in the majority opinion that I found particularly noteworthy:
Cyberspace Exceptionalism
47 USC 230 was enacted in 1996 during the height of "cyberspace exceptionalism," the belief that the Internet was unique/special/different and therefore should be regulated differently. 47 USC 230 is a flagship example of such exceptionalism. It creates rules that really differ between the online and offline worlds, such that publishing content online may not create liability where publishing the identical content offline would. The medium matters.
Despite Congress’ obvious intent, the majority opinion bristles with antipathy towards cyberspace exceptionalism. In numerous places, it expresses skepticism that offline rules should not apply verbatim to online behavior--even though that's exactly what 230 does in some cases. Kozinski’s not the first judge to rankle at the policy implications of Congress' cyberspace exceptionalism, but he may have let this hostility override other analytical considerations.
As result, I think the majority opinion reflects an implicit normative judgment that the Fair Housing Act should trump 47 USC 230, which distorts the statutory analysis. (To be clear, the dissent makes this point too, so I'm not the only one who feels this way). I understand why the majority would go this direction; anti-discrimination goals are normatively very important. At the same time, 230 codifies some very important norms too.
Structured Search
Like his last opinion, Kozinski's opinion repeatedly indicates that unstructured searches pose fewer problems for 230 than structured ones. Specifically, the majority opinion repeatedly says that “neutral tools” (a term used 5 times but never defined) fully qualify for 230 protection, even if these search tools are misused for impermissible searches. Thus, the opinion explicitly says that general purpose search engines like Google can qualify for 230 even if someone uses it to engage in searches that violate the Fair Housing Act.
The majority opinion further tries to narrow the offending behavior significantly. It says that pull-down menus aren’t inherently problematic. For example, “A dating website that requires users to enter their sex, race, religion and marital status through drop-down menus, and that provides means for users to search along the same lines, retains its CDA immunity insofar as it does not contribute to any alleged illegality.” [So, if someone entered an age below 18 and the lawsuit was over a subsequent sexual assault or statutory rape, no immunity?] It also says that a site that enables searches via “user-defined [search] criteria” would retain the immunity [not sure what that means]. Even so, the ambiguities in this discussion may unfortunately dissuade some websites from providing structured searches of user-supplied content.
The Role of Passivity
Prior to the passage of 230 in 1996, the conventional Cyberlaw wisdom was that an online entity wasn’t liable for user content only if it acted like a "passive conduit." If the entity actively managed its user-supplied content, it could not avoid liability for that content.
We had thought 230 changed that paradigm and eliminated any differences in legal treatment between passive conduits and active content managers. Unfortunately, this opinion raises questions about that. The majority opinion uses the term "passive" 7 times in its opinion, each time implying that passivity contributes to the immunization.
At the same time, the majority opinion also contains some contrary language suggesting that active involvement still earns 230 protection. The majority specifically gives an example where a website that edits user content doesn't lose the immunity unless the editing changes the content substantively:
A website operator who edits user-created content—such as by correcting spelling, removing obscenity or trimming for length—retains his immunity for any illegality in the user-created content, provided that the edits are unrelated to the illegality.
This sounds like a reasonably active involvement with user content. So what does passivity mean, and why did the opinion consistently refer to it?
What Does this Opinion Mean?
Overall, the majority tried hard to communicate that the rule it articulated here should apply narrowly to a limited number of sites: “The message to website operators is clear: If you don’t encourage illegal content, or design your website to require users to input illegal content, you will be immune.” The opinion also tries to signal that this ruling isn’t a major shift away from 230:
Websites are complicated enterprises, and there will always be close cases where a clever lawyer could argue that something the website operator did encouraged the illegality. Such close cases, we believe, must be resolved in favor of immunity, lest we cut the heart out of section 230 by forcing websites to face death by ten thousand duck-bites, fighting off claims that they promoted or encouraged—or at least tacitly assented to—the illegality of third parties.
These broad pronouncements are helpful, and I hope future judges take them to heart. Unfortunately, it’s virtually impossible to articulate in crystal-clear terms why Roommates.com crossed the line while many other websites with similar user interactions still qualify for 230. As a result, despite the broad pro-230 philosophical statements, I'm fairly confident that lots of duck-biting plaintiffs will try to capitalize on this opinion and they will find some judges who ignore the philosophical statements and instead turn a decision on the opinion’s myriad of ambiguities. Ultimately most courts will reach the right results, but only after significant transaction costs, and even so I think erroneous judgments are inevitable. At least this will create a steady stream of appeals that let Kozinski further amplify his views on 230.
