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Technology & Marketing Law Blog

January 27, 2012

Top Internet Law Developments of 2011

By Eric Goldman

As usual, I'm running late with my year-end recap. This post begins with my countdown of the top 5 Internet Law developments of 2011, then it lists other interesting developments and cases. It concludes with some of the most linked posts and then my editor's choice of some posts in 2011 that might have been a little overlooked. As usual, thanks for reading the blog in 2011!

Countdown: My Top 5 List of Developments in 2011

#5: Righthaven Implodes. Since the beginning, I've been skeptical of Righthaven's business model. Seriously, who else thinks it's a good idea to sue small-time mom-and-pop bloggers and non-profits on a one-by-one basis? However, even I had no idea that Righthaven would accelerate their own demise by routinely making basic litigation errors. A sketchy business model + a litigation shop that isn't very good at litigation = one dead start-up. It's always fun (in a bloodsporty way) to watch hubristic bullies get their just desserts, but watching the Randazza firm school the Righthaven litigators in Litigation 101 has been amazing. THAT'S how you litigate.

Righthaven lost often in 2011 (see my August reset). They lost fair use rulings (e.g., CIO, Choudry). They lost on standing grounds (e.g., Democratic Underground, Wolf). They were hit with sanctions. They were hit with hundreds of thousands of dollars of attorney fee shifts (e.g., Leon, Wolf, DiBiase). They even lost their domain name in an auction--a delicious irony given that Righthaven's complaints improperly demanded its defendants' domain names on the theory that it might need the domain name to satisfy a judgment against the defendant, when in fact it was Righthaven's domain name that was used to help satisfy a judgment against it!

Righthaven ended 2011 on death's door, but the trend of newspapers trolling for copyright litigation isn't going away. I'll be watching NewsRight closely in 2012.

#4: Medical Justice Gives Up. Speaking of hubristic bullies... You recall Medical Justice, the organization that helped doctors and other medical service providers take copyright assignments from patients in their as-yet-unwritten reviews so that the doctors could expeditiously remove unwanted reviews by sending 512(c)(3) takedown notices to review sites. It's an interesting legal hack, but it has some bad side-effects, including the fact that patients hated it, the copyright assignments almost certainly were void (for public policy reasons and others), doctors were hurting themselves by discouraging patient reviews (patients prefer to choose doctors when there's a critical mass of patient reviews), and (as our research uncovered) most consumer review sites ignored the doctors' 512(c)(3) takedown notices. Obviously, with those defects, Medical Justice wasn't exactly adding a ton of value to its clients. Medical Justice finally gave up, but too late to prevent a lawsuit against one of its clients and a complaint to the FTC. Chances are Medical Justice will be living with a long-term hangover from this entrepreneurial foray.

Seeing Medical Justice stop peddling anti-patient review tools was slightly satisfying, but that result was always a fait accompli. The reason Medical Justice's change of heart matters is that shady or clueless vendors keep developing new ways to suppress unwanted consumer reviews, and I hope Medical Justice's experiences will discourage other vendors from trying the copyright hack. I talk about these dynamics more in my paper on regulating reputational information.

#3: gTLD Expansion. It remains unclear exactly what ICANN's rollout of unlimited top level domains will do. Due to the expansion of new namespaces, brand owners face a long list of complicated--and potentially expensive--choices to make. Unfortunately, these choices don't really benefit society; instead, the gTLDs tax businesses while the benefits accrue to a small number of service providers (and, of course, ICANN itself). I think many businesses will reserve their name in multiple new gTLDs to prevent squatting--with the net effect that businesses will spend more money just to preserve the status quo. Meanwhile, most consumers are likely to be bewildered by the unlimited number of TLDs, which is just going to increase their tendency to rely on search engines and link directories rather than domain names to navigate to their desired destinations.

#2: Internet Consumer Privacy Lawsuits Tank. 2011 initially looked like the year of the Privacy Plaintiff. A torrent of privacy lawsuits had been filed, plaintiffs had wrested a few important and lucrative settlements, and Internet companies continue to make questionable privacy decisions that create a steady supply of potential new lawsuits.

But the path to riches didn't materialize. Instead, 2011 emerged as the year when privacy class action lawsuits mostly failed miserably. Courts principally rejected the lawsuits on standing grounds for lack of cognizable harm, but plaintiffs failed on other related grounds, such as a lack of damages negating the prima facie case. There were some exceptions where plaintiffs made a little progress (see, e.g., Claridge v. RockYou, Anderson v. Hannaford, Fraley v. Facebook). I'm sure the privacy plaintiffs' bar will be studying those rare successes to formulate a better battle plan--and to better prepare their cases and find strong named plaintiffs, a recurring omission that hasn't gotten a lot better over the year. However, for now, it's clear that the privacy plaintiffs' bar can't just show up in court and hold out their hands for a payday.

#1: Regulators Broke the Internet. We've always known that regulators could combat bad online activity by working "up the chain," i.e., by making upstream service providers liable for the bad acts or obligated to cut off the activity. However, for the most part, we've shared a tacit understanding that systematically going up the chain was a "nuclear" option--it would fix the specific problem but only at significant collateral cost that, on balance, makes the option unattractive.

I think we'll look back at 2011 as the year that tacit understanding broke down. In 2011, regulators around the world showed a seemingly insatiable demand for working up the chain. Although we in the USA like to think we're different from other repressive regimes, the evidence suggests otherwise. Some examples of "up the chain" activity in 2011:

* Arab Spring. Repressive regimes got local Internet access providers to turn off Internet access in the country.
* Operation in Our Sites. The Immigrations and Customs Enforcement (ICE) agency keeps seizing domain names of suspected foreign rogue websites on an ex parte basis, making errors and breaking the law in the process. Mike Masnick blew open the story on Dajaz1.com, which ICE seized on an ex parte basis, conducted secret proceedings for a year, and then gave back the domain name with no explanation.
* Graduated Response. Copyright owners got Internet access providers to voluntarily (?) agree to restrict, and eventually terminate, their users' accounts.
* Secondary liability against intermediaries. Rightowners keep expanding their intermediary targets, including lawsuits against ad networks and SEOs/web designers. To be fair, some of these lawsuits aren't going very far, and expansive secondary liability theories aren't new in 2011.
* Ex Parte Seizures. Rightsowners are asking for the moon against third party service providers in ex parte proceedings, and courts are giving it to them because the third parties aren't there to represent their own interests. We recap this epidemic in this post.
* SOPA and PIPA. These proposed bills were the finest examples of rightsowners pursuing the nuclear option regardless of the collateral damage. The bills' basic architecture was to attack a wide range of intermediaries for third party actions--domain name registrars, search engines, payment service providers, ad networks. By seeking to deputize the intermediaries, the bills sought to instantiate "up the chain" duties across virtually the entire Internet. Putting aside their other policy deficiencies, I think we should resist all laws predicated on that fundamental assumption of intermediary deputization. See my post on the OPEN bill for why I reject the compromise "follow the money" solution. Sadly, I stand virtually alone in my stance.

Other Interesting Developments.

Some other interesting developments this year:

* Patent Reform. The America Invents Act is the most dramatic patent reform bill in years, and it has many provisions that may affect Internet companies, including the joinder standards, the prior user defense, and the novelty/priority standards. The law doesn't fix the overall problems with bad Internet patents or unmeritorious assertions of those patents, but it nevertheless could make some dramatic changes in what Internet companies do.

* Google and Antitrust. Google has become the incumbent in search, and all of its rivals--especially the companies Google is disintermediating--are desperately seeking to knock it off its perch. I believe Google and antitrust was the #1 topic prompting reporter phone calls to me in 2011. We are waiting to see what comes from the FTC investigation into Google's practices, and the list of Google-haters keeps growing daily. At the same time, the anti-Google forces made surprisingly little actual progress in 2011, including suffering a conspicuous (and not even close) loss in the myTriggers case. See my paper on why I am so over the Google antitrust battles.

* DC's Obsession with Busting Silicon Valley Companies. Sometimes, it feels like DC insiders wake up in the morning and wonder, "What Silicon Valley company do I feel like busting today?" Drive down the 101 from San Francisco to San Jose and play the "Spot the FTC/DOJ Bust" bingo game. Some of DC's targets in 2011: Google Buzz, Twitter (finalized in 2011), Facebook, Google pharma ads, Apple and others for no-poaching restrictions, and others. Good times!

* Judges Order Litigants to Hand Over Passwords to Social Networking Sites. This year, several judges ordered litigants to turn over their Facebook passwords to their litigation opponents for discovery purposes. See, e.g., Zimmerman v. Weis (which I added to my Internet Law reader this year). In 10 years, we'll look back at this mini-trend and shake our heads at the judicial cluelessness. Social networking sites contain a mix of public and private information, and letting a litigation opponent root around the account is just as objectionable as making a litigant hand over the keys to his/her house so the opponent can rummage around.

Other Key Court Rulings in 2011

Some other interesting court decisions this year:

* Author's Guild v. Google. The court rejected the Google Book Search settlement agreement for good reasons, but it sent the parties back to square 1. Why the parties haven't been able to broker a legislative compromise is beyond me.

* Barclays v. theflyonthewall. The Second Circuit took a big bite out of the hot news doctrine. Unfortunately, the Second Circuit didn't kill the hot news doctrine outright, but the opinion leaves open very little room for hot news plaintiffs.

* Network Automation v. Advanced System Concepts. The most important keyword advertising ruling to come out in several years. While the ruling itself was a mixed bag for the litigants, the opinion tore down a number of crusty plaintiff-favorable legal doctrines that had cluttered up trademark jurisprudence for years--including virtually mooting the initial interest confusion doctrine and killing the "Internet trinity" bypass to the standard multi-factor likelihood of consumer confusion test. I've noticed that the opinion has already noticeably tilted courts towards more defense-favorable rulings.

* Betty Boop case (Fleischer Studio v. AVELA). For a few months, it looked like the Ninth Circuit had eliminated trademark merchandising rights in characters that were out-of-copyright. Then it changed its mind; but still it liberated Betty Boop to the world.

* PhoneDog v Kravitz. An interesting battle over ownership of a Twitter account.

* Levitt v Yelp/Ascentive v. PissedConsumer. 47 USC 230 still works really, really well as an immunity. In Levitt, Yelp got a 230 dismissal that Yelp had tried to get advertisers to pay to manage consumer reviews. In Ascentive, the court rebuffed a plaintiff's effort to use a trademark infringement claim against a consumer review website to work around 230.

* Habush v Cannon. Buying a person's name as the trigger for keyword advertising doesn't violate their publicity rights.

* UMG v. Shelter Capital. While everyone waits for the Second Circuit's decision in Viacom v. YouTube, the Ninth Circuit stole some of that thunder with a powerful endorsement of the 17 USC 512 safe harbor. Too bad Veoh didn't live long enough to enjoy the win.

* In re Rolando S. Rolando was convicted of felony identity theft for taking a classmate's Facebook page for a joyride. My vote for the most interesting Internet Law case of 2011, and an instant cyberlaw classic. I've already added it to my Internet Law reader, and the students seemed to enjoy discussing the case.

Some of the Most Linked Blog Posts in 2011 (Per Topsy)

* New Advertising & Marketing Law Casebook Available for Review
* Court Orders Plaintiff to Turn Over Facebook and MySpace Passwords in Discovery Dispute -- Zimmerman v. Weis Markets, Inc.
* "App Store" Isn't Generic, But Apple Can't Enforce Its Purported Trademark in the Term--Apple v. Amazon (Apple legal issues are always good link bait)
* Twitpic Modifies Terms and Claims Exclusive Rights to Distribute Photos Uploaded to Twitpic
* Republishing Entire Newspaper Story is Fair Use--Righthaven v. CIO
* Court Rules That Instant Message Conversation Modified the Terms of a Written Contract -- CX Digital v. Smoking Everywhere (the most popular post of the year by far--a modern Contract Law classic)
* Second Life Ordered to Stop Honoring a Copyright Owner's Takedown Notices--Amaretto Ranch Breedables v. Ozimals

Favorite "Overlooked" Posts

A few posts that maybe got overlooked a little:

* Cyberbullying and Restorative Justice [a Long-Delayed Post on DC v. RR]
* Racy Teen Photos Posted to Facebook Are Constitutionally Protected Speech--TV v. Smith-Green
* Marijuana Activist Can't Change His Name to "NJWeedman.com" -- In re Forchion
* Free-to-Consumers Ad-Supported Website Isn't Illegally Priced--Cammarata v. Bright Imperial
* What Would a Government-Operated Search Engine Look Like in the US?

Lists of Yore

Previous top 10 lists from 2010, 2009, 2008, 2007 and 2006. Before that, John Ottaviani and I put together a list of top Internet IP cases for 2005, 2004 and 2003.

Posted by Eric at 09:45 AM | Copyright , Derivative Liability , Domain Names , Evidence/Discovery , Internet History , Patents , Privacy/Security , Search Engines , Trademark | TrackBack

January 20, 2012

Google Gets Significant Win in AdWords/Parked Domains Case

By Eric Goldman

In re Google AdWords Litigation, 2012 WL 28068 (N.D. Cal. Jan. 5, 2012)

Google defeated class certification in an AdWords-related case over Google's placement of ads on parked domains. This almost certainly ends this case in practice, as few if any advertisers will find it worth continuing the case on their own. This ruling also takes us closer to the end of litigation wars over parked domains.

The advertisers sued Google for placing AdWords ads on parked domains and error pages and not adequately disclosing these facts.

The court finds standing under both California UCL/FAL and Article III based the named plaintiffs' allegations that they bought advertising they wouldn't have bought if they knew where Google was going to put it. This was also good enough to confer standing for the unnamed plaintiffs; the court says that "where one class representative in a UCL or FAL class action has already established Article III standing, the court need not analyze the standing of unnamed class members."

The court also finds numerosity, typicality, adequacy, and commonality (on the question of “whether Google’s alleged omissions were misleading to a reasonable AdWords customer”). However, the court rejects class certification on predominance grounds. Even though there are common legal questions among the advertisers, their idiosyncratic factual questions are more important than the common legal questions. Specifically, because only some advertisers were financially harmed by Google's placement of ads on parked domains and error pages, the court would have to investigate each advertiser's results to determine if restitution were appropriate. Further, because each click was auctioned off and sold for a constantly changing price, it would be hard to calculate the "but for" pricing that advertisers would have paid. Plus, not every advertiser is seeking click conversion; presumably (although not articulated in the court's opinion) some advertisers compute their bids on the branding value of ads. The court thus concludes this discussion by saying "any effort to determine what advertisers “would have paid” under a different set of circumstances requires a complex and highly individualized analysis of advertiser behavior for each particular ad that was placed."

To fix this problem, advertisers' counsel suggested a variety of restitution formulae that relied on blanket assumptions applicable to all advertisers. The court rejects these categorical approaches, saying "[s]ince the purpose of restitution is to return class members to status quo, the amount of restitution due must account for the benefits received from ads placed on parked domains and error pages." This too requires a per-advertiser assessment.

Google continues to make substantial progress cleaning up its AdWords litigation docket. Recently, it got rid of Woods v. Google over click fraud and improper pricing discounts; it defeated class certification in FPX v. Google over trademark triggering; and the Ninth Circuit upheld its settlement of the CLRB Hanson case. Even so, it's also clear that litigation forays by advertisers will be a perennial aspect of Google's life going forward; partially due to Google's occasional corner-cutting, but mostly due to advertisers' wish that they could get unlimited traffic at no cost. Then again, the plaintiffs' bar will be sharing some of that joy with Facebook too.

This lawsuit was just one of several lawsuits over the legitimacy of parked domains. I've criticized Google before for its AdSense for Domains program, which fosters an ecosystem that motivates questionable domain name registrant behavior while providing little if any real value to consumers. From my perspective, it's pathetically anachronistic that Google still offers its parked domain program--what is this, 2004? Time for Google to grow up a little more.

While I think it's sad Google can't wean itself from the questionable revenues it derives from its parked domains program, I think it's even sadder to see plaintiffs trying to attack the parked domains ecosystems using proxy defendants like intermediate service providers rather than just going after the domain name owners directly. See, e.g., Vulcan Golf v. Google; In re Yahoo; uBid v. GoDaddy; etc. Let's hope this ruling discourages plaintiffs from bringing future proxy battles over parked domains.

Posted by Eric at 09:24 AM | Domain Names , Licensing/Contracts , Marketing , Search Engines | TrackBack

January 17, 2012

Egregious/Overreaching Ex Parte Orders for Rightsowners Keep Coming -- Deckers and Richemont

[Post by Venkat Balasubramani, with comments from Eric]

Deckers v. Liyanghua, 11-cv-07970 (N.D. Ill.; Dec. 15, 2011) (report and recommendation)

Deckers proceeds against a slew of domain names in Illinois. The case was originally sealed, but in granting a preliminary injunction, the court unseals it. The court's November 15, 2011 (now-unsealed) order provides for the following relief:

- an injunction against defendants
- An order requiring the registries and/or registrars to “prevent the . . . domain names from connecting to corresponding” websites and prevent the registration or transfer of new domain names
- an order directed at search engines, web hosts, registrars and registries to cease facilitating access to any websites through which defendants conduct business
- expedited discovery (Deckers emails a subpoena to banks and service providers who now have to turn over documents)
- authorizing notice via email . . . but “[a] ruling on permissible service of process methods is held in abeyance until Deckers has obtained discovery responses from third parties” [this is significant -- there has not yet been service of process]
- an asset transfer restriction

The preliminary injunction similarly includes a broad injunction against defendants. It also orders the registries to change the registrar of record for the domain names to a registrar of Decker’s choosing. There’s a broad injunction against those "in privity" with defendants, including search engines, web hosts, registrars and registries. The court orders broad discovery, and an asset freeze.

The one interesting thing is that the court makes Deckers post a $150,000 bond. Deckers contested this but the court didn't budge on this issue.

Richemont Int’l v. Montesol OU, 11-cv-09322 (S.D.N.Y.; Jan. 3, 2012)

In this case, the court enters a TRO on Dec. 21, 2011. The TRO broadly enjoins defendants from infringing on the marks and contains an asset freeze. It also purports to enjoin websites, online search engines, online shopping price comparison services and other businesses and publications from advertising, promoting, or marketing the websites or products in question. A similar prohibition is directed to website hosts, ISPs “or any other business supporting, hosting, or providing e-commerce services to defendants’ websites.” The order also directs registries or registrars to “delete all existing DNS entries” for the domain names and to enter the registrar’s default DNS address for the domain names, and orders a slew of service providers to "temporarily disable service to" the domain names.

On January 3, 2011, the court enters a preliminary injunction. The order notes that defendants were served with the papers on December 23 and, as of January 3, 2012, they did not submit any papers in objection. The injunction is similar in scope to the TRO. It contains a broad account freeze directed at third parties. It enjoins service providers from providing support to the websites. It tells the registries/registrars to delete all existing DNS entries and enter the registrar's default DNS address.
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Venkat's Comments

This activity in the courts is crucially relevant to the SOPA/PIPA discussions taking place right now. Congress should take a look at what is going on in courts--if for no other reason than to figure out what relief judges think is authorized under current law (or what relief plaintiffs seem to obtain) and what potential abuses (if any) may occur, and also to explain how exactly SOPA/PIPA changes existing law. Obviously, just because a court authorizes a certain type of relief does not mean that there is always a proper basis for it. There are a lot of cites to "the court's inherent equitable power" in these orders. That's judicial code for: "there is no express basis for it, but I think certain relief is appropriate and I'm going to grant it."

It may not be easy to engender much sympathy for these defendants, but that's not the point. The system has certain procedural safeguards in place, and those should not go out the window just because you're dealing with a foreign online infringer. The relief that is being granted in these cases is extraordinary and is frequently being done with no notice or minimal notice. There is no way much of this will fly against a domestic litigant. In some cases, the initial papers are filed under seal, so defendants cannot determine what the allegations are against them until the preliminary relief--in the form of a shutdown--is awarded. Plaintiffs seem to be required to do nothing more than to present a declaration from their investigative team alleging that (1) defendants infringe, (2) defendants are located abroad, and (3) perhaps the defendants will evade or frustrate the court's relief.