While I expect plaintiffs to be emboldened by the lawsuit and to look at the Ninth Circuit as the new venue of choice (replacing the Seventh Circuit after the Craigslist case didn’t turn out to be plaintiff-favorable), I also wonder if this case will spur plaintiffs as much as the recent Mazur case. That case highlights the risk that websites can be attacked for their marketing statements even if the representations are rendered untrue by third party actions or conduct. So, for example, in theory plaintiffs could attack a site like Roommates.com for any marketing statements that say or imply that using its tools are legal. If these kind of "back-door" attacks on a site aren't covered by 230 (and there may be good reasons why they aren't), then plaintiffs won't have to try to exploit ambiguities in the Roommates.com opinion to get their desired results. If so, while this opinion may not be a great one for defendants, there may be even darker clouds on the horizon.
___________________
Other perspectives:
* Michael Erdman
* Ryan Siegel
* Evan Brown
* Eugene Volokh
* Susan Crawford
* Daithí Mac Síthigh
* Greg Beck and Paul Levy
* Jonathan Frieden
* The Recorder
* Jeff Neuburger
* Sam Bayard
* Derek Bambauer
* Dan Solove
* Cathy Kirkman
_______________________
UPDATE: Michael Risch writes me:
You said: "Unfortunately, it’s virtually impossible to articulate in crystal-clear terms why Roommates.com crossed the line while many other websites with similar user interactions still qualify for 230."
Here's my attempt at clarity: Roommates.com REQUIRES people to state their race, and thus is a co-developer of what is published on its site. The other sites likely did not have mandatory choices with mandatory publication.
Thought experiment - the comment section on my blog allows for free responses, but at the bottom is a drop-down box, in which every user must make a choice in order to post the comment: "I hate jews", "I hate women". When the comment appears, the user's text, and the text of the selection shows up in the comment. Sure, the user selected the statement, but I'm the one who came up with the idea and forced the user to select on or the other, and then forced the text to display. I have to think that is a development of the content.
Of course, the extension of this is that epinions now gets sued where it requires a 1 star to 5 star rating. That doesn't seem right, but maybe that's on the merits and not on the immunity. You would, I imagine, say it SHOULD be about the immunity, but I'm not so sure.
I think the even less clear question is what if it is NOT mandatory, and merely suggestive.
As for the searching aspect, here is the attempt at clarity: if Roomates.com had a button that said "find white roommates" it would be the speaker of a discriminatory search practice. Allowing a choice of white, black, etc. as a search item is simply an expansion of that.
_____________
The case library:
* Recording of the en banc oral argument
* Amicus brief from a variety of Internet companies such as Google, eBay and Amazon plus non-profit organizations such as the EFF [subsequently rejected by the Ninth Circuit]
* Amicus brief from various news organizations
* Amicus brief from the ACLU. Roommates.com's reply brief to the ACLU brief.
* The Fair Housing Councils' request to brief Batzel. Roommates.com's opposition. The Ninth Circuit denied the Councils' request on Nov. 6.
* The Ninth Circuit order granting the en banc hearing
* Fair Housing Councils' reply to the EFF et al amicus brief
* EFF et al amicus brief supporting a rehearing en banc
* Fair Housing Council's response to Roommates.com's request for an en banc rehearing
* Roommates.com's En Banc Request
* The original Ninth Circuit opinion
* My blog post on the Ninth Circuit opinion
______________________
So what does a duck bite look like? See here. Quack!
Posted by Eric at 08:05 PM | Derivative Liability | TrackBack
Roommates.com Denied 230 Immunity by Ninth Circuit En Banc
By Eric Goldman
Hot news! The Ninth Circuit en banc panel in the Roommates.com case upheld the 3 judge panel and issued an opinion, not surprisingly written by Judge Kozinski, saying that Roommates.com doesn't qualify for immunity under 47 USC 230. The en banc panel voted 8-3 with a lengthy dissent by Judge McKeown. I'll post an analysis as soon as I can work through it.
UPDATE: My full blog post.
Posted by Eric at 10:02 AM | Derivative Liability | TrackBack
April 01, 2008
Recent 47 USC 230 Developments Talk
By Eric Goldman
Today I gave a talk on recent 47 USC 230 developments (following on the popular "47 USC 230 Week" at the Technology & Marketing Law Blog a couple of weeks ago). I didn't even really get into the Craigslist case because the opinion wasn't all that insightful and we really need to see the Ninth Circuit en banc ruling in the Roommates.com case to see where we stand on those issues. Instead, I focused on three hot issues in 47 USC 230 jurisprudence:
* when does 47 USC 230 immunize a website from its own marketing representations?
* how does 230 apply to online retailers for merchandising?
* does 230 preempt state IP laws? [Note: this refers to last week's Friendfinder case, which I'll blog fully later this week]
Check out the slides.
Posted by Eric at 08:44 PM | Derivative Liability | TrackBack
March 30, 2008
Zango's Brief in Zango v. Kaspersky Ninth Circuit Appeal
By Eric Goldman
Zango has filed its initial appellate brief in Zango v. Kaspersky [warning: 2.1MB file], the case addressing the liability of anti-spyware vendors for their classification decisions. Characteristically, Zango goes on the offensive, declaring that Kaspersky's software is the real "badware" here.
Other materials in this case:
* The district court's dismissal and my commentary
* TRO Denial and my commentary
* Kaspersky's Response to TRO Motion
* Zango's TRO motion
Posted by Eric at 01:45 PM | Adware/Spyware , Derivative Liability | TrackBack
March 14, 2008
Craigslist Gets Seventh Circuit 230 Win in Fair Housing Act Case--Chicago Lawyers' Committee v. Craigslist
By Eric Goldman
Chicago Lawyers' Committee for Civil Rights Under Law v. Craigslist, Inc., 2008 WL 681168 (7th Cir. March 14, 2008)
Yesterday, I declared this week "47 USC 230 Week" at the Technology & Marketing Law Blog. The Seventh Circuit helps us end 47 USC 230 Week with a bang with its Craigslist ruling, an important opinion that reinvigorates 47 USC 230 doctrine in the Seventh Circuit. Sadly, like the district court opinion, this opinion is filled with gratuitous and unfortunate dicta that dilutes the analysis. Nevertheless, on the plus side, the Seventh Circuit (like the district court) emphatically reaches the right result and grants Craigslist a solid win under 47 USC 230.
Easterbrook's opinion takes a loving and lengthy gaze at his previous Doe v. GTE opinion (including using about 20% of this opinion to quote from the prior opinion), but I don't think there's much value to parsing his confusing statutory analysis to figure out how the two opinions sit together. Instead, the key part of the opinion is that Easterbrook fully realizes the costs and benefits of making an intermediary filter user content. Craiglists provides an excellent test case for that because they are so leanly staffed, and the Fair Housing Act is a good test statute because of the squishy nature of making discrimination assessments. More fundamentally, Easterbrook also understands that any filtering system is imperfect: "Automated filters and human reviewers may be equally poor at sifting good from bad postings unless the discrimination is blatant; both false positives and false negatives are inevitable."
As a result, Easterbrook recognizes that turning Craiglist into a content cop may not be the best solution. I think his conclusion says it best:
Using the remarkably candid postings on craigslist, the Lawyers’ Committee can identify many targets to investigate. It can dispatch testers and collect damages from any landlord or owner who engages in discrimination....It can assemble a list of names to send to the Attorney General for prosecution. But given §230(c)(1) it cannot sue the messenger just because the message reveals a third party’s plan to engage in unlawful discrimination."
It will be interesting to see how this opinion affects the Ninth Circuit's en banc consideration of the Roommates.com case. After all, the legal issues are identical, and Easterbrook's Doe v. GTE ruling was a key precedent for the plaintiffs. Now, with Easterbrook having said (decisively) that 230 preempts claims for the Fair Housing Act, it seems like the Doe precedent is effectively worthless to the Roommates.com plaintiffs. As a result, the only solid way for the plaintiffs to distinguish the uniformly defense-favorable precedent is by hammering on the fact that Roommates.com provided structured categories for user content--a fact that might be enough to craft an exception to 230, though I think it shouldn't.