Based on this, the court typically shuts off the defendant's website and also orders relief directed at third parties who may or may not be subject to the court's jurisdiction. These third parties are not before the court and have no chance to contest the scope of the relief being sought. I'm curious as to how they react when they are presented with the order. Do registrars routinely transfer domain names to a friendly registrar of the plaintiff's choosing? Is DNS deletion or revision routinely implemented in response to these orders?

It's interesting to compare the approach Deckers took in this case to the approach it took against alleged infringers who was selling counterfeit UGG boots out of a house (located in Illinois). See Deckers v. Migliore, 11-cv-06836 (N.D. Ill.; Nov. 15, 2011). Deckers didn't obtain any ex parte relief; they moved for a default after effecting service. Is this because a court was less likely to order the total shutdown of the point of sale of the infringing goods (in this case, a house), or because Deckers views infringement occurring on the internet as somehow different?

All of these ex parte shutdown cases (and there are probably many more out there) warrant a *close* look. It's disappointing to see so many of these orders sail through without any significant objection from the judges who sign them. Of course, they offer a preview of how rightsowners will proceed under SOPA. Many have highlighted the potential for abuse under SOPA. There's little doubt that rightsowners will push the envelope. They are already doing so under current law.
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Eric's Comments

Ex parte orders regarding foreign alleged infringers are out-of-control. Without sufficient regulation and without any adversarial pushback, rightsowners have learned that they can ask for ridiculous relief on an ex parte basis and get a judge to sign off on most or all of it. It's clear that rightsowners are asking for way more than the law allows, but judges seem to acquiesce. The results are two-fold:

1) the rightsowners are taking control over third party domain names on an ex parte basis and with questionable notice given to the domain name registrants
2) worse (IMO), judges are issuing orders that purport to bind third party non-litigants, such as domain name registrars, search engines and shopbots. The Federal Rules of Civil Procedure purport to limit such orders against non-litigants, but litigants and judges apparently interpret phrases like "acting in concert" incredibly broadly. The result is that these third party service providers--who aren't in court protecting their interests when the orders are being signed--are presented with a court order that imposes costs on them no matter what they do. They can take the action required in the court order...at some cost. Or they can contest the order...at some cost. Or they can ignore the order and risk being found in contempt. Naturally, these third parties will take whatever path is cheapest--which is usually to honor the order regardless of its legal legitimacy. (This is especially true in the case of domain name registrars, who typically make only a buck or two of profit a year off any particular domain name). So when the judge doesn't tightly control the ex parte requests being imposed on third parties, the judges are usually ensuring that the third party won't contest even an illegitimate order.

Rightsowners don't look so good in this process, but who can blame them for overreaching? If judges are freely handing out lollipops, why not ask for a lollipop! Plus, lawyers view themselves as zealous advocates, so anything that they can get a judge to sign must, by definition, be OK.

This means the real breakdown is occurring with judges. They are supposed to be the safeguards to prevent abuses, but judges are so dependent on adversarial proceedings that they are surprisingly flexible when only one side bends their ears. It looks we need some urgent judicial education about the issues raised by rogue website enforcements.

As Venkat points out, some members of Congress and their rightsowner patrons are also looking pretty silly right now. They keep insisting, with the straightest face imaginable, that rightsowners lack the current ability to bring effective enforcement actions against foreign rogue websites, and this is just FLAT-OUT WRONG. So either these folks are ignorant about what's happening in the courts or lying about it (or possibly both). Now, the entire legislative process is routinely detached from actual facts, so this is nothing unusual, but it's hardly a credit to those who are looking increasingly foolish as rightsowners in court keep getting what lobbying rightsowners and members of Congress keep insisting isn't possible to get. Get your story straight, please.

For the critics of SOPA and PIPA who have decided this legislation is the place to draw the line in the sand: I'm with you, brothers and sisters, but defeating the legislation doesn't end the problem. Until we fix what's taking place in the courts with rightsowners running hog-wild in ex parte proceedings, any legislative successes will be hollow. After we wipe out SOPA and PIPA completely, we need to proactively seek out at least two additional policy solutions:

1) We need to develop educational programs for judges about dealing with ex parte orders, especially when it comes to third party non-litigants.
2) We may need to fix or clarify the portions of the Federal Rules of Civil Procedures so that ordinary service providers aren't bound by ex parte orders against them. The rules should be clear enough that service providers don't have to spend their money to correct judicial errors. Maybe an automatic fee-shift if a plaintiff gets a judge to sign off on an overbroad order that a third party non-litigant successfully contests?

If you have any other suggestions about proactive steps we should take to fix the abuses we're seeing in court, please send them along.

Prior blog coverage of these topics:

* More on Ex Parte Cutoffs of Foreign "Rogue" Domain Names
* Does the House Judiciary Committee Debating SOPA Know What's Going On In the Courts?--Philip Morris v. Jiang
* If You Dislike SOPA, You'll Dislike This Case Too--True Religion v. Xiaokang Lei
* Ad Network Avoids Contributory Copyright Infringement for Serving Ads to a Rogue Website--Elsevier v. Chitika
* Court OKs Private Seizure of Domain Names Which Allegedly Sold Counterfeit Goods--Chanel, Inc. v. Does

UPDATE FROM ERIC: A reader reminded us of the UDRP Sec. 3, which says: "We [registrars] will cancel, transfer or otherwise make changes to domain name registrations under the following circumstances...b. our receipt of an order from a court or arbitral tribunal, in each case of competent jurisdiction, requiring such action." So when a judge issues an ex parte order against a registrar, the registrar's hands may be tied. All the more reason for the judge to get it right and not rely on ex post pushback from the non-litigant third party. This also creates the possibility of abuse of ex parte orders, just like I discussed in this blog post. If we were to redraft the UDRP, we probably would not make it mandatory for registrars to honor ex parte orders.

Posted by Venkat at 11:49 AM | Copyright , Domain Names , Trademark | TrackBack

January 07, 2012

Trademark Owner Can't Hold GoDaddy Liable for Domain Name Forwarding -- Berhad v. GoDaddy

[Post by Venkat Balasubramani]

Berhad v. GoDaddy, C 09-5939 PJH (N.D. Cal.; Jan. 3, 2012)

Plaintiff, Petroliam Nasional Berhad (Petronas), a government owned entity, owns the Petronas Towers in Malaysia. It’s trying to enforce its trademark rights against two domain names (petronastowers.net and petronastower.net). In mid-2010, it quickly obtained relief against both domain names, via in rem actions. These aren’t the disputes before the court. Prior to obtaining in rem relief against the domain names, Petronas urged GoDaddy to disable the website and domain names (the domain names were registered to GoDaddy and GoDaddy provided forwarding services, which pointed the domain names to porn sites). GoDaddy demurred, stating that as the registrar, it could not adjudicate Petronas’s cybersquatting claim and since it did not host the underlying sites, it couldn’t process Petronas’s trademark infringement claim. Petronas is trying to hold GoDaddy liable for not ‘disabling’ the domain name and website at Petronas’s urging. It asserted claims for cybersquatting and contributory cybersquatting against GoDaddy. Its hook for trying to hold GoDaddy liable? GoDaddy “used” the domain names by providing forwarding services for its customers.

Cybersquatting claim: GoDaddy argued that it was covered by the ACPA’s safe harbor. It also argued that two of the three ACPA elements ((1) use; (2) confusingly similar domain name; (3) bad faith intent to profit) were not satisfied. The court does not rule on the safe harbor issue but agrees with GoDaddy that Petronas's claims cannot withstand summary judgment.

The court finds that GoDaddy’s forwarding service does not amount to “use” of the domain names: “GoDaddy simply provided the infrastructure to the registrant to route the [domain names] to the website of his choosing.” It was a free service that GoDaddy provided to its domain name registration customers. Additionally, under the cybersquatting statute, only the registrant or its representative can “use” the domain name and potentially incur liability. Second, there was no evidence that GoDaddy harbored a bad faith intent to profit by providing forwarding services. It also did not charge for the service so it did not profit from the forwarding in any way.

Contributory Cybersquatting: As the court acknowledges, it’s unclear whether courts even recognize claims for contributory cybersquatting. (I blogged about a Western District of Washington case whre Judge Martinez allowed the claim to go forward at the early stages: “Court Allows Microsoft's Claims for Contributory Cybersquatting and Dilution to Move Forward”; see also Eric’s post about SolidHost v. NameCheap: “Contributory Cybersquatting and the Impending Demise of Domain Name Proxy Services?”). The court analyzes the contributory cybersquatting claim under Perfect 10 and Lockheed and says that Petronas has to show that GoDaddy had knowledge and directly contributed to or induced the infringement. When the defendant provides a service the defendant can be held liable where it exercises “direct control and monitoring of the instrumentality” used to infringe. The court says that there is no evidence that GoDaddy exercised any type of control over the registrant’s use of the forwarding services. The court also says that Petronas has not shown that there is any bad faith by the registrant (the person who utilized GoDaddy’s forwarding services). According to the court, the registrant could have used the forwarding to “create mischief” or “annoy the owner of the Petronas mark” – he didn’t necessarily use the forwarding to “profit.” [This was a strange conclusion. I would have thought that the disposition of the in rem actions would conclusively establish bad faith intent to profit by the underlying registrant.]

Cancellation of Petronas’s Mark: GoDaddy asserted counterclaims and sought to cancel Petronas’s mark. Petronas argued that GoDaddy lacked standing to assert the claim for cancellation but the court rejects this: “GoDaddy has standing to seek cancellation because Petronas is using the registration as a sword against GoDaddy.” With respect to the merits of GoDaddy’s claim, the court says that factual issues preclude the grant of summary judgment. [Ouch. Petronas tries to hold GoDaddy liable, but all that's left of the lawsuit at this point is GoDaddy's claim for cancellation of Petronas's mark.]
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The recently much-maligned GoDaddy may deserve a star for not caving to Petronas’s takedown notice, even at the risk of liability to GoDaddy. The court’s discussion alludes to the fact that registrars play a central role in the functioning of the internet as we know it. This just highlights the effect of GoDaddy’s conduct in other cases (e.g., the ex parte takedown cases Eric and I have blogged about). Of course, there’s also GoDaddy’s SOPA-support debacle, which resulted in a drain of domain names (including this one) away from GoDaddy. It’s unclear exactly what GoDaddy did in response to Petronas’s claims. While it did not cancel the forwarding, it did “assist Petronas in seeking a transfer order, and [locked] each domain.” In any event, GoDaddy deserves kudos for not summarily killing the forwarding that the registrant had in place.

The court’s treatment of Petronas’s direct infringement claim for cybersquatting spans many pages. The court ultimately concludes that GoDaddy provided services to the registrant in the nature of “infrastructure,” but still declines to consider GoDaddy’s claim that it was protected under the safe harbor. This is unfortunate because GoDaddy was forced to expend resources dealing with discovery and summary judgment; this may well influence GoDaddy's future dealings with others who are similarly situated to Petronas. ACPA's relevant registrar immunity provision (for damages) provides:

A domain name registrar, a domain name registry, or other domain name registration authority shall not be liable for damages under this section for the registration or maintenance of a domain name for another absent a showing of bad faith intent to profit from such registration or maintenance of the domain name.

GoDaddy’s forwarding services arguably fall under “maintenance” of a domain name, but there’s not much discussion of GoDaddy’s immunity argument at all in the court’s order. The text of the immunity provision also leaves room for a damages claim where the plaintiff shows a “bad faith intent to profit.” This looks like unfortunate drafting that makes it tough for courts to grant immunity without consideration of fact-specific issues that are germane to the overall cybersquatting analysis. It would be nice for the immunity to distinguish between when the registrar is acting as a registrar and when it’s arguably trying to monetize domain names (e.g., through parking). (See: "Film Academy Targets GoDaddy Founder As Legal Fight Heats Up.") Registrar immunity rulings are rare, but if there was ever a candidate for when it is appropriate, this was it. A scenario where registrars routinely comply with rightsholder requests and disable forwarding or DNS resolution would break the internet. The court recognizes as much in its background discussion of the case (“If registrars stopped performing the function of taking name server information and providing it to registries, the Internet would not function.”) Unfortunately, the court does not take the route of providing immunity. [The routing point is relevant to the overall SOPA discussion.]

The court analyzes the contributory claim under Lockheed’s test for contributory trademark infringement. Courts continue to assume the viability of a claim for contributory cybersquatting, but they rarely dig in. Courts also don’t seem to discuss the contours of a cause of action against the backdrop of registrar immunity. A broad cause of action for contributory cybersquatting against registrars is a work-around of the registrar immunity provisions. (As GoDaddy pointed out, it was precluded by the ICANN/UDRP rules from disabling the site pending resolution of Petronas's claims, which were properly directed to a UDRP forum or a court.) I’m surprised the court did not take a much more critical look at Petronas’s claims here. Trying to hold GoDaddy liable for routing and pointing to DNS servers is a short step away from arguing that GoDaddy should be liable for forwarding. What’s next? Will Petronas sue Al Gore for its injuries because he invented the internet?

Petronas obtained the relief it sought: control or cancellation of the infringing domain names. It tried to hold GoDaddy liable because GoDaddy did not in effect disable access to the domain names. The court correctly rejects GoDaddy’s claims, but does not take the shortest possible route in doing so. The court should be cognizant of how its resolution of claims against GoDaddy will affect how GoDaddy reacts in the future to notices from rightsowners. The current trademark liability rules have resulted in a system where trademark owners can send takedown notices, typically to sites themselves. Rightsowners have pushed the envelope and through rulings such as Akanoc, are likely extending this to hosts as well. Petronas's claims tried to take it one step further, and broaden this to the registrar level. The court rejects its attempt, albeit in a long-winded way.

Posted by Venkat at 11:20 AM | Derivative Liability , Domain Names , Trademark

January 03, 2012

Nov.-Dec. 2011 Quick Links, Part 2 (Extended IP Edition)

By Eric Goldman

Copyright

* Costco v. Omega (E.D. Cal. Nov. 9, 2011). On remand after the disappointing non-result from the Supreme Court in this case, the district court gives Costco a decisive win, holding that Omega engaged in copyright misuse:

Omega concedes that a purpose of the copyrighted Omega Globe Design was to control the importation and sale of its watches containing the design, as the watches could not be copyrighted. Accordingly, Omega misused its copyright of the Omega Globe Design by leveraging its limited monopoly in being able to control the importation of that design to control the importation of its Seamaster watches.

The net effect is that Costco violated copyright law's importation clause but Omega's copyright misuse makes the importation not actionable. This is one of the most significant copyright misuse decisions we've seen. Assuming it goes to the Ninth Circuit again, it will be interesting to see what they do with it. If this latest ruling stands, Omega's legal hack will be decisively shut down; and other manufacturers trying to use copyright to control their channels for non-copyrightable articles will want to reevaluate their approach.

* The Righthaven debacle continues to wind towards its messy but inevitable conclusion. Some of the items from the last couple months that caught my attention:

- Every time Righthaven's lawyers whine about opponents' unfair litigation tactics, I'm dumbstruck by the duplicity.

- Stephens Media dropped its efforts to contest that Democratic Underground made a fair use by republishing a newspaper article excerpt.

- Righthaven v. Wolf: "The Court admonishes Mr. Mangano regarding his lack of civility. The motion for reasonable attorney's fees in the amount of $32,147.50 and costs of $1,000.85 is GRANTED."

- Righthaven LLC v. Newsblaze LLC, 2011 WL 5373785 (D. Nev. Nov. 4, 2011). Yet another dismissal for lack of standing.

- the auction for Righthaven.com is going on right now. Current high bid is $1,900.

* C-70/10, Scarlet Extended SA v. Societe Belge des auteurs, compositeurs et editeurs (SABAM) (ECJ Nov. 24, 2011). Some interesting quotes from an ECJ opinion:
- "EU law precludes the imposition of an injunction by a national court which requires an internet service provider to install a filtering system with a view to preventing the illegal downloading of files"
- "The filtering system would also be liable to infringe the fundamental rights of its (Scarlet's) customers, namely their right to protection of their personal data and their right to receive or impart information"
- “E.U. law precludes an injunction made against an Internet service provider requiring it to install a system for filtering all electronic communications passing via its services, which applies indiscriminately to all its customers, as a preventive measure, exclusively at its expense, and for an unlimited period”

* Brownmark Films LLC v. Comedy Partners, 2011 WL 6002961 (E.D. Wis. Nov. 30, 2011): In awarding a fee shift to defendants, "the Court finds that Brownmark's legal positions were also objectively unreasonable, and thus their position was frivolous. To this Court, there is little that could justify the plaintiff's stated view that the South Park version was not parody....given the transformative nature of the use and the lampooning Brownmark's original received, there is ample reason to believe that South Park's use would have greater spurred the market for the original. In the internet era, with information freely and quickly accessible, viewers interested in South Park's version could turn to the internet to find a copy of the original. And any confusion over which version was the original could be supplied to online viewers through a statement at the video's web page. For all of these reasons, the Court finds that Brownmark was objectively unreasonable in its position that South Park's use was not fair." Wendy Davis' writeup.

* Carolyn Wright, a/k/a PhotoAttorney, who helps photographers enforce their copyrights, got side-swiped in a misguided enforcement action and had her photo site mistakenly taken offline by a DMCA takedown notice (not surprisingly, GoDaddy was in the middle of this).

* UC Berkeley revamps its policies about student note-taking and recordings of classes. It seems a little odd to encourage faculty members to be sending 512(c)(3) takedown notices freely. James Grimmelmann has more criticisms.

* Gibson v. Amazon (C.D. Cal. Sept. 8, 2011). The court rejected a copyright infringement case against Amazon, Urban Dictionary and others. Gibson is appealing to the Ninth Circuit.

* RIAA is in pre-litigation enforcement mode against ReDigi for reselling digital files.

* The Zynga-Vostu litigation settled.

* Ars Technica: Warner Bros: we issued takedowns for files we never saw, didn't own copyright to

* Megaupload brought a 512(f) suit against UMG for wrongfully taking down a promotional video. The complaint. The contract. James Grimmelmann's comments.

* The economics of the record label-online music site deals look very, very bad for the music sites.

* Techdirt: Congressional Research Service Shows Hollywood Is Thriving

* David v. CBS complaint. Tertiary infringement re-redux: Download.com sued again for secondary copyright infringement for distributing LimeWire and BitTorrent clients.

* A Singapore newspaper sued Yahoo News for copyright infringement.

* An analysis of the Trans Pacific Partnership (TPP).

Trademark

* 1-800 Contacts, Inc. v. Lens.com, Inc., 2011 WL 5403368 (D. Utah Nov. 4, 2011). The court denies 1-800 Contacts' motion for post-judgment relief based on newly discovered evidence. This case could be a textbook case of trademark bullying--remember, 1-800 Contacts has spent well over $650k on this case and Lens.com made $20 (not a typo) of profit directly from its keyword ads based on 1-800 Contacts' trademarks. Prior blog post.

* Speaking of trademark bullying, does an "Eat More Kale" t-shirt infringe any IP rights that Chik-fil-A has in "Eat Mor Chikin"? See the 2011 C&D letter, the 2006 C&D letter and the 2006 C&D response. I assume most kale eaters don't overlap with Chik-fil-A consumers. But, Paul Levy explains why there should be a pox on both parties' houses.

* Lovely Skin, Inc. v. Ishtar Skin Care Products, LLC., 2011 WL 6055489 (D. Neb. Dec. 6, 2011). In a trademark lawsuit, the defendant asked for:

REQUEST NO. 32: All documents referring or relating to purchasing of keywords, “Ad Words,” “sponsored links,” or other advertisements for search engines and any efforts to achieve search prominence on search engines, including but not limited to Your purchase, or consideration to purchase, the name “Lively Skin” or the URL www.livelyskin.com.