UPDATE: Randy Picker: "Chicago Lawyers’ Committee v Craigslist: Yet Another Reason Newspapers are Dying"
Posted by Eric at 12:17 PM | Derivative Liability | TrackBack
March 13, 2008
eBay Denied 230 Defense for Its Marketing Representations--Mazur v. eBay
By Eric Goldman
Mazur v. eBay Inc., 2008 WL 618988 (N.D. Cal. March 4, 2008)
I declared Monday "47 USC 230 Day" here at the Technology & Marketing Law Blog, but with this new case, I'm declaring it 47 USC 230 Week. This case explores one of the frontiers of 47 USC 230 jurisprudence--when can 230 preempt a claim that a website made false marketing representations? This issue has been lurking in numerous recent 47 USC 230, but it arises squarely here. Unfortunately, the legal analysis isn't clean or easy.
eBay offers its users the ability to engage in "live bidding" (i.e., bidding via the Internet on auctions taking place in physical space) through third party vendors. eBay's marketing materials described these vendors as "safe" and "carefully-screened, reputable international auction houses" and that the bidding was against "floor bidders" (i.e., people bidding on the physical floor of the auction). The plaintiff claims that instead shill bidders at the auctions caused her to overpay. eBay defends against the claims based on 230 because any falsity introduced into its statements was attributable to the actions of third party vendors.
Judge Patel found that 230 helped eBay in a number of respects:
* "to the extent plaintiff seeks to hold eBay liable for information provided by [a third party vendor], eBay is immune from liability".
* "plaintiff’s assertion that eBay knew of the seller’s illegal conduct and failed to prevent it is nevertheless under the ambit of section 230"
* "eBay’s assertion that the auction houses were screened is not actionable" because the screening is an editorial function [note: I'm not sure screening vendors for quality is really an editorial function in the traditional sense. Perhaps this particular issue would have been more appropriately handled under 230(c)(2)?]
At the same time, the court says that three other statements at issue--that live bidding is "safe," is conducted against "floor bidders" and involves "international" auction houses--are not preempted by 230. In doing so, the court distinguishes several cases, including:
* the Gentry case (involving eBay's liability for fake sports memorabilia) because eBay's communications there were distilled from user-supplied feedback
* the SexSearch case (where the site claimed its users were 18+ but a minor lied about her age) because the marketing claims "were merely a regurgitation of its users’ representations" whereas here, apparently eBay made no regurgitations
* the infoUSA case (where infoUSA said that it verified data in its database) and the Barnes case (where Yahoo failed to take down bogus user profiles) because each involved the accuracy of data, while this case involves the promise of safety. [Note: I think the court makes a rather fine distinction here. Clearly the word "safe" means something special to this judge: "eBay’s statement regarding safety affects and creates an expectation regarding the procedures and manner in which the auction is conducted and consequently goes beyond traditional editorial discretion."]
The court doesn't discuss the Accusearch case, which seemed like the most analogous case to me. That case involved a vendor's resale of illicit phone records that were procured by third parties via pretexting, and the court held that 230 didn't protect the vendor even though the underlying asset being sold was information from a third party. The Accusearch opinion doesn't directly hold the vendor responsible for marketing these illicit records as legitimate, but that would be a fair way to read the opinion. The court also could have cited (but didn't) the CafePress opinion, which also involved a 230 denial for a website selling tortious third party goods.
So, what does all of this mean? The bad news is that this case seems to open up a major bypass to 230 for plaintiffs. They don't need to sue a website for a third party-caused tort by asserting the prima facie tort against the website; instead, following the "logic" in this opinion, all a plaintiff needs to do is find that the website made a marketing representation somewhere that says or implies the tort wouldn't occur, and the claim for bad marketing should be outside 230's coverage. [Note: I understand that's not exactly what Patel said because she did reject the claims for eBay's marketing representation about screening. But the claim over "safety" fits this pattern neatly.]
On the other hand, I'm not sure this case reached the wrong result. Assume for a moment that per 230, eBay isn't liable for the marketing claim that its vendors are "safe." This seemingly would mean that eBay could freely make such claims, true or not, reap the economic benefits from consumer choices driven by those claims, and yet completely avoid liability. I don't think 230 should provide a free pass for commercial misrepresentation. eBay picks the words to describe its business; it should own those words.
In any case, as this case illustrates, I think it's fair to say that 230's preemption of marketing representations remains a major open area in 230 jurisprudence. If you're looking for a term paper project, this looks like a good one to me.
Even if 230 doesn't apply, eBay has other defenses against liability for the alleged marketing misrepresentations. The court rejects eBay's defense based on the release in the eBay user agreement, but it does dismiss the fraud claim (with leave to amend) because it lacked the requisite specificity.
The opinion also discusses one of the auction vendor's user agreements, which specified a highly expedited extrajudicial adjudication as the sole dispute resolution option. The court tosses the contractual adjudication procedure as unconscionable due to the contract's formatting and substantive unfairness. Along the way, the court casts some doubt on extrajudicial adjudication clauses that have "no witness" provisions. If you're interested in forming enforceable online user agreements, you should check out this opinion.
Posted by Eric at 09:40 AM | Derivative Liability , E-Commerce , Licensing/Contracts , Marketing | TrackBack
March 10, 2008
47 USC 230 Day at the Technology & Marketing Law Blog
By Eric Goldman
Today is 47 USC 230 Day at the Technology & Marketing Law Blog as we catch up on a hat trick of recent 47 USC 230 opinions.
1) Gregerson v. Vilana Financial, Inc., 2008 WL 451060 (D. Minn. Feb. 15, 2008)
The defendants repeatedly infringed plaintiff's photos. After the defendants did not pay up in response to a demand letter, the plaintiff posted some griping material to his website and included a section inviting comments about the defendants. Third parties subsequently posted potentially defamatory comments. In a rather perfunctory and typical analysis, the court says that per 47 USC 230 the plaintiff isn't liable for these third party comments, even if the plaintiff received notice about them.
Beyond the 230 discussion, the case touched on some other interesting issues:
A) The defendant's principal claimed that he had a conversation with a guy in a public sauna who recreated the photos and then granted legitimate licenses to the defendants. Unfortunately, alibis based on business deals arranged with strangers in public saunas are always a tough sale for judges.
B) The plaintiff's demand letter quoted his standard license fee for the photos but, as a penalty, demanded 3X that amount and said the settlement price would increase 10X if the plaintiff wasn't paid in 2 weeks. This type of escalating demands is fairly typical with freelancers, who often overestimate the value of their work both in the market and to particular defendants. The court scoffs at the 10X demand, rejecting its legitimacy as a measure of copyright damages, and instead awards the plaintiff its license fee without any gross-ups. I hope this opinion encourages freelancer photographers to make settlement demands based on a realistic assessment of damages, not based on fantastic artificially inflated license fees.
C) The plaintiff gets damages under 17 USC 1202 because the defendants cropped some copyright management information from the photos. This is one of very few plaintiff wins under 1202.
2) Global Royalties, Ltd. v. Xcentric Ventures, LLC, 2008 WL 565102 (D. Ariz. Feb. 28, 2008)
I previously blogged on this case here. As I noted then, Ripoff Report got a defamation claim dismissed (with leave to amend) per 47 USC 230 even though the original poster had repudiated the post and requested its removal. The plaintiff filed an amended complaint, but the court rejects it again, concluding that the poster's request to remove his posting doesn't change the 230 analysis: "liability based on an author’s notice, workable or not, is without statutory support and is contrary to well-settled precedent that the CDA is a complete bar to suit against a website operator for its “exercise of a publisher’s traditional editorial functions—such as deciding whether to publish, withdraw, postpone or alter content” [cite to Zeran]."
The court also rejects the plaintiff's arguments that (1) the Ripoff Report should drop out of 230 coverage because it allegedly runs an extortion racket, (2) Ripoff Report's supplying of category tags matters, and (3) the Roommates.com case has any bearing on this case (the Ninth Circuit opinion was vacated with the en banc hearing, so there's nothing precedential at the moment). The court also refused to stay the case pending the en banc opinion.
3) John Doe Anti-Terrorism Officer v. City of New York, No. 06-cv-13738 (S.D.N.Y. Feb. 6, 2008) [hat tip Jeff Neuburger]
The plaintiff is an Arab-American police officer in the NYPD. He is suing the NYPD and Tefft for racial discrimination principally based on invective-filled emails sent by Tefft, who was a third party contractor (an antiterrorism consultant) to the NYPD. Tefft defends on 47 USC 230 because he claims he simply forwarded third party content (such as articles) in his emails. However, Tefft also added his own commentary to that third party content, such as introductory statements to the articles, and the court rightly says that 230 doesn't provide any protection for the material added by Tefft.