REQUEST NO. 37: Documents referring or relating to communications with Google to purchase “lively skin” and “livelyskin.com” as keywords or “Adwords.”

The court says (cites omitted):

In support of its motion to compel, Ishtar states that Lovely Skin's production of documents in response to these requests are “deficient for two reasons.” First, the Google information lacks the dates that the keywords were used, which are necessary to establish “(1) whether Lovely Skin's marks had achieved secondary meaning when Ishtar entered the market; and (2) the extent of Lovely Skin's inequitable use of the term “livelyskin” in its keyword advertising campaigns.” Second, Ishtar claims that as a result of its recent Internet searches, Ishtar has learned that “Lovely Skin possesses additional information regarding keyword purchases made by Lovely Skin through other search engines.” The Court finds that the information sought by Ishtar is relevant to its affirmative defenses of the claims made against it by Lovely Skin.

* Partners for Health and Home, L.P. v. Seung Wee Yang, 2011 WL 5387075 (C.D. Cal. Oct. 28, 2011):

Defendants have infringed Plaintiff's Perma–Life trademark by each of the following acts, taken either individually or as a whole:

a. Registering the domain www.perma-life.co.kr and using it to promote their competing Pearl Life cookware;

b. Applying the metatags “perma life” and “permalife” to the website at www.perma-life.co.kr through which they sold their competing Pearl Life cookware;

c. Applying the term “permalife” as visible video tags (indexes) on videos promoting Pearl Life cookware which they posted on the Internet at video sharing websites YouTube (www.youtube.com) and Tag Story (www.tagstory.com), and on the “blog” site Daum (www .daum.net).

d. Purchasing the term “permalife” as an Internet search engine advertising keyword to direct Internet users to their website at www.pearllife.com at which they advertised their Pearl Life cookware.

* Foreword Magazine Inc. v. Overdrive Inc., No. 10-1144 (W.D. Mich. Oct. 31, 2011). Offering to sell a domain name after getting a C&D can't be introduced as evidence of bad faith in the resulting ACPA suit.

* Weather Underground v. Navigation Catalyst (E.D. Mich. Nov. 9, 2011). Typosquatters' liability for ACPA violations must be evaluated on a domain name-by-domain name basis, not based on the defendant's entire portfolio; and ACPA bad faith cannot be established on a "willful blindness" standard.

* iYogi Holding Pvt. Ltd. v. Secure Remote Support, Inc., 2011 WL 6291793 (N.D.Cal. Oct. 25, 2011). A default judgment against a competitor who created fake reviews bashing the plaintiff.

* Fordham sent a trademark demand letter to Texas Wesleyan for using the acronym "CLIP" to describe its IP center, which garnered derision from many other IP professors. The demand letter (currently set to private; I'm trying to fix that).

* Multi-Time Machine v. Amazon complaint. A watch manufacturer sues Amazon for trademark infringement based on Amazon's internal search engine's results.

* Night Owl Games v. Zynga complaint. Another game developer seeks a declaratory judgment against Zynga over the -ville trademark, this time "Dungeonville."

* Harvard spikes a Yale t-shirt making fun of it.

* Rebecca provides three updates on Southern Snow Manufacturing Co. v. Sno Wizard Holdings, Inc. (see my prior blog post on the case): insurer had duty to defend, a baffling battle over false trademark marking, and a further rejection that metatags matter.

Patents/Trade Secrets

* The Trade Secret Litigator: The America Invents Act: What Will the Impact of the New Patent Law's "Prior Commercial Use" Defense Have on Trade Secret Protection?

* Coca-Cola turns the vault for its secret formula into a tourist attraction.

* The producers of the Bachelor/Bachelorette sued Reality Steve for inducing show participants to leak spoilers. Reality Steve’s response.

* Are strict limits on e-discovery coming for patent cases?

* All Things D reports on Abhyanker v. Benchmark Capital, an idea theft lawsuit against a VC fund involving the entrepreneur who also is behind Trademarkia.

Posted by Eric at 01:05 PM | Copyright , Domain Names , Evidence/Discovery , Patents , Trade Secrets , Trademark | TrackBack

I'm Not a Fan of this Craptastic Trademark Lawsuit--Fancaster v. Comcast

By Eric Goldman

Fancaster, Inc. v. Comcast Corp., 2011 WL 6426292 (D.N.J. Dec. 22, 2011).

We've seen some pathetic trademark lawsuits this year (SUE MOAR KALE, anyone?), but I'll nominate this long-running litigation money-sink (going over 3.5 years) as the saddest trademark case of 2011.

Fancaster registered its mark in 1989 for broadcasting services, and over the years it's been used in connection with a range of services, "including selling Fancaster branded radios, charging customers to watch closedcircuit boxing matches, producing karaoke shows, transmitting sponsored news messages to wireless pagers and cell phones, and conducting live demonstrations of FANCASTER broadcast services" (cites omitted).

In 2006, it launched Fancaster.com to broadcast short sport-related video clips. It hopes to cover such must-see events "as La Tomatina in Spain, Ostrich racing in Arizona, the Westminster Kennel Club Dog Show and the annual Nathan's Hot Dog Eating Contest." Rather than advertise the website on the Internet (you know, where people who enjoy content online might already be), instead they are seeking out untapped Internet enthusiasts by "marketing the website at sporting events, bars, on local television channels in Sioux Falls, South Dakota and Sioux City, Iowa, on radio stations in Charleston, South Carolina, and via flyers and handbills."

Meanwhile, in 2008 Comcast rolled out a service called fancast.com "that allowed users to watch full-length premium mainstream media over the Internet." The service was a debacle, losing $80M in less that 2 years due to “the unexpectedly high cost of distributing video content on the internet.” (Even though Comcast acquired bandwidth at wholesale rather than retail costs...how much it would have cost non-carriers to launch competitive services?). In March 2011, Comcast shut down the Fancast service and rolled the domain name over to XfinityTV.

With the overlap between the Fancaster and Fancast names, one possibility is that Comcast blatantly ripped off the name of a small startup who wouldn't want to tangle with a giant, thereby creating "reverse confusion" where everyone thinks first-mover Fancaster infringes second-comer Comcast. But another story equally fits this facts: Fancaster is doing a little trademark trolling, seeking to increase Comcast's $80M of losses by grabbing some gravy for itself. (Some gravy indeed: Fancaster's damages expert thought it would take $73M of corrective advertising to fix Comcast's damage to a brand that has no market awareness outside of Sioux City.)

It's a sad commentary on our milieu when we can't tell which litigant is bullying the other. Maybe *both* parties are equally imbibing the bullying elixir. Fancast initially unleashed the litigation hounds, but Comcast responded with a hailstorm of countermoves, including an ACPA counterclaim for a slew of "fancast" domain names Fancaster registered after learning about Comcast's upcoming launch. A lot of lawyers appear to have satisfied their billable hour goals using this case. Yay for free-spending deep-pocketed clients!

Trademark Infringement

The court resoundingly thumps Fancaster's core argument about consumer confusion, miraculously finding a way to twist all of the factors to Comcast's favor. The judge may have cut some analytical corners, but that says the judge simply didn't accept Fancaster's narrative.

The court specifically rejected the possibility of initial interest confusion, citing 3rd Circuit precedent that basically limited IIC to competitors, and the parties didn't directly compete. The court also dismisses Fancaster's efforts to show overlaps in search engine results, saying "the confusion one encounters on an Internet search engine is a twenty-first century version of that experienced when searching the phone book." I am going to be doing some work this quarter to show that the initial interest confusion doctrine almost never succeeds in court any more, and therefore it imposes costs on both litigants for no gain. This case is just one example of that.

The court also scoffed at Fancaster's request for $73M for corrective advertising:

There is not a shred of evidence of any damage to the fancaster mark caused by Comcast. The only loss to Fancaster that Mr. Krueger could testify to was that resulting from pursuing the instant litigation against Comcast.

Evidentiary Issues

Comcast had survey expert Hal Poret do two surveys. The court tosses the first one because it didn't adequately replicate market conditions by not presenting consumers with a navigable website:

use of a printout and static screenshots, instead of live websites, provide ample grounds on which to exclude the March 2009 survey. For one, it is difficult to fathom how presenting a respondent with a paper printout of the FANCAST homepage in anyway replicates how an Internet user would encounter and perceive the FANCAST website in the marketplace. Websites, particularly those that offer video content, are meant to be viewed on a computer and allow consumers to browse and interact with them via hyperlinks. The FANCAST printout offered none of these aspects. Similarly, although viewed on a computer, the static screenshots of the fancaster and control website homepages did not allow respondents to interact with them as they ordinarily would in the marketplace.

I haven't researched this issue, but this ruling may tell us something important about the requirements for consumer surveys when websites are involved.

JUST FOR LAW PROFESSOR READERS: Our colleague Greg Lastowka (a longtime friend) gets toasted by the judge for his expert report, which the judge repeatedly called "totally inappropriate" and says "wanders far from the proper scope of an expert's opinion." For example, Greg's report says the judge can award between $1k-$100k for an ACPA violation (a true statement of the law), to which the judge sarcastically responds "Lastowka's generosity gives the Court at least a modest role." Later, the judge blasts Greg for narrating the requirements of an ACPA claim, saying "A jury should not be receiving instructions on the law from two sources, and however erudite and accurate they may be, Mr. Lastowka's instructions will not be allowed to compete with the Court's instructions." The judge also tosses Greg's report on why Fancaster engaged in ACPA bad faith, saying "the expert assumes the role of the fact finder and is therefore not performing the role of an expert." This is a good reminder that when we're called for potential expert gigs, we have to clarify exactly what we're being asked to opine upon and whether it's appropriate for expert testimony. This judge clearly didn't respond well to any line-blurring about expert testimony.

For what it's worth, the court similarly shreds Gary Krugman's expert report for Comcast about PTO practices (part of Comcast's counterclaim for fraud on the PTO), part of which the judge says "inappropriately usurps the role of the fact finder."

Conclusion

This ruling eviscerated Fancaster's case, making it a strong win for Comcast, but it left a few residual legal issues open. Yet, the legal battle has been mooted by the passage of time. Comcast already stopped using Fancast as a brand, and Fancaster still hasn't shown a lot of movement towards developing a real business or even a revenue model. Are the parties really going to spend more money on a pointless lawsuit? We all know what the answer should be; let's see what they actually answer.

For more on the case, see Rebecca's post.

Posted by Eric at 09:00 AM | Domain Names , Evidence/Discovery , Trademark | TrackBack

December 18, 2011

More on Ex Parte Cutoffs of Foreign "Rogue" Domain Names

By Eric Goldman

I got the following email regarding our prior three posts on ex parte cutoffs of foreign "rogue" websites in the Chanel, True Religion and Philip Morris cases (I'm republishing the email with permission):
__________

All of the court papers in the Chanel case were been posted to http://servingnotice.com/sdv/. Similarly, the court papers in the Philip Morris case are at http://servingnotice.com/jiang/index.html.

A little exploration of the site reveals that a Fort Lauderdale lawyer named Stephen Gaffigan (who seems to be a sole practitioner) has brought a bunch of these cases. In the Chanel case, "service" on the vast majority of the defendants was achieved by posting the complaint at http://servingnotice.com/sdv/ and getting a TRO ordering the registrar of defendants' domains to redirect the accused domain names to http://servingnotice.com/sdv/. Reading the court papers, it turns out that the purported authority cited by Mr Gaffigan in his memorandum supporting Chanel's motion is a collection of orders and default judgments in other uncontested cases brought by the same lawyer, according to the same template. (See http://www.servingnotice.com/ofn/index.html; http://servingnotice.com/pan/index.html; http://servingnotice.com/off/index.html; http://servingnotice.com/oft/index.html; http://servingnotice.com/li2/index.html; http://servingnotice.com/qi/index.html; http://servingnotice.com/wu/index.html; http://servingnotice.com/ling/index.html).

Gaffigan's method seems to be to rely on default judgments. Nobody has showed up in any of these cases to contest his motions in court. (The docket sheet in the Chanel case shows the voluntary dismissal of a couple of defendants, so I assume those individuals showed up and either settled out of court or got off without settling to avoid an in-court contest.) So, there has been nobody to make the argument to district courts that no US statute authorizes the remedies Gaffigan seeks, and nobody to appeal the judgments to a court of appeals, and no opportunity for a court to assess the appropriateness of the remedy in a contested proceeding.
__________

Eric's comments: This email helps to answer some of my prior questions, such as how many similar cases are out there (many) and whether these cases will multiply (it appears the True Religion case was brought by an unrelated law firm, Greenberg Traurig). Yet, it leaves open my most basic question, which is what can be done proactively to educate judges about the potential abuses of the ex parte process, joinder, notice to defendants and orders purportedly binding non-litigant third parties. It also leaves open the implicit question of whether attorneys who seek overreaching ex parte requests will be subject to discipline or sanction for any possible abuses of the process.

Prior coverage:

* Does the House Judiciary Committee Debating SOPA Know What's Going On In the Courts?--Philip Morris v. Jiang
* If You Dislike SOPA, You'll Dislike This Case Too--True Religion v. Xiaokang Lei
* The OPEN Act: Significantly Flawed But More Salvageable Than SOPA/PROTECT-IP
* I Don't Heart SOPA or PROTECT-IP: A Linkwrap
* Ad Network Avoids Contributory Copyright Infringement for Serving Ads to a Rogue Website--Elsevier v. Chitika
* Court OKs Private Seizure of Domain Names Which Allegedly Sold Counterfeit Goods--Chanel, Inc. v. Does
* Why I Oppose the Stop Online Piracy Act (SOPA)/E-PARASITES Act

Posted by Eric at 11:17 AM | Domain Names , Trademark | TrackBack

December 16, 2011

Does the House Judiciary Committee Debating SOPA Know What's Going On In the Courts?--Philip Morris v. Jiang

[Post by Venkat Balasubramani, with comments from Eric]

Philip Morris USA, Inc. v. Jiang, 11-cv-24049 (S.D. Fla.) (TRO entered on Nov. 16, 2011) (Prelim. Injunction Entered on Dec. 12, 2011)

This is yet another case where a court orders broad remedies to a rightsowner who alleged that various foreign domain names were selling infringing products. See our recent blog posts on the Chanel and True Religion cases.

The plaintiff in this case is Philip Morris, who alleges that an investigator purchased products from various websites. The investigator forwarded the products to a Philip Morris representative, who alleged that "what appeared to be Marlboro cigarettes were in fact counterfeit." Additionally, the representative

reviewed and visually inspected the internet websites operating under each of the subject domain names, as well as pictures of items bearing the Philip Morris USA Marks offered for sale on the internet websites, and determined that the products were not genuine and/or authorized Philip Morris USA products.

The court issues a TRO that is similar in scope to the Chanel TRO. (The same lawyer was involved in both cases on the plaintiff's side, so this is probably more of a function of the fact that Chanel and Philip Morris sought similar relief.) The TRO contains the following:

- Defendants are enjoined from using any Philip Morris marks, in websites, domain name extensions, links to other websites, search engine databases.
- The domain name registrars are directed to transfer the domain name certificates to plaintiff (for deposit with the court).
- The registrars are directed to transfer the domain names to GoDaddy, who will "hold the registrations for the . . . domain names in trust . . . during the pendency of [the] action."
- GoDaddy shall also update the DNS data so it points to a copy of the complaint, summons, and court documents (<http://servingnotice.com/jiang/index.html>).
- Finally, Western Union is directed to "divert" transfers made by US consumers to three named individuals

The court later extends the TRO and enters a preliminary injunction with substantially similar terms. The orders in this case don't order any sites de-listed, but are still pretty extraordinary in scope. The fact that the court orders the complete disabling of websites and orders registrars to transfer domain names to GoDaddy based solely on the strength of the declarations Philip Morris's investigator and representative is really surprising. Of course, ordering (on an ex parte basis) the diversion of funds transmitted through Western Union is extreme.

As with the Chanel and True Religion cases, the same questions remain. Is there a relationship between the various defendants and the domain names? What type of notice of the lawsuit did defendants actually receive? Was there actually infringement or counterfeiting? The plaintiffs in these cases end up convincing the court of a key fact: immediate, ex parte relief is necessary because defendants will hide assets and shift operations. Courts seem to take this allegation at face value. (The court does authorize service via alternate means and Philip Morris filed affidavits of service in accordance with the court's directive, but this seemed like an afterthought.)

Yesterday's SOPA hearings caused many observers to cringe (see, e.g., Mike Masnick's horrifying recap). I think it's worth revisiting the question of how courts appear already open to remedies people think are objectionable in legislative proposals that are being considered.

Eric's Comments

In our True Religion post, I asked just how many similar cases are in the system. Unfortunately, there's not an easy way to quantify the litigation activity. For example. in the True Religion case, the entire action was sealed for a couple of weeks. Even without the seal, I don't know how to find these ex parte rightsowner enforcement cases against foreign rogue websites other than laboriously reviewing every federal filing, having readers tip us off or serendipity.

However, with today's case representing the third foreign rogue website enforcement case we've found in the past month, I'm going to guess that more enforcement actions are out there today or are coming imminently. This seems to suggest that rightsowners have figured out a way to work with the current system without any additional legislation.

The fact that rightsowners are making progress on their own without help seems quite relevant to the debates about SOPA taking place right now in the House Judiciary Committee. Unfortunately, those debates are so ungrounded from reliable fact-based deliberation that the unpersuadable committee members wouldn't care if we found a million of these cases. In contrast, if they were willing to consider the facts on the ground, the possibility that courts are giving rightsowners what they want is a strong indication that SOPA doesn't need to be slammed home on the fast track without proper deliberation.

From my perspective, the three cases demonstrate the problems with ex parte judicial oversight. Only hearing one side of the story isn't enough to trigger the kind of draconian remedies the courts are granting. In particular, in this case, interdicting money being sent via Western Union is quite troubling. Basically, the court says that money being sent by customers who may have done nothing wrong goes into a holding tank--the customers don't get their money back now (and maybe never?) even if the transaction didn't consummate. It seems like rejecting the money transfers, rather than interdicting the money, would have a lot fairer to the buyers caught in the middle. But they aren't in court to defend their interests, and no one else is speaking up on their behalf, so the rightsowner can make a pure cash grab from potentially innocent buyers. That kind of result wouldn't happen with real due process.

Instead of insulting each other on Twitter or reading the sports pages, what the House Judiciary Committee should be doing is putting the existing legislative proposal to the side, taking a close look at what's going on in these cases, figuring out how much relief rightsowners are getting today from the courts, and then deciding if any incremental legislation is necessary to fill any gaps or--equally importantly--curb any rightsowners' abuses of the ex parte process. Instead, sadly, the House Judiciary Committee will continue its bizarre form of political theater until the rightsowners get what they paid for.

Meanwhile, I would be interested in trying to curb the ex parte abuses in court, but I don't know how. We are finding out about these orders after-the-fact, and I don't know how to get ahead of the curve. If the affected domain name owners aren't complaining after-the-fact, perhaps that's a sign that the rightsowners are truly hitting only the bad guys. On the other hand, if the process remains ex parte, inevitably rightsowners will make some serious mistakes that will have terrible consequences for legitimate players. I wish I could figure out a way to sensitize the judges about those risks before they rotely accede to the rightsowners' requests.

Posted by Venkat at 09:46 AM | Domain Names , E-Commerce , Trademark

December 14, 2011

If You Dislike SOPA, You'll Dislike This Case Too--True Religion v. Xiaokang Lei

[Post by Venkat Balasubramani, with comments from Eric]

True Religion v. Xiaokang Lei (S.D.N.Y.) (TRO; Nov. 18, 2011) (Prelim. Injunction; Dec. 2, 2011). The initial complaint.

We recently blogged about a case where Chanel obtained surprisingly broad remedies against domain names associated with foreign "rogue" websites which allegedly sold counterfeit Chanel items. Much of the relief Chanel sought and obtained in that case overlapped with relief that the proposed SOPA law would provide to rightsowners.

True Religion, a company which manufactures jeans, brought a similar enforcement action against foreign "rogue" websites in the Southern District of New York. It first obtained a temporary restraining order, which the court converted into a preliminary injunction. The relief obtained by True Religion is similarly broad as, and presents the same due process concerns raised by, the Chanel case.

True Religion filed a lawsuit in the Southern District of New York. As in the Chanel case, it went after numerous domain names in a single lawsuit, and it presented declarations from its investigators that they bought counterfeit goods from those domain names. True Religion also presented evidence that defendants undertook efforts to conceal their true identities (primarily by supplying 'purposely-deceptive contact information' to registrars), and that if defendants were provided notice, they would "likely destroy, move, hide or otherwise make [the domain names, products in question, accounts, and records] inaccessible to the Court." True Religion filed its lawsuit on November 15, and the court issued an ex parte TRO three days later. The TRO broadly enjoined the conducts of defendants and third parties, authorized service via email, and set a hearing for November 30, 2011. Defendants were required to show cause on or before the hearing date as to why the court should not issue a preliminary injunction. True Religion filed two sealed declarations and an unsealed declaration. No defendant appeared or filed any pleadings. On December 2, 2011, the court issued the preliminary injunction.

The TRO: The TRO finds that True Religion established a likelihood of succeeding on the merits of its claims that defendants sold products which infringed on True Religion's trademarks and copyrights and that defendants' conduct will cause irreparable injury to True Religion. The TRO also finds that defendants undertook efforts to conceal their identity and that if "True Religion were to proceed on notice to defendants," defendants would shift their operations. Pending the court's ruling on True Religion's request for an injunction, the court issues the TRO, which contains the following provisions:

- defendants and any third parties acting in concert with them, including ISPs, registrars or third party selling platforms are restrained from selling allegedly infringing items;
- True Religion is entitled to broad financial discovery and discovery from various service providers (MasterCard, Visa, PayPal, back-end service providers, web designers, third-party selling platforms, registrars, registries, ad-word providers, etc.);
- third party payment processors and financial institutions are ordered to freeze any of defendants' funds;
- domain name registries (VeriSign, Neustar, Public Interest Registry) and registrars are orderd to "temporarily disable" the domain names referenced in the TRO, "through a registry hold or otherwise";
- third party service providers are ordered to cease providing service to defendants.

The Preliminary Injunction:

The order largely tracks the TRO, but adds a approximately 24 new domain names. As with the TRO, the preliminary injunction broadly enjoins defendants from exploiting True Religion's copyrights and trademarks. In addition, it contains the following provisions:

- third party service providers who are provided notice are enjoined from providing services to defendants in conjunction with any of the acts which defendants are enjoined from doing;
- a broad asset freeze, directed at banks, payment processors, PayPal and other payment services providers;
- continuing right to conduct discovery for True Religion;
- domain name registries and registrars are directed to continue disabling and lock the domain names, including the new domain names;
- third party service providers, including ISPs, back-end service providers, affiliate program providers, web designers, sponsored search engine or ad-word providers are ordered to "disable service" to the defendant websites; and
- an authorization to serve process via "registered electronic mail" pursuant to rule 4.

This is a slightly different flavor from the Chanel orders, but it raises similar due process concerns. The initial order (the TRO) is issued on an ex parte basis without notice, and it contains extraordinary relief--it's essentially a kill switch for the websites in question. There are a variety of reasons why this has the potential to run roughshod over the rights of defendants or third parties; among other things, there could be some mistake as to the underlying domain name or website. There's no assurance that the site as a whole (as opposed to one or two products) is infringing. Also, after bona fide adversarial proceedings, True Religion's copyrights or trademarks may not turn out to be as enforceable as they seem at first blush. But on the strength of True Religion's unchallenged assertions, the court orders various third parties, including registrars, registries, payment processors, ad-word providers and others, to cut off the defendants. (The court did require True Religion to post a bond of $10,000--a laughably nominal amount.)

Regardless of whether the court has the authority to issue an injunction binding third parties who are not before the court, and who may not even be subject to the court's jurisdiction, many service providers will just follow the court order anyway. They may have no interest in expending resources to fight for a third party's due process rights. Indeed, in its declaration filed after the TRO was issued, True Religion indicated that the registries (VeriSign, Affilias, Public Interest Registry, Nominet UK) disabled many of the domain names in question upon receiving notice of the court order. PayPal also froze the funds in 84 different PayPal accounts.

It's unclear how much business defendants conducted in the United States. If their business activities in the US were nominal, this looks like an extraterritorial enforcement by a US rightsowner in a US court. It's tough to tell, given that the process hasn't been adversarial or even designed to facilitate bona fide participation by the defendants.

I know there are some tweaks in pending SOPA/PIPA legislation that surely would be even more helpful to plaintiffs, but courts today seem willing to grant broad remedies to rightsholders without any legislative change at all. It seems that today, rightsowners are able to go to court and, quickly and at low cost, take down domain names and get an order directing third parties, including service providers, ad networks, and payment processors, not to provide services to various websites. That's a pretty good deal if you are a rightsholder. They may even prefer that to the ITC proceedings proposed in OPEN.

_______

Eric's Comments

This case raises so many unanswered questions for me:

1) Just how many rightsowner vs foreign rogue website lawsuits are already in the court system? Are the Chanel and True Religion cases unique, or are dozens or hundreds of similar cases percolating through the system?

2) Did so much of this case really need to be done under the cloak of secrecy, and even if the answer is yes, why is so much of the case history still sealed?

3) Just how far can rightsowners go in suing dozens or hundreds of unrelated defendants in a single lawsuit? We've seen some pushback against copyright trolls. Are trademark owners similarly overreaching?

4) Just how far can rightsowners go in forcing third party service providers, like domain name registrars, ad networks, payment service providers and others, to honor rulings where the service providers aren't litigants? We dealt with this issue a bit in the 47 USC 230 context in the Blockowicz case. In that case, the Seventh Circuit set some important limits on the reach of Rule 65. Without an adversarial process, were the Chanel and True Religion courts perhaps a little lax in their reading of Rule 65?

5) If rightsowners can already get in court so much of the remedies that SOPA would provide, then why are they pushing so hard for SOPA?

6) Then again, if rightsowners can already get SOPA-like remedies in court, why are we fighting so hard against SOPA? This reminds me a little of the public outcry against UCITA a decade ago--much of the angst was about the parts where UCITA merely restated then-current contract law. Similarly, perhaps SOPA is more of a mirror on present reality than a bona fide change in the law. At minimum, it suggests SOPA may be distracting us from other real problems. If we object to the remedies in SOPA, not only do we need to kill SOPA, but we need to proactively seek new statutes that prevent the outcomes Chanel and True Religion are getting in court.

I plan to continue my personal efforts against SOPA, but it's clear that killing SOPA isn't enough to end the fight. Perhaps OPEN would help by giving rightsowners an easier path to attacking illegitimate foreign websites and thereby alleviate the pressure that rightsowners are putting on doctrines not specifically designed to deal with that problem. That would be a good reason to support OPEN, but it's now 100% clear to me that OPEN also needs more immunities, safe harbors and other limitations on rightsowner powers. If rightsowners get a shiny new enforcement toy via OPEN, they should have to give up some of their overreaching elsewhere.

Posted by Venkat at 11:54 AM | Copyright , Domain Names , Trademark

December 03, 2011

Facebook's Trademark Enforcement Effort Against "Faceporn" Hits Jurisdictional Snag -- Facebook v. Pedersen

[Post by Venkat Balasubramani]

Facebook, Inc. v. Pedersen, et al., 10-cv-04673 (N.D. Cal.; Nov. 29, 2011)

Facebook sued Pedersen and Retro Invent, who are based in Norway and run the "Faceporn" site. "Faceporn" is a website which features pornographic content and "allows its users to create profiles, join groups, upload photos and video, and conduct live chats." Facebook served Retro Invent using the Hague Convention, and moved for default judgment.

The court, on its own motion, raises the issue of personal jurisdiction, and orders Facebook to show cause why the lawsuit should not be dismissed for lack of personal jurisdiction. Facebook argued in its filings that Faceporn targets a United States audience by using a ".com" address, and by virtue of the fact that Faceporn is an interactive website with 250 users in California and 1000 users in the United States. The court says that these allegations alone are not sufficient to satisfy the standard for personal jurisdiction:

not all material placed on the Internet is, solely by virtue of its universal accessibility, expressly aimed at every state in which it is accessed.

(citing Mavrix Photo, Inc. v. Brand Techs., Inc.).

Given the numerous foreign regulators who are taking aim at Facebook, it seems foolhardy for Facebook to argue that use of a TLD along with local registered users confers jurisdiction in a foreign country. Perhaps this argument won't directly tag Facebook because it is already subject to jurisdiction in every country where it uses the TLD, but it's not a great precedent for other internet companies. I'm somewhat surprised Facebook made this argument. Clearly, it's not an internet start-up any more.

Posted by Venkat at 10:32 AM | Domain Names , Trademark

November 28, 2011

Court OKs Private Seizure of Domain Names Which Allegedly Sold Counterfeit Goods--Chanel, Inc. v. Does

[Post by Venkat Balasubramani]

Chanel, Inc. v. Does, et al., 11-cv-01508-KJD-PAL (D. Nev.) (Sept. 26, 2011 Order) (Oct. 11, 2011 Order) (Nov. 14, 2011 Order)

Luxury brand Chanel has engaged in a fierce campaign against counterfeit websites in federal court in Nevada. It has seized approximately six hundred domain names in the last few months.

The basic facts alleged by Chanel are nearly identical. It identifies domain names which are used to "advertise, promote, offer for sale or sell" Chanel goods, including "handbags, wallets, shoes, boots, sunglasses, tee shirts, watches, and costume jewelry." Chanel's investigative team orders goods from the sites. When the goods arrive, they identify the goods as counterfeit (i.e., they bear Chanel marks but are "non-genuine Chanel products"). Chanel also argues that the defendant websites can "transfer registrations, change registration data and content, change hosts, and redirect traffic," thus thwarting Chanel's ability to have effective recourse against the defendants.

Based on these allegations, the court first enters a TRO against approximately 400 domain names, followed by a preliminary injunction (the September 26 and October 11 orders). The second time around, the court enters a temporary restraining order and preliminary injunction aimed at approximately 200 domain names (the November 14 order).

The relief granted by the court is extraordinary in its scope, and includes:

- an injunction against the defendants prohibiting them from using any Chanel marks or selling any Chanel products;

- an injunction against the top-level domain name registry, directing it to change the registrar of record for the domain names to GoDaddy (!);

- an injunction telling GoDaddy to change the DNS data for the domain names so the domain names resolve to a site where a copy of the case documents are hosted (servingnotice.com/sdv/index.html);

- authorization for Chanel to enter the domain names into "Google's Webmaster Tools" and cancel any redirection of the domain names;

- an order requiring Google, Bing, Yahoo, Facebook, Google+, and Twitter to "de-index and/or remove [the domain names] from any search results pages."

Chanel is required to post a bond in the amount of $20,000.
__

Wow.

I'm sympathetic to the "whack-a-mole" problem rights owners face, but this relief is just extraordinarily broad and is on shaky procedural grounds.

First, I did not get a clear sense that this is an enforcement action against a single defendant. If there's no credible allegation of a conspiracy or an arrangement between whomever is behind these domain names, it strikes me as problematic for Chanel to file a placeholder lawsuit and then add or remove defendants at its convenience.

Second, it was not entirely clear why the lawsuit was in Nevada. The domain names are not registered to a registrar that is based in Nevada, and there's no clear basis for in rem jurisdiction. It's possible that plaintiff picked this jurisdiction as a matter of convenience, but there's no apparent relationship between the alleged counterfeiting activities and the State of Nevada.

Then there's the matter that some of the court's relief is directed at a variety of entities that are not parties to the dispute (including the registrars, the registry, Facebook, Twitter, Google, etc.). I'm not sure how this court can direct a registry to change a domain name's registrar of record or Google to de-list a site, but the court does so anyway. This is probably the most problematic aspect of the court's orders. [Interesting that GoDaddy was chosen as the registrar that the domain names would be transferred to.]

Finally, there's no clear basis to authorize a transfer of a defendant's property pending resolution of a lawsuit to the plaintiff. (See Bosh v. Zavala.) I don't see this as particularly problematic in this case because Chanel is not looking to liquidate the domain names, but it certainly raises due process red flags, given that this is all done with minimal (or no) notice to defendants.

On a loosely related note, TorrentFreak has a post about the latest seizure action by ICE/DOJ: "Feds Seize 130+ Domain Names in Mass Crackdown," where the feds seized a bunch of domain names that were allegedly used to sell or promote "counterfeit clothing." I'm always stumped by the timing, motivation, choice of targets, and other aspects of the DOJ's intellectual property enforcement efforts, but particularly in this context, I'm unclear as to why the DOJ puts energy towards enforcements that private parties seem to be able to accomplish on their own. (I'm sure they have their reasons, but they're never obvious to me.)

It's also worth viewing this case within the broader context of SOPA and thinking about which of the remedies obtained by Chanel in this case are ones that SOPA provides (and which have resulted in a hue and cry). (See, e.g., Eric's post: "Why I Oppose the Stop Online Piracy Act (SOPA)/E-PARASITES Act"; Techdirt: "The Definitive Post On Why SOPA And Protect IP Are Bad, Bad Ideas.") An injunction requiring Google to "de-list" sites is one remedy which SOPA expressly makes available, and ordering the registry to transfer domain names to GoDaddy and ordering GoDaddy to update the DNS records is in effect achieving another remedy which SOPA creates. The fight against SOPA may be a red herring in some ways, since IP plaintiffs are fashioning very similar remedies in court irrespective of the legislation. Thus, even if SOPA is defeated, it may turn out to be a Pyrrhic victory--opponents may win the battle but may not have gained much as a result.

Posted by Venkat at 11:21 AM | Domain Names , Trademark

October 31, 2011

District Court Denies Motion to Dismiss on Reverse Domain Name Hijacking Claim -- Airfx.com v. AirFX LLC

[Post by Venkat Balasubramani, with comments from Eric]

Airfx.com v. AirFX LLC, 11-01064 (D. Ariz.; Oct. 20, 2011). See also the UDRP ruling, AirFX, LLC v. ATTN AIRFX.COM,
Claim Number FA1104001384655 (NAF May 16, 2011).

Lurie is an indoor skydiving enthusiast and inventor. He invested in "SkyVenture" brand wind tunnels. In 2006, he looked for an alternate brand and ultimately adopted the trade name "AIRFX." He hadn't publicly launched his business, but he undertook preparations to launch (e.g., lined up a customer and partners). He tried to register Airfx.com but it was already registered. Lurie purchased it from the then-current registrant on February 2, 2007.

AirFX LLC is an Indiana-based business that uses the AIRFX trademark for motorcycle and vehicle parts. In 2010, it contacted Lurie and tried to wrestle the domain name from him. He declined. In April 2011, AirFX LLC brought a UDRP action. The panel ruled that the domain name should be transferred to AirFX LLC.

Lurie brought a lawsuit for reverse domain name hijacking in federal court. AirFX LLC moved to dismiss or to have the case transferred to Indiana.

Reverse hijacking: The court declines to dismiss Lurie's reverse hijacking claim. As the court notes, a reverse hijacking claim was provided in the statute to address the situation where a trademark owner "overreaches" when exercising the trademark owner's ACPA rights. In order to succeed on a reverse hijacking claim, a plaintiff (registrant) must show that (1) the plaintiff's name was "suspended, disabled, or transferred" under a registrar's policy, (2) the trademark owner has notice of the action, and (3) plaintiff's use or registration of the domain name is not unawful. The court says that plaintiff need only show that the use or registration is not unlawful under the ACPA (and not under the Lanham Act).

AirFX LLC largely relied on the UDRP panel's findings plus the fact that, as a trademark owner, it had an obligation to police infringements. The court says that the UDRP rulings are not binding on federal courts and rejects AirFX LLC's arguments that a plaintiff has to show "harassment" in order to prevail on a reverse hijacking claim. Lurie's reverse hijacking claim moves forward.

Procedural disputes: The parties disputed a couple of peripheral procedural issues. AirFX LLC sought to have the action transferred to Indiana. The court rejects this argument because AirFX was required to submit to jurisdiction over a subsequent challenge to the UDRP in "either the location of the registrar's office or where plaintiffs are located." The registrar (GoDaddy) is located in Arizona, so having agreed to this forum in the UDRP filings, AirFX can't move the dispute to Indiana.

AirFX LLC was also hit with an award of costs and fees in the amount of $4,086.30 because it refused to waive service of process. AirFX LLC had a variety of menial arguments for why the waiver did not comply with the rules (lack of a specified return date, an alleged failure to include a self-addressed stamped envelope), but the court rejects these arguments.

___

Reverse hijacking argument claims are rare. A provision under subsection (v) (invoked here) allows for declaratory and injunctive relief. There's also a separate provision (subsection (iv)) which allows for damages but requires the registrant to show that the person claiming rights to the domain name made "knowing and material" misrepresentations. (See Eric's post on the Digimedia case from last year: "Wildcarding Subdomains Is OK; Reverse Domain Name Hijacking Isn't--Goforit v. Digimedia.")

I'm not sure about the court's comment that the registrant bringing a claim under subsection (v) has to show just that the registrant's conduct was lawful under the ACPA, and not address any Lanham Act arguments. Subsection (v) says that the registrant may file an action "to establish that the registration or use of the domain name by such registrant is not unlawful under this chapter." [emphasis mine] (Here's a link to the statute.)

To begin with, AirFX LLC is not going to have an easy time showing that Lurie violated its rights under the ACPA, but the court also drops a footnote to the GoPets case, under which Lurie may be able to tack his registration to the previous owner's. (Here's my post on that case from earlier this month: "Re-registration of Domain Name is not a "Registration" Under the ACPA -- GoPets Ltd. v. Hise.") Why AirFX LLC did not just participate in the market like Lurie and try to purchase the domain name from the former registrant I don't know, but that's one question I'd be asking if I were the court.

(h/t to Marc Randazza, who is counsel for Lurie)
___

Eric's Comments

This is a fine example of how trademark owners claim the "policing" duty to justify trademark bullying. On the surface, there appears to be nothing wrong with Lurie using "airfx" in the pseudo-skydiving business in parallel with AirFX's use in the automobile industry. Because of the unrelated industries, AirFX doesn't have any policing "duty" here. In effect, AirFX appears to be assuming it's the only company in the world that gets to use the trademark--effectively, that it should get dilution-style protection for a trademark that can't meet the requisite requirements.

AirFX's efforts to claw back the domain name are particularly troubling. AirFX doesn't get to preclude all other uses of "airfx," so it is does not "deserve" the domain name airfx.com. Yet, it's able to cheaply pursue a UDRP...and wins! (There is some discussion in the UDRP ruling that Lurie offered to "rent" the domain name and put up PPC links on the parked domain; the panelist seemed to ignore the former and focus on the latter). AirFX overclaimed its trademark rights, the UDRP deck is stacked against domain name registrants, and the result is that Lurie has to spend significant money first to fight the UDRP and then to sue in court. What's wrong with this picture?

To me, this seems like a stereotypical example of trademark bullying as conceived by Sen. Leahy. You recall the Department of Commerce doesn't believe such a thing exists, but consider the results of this litigation battle: AirFX imposed a bunch of legal costs on Lurie for him just to stay in place, making his court "victory" a Pyrrhic one.

As Venkat points out, we've had very few successful claims of ACPA reverse domain name hijacking. It would have been more exciting if Lurie could get ACPA damages (maybe that will come in due course), but even without that, this opinion is noteworthy for the domain name owner's ACPA success.