The court goes on to say that Tefft can't qualify as a "user" of an ICS, a determination that the court apparently didn't research very well because the caselaw has repeatedly reached the opposite conclusion.
Posted by Eric at 09:49 AM | Copyright , Derivative Liability | TrackBack
March 04, 2008
Utah Quietly Killing the Trademark Protection Act [UPDATED]
By Eric Goldman
[See update below]
We're coming up on the one year anniversary of the Utah Trademark Protection Act, Utah's effort to kill/tax keyword advertising. It looks like the law may not survive until its first birthday, as the Utah legislature is in the process of amending the act. On Feb. 6, the Utah Senate passed SB 151 and sent it to the Utah House, where it is now pending. A quick perusal of SB 151 indicates that the amendments strike every instance of the term "electronic registration mark" (Utah's phrase for the new sui generis property right it created in the Trademark Protection Act). As I blogged before, the amendments instead focus on allowing trademark owners to electronically register their trademarks in a Utah database (more on this in a moment).
Thus, it looks like the Utah legislature will eliminate all of the new substantive provisions added in the Utah Trademark Protection Act--in other words, a complete 180. On the one hand, I applaud the Utah legislature for reaching the only logical conclusion available to it--that the Utah Trademark Protection Act was stupid and untenable, so wiping the slate clean was both the best social policy and the lowest cost option. On the other hand, I remain shocked that Utah residents tolerate legislators who screw up this big and waste valuable resources enacting ill-advised laws only to waste more resources reversing themselves. If a California legislator screwed up like this, he or she would be recalled faster than you can say "Rose Bird" or "Gray Davis." And I apologize if it's rude to say this, but I get asked this question a lot--when the legislature whiffs as bad as this, yes, we do think the Utah legislature is a (bad) joke.
As for the new electronic registry, I'm a little confused about what Utah is considering. If the database is simply an e-government initiative to cut down on paper filings and push registrants to make electronic filings, that sounds like a positive development but I'm not sure why it would require legislative authorization. But there is an intimation that this will generate new incremental revenues from trademark owners who seemingly will value listing in Utah's electronic database. The fiscal report indicates that the law should generate $50,000 of revenues, enough to compensate for $50,000 of database development costs. Perhaps Utah is planning to get into the worthless-registry business, an industry well-known to all trademark owners. After a trademark registers, the owner gets a blizzard of official-looking letters from companies offering to list the trademark in a proprietary but worthless registry. What better way to scare some cash out of unsophisticated trademark owners than an official solicitation on Utah state letterhead?
Even when the Utah Trademark Protection Act has been fully gutted and eliminated as a threat to the keyword advertising industry, I guarantee that the war is hardly over. Future state legislators are going to find regulating online advertising irresistible, and each of these legislative initiatives poses grave risks to our information economy. As a community, we need to undertake the Sisyphean effort of continuously monitoring our legislators and educating them about the harm they can do with misguided regulatory intervention.
UPDATE: Hold the phone! Perhaps this is not surprising, but the Utah legislature is doing more screwy stuff. When the dust clears, I'll post a new blog post trying to make sense of the madness.
UPDATE 2: It appears that Utah passed the law in the form I blogged about. See here and here. This presumably sends the bill to the governor for signature. I'll blog more about the last 24 hours shortly.
Posted by Eric at 11:14 AM | Derivative Liability , Marketing , Search Engines , Trademark | TrackBack
March 03, 2008
Lifestyle Lift Tries to Use TM Law to Shut Down User Discussions; Website Countersues for Shilling--Lifestyle Lift v. RealSelf
By Eric Goldman
Lifestyle Lift Holding, Inc. v. RealSelf Inc., 2:08-cv-10089-PJD-RSW (complaint filed Jan. 7, 2008 and answer/counterclaims filed March 3, 2008)
[disclosure note: I have done some legal work for RealSelf, including some limited counseling on this lawsuit]
No matter how many times I see it--and in the Internet era, I see it all too frequently--I always shake my head in disappointment and frustration when a company uses trademark law to lash out against unflattering consumer reviews. To these companies, trademark law is a cure-all tonic for their marketplace travails, and trademark doctrine is so plastic and amorphous that defendants have some difficulty mounting a proper defense. As a result, all too frequently, the threat of a trademark lawsuit causes the intermediary to capitulate and excise valuable content from the Internet. Fortunately, a defendant has decided to fight back and resist the pressure to succumb to unmeritorious trademark claims. See the press release.