Posted by Venkat at 02:25 PM | Domain Names

October 11, 2011

Q3 2011 Quick Links, Part 2 (Trademarks/Domain Names Edition)

By Eric Goldman

* In the Betty Boop case (Fleischer Studios v. AVELA), the Ninth Circuit stepped back from some of its perplexing language about aesthetic functionality and the Dastar opinion, but the revised opinion remains confusing. Rebecca's coverage.

* Car-Freshner Corp. v. Getty Images, Inc., 2011 WL 4527782 (N.D.N.Y. Sept. 28, 2011). In rejecting a motion to dismiss, the court say that selling photos of trademarked items can be trademark use in commerce and may not qualify as trademark fair use; and Getty could be contributorily liable for third party photographs. Terrible decision! Marty’s coverage.

* Rebecca recaps the latest ruling in Fair Isaac Corp. v. Experian Information Solutions, Inc., 2011 WL 3586429 (8th Cir. 2011). Prior blog post.

* Firefly Digital Inc. v. Google Inc., 2011 WL 4454909 (W.D. La. Sept. 23, 2011):

Firefly's Marks, GADGET and WEBSITE GADGET, are generic and/or descriptive without distinction or secondary meaning. Accordingly, the Motion for Summary Judgment filed by Google will be granted and Firefly's claims for trademark infringement under the Lanham Act, federal unfair competition, LUPTA and federal and state dilution will be dismissed. Finding that all the requirements for cancellation of Firefly's federal marks have been met, the Court will order that Federal Registration Numbers 3,711,998 and 3,730,874 are cancelled, and will direct the Clerk of Court to provide a certified copy of the judgment that will issue pursuant to this ruling, to the Director of the U.S. Patent and Trademark Office pursuant 15 U.S.C. § 1119 for appropriate cancellation of the foregoing federal registration numbers. Further, the Court will order that the Louisiana Secretary of State cancel from the state registry Firefly's mark, WEBSITE GADGET, pursuant to La. Rev. Stat. 51:219.

Yet another trademark owner ends a trademark lawsuit against Google with fewer trademarks than they started with.

* IPKat provides a very useful explanation of what happened (and didn't happen) with the L'Oreal v. eBay ECJ ruling.

* LimoStars Inc. v. New Jersey Car & Limo, 2:10-cv-02179-LOA (D. Ariz. Aug. 8, 2011). In a default judgment, the court wrote “the mere existence of the www.nylimostars.com website likely adversely impacted Plaintiff’s ranking of www.limostars.com in the listings of Google and other popular online search engines.” Really…? Compare the Bitchen Kitchen case. Also interesting: the court said that the trademark plaintiff could sue the defendant in Arizona based on the defendant’s registration of a domain name with GoDaddy, citing the GoDaddy-registrant agreement’s venue selection clause. I wonder if that contract also has a “no third party beneficiary” clause…?

* Adaptive Marketing LLC v. Girard Gibbs LLP, 2009 WL 8464168 (C.D. Cal. Oct. 9, 2009). I don’t remember seeing this case before, and it just showed up in my Westlaw alerts after 2 years. Keyword advertising defendants may find this case useful. The defendant was a law firm seeking clients who had been allegedly victimized by the plaintiff. The defendant bought the plaintiff’s trademark as an ad trigger and then used the trademark in the ad copy. The court says that the ad buy didn’t constitute initial interest confusion or dilution because the advertiser made a nominative use; and also there was no initial interest confusion because the litigants were not competitors. This outcome is so logical that it should be unremarkable, but defense wins are rare when the keyword ad copy includes the third party trademark.

* Suntree Technologies, Inc. v. Ecosense Intern., Inc., 2011 WL 2893623 (M.D. Fla. July 20, 2011): "Suntree alleges initial interest confusion, which is not actionable confusion in the Eleventh Circuit." Rebecca has more on this case, which reminded me a little of the classic Jacob & Young v. Kent case.

* Mirina Corp. v. Marina Biotech, 770 F. Supp. 2d 1153 (W.D. Wash. March 7, 2011): "in this case, Plaintiff does not argue that Defendant lures its customers away: it argues instead that Plaintiff has a harder time making business contacts because the contacts believe the Plaintiff is the Defendant. Thus, this case is distinguishable from cases where the court has applied an 'initial interest confusion' theory."

* QVC Inc. v. Your Vitamins Inc., No. 10-4587 (3d Cir. July 14, 2011). A corporate-authored blog post about a competitor's products didn't support a false advertising preliminary injunction. The court rejected user-authored comments to the blog post as evidence of consumer confusion (cites omitted):

Comments left on blog posts can be very difficult to authenticate. The use of false identities in Internet forums is now a well-known tactic for attacking corporate rivals. Even if a poster is "legitimate," doubts will often remain as to the sincerity of the comment. And, finally, even if a poster is genuine and making a comment in good faith, whether he or she would fall in to the universe of consumers whose opinions are relevant (i.e., those who are or potentially might be purchasers of the products in question) often cannot be known. Given these considerations, it was especially appropriate for the District Court to give the blog comments only limited weight.

Rebecca's blog post on the case.

* Z Productions, Inc. v. SNR Productions, Inc., 2011 WL 3754693 (M.D. Fla. Aug. 18, 2011). Trademark battle over the mark “cam guys.”

* Coventry First lawsuit dismissed. Prior blog post.

* Sex spray settles Sears "Die Hard" trademark lawsuit.

* Rosetta Stone v. Google oral arguments. A recap (perhaps a little biased).

* Coke Zero’s latest “joke” about overexpansive trademark rights (remember their "joke" about "taste infringement"?) is that it claims it owns the word “and.” That would be funny, except that it’s more of a sad commentary on the state of trademark law--expanded significantly by big trademark owners...like Coca-Cola--that I wouldn’t rule anything out. Yuck yuck yuck.

* Mark McKenna, Probabilistic Knowledge of Third-Party Trademark Infringement, Stanford Technology Law Review (2011). Part of the abstract:

This essay argues that the Supreme Court’s Inwood decision [requires] knowledge that particular actors are likely to infringe as a condition of secondary trademark liability. If, however, courts were inclined to take the analogy to tort law more seriously, then cases involving probabilistic harm would be viewed as negligence cases rather than trademark infringement cases. Liability in these cases would turn on an evaluation of the reasonableness of the defendant’s conduct in preventing harm, taking into account the full cost of alternative precautions. It would also turn on the trademark owner’s ability to prove causation – both in-fact and proximate – concepts that generally are completely absent from trademark cases.

* Tucows.Com Co. v. Lojas Renner S.A., No. 11-C52972 (Ontario App. Ct. of App. Aug. 5, 2011). Ontario court says domain names are property.

* Humorous critique of ICANN's new TLDs.

Posted by Eric at 08:57 AM | Domain Names , Trademark | TrackBack

October 06, 2011

GoDaddy Mismanages Its User Agreements--Crabb v. GoDaddy

By Eric Goldman

Crabb v. GoDaddy.com, Inc., 2:10-cv-00940-NVW (D. Ariz. Sept. 27, 2011)

As online user agreements become longer and more byzantine, it's become common for a "master" user agreement to incorporate numerous other documents by reference. For example, stylistically, many websites put the user agreement and the privacy policy into two separate documents and then incorporate the privacy policy into the user agreement by reference. In most cases, the privacy policy doesn't have to exist separate from the user agreement; but it's so common nowadays that I bet many websites don't consider any other approaches.

Having legal terms sprinkled throughout different documents on the site is legally acceptable if--and only if--the documents link together properly. The flagship online contracts case, Specht v. Netscape, is a good example of how this linking process can fail (it would have been trivially easy for the drafters to cross-link the EULAs in that case). Here, GoDaddy gets a hard lesson in its failure to properly cross-reference documents, and its mistake could lead to a cash payment.

This case is another lawsuit against a registrar for parking ads on undeveloped domain names. Personally, I think it's scummy of registrars to do this because it sets up significant conflicts of interest between registrars and registrants. But if the registrant is told that their undeveloped domain name will be used for ad parking and the registrant can avoid this outcome, then caveat emptor, and may the best registrar win in the marketplace.

In this case, GoDaddy claims it told registrants about the ad parking in its "Universal Terms of Service," which purported to incorporate by reference a "Parked Page Service Agreement." However, the cross-reference in the TOS said the parking agreement applied "only to customers who have purchased those referenced Services." But the registrants didn't "purchase" the ad parking service; rather, GoDaddy imposed it on them for free (or, more precisely, against their will). With the botched cross-reference, the contracts the registrants actually agreed to didn't adequately disclose the ad parking. As a result, GoDaddy can't claim the registrants contractually authorized the parking. GoDaddy still has plenty of other defenses, but it must sting to lose its preferred defense--especially when it had complete control over the situation. WHOOPS.

Posted by Eric at 01:46 PM | Domain Names , Licensing/Contracts | TrackBack

October 03, 2011

Re-registration of Domain Name is not a "Registration" Under the ACPA -- GoPets Ltd. v. Hise

[Post by Venkat Balasubramani]

GoPets Ltd. v. Hise, 08-56110; 08-56112 (9th Cir. Sept. 22, 2011)

Although Eric is not a big fan of them, the Ninth Circuit has produced a slew of domain name opinions this year. GoPets Ltd. v. Hise is one to add to the list.

Background: Hise registered gopets.com in 1999. Hise and his brother and their entity are experienced domainers; they registered more than 1,300 domain names in the past decade. In 2004, Eric Bethke founded GoPets Ltd., a Korean company that developed a game involving "virtual pets that move between the computers of registered users." GoPets filed an application to register the "GoPets" mark in 2004 and the registration issued in 2006. Starting in 2004, Bethke made several attempts to purchase the gopets.com domain name from Hise. The parties went back and forth but never consummated a sale of the domain name.

In 2006, GoPets filed a UDRP action against Wise. The arbitrator ruled in favor of Hise, finding that since Hise registered gopets.com before GoPets Ltd. started using the mark, there could be no bad faith. After the UDRP ruling, the Hise brothers registered a slew of other gopets domain names, including gopet.biz, gopet.org, egopets.com, gopetz.bz, gopets.ws, gopet.tv, gopet.ws, gopet.bz, gopet.de, gopet.eu, and gopet.name. Meanwhile, Bethke again tried to purchase the domain name, and offered up to $40,000 for gopets.com. The Hises demurred and instead sent a letter to the investors of GoPets, offering to sell the domain name for $5 million. After receiving the offer to sell the domain name for $5 million, GoPets Ltd. filed a complaint for cybersquatting, and for claims under the ACPA, and Lanham Act.

The district court granted GoPets Ltd.'s motion for summary judgment on its ACPA and Lanham Act claims with respect to all of the domain names. The court also granted GoPets Ltd. its attorney's fees.

Re-registration of gopets.com: Hise transferred the gopets.com domain name to Digital Overture, an entity owned by him and his brother. Digital Overture re-registered the domain in 2006. The question is whether the 2006 re-registration violated the ACPA. GoPets argued that since its mark was distinctive in 2006 when the domain was re-registered, this is sufficient to state a claim under the ACPA. According to the court, the key question is whether the initial registration was done in bad faith--subsequent renewals or even transfers are irrelevant:

we conclude that Congress meant "registration" to refer only to the initial registration. It is undisputed that . . . Hise could have retained all of his rights to gopets.com indefinitely if he had maintained the registration of the domain name in his own name. We see no basis in ACPA to conclude that a right that belongs to an initial registrant of a currently registered domain name is lost when that name is transferred to another owner.

The court finds that although the re-registration or transfer of gopets.com was not in bad faith, there was ample support for the factual conclusion that Hise's registration of the remaining domain names were done in bad faith. Hise tried to argue that he thought that registration of these domain names was proper based on his UDRP victory, but not surprisingly, the court rejects this defense.

Damages: The trial court awarded $100,000 in damages for Hise's registration of gopets.com and $1,000 in damages for the remaining domain names. The Ninth Circuit vacates the $100,000 award based on gopets.com but affirms the remaining damage award.

The ACPA allows for a plaintiff to elect statutory damages: "in the amount of not less than $1,000 and not more than $100,000 per domain name, as the court considers just." Hise argued (relying on Feltner v. Columbia Pictures Television) that the statutory damage award should have been decided by a jury and not a judge, and having a judge rather than jury determine statutory damages violated his Seventh Amendment right to a jury trial. The court says that this may be a viable argument, but not in this case, since the court awarded the minimum statutory amount. Hise could not have achieved a better result in front of a jury since the jury would have had to award the minimum as well. (See the similar BMG v. Gonzalez ruling in the copyright context). This issue will have to be hashed out in another case.
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If I'm reading the court's opinion correctly, it means that any time someone registers a domain name before a mark has become distinctive or famous, that domain name gets a free pass, regardless of any transfers or changed use of the domain name? Or is the court's decision based on the fact that the basis for the ACPA claim was based on "registration" (as opposed to "trafficking" or "use"), and therefore the renewal or transfer does not create ACPA liability? If GoPets had stronger facts around Hise's use of the domain name, would it have made a difference?

I'm guessing the opinion just speaks to registration. Other decisions have held that the determination of the lawfulness of a domain name registration is not fixed--it may change over time, depending on the defendant's conduct and use of the domain name. (Storey v. Cello Holdings, L.L.C., 347 F.3d 370, 385 (2d Cir. N.Y. 2003) ("Congress intended the cybersquatting statute to make rights to a domain-name registration contingent on ongoing conduct rather than to make them fixed at the time of registration".) It's useful to contrast the result for gopets.com with Newport News Holding Co v. Virtual City Vision (4th Cir. April 18, 2011) [pdf]. As Eric wrote in May, the registrant of newportnews.com won a UDRP proceeding, but ten years later, was the subject of an adverse ruling on ACPA claims against it. What went wrong?

[I]n making changes to its website in 2007, VCV [the registrant of newportnews.com] shifted its focus away from the legitimate service of providing information related to the city of Newport News and became instead a website devoted primarily to women’s fashion....VCV cannot escape the consequences of its deliberate metamorphosis....newportnews.com went from being a website about a city that happened to have some apparel advertisements to a website about women’s apparel that happened to include minimal references to the city of Newport News.

Thus, the court awarded $80k in damages, $10k in sanctions and attorneys' fees against VCV (the registrant of newportnews.com). It would not be prudent to read the Ninth Circuit's Gopets.com opinion as giving registrants a free pass for the life of the domain name. I doubt that's what the court meant, but I was surprised the court was not clearer about it, and surprised that the facts around the Hises' use of the domain name did not factor at all into the legal analysis.

UPDATE: Ryan Gile says "The lesson here is two-fold. Failing to negotiate in good faith can lead to unnecessary lawsuits and lawsuits often last longer than internet companies or their brands."

Posted by Venkat at 01:22 PM | Domain Names , Trademark

September 22, 2011

Copyright Preempts State Tort Claims Over Loss of Control Over Website -- 78th Infantry Div. v. Oprendek

[Post by Venkat Balasubramani]

78th Infantry Division, WWII Living History Ass'n v. Oprendek, 11-165 (D.N.J.; Aug 4, 2011)

This is another web vendor dispute. Professor Goldman posted about one earlier this week. As in that case, here the parties did not heed his admonition (which cannot be repeated often enough):

Hey people, when you have vendors help run your website, PLEASE dot your i's and cross your t's. When the shit hits the fan and the contract isn't in place or clear enough, the resulting litigation fusillade can destroy your life.

The 78th Infantry Division, World War II Living History Association is a non-profit organization that provides World War II reenactments and educates the public about World War II. According to the facts as the court describes them, the Association registered the 78thinfantry.com domain name in 2003, and in 2006 Oprendek joined the Association "and volunteered to be the webmaster." He recommended that the Association transfer the domain name to him, "claiming that 'the website needed more space,' and that the website would be easier to maintain under his control." We all know what happens next.

In 2009, Oprendek resigned, and instead of transferring the domain name back to the Association, he allegedly cancelled it and registered the domain name in his own name. He also allegedly used "content from the Association's website" to create a competing organization which he formed with some former members of the Association. Oprendek then registered the website's contents with the copyright office.

The Association sued in state court, alleging conversion, trespass to chattels, breach of the duty of loyalty, tortious interference, and unjust enrichment. Oprendek removed the lawsuit to federal court, citing preemption. The Association moved to remand, and in a sweeping ruling, the court says that the lawsuit stays in federal court due to copyright preemption.

The court says that "the core" of the Association's conversion claim "is the unauthorized taking of a website domain and its contents." Conversion under state law is the exercise of control over property "without authorization," and the court says that this element is "conceptually indistinguishable from an unauthorized taking in the copyright context." The court finds that a trespass to chattels cause of action is similar to a conversion claim, and both of these claims are preempted.

For whatever reason, the court does not separate out the Association's claim for dispossession of the domain name and the contents of the website. Wrongfully taking control of someone's domain name can state a claim for conversion. Recently, the Ohio Court of Appeals found in Eysoldt v. Proscan that GoDaddy could be held liable for preventing a customer from accessing their domain name and transferring it. This is not the same as preventing someone from accessing or updating the contents of their website, and this difference should be enough to avoid preemption. Preventing someone from accessing the back-end of their website so they cannot update the site's contents is a somewhat closer question, but even this arguably does not fall squarely within the rights granted by the Copyright Act. The question in my mind is whether this overlaps with the right to modify and create derivative works as provided in the Copyright Act. There's also the issue that the ownership of the underlying contents is at issue, and this is sometimes resolved with reference to state law.

The Ground Zero Museum web-vendor dispute Eric posted about addressed almost exactly the same preemption issue, and the court in that case also conflates access to the server, access to the website, and control over the domain name. The court comes to the opposite conclusion in that case, finding the trespass claim not preempted:

Plaintiffs do not contend that Wilson reproduced the content of the website, prepared a derivative work, distributed copies of the website, or displayed it in an alternate public forum. Instead, one component of Plaintiffs' claim is that Wilson deprived them of access to or possession of their own website or specific webpages for a period of time. This does not overlap with the exclusive rights granted to copyright holders.

The discussions from both of these cases were somewhat confused (and confusing). As Eric mentioned, in looking at the issue, it's worth separating and analyzing separately: (1) the domain name, (2) the content of the website, (3) access to the content of the website (which in many cases probably can't form the basis for a claim that does not survive preemption), and (4) access to the physical server itself.

This is a messy dispute all the way around, and Eric's admonition with reference to the Ground Zero web dispute is probably the big takeaway: do not transfer your domain name to your web vendor without documentation in place. I also thought the court's conclusion on the preemption issue was worth flagging and worth contrasting with the GZM case.

Posted by Venkat at 07:32 AM | Copyright , Domain Names , Trespass to Chattels

September 06, 2011

Marijuana Activist Can't Change His Name to "NJWeedman.com" -- In re Forchion

[Post by Venkat Balasubramani with additional comments by guest blogger Laura Heymann and Eric]

[Eric's note: this may be our first post with *three* different bloggers covering the same case! Venkat starts us off:]

In re Robert Edward Forchion, Jr., 2011 WL 3834929 (Ca. Ct. App. Aug 31, 2011)

Robert Edward Forchion, Jr. filed a petition to have his name changed legally to "NJWeedman.com." The trial court denied the request, and the appeals court affirms.

Background: As the court describes him, Forchion:

is a resident of New Jersey. Since 2009, he has managed a Rastafarian temple in Los Angeles and has operated a medical marijuana dispensary that he claims is lawful under the Compassion Use Act of 1996. . . . He has devoted his adult life to promoting the legalization of marijuana and, in 2000, was convicted in New Jersey of marijuana offenses. Forchion is currently facing trial in New Jersey on marijuana charges arising out of an arrest on April 1, 2010. He is free on bail.

Forchion has a national reputation as a marijuana advocate and is popularly known as NJweedman. He operates a Web site, "NJweedman.com," which discusses his efforts to legalize the drug. In 2001, Forchion unsuccesfully petitioned the New Jersey state courts to change his name to "NJWeedman.com."

Discussion:

Forchion's life: The court spends approximately 20 pages recounting the details of Forchion's life, including his protests, and brushes with the law. (These facts were apparently taken from Forchion's website.) For example, the court notes that he "smoked his first marijuana cigarette and 'was immediately impressed by its medical healing powers, in regard to his asthma' . . . . [b]y age 18 he was a regular user . . . and dismissed the Surgeon General's claims of its harms as 'propaganda and Christian superstitions.'" He enlisted in the United States Marine Corps where he continued to use marijuana, despite the government's prohibition. He became a coast-to-coast trucker in 1994. In 1995 he "became a practicing Rastafarian."

In 2008, he apparently fled to California, "seeking asylum, leaving the garden state for the pot friendly environs of Los Angeles." In 2009 he opened a "Rastafarian Temple" on Hollywood Boulevard. The temple was named "Liberty Temple II, after a series of protests he held at the Liberty Bell in Philadelphia." He then became a "Hollywood persona," and opened a "party promotions company called "NJweedmanPromotions." In 2010, he penned his biography, which was titled "Public Enemy #420." None of this is particularly relevant to Forchion's name change petition, but the court walks through the facts in some detail and they were strangely interesting. (All of this just gets to page 6 of the court's recitation of facts.)

Name changes generally: The court notes that people who wish to change their names have two different options. They can take the route of a "common law change of name," and simply start referring to themselves as something else (as long as their purpose is not to "defraud or intentionally confuse"). They can also formally change their names pursuant to statute. The statutory route offers certain advantages, namely the change of name is "definitely and specifically established and easily proved." In contrast:

[a] common law name change . . . carries with it no mandate to those with whom one comes in contact to accept at face value the nexus between the new name and the individual who assumes it.

In any event, the court concludes that while there must be a "substantial" reason for denial of a request to change one's name, the trial court is vested with discretion in ruling on a name change petition and the reasons offered in case law for refusing a name change request are not exhaustive.

Can Forchion change his name to a domain name?: The court turns to the key issue of whether Forchion can change his name to a domain name. This turns on whether Forchion is guaranteed to be able to use the NJWeedman.com domain name indefinitely. The court notes that although domain name registrants "appear to possess all [of] the component rights" of property owners, on closer examination, "it becomes apparent that a domain name is not property." The court concludes that a domain name is merely the product of an agreement for services between the registrant and the registrar. The agreement--pursuant to which a registrant secures a domain name--is not guaranteed to continue indefinitely. The registrar places numerous limitations on the registrant's use of a domain name and if the registrant breaches the domain name registration agreement in any number of ways (e.g., fails to pay fees, allows the domain name registration to lapse, uses the domain name in violation of the law), the registrar can cease providing the registration services. The court sees this as problematic because if Forchion's name change is approved, his name would "permanently" become "NJWeedman.com," but if he loses the domain name a subsequent user could end up with the rights to NJWeedman.com. In the court's eyes, the "dual use might create confusion, depending in part on what the new registrant did with NJweedman.com."

The court also notes that even if Forchion continued to pay the registration fees in perpetuity, his use of the domain name may run into problems due to a conflict with third party trademark rights. If a third party is able to assert trademark rights and successfully force Forchion to change his website or discontinue his use of the NJweedman domain name, the court says that his continued use of NJweedman.com as a personal name would be problematic. The court says it's not aware of any procedure pursuant to which a third party could force NJweedman.com (f/k/a Forchion) to change his personal name. The court says that these types of trademark considerations are not ones that the trial court should be forced to consider, when ruling on a name change. [Strangely enough, the court relies on those considerations in making its decision.] At the end of the day, the court says that domain names and personal names should remain in separate realms and the streams should not be crossed:

In sum, personal names and domain names should not overlap; they belong in distinct realms. Domain names were created for use on the Internet and should be limited to assisting a user in finding a desired Web site. By the same token, we should not treat a person as part of a domain.

As an added bonus, the court also points out that Forchion's website encourages others to break the law and is on thin legal ice. The website provides instructions on how to grow marijuana. It urges individuals to call New Jersey law enforcement and "provide false reports about the use of marijuana, hoping to send the police on wild goose chases and squander valuable resources." The court also closes the 37 page (!) order with a nod to comity principles. The court notes that while courts are "divided over res judicata applies to name changes . . . the principles that underlie the application of that doctrine are present here."

The court's opinion borders on entertaining and covers a lot of different ground. In particular, the discussion of the two types of name changes was interesting. At 37 pages, it felt a bit excessive, but I can't say I was disappointed after reading it.

I was surprised to see the court treat the domain name registration rights as a contract right, rather than a property right, given that numerous cases have discussed the issue since Kremen v. Cohen and have concluded that (at least for conversion and creditor remedies purposes) domain names are considered property and not a contract right. (See, for example: Eysoldt v. ProScan and CRS Recovery, Inc. v. Laxton.) As Eric points out, the fact that the domain name registration agreement could lapse or be terminated wasn’t a particularly persuasive basis to deny Forchion’s name change request.

I hadn't given any thought to the interplay between trademarks and personal name changes, but a quick Google search led me to a Yahoo! answers question titled "Can i legally change my name to Krispy Kreme," which in turn led to a New York Times article about a 1995 lawsuit between Coca Cola and Fredrick Koch, who wanted to change his name to "Coke-is-It." (See "Coke Settles With 'Coke-is-it.'") It looks like Coca Cola settled with Mr. Coke-is-it based in part on his agreement to not use his name commercially. To the extent the court should have even raised the issue on its own, the trademark versus personal name conflict was unrealistic in this case, given the name chosen by Forchion. I guess a lawn maintenance company in New Jersey could have a similar name and grumble, but really?

I wasn't particularly persuaded by the court's reasoning that a person should not share a personal name with a website because of the possibility of confusion between the two. Is there a realistic possibility that someone would look at Forchion post-name change and equate him with a website found on the internet? Even to the extent there is confusion, would this really result from the addition of .com to NJweedman? Courts and the PTO have long recognized the lack of trademark significance of a .com, and the court's conclusion seems to presume that Forchion's use of a dot com for his personal name would somehow be the basis for confusion.

I didn't have any immediate plans to change my name to balasubramani.com, but at least in California it looks like this wouldn't fly.

Other coverage:

"Court won’t let marijuana activist change his legal name to njweedman.com" (Evan Brown)

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Laura Heymann's Comments

[Eric's introduction: I'm pleased to include the following thoughts from Laura Heymann, the Class of 2014 Professor of Law at William & Mary Law School. Laura has been doing some excellent and thought-provoking work on the regulation of naming, and this case squarely implicates the issues she has been thinking about deeply.]

In In re Robert Edward Forchion, the California Court of Appeal affirmed a lower court decision denying Forchion the right to change his name to NJweedman.com, which also happens to be the URL for his website. Forchion is not the first individual to attempt to change his name to a URL. In 2003, animal rights activist Karin Robertson legally changed her name to GoVeg.com, the website of her employer, the People for the Ethical Treatment of Animals, in order to spark discussions about vegetarianism and animal rights; she reverted to her birth name three years later.

Forchion has apparently long advocated in favor of the legalization of marijuana, and both his advocacy and his personal experience with the drug have been the cause of a number of run-ins with the law, all of which is detailed at his website. (As Venkat notes, the California appellate court, taking “judicial notice of the content of [Forchion’s] Web site and any other Web site to which it provides a link,” quoted extensively from the website in rendering its decision.) While he was incarcerated in New Jersey, his home state, Forchion unsuccessfully petitioned the New Jersey state courts to change his name to NJWeedman.com. Forchion subsequently moved to California, where he continued his advocacy (and also operated an allegedly lawful medical marijuana dispensary). In California, Forchion tried again, petitioning a lower court to change his name to NJweedman.com, and was similarly rebuffed both there and on appeal.

As Forchion’s choice of moniker demonstrates, and as I have discussed in a recent article (Naming, Identity, and Trademark Law), personal names have at least three functions. A name is denotative, in that it refers to or identifies a person, allowing us to talk about an individual when he or she isn’t present. A name is also connotative, in that it often suggests or brings to mind a set of characteristics or attributes relating to the person to whom the name is connected. Parents typically have connotation in mind when they decide what to name their children, particularly when choosing a name that signifies a connection to a religious or ethnic heritage. And a name also has an associative function in that it signals a connection to a group or family. Indeed, the decision of Eric and his wife, Lisa, to take on a new shared surname upon their marriage is an example of, as he once wrote, establishing a “new common identity which is uniquely [theirs] as a couple.”

Our personal names also function, in a sense, like trademarks. When we write or speak or otherwise share our creativity with the world, our name is what tells people who is responsible for those thoughts and what allows us to build our reputations. And, like trademarks, we may well want to choose a name for our efforts that is itself creative – that expresses something about ourselves that our given names do not. Indeed, each time we participate in an online environment – a social network, a virtual world, a blog, or even sending e-mail – we choose a name through which we will present ourselves to the world.

Many naming choices are made informally – we ask friends and relatives to call us by a nickname or choose a pseudonym when we decide to comment on a blog post. But in an increasingly administrative world, some choose to make names “official” by petitioning the courts for a change in name. Despite the claim by many jurisdictions that this process is ministerial – simply to create an official record of the exercise of the right we have under the common law to change our name – courts will, from time to time, deny such requests on the grounds that the requested name was chosen for fraudulent or deceptive reasons, is offensive or obscene, or is otherwise objectionable. California’s name change statute has been interpreted as granting the courts discretion in deciding whether to grant a name change petition but also as providing that petitions should not be denied without some “substantial reason.” Indeed, the California courts’ own website suggests that the “main reasons” for denying a name change petition in the state are a finding that the petitioner is changing his name to commit fraud, hide from authorities, or for some other illegal reason.

So why was Forchion’s petition to change his name to NJweedman.com denied? The California appellate court offered four reasons, all of which seem somewhat curious. First, the court held that allowing Forchion to change his name to NJweedman.com ran the risk of confusing others. For example, the court noted, if Forchion ever lost the domain name for his website and someone else were to pick it up, there would now be two entities out there sharing the name NJweedman.com: Forchion and the now unrelated website. This, the court held, was untenable because “if both parties used that name to conduct business, confusion might result.” Second, even if Forchion did maintain the website, the court held, “the name might be so similar to another Web site name or trademark that the multiple usage would create confusion.” Third, the court held that the name change would encourage those who encountered Forchion to view his website, which, the court concluded, encouraged illegal activity. And, finally, the court held that given Forchion’s failed attempt to request a similar name change in New Jersey, his home state, principles of comity militated in favor of denying relief in California.

The idea that changing one’s name to that of an existing URL would create a level of confusion warranting the denial of the name change – either as between that URL or another URL or trademark – seems implausible. Naming is always contextual, and it is the rare name that isn’t also being used by someone else. We all like to think of our names as unique, but a quick Google search will often reveal at least one other person who shares our first name/last name combination. [Eric's note: recall our mockery of Bev Stayart on this point]. It’s also not uncommon for a personal name to be identical to a common word in the English (or another) language, such as the first names Hope, Faith, Hunter, and Clay. None of this presents a considerable difficulty either for the named or for those who refer to them; context will typically tell us whether the sentence “Faith is important to me” is being uttered by a congregant or by Faith’s partner. Although it has communicative components to it, a URL is ultimately an address. “Montana,” for example, has ranked among the top 1,000 girls’ names in the United States in recent years [you can do a search for Montana in NameVoyager], but no one would suggest that the existence of hundreds of little Montanas running around is going to cause travelers to have problems finding the state on a map. Nor is the potential similarity to an existing trademark problematic. A quick Internet search reveals more than fifty individuals with the given name John Deere, but it is unlikely that anyone negotiating with any of these men has been confused into thinking that they are dealing with the farm equipment manufacturer.

Comity also seems to be a curious basis for denying a name change petition. Given the mobility of individuals today and evolving family situations, it’s possible that an individual might change one’s surname upon marriage, change it back to one’s birth name upon divorce, change it again upon remarriage, and change it again for professional reasons. It would be odd to suggest that the ruling of any one state on one of these petitions would affect in any way the ability of another state to make a subsequent ruling. There may be statutory limitations on a court’s ability to render such a judgment, in that a particular state statute might require that the petitioner be a resident of the state in order to file a petition (as the appellate court suggested here). But comity doesn’t seem to be the reason to bar such requests, particularly if part of the basis for deferring to a sister state is, as the court stated here, that “the first two letters of the requested name — NJ — are not only the home state’s abbreviation but are intended to refer to that state.”

And so we come to what seems to be the primary motivation for the denial: the content of Forchion’s website. The court did not conclude that the name “NJweedman.com” was itself offensive; indeed, it noted that several New Jersey residents bear the surname Weedman. And while courts have rejected petitions to change one’s name to words that are, on their face, offensive or obscene, on the ground that the court should not be seen as stamping its imprimatur on the name choice, the name “NJweedman.com” does not seem to rise to that level. Nor should the fact that the name request is unusual be dispositive. Courts have approved name changes to single words, such as “Variable,” and to names that include punctuation marks, such as exclamation points. Not all courts have followed this path; a Pennsylvania court in 2000 affirmed a lower court’s rejection of a woman’s request to change her surname to the letter R on the ground that such a surname was “bizarre” and would therefore arouse suspicion. But even the New Jersey appellate court hearing Forchion’s previous petition noted, in its 2004 ruling, that “the name is not so bizarre as to call for denial of the request on that basis.”

But denying a name change petition on the ground that it may lead others to read about the petitioner’s views on controversial matters – even if those views can be characterized as supporting illegal activity – seems to create difficult boundary problems. A name change inspired by a reclaiming of one’s heritage, for example, may connect that individual to new or additional communities, but it would be problematic to suggest that a court’s view of that community should be the basis for rejecting the change. The fact that Forchion’s requested name change is also the URL of the site may well inspire a few who encounter Forchion to visit the site. But given Forchion’s own self-promotion efforts – and the media stories that have resulted, many of which use Forchion’s adopted name in any event – any such effect seems to be a thin justification for deeming the name change improper. Indeed, the fact that the court stated that the URL “should not also serve as Forchion’s personal name as long as he uses the Web site to encourage others to violate the law,” thus suggesting that the name would be appropriate were the content of the website to change, raises interesting First Amendment implications.

Here, the words of an Ohio appellate court seem relevant, when, in 2005, it granted a petitioner’s request to change his name to “Sacco Vandal,” after the anarchist Nicola Sacco and the Germanic tribe. “It’s a free country,” the court wrote. “The applicant is a grownup. He can change his name to anything he wants so long as the new name is not clearly improper or unreasonable . . . . If the applicant is using the name change to make a statement to society – and most applicants do – it is a subtle one.” The statement that Forchion is making by calling himself NJweedman.com may be considerably less subtle, but that does not mean it is without expressive content.
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Eric's comments

I agree with Laura's comments that the court's rationales for rejecting the name change are indefensible. It seems that the court implicitly--and improperly--shifted the burden onto Forchion to have a good reason for the name change, instead of retaining the burden to provide a good reason why the name change was problematic.

I was especially unpersuaded about the possibility that the NJWeedman.com domain name would end up in someone else's hands. If this is the court's concern, Forchion could have prepaid the domain name registration for the maximum length permissible, which I believe is at least a decade. That wouldn't have changed the fact that Forchion could still lose the domain name due to a breach of the registration agreement, but I believe those interventions are exceedingly rare. So the "permanence" of a domain name registration could be largely addressed through cash, and the court cut an analytical corner by treating a domain name registration as impermanent.

I'm also scratching my head because Forchion can still effectuate a common law name change, which will give him 90% of the website publicity traffic he seeks. So it's not clear how the court actually advances its policy concerns by denying the official name change.

More generally, despite Laura's scholarly work, state policies governing name spaces remain undertheorized and under-scrutinized. For example, as I blogged on my personal blog, California went decades with a facially illegal distinction in its marriage license, letting the woman take the man's name but not letting the man take the woman's name. California finally fixed this problem with a statute in 2007. For more discussion on government policies towards personal names, see these articles on marriage names and baby names). Another government-operated namespace that doesn't get much attention are vanity automobile license plates; we've seen a variety of questionable government policies emerge there without much pushback.

FWIW, because I changed my name to Eric Goldman from Eric Schlachter, the name Eric Schlachter is freely available for other takers (although, I should point out, there are a few other Eric Schlachters currently using the name). As I mentioned in this blog post, anyone else is free to adopt "Eric Goldman" too, but I plan to defend my favorable search engine placement vigorously!

Posted by Venkat at 08:41 AM | Domain Names , Publicity/Privacy Rights , Trademark

August 29, 2011

Levi Strauss's Trademark and Domain Name Claims May Block Unauthorized Resales -- Levi Strauss v. Papikian

[Post by Venkat Balasubramani]

Levi Strauss & Co v. Papikian Enterprises, C 10-05051 JSW (N.D. Cal.; Aug. 24, 2011) [pdf]

Facts: Levi Strauss owns trademarks for "Levi's," "501" and other terms. It sells its products directly and to authorized retailers but does not sell through "distributors, wholesalers or jobbers." Retailers are contractually restricted from reselling "first quality merchandise." Papikian registered several domain names (501USA.com, 550jeans.com, 517jeans.com) through which he offered Levi Strauss products for sale. Levi Strauss grumbled about his use of various Levi Strauss trademarks and how Papikian sold goods to EU residents. The parties engaged in settlement discussions which were not fruitful, and ultimately Levi Strauss brought suit, alleging trademark and cybersquatting claims. Levi Strauss alleged that in response to some of Levi Strauss's complaints, Papikian made some changes to his website, but at some point along the way, these changes reverted, and Papikian's website "looked more professional, offered [Levi Strauss] products exclusively, and make more extensive use of [Levi Strauss] trademarks."

Papikian brought a motion for summary judgment, which the court denies.

Discussion:

First sale defense: Papikian argued that his sales of Levi Strauss products was protected under the first sale doctrine. Similar to the first sale doctrine in copyright, courts have held that "the right of a producer to control distribution of its trademarked product does not extend beyond the first sale of the product." (One big difference is that unlike copyright law, trademark law does not allow trademark owners to control importation of trademarked goods, other than counterfeits.) However, resellers who wish to take advantage of the first sale rule have to carefully tread the line between a retailer merely carrying/selling the goods and "suggesting affiliation" with the trademark owner. While the court doesn't describe the actual evidence put forth by Levi Strauss, it finds that Levi Strauss put forth sufficient evidence to create a factual question on the issue of whether Papikian crossed the line.

Nominative fair use: Papikian argued that his use of Levi Strauss trademarks was protected under the nominative fair use defense. Once a defendant shows that it is using the trademark to refer to the trademarked good, the burden shifts to the plaintiff to show a likelihood of confusion. The court finds that Levi Strauss sufficiently created a factual dispute on this point; again, the court looks to the changes to Papikian's website and the fact that it had disclaimers at one point but no longer does. The court also cited to Toyota Motor Sports v. Tabari and noted that Papkian's domain names were the types of domain names that the Ninth Circuit hinted could suggest sponsorship or endorsement.

Cybersquatting: The court also denies Papikian's request for summary judgment on Levi Strauss's ACPA claim. The court says that there are "material facts in dispute with regard to Papikian's intent." The court notes that Papikian's fair use defense remains unresolved. Additionally, Levi Strauss presented evidence of an adverse WIPO decision against Papikian. The order does not contain any discussion of the ACPA's safe harbor provision, which protects registrants who "believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful."

European law: The order thus far has been bad news for Papikian, but there is one ray of light. Levi Strauss asserted claims under EU trademark law against Papikian. It argued that Papikian's importation of products into the EU without Levi Strauss's consent violated "Articles 5 and 7 of the First Council Directive 89/104/EEC of 21 December 1988, to approximate the laws of the Member States relating to trademarks, as amended by the Agreement on the European Union of 2 May 1992." The court declines to exercise jurisdiction over this claim out of comity. The relevant treaties provide for the "independence" of various member countries, and having tribunals in one country adjudicate the rights under the trademarks of another country would undermine the "spirit of cooperation" that underlies the comity doctrine. The court says that while it declines to exercise supplemental jurisdiction over Levi Strauss's claims in this case, this does not mean that it would decline supplemental jurisdiction "over every case involving foreign trademarks."