I don't know much about Lifestyle Lift and its relative pros and cons as a cosmetic surgery. Fortunately, there are thousands of Lifestyle Lift customers who do, and a large number of them have shared their opinions publicly on RealSelf, a website that allows consumers to discuss anti-aging products and services. I think it's fair to say that many of the consumer-submitted reviews of Lifestyle Lift are unfavorable--exactly the kind of word of mouth that prospective consumers should consider before undergoing a Lifestyle Lift surgery.
But this kind of negative buzz can be fatal to providers of health/beauty products and services, especially given the faddishness of that market. As a result, Lifestyle Lift has resorted to legal mechanisms to prop up its business. (Indeed, Lifestyle Lift is no stranger to court; see this PACER report on their litigation history in federal court).
In doing so, Lifestyle Lift has limited tools to go after RealSelf for consumer-submitted reviews. After all, 47 USC 230 clearly eliminates almost all of RealSelf's possible liability for those reviews. However, 47 USC 230 leaves open federal trademark claims--hence, Lifestyle Lift has embraced trademark law as its recourse to wipe the negative reviews off RealSelf and keep them from influencing prospective consumers.
(Lifestyle Lift could always go after individual consumers submitting negative reviews...if they have a meritorious claim. Given Lifestyle Lift's litigiousness, it wouldn't surprise me if they bring some of these lawsuits regardless of merit).
In its answer, RealSelf goes on the offensive and alleges that Lifestyle Lift directly or indirectly posted shill reviews to the Lifestyle Lift discussion, thereby breaching RealSelf's user agreement. Off the top of my head, I can't think of another lawsuit where the message board operator sued a company for shill postings, so I think this case may be breaking important new legal ground. If in fact Lifestyle Lift was trying to manipulate the perceptions of prospective consumers through shill reviews, I hope they are brought to justice for their efforts to pollute the information environment.
More generally, regardless of who wins these specific lawsuits, Lifestyle Lift will never succeed at stifling negative discussion about its offerings. This may just be another painful lesson in the power of online word of mouth.
Posted by Eric at 01:45 PM | Derivative Liability , Trademark | TrackBack
March 02, 2008
Feb. 2008 Quick Links
By Eric Goldman
Advertising
* BusinessWeek: Monetizing social networking sites isn't as easy as everyone had hoped, clickthrough rates are through the floor (0.04%!), and ad proliferation on the sites is driving users away.
* Wilbur, Kenneth C. and Zhu, Yi, "Click Fraud" (January 2, 2008). This paper appears to argue that search engines can increase their profits by failing to disclose the true rate of click fraud on their network.
* In re Miva, Inc. Securities Litigation, 2008 WL 450037 (M.D. Fla. Feb. 15, 2008). This lawsuit alleges that Miva and some associated individuals understated or misreported Miva’s reliance on click fraud, spyware and third party distributors in its public statements and thus inflated the company's stock price. Last year, the court dismissed many of the allegations but let a couple survive. In this ruling, the court dismisses a few more defendants from some statements and lets the rest of the case proceed.
* Going-out-of-business sales are often just another scam. (HT ContractsProf). Note this is completely consistent with economists’ theoretical predictions of final-period behavior of trademark owners.
* Google's stock has lost $70B in market cap in 7 weeks. Oh darn. Clickz offers some theories about why Google's clicks are declining. Could lower rates of click fraud be part of it?
* Hal Varian, Google's Chief Economist, argues that Google's marketplace success is solely due to its "secret sauce" (i.e., the advantage of learning by doing) rather than any defects in the marketplace.
Spam
* Jaynes v. Virginia (Va. Sup. Ct. Feb. 29, 2008). By a 4-3 vote, the Virginia Supreme Court upheld Jeremy Jaynes' 9 year sentence for violating Virginia’s spam law.