[The court also rejects Papikian's request for summary judgment on the dilution claims, finding that Papikian failed to demonstrate the absence of factual disputes with respect to these claims.]
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The court's refusal to entertain Levi Strauss's claims under EU law is noteworthy. Allowing it to proceed with those claims would allow Levi Strauss to enforce an importation ban into the EU based on EU trademark law, something that it clearly could not do under US trademark law. The court did not discuss it in those terms, but it would be an end run around the fact that trademark law does not permit the trademark owner to control exportation or importation to allow the trademark owner to enforce a foreign ban on importation without consent. It would have also sharply limited the first sale defense.

Once the EU claims are taken out of the picture, you're left with claims by a trademark owner against a re-seller, who is legitimately selling the trademark owner's goods. The re-seller should have some amount of leeway to use the trademark owner's mark in order to refer to the trademarked goods and in the re-seller's domain name, but the court's order doesn't cut the re-seller much slack. The repeated tweaks to Papikian's site, along with the removal of the disclaimer and Levi Strauss's vague allegations that Papikian used more than Levi Strauss's marks than was necessary, is enough to get past summary judgment. As prior posts demonstrate, courts readily seem to find a hook to deny summary judgment to a reseller-defendant who raises first sale and nominative fair use defenses. (See "eBay Resales Constitute Trademark Infringement Despite First Sale Doctrine--Beltronics v. Midwest" (alleged warranty misstatements);"Online Resale of Expired Cosmetics May Be Trademark Infringement--Mary Kay v. Weber" ("expired" cosmetics that plaintiff argued were materially different)). One takeaway here is that trademark first sale and nominative fair use defenses remain murky and fact-specific.

Previous related posts:

eBay Resales Constitute Trademark Infringement Despite First Sale Doctrine--Beltronics v. Midwest
Online Resale of Expired Cosmetics May Be Trademark Infringement--Mary Kay v. Weber

Posted by Venkat at 09:07 PM | Domain Names , Trademark

August 02, 2011

Ninth Circuit Reconsiders SEO-Destroying Injunction Against DMV.Org--TrafficSchool v. EDriver (Joint Blog Post)

By Rebecca Tushnet and Eric Goldman

TrafficSchool.com, Inc. v. Edriver Inc., 2011 WL 3198226 (9th Cir. July 28, 2011)

[Over the years, Rebecca and I have blogged dozens of the same cases. However, we've never done a joint blog post until today. Rebecca and I had both blogged on the district court ruling in this case, so it made sense that both of us were going to blog on the Ninth Circuit ruling. It made even more sense for us to do it together! Rebecca's post. Warning: both Rebecca and I write long blog posts, so our combined effort is a beefy 3,800+ words.]
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Rebecca's comments:

District court opinion discussed here. Judge Kozinski has long been a proponent of political-speech-level protection for commercial speech, and that position has its influence on this opinion, which is written in his usual highly readable style. You can also see here the growing lawsuit-limiting effect of standing doctrine, though here at least there was an actual factfinding before the judges decided whether the plaintiff had been harmed.

As Judge Kozinski explains, “Consumers visit DMV.org for help renewing driver's licenses, buying car insurance, viewing driving records, beating traffic tickets, registering vehicles, even finding DUI/DWI attorneys. The more eyeballs DMV.org attracts, the more money defendants earn from selling sponsored links and collecting fees for referring site visitors to vendors of traffic school courses, driver's ed lessons and other driver-related services. This seems like a legitimate and useful business, except that some visitors mistakenly believe the site is run by their state's department of motor vehicles (DMV).”

After trial, the district court found a violation of the Lanham Act but not of California’s UCL. Its injunction required every site visitor to go through a splash screen with a disclaimer. (The Electronic Commerce & Law Reporter blurb described it as a pop-up. It’s not.)

The district court found that plaintiffs “failed to prove ... that they have suffered an injury in fact and lost money or property as a result of Defendants' actions,” and that they “provided no evidence showing a causal connection between Defendants' actions and any harm Plaintiffs incurred.” Edriver argued that this finding proved that TrafficSchool also lacked Lanham Act standing. This was wrong because California’s UCL defines standing more narrowly (pecuniary injury and “immediate” causation) than the Lanham Act, which only requires a plaintiff to believe that it’s likely to be injured.

What about Article III standing? The UCL also defines injury in fact more narrowly than Article III does, so the loss doesn’t necessarily preclude Article III standing. The district court didn’t independently analyze Article III standing, but the court of appeals did, looking for injury in fact, causation, and redressability. The key here was injury in fact.

Article III injury exists in a false advertising case if some consumers who bought defendant’s product under a mistaken belief fostered by the defendant would otherwise have bought plaintiff’s product. This can be proven by actual market experience and probable market behavior. Probability is fine “because proving a counterfactual is never easy, and is especially difficult when the injury consists of lost sales that are predicated on the independent decisions of third parties; i.e., customers. A plaintiff who can't produce lost sales data may therefore establish an injury by creating a chain of inferences showing how defendant's false advertising could harm plaintiff's business.”

TrafficSchool produced ample evidence that it competes with DMV.org for referral revenue, sometimes with the same course providers. “Sales gained by one are thus likely to come at the other's expense. Evidence of direct competition is strong proof that plaintiffs have a stake in the outcome of the suit, so their injury isn't ‘conjectural’ or ‘hypothetical.’ Plaintiffs also presented testimonial and survey evidence that a ‘recommended by DMV’ endorsement is an important factor in consumers' choice of traffic schools and driver's ed classes. It stands to reason that defendants will capture a larger share of the referral market—to plaintiffs' detriment—if they mislead consumers into believing that DMV.org's referrals are recommended by their state's DMV. Plaintiffs have therefore established sufficient injury for Article III standing.”

Lanham Act standing requires (1) a commercial injury based upon a misrepresentation about a product; and (2) a competitive injury. (Footnote: a plaintiff can show both these things and still lack standing if the purpose of its false advertising suit is to enforce someone else’s statutory rights—plaintiffs here couldn’t sue on the California DMV’s trademark rights. But they sued to enforce their own right to be free of unfair competition.) Defendants argued that DMV.org was a publisher, while plaintiffs’ sites are self-promotional tools, but plaintiffs introduced evidence that they compete in the referral market.

Defendants argued that the only injury here was to the public. Though plaintiffs didn’t prove “identifiable” injury to themselves, the standard for “commercial injury” was different. Likely injury is all that’s required, not actual injury. “[W]hen plaintiff competes directly with defendant, a misrepresentation will give rise to a presumed commercial injury that is sufficient to establish standing.” Kozinski defended this presumption; advertising is about competing for consumer dollars, and misleading ads can upset competitive positions. “Moreover, the Lanham Act is at heart a consumer protection statute. Requiring proof that defendant's ads caused plaintiff to lose sales as a prerequisite to bringing suit would frustrate its ability to act as the fabled vicarious avenger of the consuming public.” The court didn’t need to decide whether the presumption was conclusive or rebuttable because defendants didn’t provide any evidence to rebut it.

The remaining question was whether the ads were misleading. They were.

When plaintiffs sued, Californians who googled (Judge Kozinski fears no neologism, especially when it is useful) “dmv” or “drivers ed” would see DMV.org’s sponsored listings for “ca.dmv.org” or “california.dmv.org.” respectively. “While there's nothing inherently misleading about sponsored search results, they can mislead if they are named so as to give a false impression as to the likely sponsorship of the website to which they refer.” The ca. and california. prefixes were obviously designed to suggest official affiliation. The website design also mimicked an actual DMV site, copying slogans and state symbols, and linking to DMV-related pages like applying for a license, registering a car and signing up for traffic school. The disclaimer was easy to miss because it was displayed in small font at the bottom of each page, where many consumers would never scroll.

There was also plenty of evidence of actual confusion, including two declarations from confused individuals and hundreds of emails from obviously confused consumers. “Some of these emails contained sensitive personal information that the typical consumer wouldn't share with a commercial website”:

My boyfriend George [redacted] ... got a ticket in South Carolina in 2006.... Mr. [redacted] driver's license number is [redacted]. His date of birth is [redacted]. I have his social security number if needed, but I don't want to put all of his personal information on this e-mail if possible.... I was told by Central Court for Lexington County in South Carolina that if we contacted the Arkansas DMV that y'all would be able to tell us what court this is in and where to pay the ticket.

Law enforcement officials and state DMV employees were also confused, seeking help with, among other things, DUI cases (again a situation where the subject undoubtedly wouldn’t like that information out in the open). Two California cities, a private law firm in Texas and a number of newspapers mistakenly linked their websites to DMV.org instead of a state DMV website.

Plaintiffs didn’t stop there, but also provided an internet survey showing that “a majority of California residents searching online for traffic schools believed that (1) DMV.org's website was actually the California DMV's and (2) a search engine listing for DMV.org was endorsed or sponsored by the California DMV.” There were significant flaws, including failure to use a control, but the district court found it more credible than defendants’ survey and gave it “some” weight, which was not reversible error.

Overall, there were “volumes” of evidence of competition and misleadingness. This established that the DMV.org site deceived a substantial segment of the audience, and plaintiffs also showed that a “recommended by DMV” endorsement will affect purchase decisions, causing likely injury to plaintiffs.

Remedy: the district court ordered DMV.org to present every site visitor with a splash screen stating, “YOU ARE ABOUT TO ENTER A PRIVATELY OWNED WEBSITE THAT IS NOT OWNED OR OPERATED BY ANY STATE GOVERNMENT AGENCY.” Visitors have to click to continue. Defendants argued that this was overbroad and restrained conduct not at issue in the complaint, and violated the First Amendment.

The district court reasoned that the splash screen was necessary to: (1) “remedy any confusion that consumers have already developed before visiting DMV.ORG for the first time,” (2) “remedy the public interest concerns associated with [confused visitors'] transfer of sensitive information to Defendants,” and (3) “prevent confusion among DMV.ORG's consumers.” Defendants argued that the splash screen doesn’t do these things (I’ll have a bit to say about this shortly). Their only evidence was a declaration from DMV.org’s CEO stating that they tested several alternative disclaimers and “found them to be more effective than the splash screen in preventing consumers from emailing DMV.org with sensitive personal information.” Even crediting this self-serving declaration, defendants didn’t prove that the splash screen was ineffective, and said nothing about whether the alternative disclaimers served the other interests identified by the district court. Citing Home Box Office, Inc. v. Showtime/The Movie Channel Inc., 832 F.2d 1311 (2d Cir.1987), the court of appeals ruled that defendants hadn’t carried their “heavy burden” of showing that alternative disclaimers reduced likely confusion. The district court didn’t abuse its discretion when it concluded that the splash screen was the best way to correct the false advertising.

“Courts routinely grant permanent injunctions prohibiting deceptive advertising. Because false or misleading commercial statements aren't constitutionally protected, such injunctions rarely raise First Amendment concerns.” However, the permanent injunction here did because it erected a barrier to all content on the website, not merely that which is deceptive. “Some of the website's content is informational and thus fully protected, such as guides to applying for a driver's license, buying insurance and beating traffic tickets. The informational content is commingled with truthful commercial speech, which is entitled to significant First Amendment protection. The district court was required to tailor the injunction so as to burden no more protected speech than necessary.”

The injunction was a permanent and unnecessary burden to accessing DMV.org’s First Amendment-protected content. “The splash screen forces potential visitors to take an additional navigational step, deterring some consumers from entering the website altogether,” and defendants submitted evidence that splash screens typically drive away up to a quarter of potential visitors, prevent them from tailoring the landing page, and interfere with search engine indexing and ranking.

The district court premised the injunction on its findings that defendants’ search engine marketing and natural listings, including the DMV.org domain name, caused confusion prior to viewing any content, and then identified specific misleading statements. “The splash screen is justified to remedy the harm caused by such practices so long as they continue,” and so long as it helps remedy lingering confusion, but not forever. On remand, the district court had to reconsider the duration of the splash screen “in light of any intervening changes in the website's content and marketing practices, as well as the dissipation of the deception resulting from past practices.” If the district court continued the requirement, it needed to explain the continuing justification (comment: which would be the deceptive domain name) and what conditions defendants must satisfy in order to remove the splash screen in the future. The district court could also simply ban deceptive marketing or placing misleading statements on DMV.org.

My comment: I really don’t get this. It’s the domain name that’s at the core of the deception, something the district court pointed out—if the splash screen is justified “so long as [the deceptive practices]” continue, they will continue until there is a new domain name. Maybe if defendants only advertise the new domain name and simply redirect anyone who goes to dmv.org to the new domain, they should be allowed to remove the splash screen eventually. But for now, I don’t see why this isn’t a dilemma of defendants’ own deceptive making.

There is a potential bright spot, I suppose: the current splash screen is pretty bad (I would infer deliberately so). Take a look: Defendants have removed “Unofficial Guide to the DMV” from their license plate logo. The disclaimer runs at the very top, a couple of pixels away from the top of the browser window, in grey rather than black text (a nearly transparent tactic, pun intended!), not near the action invitation to click to continue, and not near the dmv.org logo, both of which are far more prominent to the eye. This placement clearly flunks the FTC’s guidelines for online disclosures, and defendants who already managed to mis-implement disclosures (of which more below) should not get the benefit of the doubt in this area. On remand, I sincerely hope that the revised remedy, whether splash page or not, forces the disclaimer into a prominent position.

The district court denied plaintiffs’ request for an award of profits because they provided no evidence of causation, nor did they quantify the harm they suffered. “Nothing in the Lanham Act conditions an award of profits on plaintiff's proof of harm, and we've held that profits may be awarded in the absence of such proof,” though it’s an uncommon remedy without proof of harm. Profits are appropriate in false comparative advertising cases, “where it's reasonable to presume that every dollar defendant makes has come directly out of plaintiff's pocket.” Likewise “where ordinary damages won't deter unlawful conduct: for example, when defendant associates its product with plaintiff's noncompetitive product to appropriate good will or brand value.”

But neither line of cases were relevant here. Profits may be awarded only as compensation and not as a penalty, but without comparative advertising plaintiff’s injury may be a small fraction of defendants’ profits. There was no error in denying damages.

The potential attorneys’ fee award did require some rethinking, though. The district court denied fees because, while plaintiffs received an injunction, they didn’t get damages, and they had unclean hands. This was reviewed for abuse of discretion.

An exceptional Lanham Act case justifying fees usually involves conduct that was “fraudulent, deliberate, or willful.” “By examining only the relief awarded to plaintiffs, and failing to consider defendants' conduct, the district court applied the wrong legal standard.” The district court may take failure to recover damages into account, but it should also consider that plaintiffs obtained a judgment and an injunction to ameliorate serious public harm caused by defendants’ unlawful conduct. “It would be inequitable to force plaintiffs to bear the entire cost of enjoining defendants' willful deception when the injunction confers substantial benefits on the public.” Plaintiffs stopped the confusion (maybe) and stopped consumers from mistakenly transferring sensitive personal information to a commercial website. “The district court abused its discretion by failing to consider these substantial benefits or defendants' bad acts in determining whether to award attorney's fees.”

Defendants challenged the finding that their deception was willful. But there was plenty of evidence to support that, including evidence that one defendant had a pattern of registering misleading domain names. “Defendants associated their website with URLs and search terms that falsely implied DMV.org was a government site. They had in their possession hundreds of emails sent by consumers who contacted DMV.org thinking it was a state agency. And DMV.org's director of customer service testified that he voiced concerns about these emails to senior management.”

Defendants responded that they added disclaimers, but they knew the disclaimers were ineffective, because that didn’t change the stream of emails from confused consumers. Given this knowing inaction, the district court could reasonably infer willfulness.

Moreover, the district court’s finding of unclean hands was clearly erroneous. This rested on two findings: (1) plaintiffs registered similar domain names, such as Online-DMV.org, Internet-DMV.org and cadmvtrafficschool.com; and (2) they attempted to advertise their products on DMV.org despite being aware that the site deceived the public. Neither was clear and convincing evidence of inequitable misconduct related to the subject matter of the false advertising claims. (In a footnote, Judge Kozinski commented that it wasn’t clear that the fee award was subject to equitable doctrines such as unclean hands, since the relevant statutory provision doesn’t use the term “equity.”)

Merely registering a domain name wasn’t proof of unclean hands, since registration couldn’t cause confusion unless the domain name was associated with a website visible to consumers, and plaintiffs’ ads on DMV.org ran for just six hours. There was no evidence of actual deception caused by plaintiffs' advertising. There was an email from plaintiffs’ co-founder recommending taking an “[i]f you can't join ‘em, shut ‘em down approach” to DMV.org. “But the doctrine is unclean hands, not impure thoughts. … And the email here actually undermines the rationale for finding unclean hands. Plaintiffs acquired information showing that defendants confused the public; using litigation to shut down a competitor who uses unfair trade practices is precisely what the Lanham Act seeks to encourage.” (I’m not sure that’s undermining, precisely.)

Remand for further proceedings.
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Eric's comments:

This lawsuit is just the latest courtroom fracas involving privately operated websites that seem designed to create the appearance of official government sponsorship. Other sites in this genre include ConsumerAffairs.com and FreeCreditReport.com. As I indicated in my prior blog post on this case, the operators of DMV.org were probably too zealous about trumping up their officialness, thus destroying a promising domain name when a lighter touch would have left some short-term profits on the table but generated more profits over the long-run.

Rebecca highlights how this opinion has some important things to say about false advertising standing, consumer confusion in false advertising and attorneys' fees in Lanham Act cases. I'm going to focus on more of the technical issues:

First, DMV.org bought keyword ads that displayed the URL "ca.dmv.org" and "california.dmv.org." The opinion says "Defendants' use of the "ca." and "california." prefixes obviously was designed to suggest an affiliation with the State of California." As far as I can recall, this is the first time a court has explicitly treated the URL displayed in keyword ad copy as contributing to consumer confusion. I know some SEMs like to play games with the domain line in keyword ad copy. Even if Google won't police the URL line, courts will.

Second, the opinion shreds DMV.org's argument that consumers didn't think it was affiliated with a government agency; it concludes that DMV.org "willfully" and "egregiously" deceived consumers because

Defendants associated their website with URLs and search terms that falsely implied DMV.org was a government site. They had in their possession hundreds of emails sent by consumers who contacted DMV.org thinking it was a state agency. And DMV.org's director of customer service testified that he voiced concerns about these emails to senior management.

This deceptive conduct wasn't curable with a website disclaimer: "defendants knew that the disclaimers were ineffective, because adding them didn't end the stream of emails sent by consumers who thought they'd contacted their state DMV." Marketing people love to "fix" any legal problems with disclaimers, but they often simultaneously resist making the disclaimers prominent enough to actually fix the problem, leaving the website no better off.

As usual, Judge Kozinski adopts a realpolitik perspective that we all know what's going on here, and he isn't going to countenance it. This discussion doesn't directly link to or cite the scienter battles in online copyright and trademark cases, but it could be a little uncomfortable for defendants like Fung who rely on form-over-substance arguments.

Third, the district court ordered DMV.org to display a splash screen to incoming visitors containing a disclaimer of government affiliation. I believe the remedy of a mandatory splash screen was also unprecedented. Among other problems with the splash screen, it can hurt or destroy search engine indexing, effectively rendering the domain name worthless. Therefore, even though the district court didn't award any damages (a ruling affirmed on appeal), the mandatory splash screen was potentially far more detrimental.

On appeal, the court partially reverses the mandatory splash screen, noting that it applied equally to deceptive and non-deceptive content that DMV.org is publishing. The court also notes the disadvantages of interfering with search engine indexing:

[The injunction] also precludes defendants from tailoring DMV.org's landing page to make it welcoming to visitors, and interferes with the operation of search engines, making it more difficult for consumers to find the website and its protected content.