* Silverstein v. Experienced Internet.com, 2008 U.S. App. LEXIS 3364 (9th Cir. 2008). Ninth Circuit dismissed a CAN-SPAM lawsuit for lack of jurisdiction when the defendants attest that they didn't send the message and aren't local.
Domain Names
* NSI has been sued for its practice of grabbing pre-registration domain names based on WHOIS searches. The complaint. Good luck defending those practices, NSI!
* Two more breathy articles about the economics of domaining from the New York Times and Network World.
47 USC 230
* Johnson v. Barras, 2007 CA 001600 B (DC Superior Ct Feb. 1, 2008). Court dismisses a lawsuit against a website for republishing a defamatory story per 47 USC 230.
* Yet another doomed lawsuit against MySpace for facilitating communications between an adult male and an underage female that led to sex. Sam Bayard's comments.
Pornography
* NY Lawyer (login required): "Defense Bar Sees Growing Practice in Internet Sex Crimes"
* A federal obscenity prosecution for publishing graphic short stories (without pictures) on the Internet? As Tim Wu says, "astonishing."
* The Utah legislature is considering entering the marketplace again, this time through a certification mark program for Internet access providers who are willing to combat porn. See HB407. Of course, the Utah legislature has had terrific success in the past creating successful new business opportunities that the marketplace has overlooked.
User-Generated Content
* Nick Carr: "What we've seen happen with self-regulating communities, both real and virtual, is that they go through a brief initial period during which their performance improves - a kind of honeymoon period, when people are on their best behavior and rascals are quickly exposed and put to rout - but then, at some point, their performance turns downward. They begin, naturally, to decay." Like, I think, Wikipedia.
* Slate on the top-heavy nature of contributions to Wikipedia and Digg.
* Christian Science Monitor: Teachers Strike Back at Students' Online Pranks.
* Sam Bayard on a motion to quash in the AutoAdmit case.
Reputation
* eBay no longer lets sellers leave negative/neutral feedback for buyers. This putatively stops sellers from retaliating against buyers who leave legitimate complaints, but it also skews the database towards only positive reviews, which ultimately undercuts its credibility.
* In India, where courtships remain very brief by US standards and grooms can be paid dowries by the bride's families, there is an emerging trend for brides to hire "wedding detectives" to ferret out the scoop on grooms and whether their representations are correct.
* Funny article on being a secret shopper for Consumer Reports.
* Dan Solove's book, The Future of Reputation, is now available online for free. Ethan's review of the book.
Patents
* Six years later, eBay finally buys it now: eBay v. MercExchange settles with eBay buying out some of MercExchange's patents and licensing others.
* Mike Masnick: "Psst! Patent Examiners Do Not Scale"
Copyright
* Mike Masnick: “Why We Should All Want Politicians Who Plagiarize.”
* Do Not Resuscitate...My Copyrights (funny).
Miscellaneous
* Citizen Media Law Project has a useful discussion on getting insurance for cyberlaw risks.
* People v. Fernino, 2008 WL 382348 (N.Y. City Crim. Ct. Feb. 13, 2008) (woman violated a no-contact order when sending a MySpace message to the person).
* Mike Masnick: "We Need A Broadband Competition Act, Not A Net Neutrality Act"
* A retrospective on some of the leading dot-coms from the 1990s.
Posted by Eric at 05:32 PM | Content Regulation , Copyright , Derivative Liability , Domain Names , E-Commerce , Internet History , Marketing , Patents , Privacy/Security , Search Engines , Spam , Trademark | TrackBack
February 25, 2008
CaféPress Denied 230 Motion to Dismiss--Curran v. Amazon
By Eric Goldman
Curran v. Amazon.com, Inc., 2008 WL 472433 (S.D. W.Va. Feb. 19, 2008)
Erik Curran was a National Guard soldier who served in "a combat zone." For reasons unclear from this opinion, he was photographed by an unspecified photographer, and the photo (or photos) of Curran became widely republished. Erik is now suing numerous defendants for violations of his publicity and privacy rights based on these republications.
CaféPress is a defendant because third party users provided Curran's photos for republication on CaféPress-produced t-shirts. CaféPress asserts a 230 defense.
Superficially, 230 looks possible. The images were provided to CaféPress by third parties, CaféPress is a website, and 230 preempts right of privacy claims. I also think 230 probably bar right of publicity claims; even if the publicity claims are IP claims, they would