In a footnote, the court explains:

Defendants introduced unrebutted evidence that splash screens commonly interfere with the automated "spiders" that search engines deploy to "crawl" the Internet and compile the indexes of web pages they use to determine every page's search ranking. And splash screens themselves don't have high search rankings: Search engines commonly base these rankings on the web page's content and the number of other pages linking to it, and splash screens lack both content and links.

This is a pretty savvy explanation of why a splash screen destroys SEO, and it's heartening to see the court recognize the First Amendment value of SEO (at least, nondeceptive SEO).

The court gives DMV.org some very good news by giving it a chance to work its way out of the splash screen:

On remand, the district court shall reconsider the duration of the splash screen in light of any intervening changes in the website's content and marketing practices, as well as the dissipation of the deception resulting from past practices. If the district court continues to require the splash screen, it shall explain the continuing justification for burdening the website's protected content and what conditions defendants must satisfy in order to remove the splash screen in the future. In the alternative, or in addition, the court may permanently enjoin defendants from engaging in deceptive marketing or placing misleading statements on DMV.org.

On the other hand, as Rebecca points out, the DMV.org domain name is, itself, designed to prey on consumer interest in official DMV services. Perhaps there will be no way for DMV.org to fix this, no matter what disclaimers it uses.

One final note: this opinion was authored by Judge Kozinski, the third domain name opinion he has written in the last 13 months. (The other two are the Tabari and eVisa cases). I went back and counted a total of 9 Ninth Circuit domain name cases in that time--the others being Advertise.com, Christensen (a 2 paragraph opinion), DSPT, Balsam, Office Depot (a non-substantive affirmance) and Vericheck. Kozinski was not on the other panels, so he wrote the opinion in each of the 3 domain name cases he heard. Is all of this just random luck?

UPDATE: Something about this opinion is spurring blog posts focusing on its arcania. Tom O'Toole notes this is the second opinion using the term "googler." Shaun Martin focuses on Kozinski's self-citations.

Posted by Eric at 09:42 AM | Domain Names , Marketing , Search Engines | TrackBack

July 03, 2011

June 2011 Quick Links, Part 1 (Copyright & Trademark Edition)

By Eric Goldman

Copyright

* Good news: the US government is funding alternative networks that dissidents can use to communicate when the Internet is censored by repressive regimes. Bad news: the US government is teaching the rest of the world how to censor the Internet through DHS domain name seizures and COICA/PROTECT IP Act. Maybe the US-funded alternative networks will help out those censored by the US government?

* Speaking of which, the EFF and Mark Lemley are fighting back against the DHS ICE domain name seizures. The EFF has more on the topic.

* Warner Bros. settled the Hangover 2/Mike Tyson tattoo lawsuit. Prior blog post.

* We don't have too many publicly announced settlement amounts for Righthaven. The latest: Righthaven settled with the US Marijuana Party for $1k. It's hard to see a profitable business model in that.

* Righthaven's dwindling inventory of cases: it filed 25 in March, 2 in April, 9 in May and ZERO in June.

* Are major US IAPs about to voluntarily implement a graduated response program?

* Murphy v. Millennium Radio (3rd Circuit June 14, 2011). Cropping the "gutter credit" from a photo violates 17 USC 1202.

* Friedman v. Guetta. Photographer gets summary judgment against an artist who copied photos from the Internet and remixed them.

* Jonathan Basamanowicz and Martin Bouchard, Overcoming the Warez Paradox: Online Piracy Groups and Situational Crime Prevention, Policy & Internet, Vol. 3, Iss. 2, Article 5 (2011). Abstract:

US federal law enforcement operations occurring between 2001 and 2005 attempted to disrupt the online piracy scene, targeting copyright piracy rings known as 'warez groups'. Previous work on warez groups has demonstrated a paradoxical situation where attempts to curtail warez group activities through policing and advancements in DRM only further encourage such groups to crack and distribute content. This study collected data on 93 convictions from these policing operations to construct a crime script of these groups' motivations and modus operandi in the release process. The results confirm previous findings that attempts to disrupt the activities of warez groups are counterproductive. To avoid the paradox, this study suggests that industry account for the motivations and modus operandi of these groups by creating DRM technologies which allow un-cracked content to seep through the testing step of the script, thereby placing a group's ability to obtain prestige at risk. Law enforcement should focus on apprehending crackers, as they are the most significant step in the release process.

See my complementary article, The Challenges of Regulating Warez Trading, from 2005.

Trademarks and Domain Names

* I'm not 100% sure what happened when ICANN approved the rollout of new gTLDs, but I'm pretty sure a lot of lawyers are going to find it lucrative for them.

* Scooter Store, Inc. v. Spinlife.com, LLC, 2011 WL 2160462 (S.D. Ohio June 1, 2011). Court allows a litigant to obtain discovery on its opponent's keyword ad buys. As I blogged in 2007, I'm surprised we don't see those discovery requests more frequently.

* Best Buy is chasing lots of folks to enforce its "Geek Squad" trademark. A prior blog post on other trademark litigation involving "geek."

* GoForIt Entertainment, LLC v. DigiMedia.com L.P., 2011 WL 2516163 (N.D. Tex. Jun 23, 2011). Plaintiff's theory that third-level domains were "domain names" for ACPA purposes did not justify awarding attorneys' fees as an "exceptional" case. Prior blog post.

* Lens.com v. 1-800 Contacts complaint. An antitrust lawsuit predicated on 1-800 Contacts' overzealous TM enforcement efforts (what some might call trademark bullying). Wendy Davis' writeup. Prior blog posts on the 1-800 Contacts v. Lens.com litigation (1, 2).

* ISystems v. Spark Networks, Ltd., 2011 WL 2342523 (5th Cir. June 13, 2011). The dating website Jdate's efforts to obtain jdate.net through a UDRP was not reverse domain name hijacking.

* Video from the March STLR Symposium panel on Emerging Issues of Secondary Liability in Trademark Law.

* Evan Williams: Five Reasons Domains Are Getting Less Important.

Posted by Eric at 06:49 AM | Copyright , Domain Names , Trademark | TrackBack

May 25, 2011

Ohio Appeals Court: GoDaddy can be Held Liable for Wrongly Transferring Control Over Domain Name and Email Accounts -- Eysoldt v. ProScan

[Post by Venkat Balasubramani]

Eysoldt v. GoDaddy, et al., C-100528 (Ohio Ct. App.; May 18, 2011)

Actions against registrars for allowing domain names to be wrongly transferred have been relatively rare. Members of the Eysoldt family brought claims against GoDaddy alleging these types of claims. A jury ruled in their favor and the Ohio Court of Appeals declined to set aside the verdict.

Jeff Eysoldt registered Eysoldt.com through GoDaddy. He used this account for personal purposes--he stored photos and used it for email, and he allowed other family members to do so. He also registered and managed a domain name for his sister's business through this account. Separately, he entered into a business arrangement with ProScan, and the parties sought to build out a website which would promote cosmetic surgery centers. As part of this project with ProScan, he registered Myrejuvenate.com and placed this domain name in the same GoDaddy account as his personal domain name and his sister's domain name.

The relationship between Eysoldt and ProScan soured, and ProScan sought control of the domain name and the website. One of the ProScan executives called GoDaddy directly. GoDaddy's customer service representative saw that the domain name was registered under Eysoldt's name but "verified" the account information with the ProScan executive by confirming the method of payment and account number used to pay.

GoDaddy gave ProScan control over the Myrejuvenate.com domain name. Unfortunately, it also gave ProScan control over the other domain names and associated email accounts in Eysoldt's GoDaddy account. Eysoldt contacted GoDaddy to fix the problem, but he was told he had to fill out a verification form and fax this along with his drivers license. He did this, but GoDaddy responded to him that his face was not legible in the copy of the drivers license. The ProScan executive also contacted GoDaddy and asked that the domain names other than Myrejuvenate.com be transferred back to Eysoldt, but this too was unsuccessful.

Ultimately, Eysoldt sued GoDaddy. He sued ProScan as well but settled with them. The jury ruled in favor of the Eysoldt and awarded him $50,000 ($20,000 for invasion of privacy and $30,000 for conversion). Two other Eysoldt family members were awarded $10,000 each ($7,000 for invasion of privacy and $3,000 for conversion). (Here is a link to the verdict form.)

GoDaddy made several technical arguments on appeal and the court rejects them all.

Economic Loss doctrine: GoDaddy argued that Eysoldt's claims were barred by the economic loss rule, but the court says that this rule only applies to negligence claims and not to intentional torts.

Conversion: GoDaddy argued that a domain name cannot form the basis for a conversion action because it is intangible property. The court says (citing to CRS Recovery, Inc. v. Claxton) that times have changed. A domain name is readily identifiable and can be converted. GoDaddy also argued that the family members could not assert conversion claims because they testified that they lacked any ownership interest in the accounts. On this point, the court ruled that there was sufficient evidence from which a jury could conclude that GoDaddy converted the "conditional email and private communications [of the family members] that were contained in the GoDaddy account."

Invasion of Privacy: Finally, GoDaddy argued that there was insufficient evidence to support an invasion of privacy claim because there was no evidence that GoDaddy accessed the email accounts. The court rejects this argument also, noting that Eysoldt testified that someone had accessed the emails. According to the court, the harm flowed from the disclosure and not the misuse of the emails. In any event, the court cites to the fact that GoDaddy took control of personal emails, websites, and communications and just handed them over to a third party.

---

GoDaddy had a pretty tough argument here given the facts. To treat a domain name as anything other than valuable third party property would be a mistake by registrars. There was some confusion early on as to whether domain names are contract rights (which do not support conversion claims) instead of property, but courts have long moved on from this question. (See Kremen v. Cohen, CRS v. Claxton, Office Depot v. Zuccarini, Bosh v. Zavala, etc.) I'm surprised GoDaddy didn't raise an argument based on waivers or limitations of liability contained in its end user agreement, but the opinion does not discuss them.

The court's conclusion regarding the invasion of privacy claim is worth noting because the court did not take the approach numerous courts have taken in data breach cases and require any showing of out-of-pocket loss. The likely explanation for this is that the plaintiff here asserted claims under the "intrusion" theory, where the harm flows from the mere disclosure, rather than the misuse, of data, but this should require a showing that the accounts contained information that was of an intimate nature. The court alludes to this in describing what type of information was contained in these email accounts, but does not come out and explicitly state this or cite to any specific information which would support a claim of intrusion.

The court's conclusion that the other family members could recover for conversion also glosses over a few nuances. The sister had a domain name registered through GoDaddy, but the court does not connect the dots on how giving Proscan control over the GoDaddy account translates into a conversion claim for the other family members. The court instead focuses on the email accounts and notes:

[w]hile Jill and Mark [the other family members] acknowledged that the account was registered to Jeff, the evidence showed that each of them had email accounts set up within Jeff's account. Additionally, Jeff and Jill had created content for Jill's website for her business, Good Karma Cookies. When Go Daddy gave control of the account to Wallace and ProScan, Jill could not access her website. Likewise, Jill and Mark could not access their email accounts. Thus, as the trial court stated, 'there was sufficient evidence produced at trial that would support the jury finding that GoDaddy converted the conditional and private email communications of Mark and Jill Eysoldt that were contained in the GoDaddy account.'

The court's focus on control over email accounts and content does not square well with the cases which say that domain names can be converted because they are freely transferable and can be bought and sold. Under the court's approach, a registrar could be found liable for terminating access to an email or hosting account, and this sounds problematic.

[Eric's comment: indeed, I read this opinion as hinting that any cloud service provider could "convert" a user account's to the extent that service provider "wrongfully" "cuts off" the user's access to his/her own intangible files. I don't think the court means to go there, but holding that GoDaddy converted the emails (as opposed to the domain names) naturally leads to a very dark place.]

It's clear that courts are not reluctant to impose some sort of obligation on the part of registrars to guard against identity theft. Registrars may need to adopt authentication procedures as rigorous as the procedures that banks use to authenticate bank accounts. Of course, even this approach is not infallible, and not easy to implement, given that much of the customer service interaction between a registrar takes place over the phone. Another suggestion is for registrars to respond promptly to any claims by customers of domain name theft. Sending a canned response from customer service when a customer frantically emails saying that his or her domain name has been stolen is not going to look good in the eyes of the fact-finder.

I'm struck at how often people register business and personal domain names in the same account, and how often the web-person ends up registering the domain name for a project in his or her account, rather than in the name of the entity, or a separate account which both joint ventures have control over. The domain name as a bank account analogy is useful here, and if you are part of a joint venture, think about whether you would want to give your co-venturers sole control over the bank account.

Posted by Venkat at 09:20 AM | Domain Names , Internet History , Licensing/Contracts , Publicity/Privacy Rights

May 24, 2011

Keyword Advertising and Domain Name Law Slides

By Eric Goldman

Today, I spoke to an audience of Chinese IP judges about keyword advertising and domain names in the United States. I put together some slides and written materials. These materials aren't especially profound, especially for regular readers, but you might find them a useful recap nonetheless. I learned a number of things from the talk:

1) It's very hard and unnatural for me to slow down my presentation enough for translators to keep up!

2) One judge believed that all of Baidu's search results are pay-for-play, i.e., rank-ordered based on the amounts that advertisers pay Baidu. Is this true? (It feels like something I should know, but the information I'm finding online is surprisingly scrappy). If Baidu is pure pay-for-play, this would reinforce why it was so detrimental for Google to pull out of China. I made the point last year that Google's departure could be a long-term drag on the Chinese economy because the Chinese economy will have less effective search engines than other economies.

3) Although there was a significant language barrier that might have obscured their intent, it seemed like the Chinese judges were having a hard time wrapping their heads around the idea that Google's trademark liability for selling keyword advertising wasn't notice-and-takedown. In fact, we don't know that notice-and-takedown for Google's keyword sales won't ultimately prevail in the United States; but it hasn't yet.

Posted by Eric at 05:54 PM | Domain Names , Search Engines , Trademark | TrackBack

May 03, 2011

Another Defense-Favorable Righthaven Ruling--Righthaven v. Choudhry

By Eric Goldman

Righthaven v. Choudhry, 2011 WL 1743839 (D. Nev. May 3, 2011)

This lawsuit involves the "Vdara Death-Ray" image published in the Las Vegas Review-Journal, which has been the basis of numerous Righthaven lawsuits. In this case, Choudhry may be a particularly poor defendant. He argues that the image appeared on his site as an in-line link (permissible under Perfect 10 v. Amazon) and via an automated process that lacked volition. The court rejects Choudhry's motions for judgment on the pleadings and summary judgment on those points, saying that the judge wants to understand the technology better before ruling on it.

On fair use, recycling some of his own recent ruling in the CIO case, the court says:

1) The defendant's use is transformative but it's not clear if the use was commercial or not
2) The nature of the work could go either way
3) Republishing the image at 30% size could go either way
4) As a matter of law, the defendant's use doesn't harm Righthaven's market

The latter point is a biggie. The fourth fair use factor is often considered the most important, and the court is treating it as presumptively weighing against Righthaven in all cases. The court is basically doing the same with the transformative nature of the works. If those two considerations automatically weigh against Righthaven in every case, Righthaven will have a tough time defeating any fair use defense.

The court rejects Righthaven's demand for the defendant's domain name. This follows from Righthaven v. DiBiase, 2011 WL 1458778 (D Nev April 15, 2011), issued by a different Nevada judge, which said: "Congress has never expressly granted plaintiffs in copyright infringement cases the right to seize control over the defendant’s website domain. Therefore, the Court finds that Righthaven’s request for such relief fails as a matter of law and is dismissed."

Finally, the judge preserves Choudhry's counterclaim, which allows Choudhry to keep the lawsuit going even if Righthaven dismisses it and sets up Choudhry to potentially go on the offensive.

All told, although this ruling doesn't break much new ground, it consolidates defendants' gains on three fronts:

* the fair use factors weighing in favor of defendants as a matter of law
* the lawlessness of Righthaven's domain name demand
* the preservation of defendant's counterclaims

April 08, 2011

March 2011 Quick Links, Part 3

By Eric Goldman

Search Engines

* Lots of Google antitrust activity:
- Apparently, an EU antitrust investigation IS something that Microsoft would wish on its worst enemy.
- Every legal regulator in the world is considering antitrust investigations into Google, including Ohio and Wisconsin (see my prior blog post about Texas’ investigation) and the FTC.
- The DOJ approved the Google-ITA merger—with conditions. This is superficially a win for Google, but I expect the anti-merger coalition won’t go away quietly.
- I interviewed with the SF Chronicle about Google and search engine bias (with photos!).

* New Google design features:
- Google lets each person individually block websites from their search results.
- Will Google’s +1 become the gold standard for personalized search, or will it be another failed attempt by Google to get social?
- A rundown of Google Autocomplete and its quirky blocking approaches.

* Blekko blocks 1.1M websites from its search index. Does this create 1.1M new plaintiffs who will sue for their "right" to be in Blekko's index?

* More eye-tracking studies showing that searchers mostly ignore the ads on the right side of the page.

* Rebecca notes that the litigation between eBay and Craigslist has a keyword advertising component.

* Expedia and American Airlines have kissed and made up. My prior blog post.

Social Networking Sites

* Facebook is doing real-time ad targeting. Does this mean we'll get Facebook's notoriously poorly targeted ads faster? Something to look forward to.

* U.S. v. Gamory, 2011 WL 832554 (11th Cir. March 11, 2011). YouTube video being shown in court was a harmless error.

* New York Times: "Across the nation, millions of young people are lying about their ages so they can create accounts on popular sites like Facebook and Myspace....Parents regularly go along with the age inflation, giving permission and helping children set up accounts. They often see it as a minor fib that is necessary to let their children participate in the digital world." My related blog post.

* Spooner v. Associated Press: Another lawsuit over an allegedly defamatory tweet.

* NYT on evolving norms about Twitter etiquette.

* Evan Brown on another sad case of online impersonation.

* Ceglia v. Zuckerberg, 2011 WL 1108607 (W.D.N.Y. March 28, 2011). Mark Zuckerberg is domiciled in CA for purposes of jurisdiction.

* I participated in an ABA Journal Podcast entitled “What Are the Ethics of Lawyer Review Sites Like Avvo?”

Content Regulation

* ICANN approved .xxx. India has already announced it will block .xxx. Meanwhile, how long until the .xxx registry vendor, in a rent-seeking fiesta, goes around to various state legislators and asks them to pass laws requiring pornographers to locate only at a .xxx domain?

* French court tosses a criminal libel prosecution over an academic book review--with sanctions.

* Craigslist drops its lawsuit against former South Carolina AG McMaster.

* The oft-cited study that Craigslist contributes to human trafficking may be junk science.

* An entrepreneurial law firm sets up anti-bullying practice. Expect lawsuits galore to ensue.

* Nature reports on lawsuits over rebuttals to scientific research and how a federal anti-SLAPP law might help. My prior blog post.

Miscellaneous

* A blogger takes down a DHS sting site for underage sex tourism.

* Latest iAWFUL list of bad Internet proposed legislation.

* National Federation of the Blind complains about universities that put students on Gmail accounts, saying the accounts don't work well with speech reading software.

* Senators ask various companies to pull apps that identify drunk driving checkpoints.

* Believe it or not, some ban in-bound links. A list.

Posted by Eric at 11:16 AM | Content Regulation , Domain Names , Evidence/Discovery , Search Engines | TrackBack

March 01, 2011

Jan.-Feb. 2011 Quick Links, Part 3 (Trademarks, Domain Names and Trade Secrets Edition)

By Eric Goldman

Trademarks and Domain Names

* From my perspective, the Department of Homeland Security (DHS) domain name seizures are one of the US government’s top 5 all-time worst assaults on the Internet’s integrity. DHS’s ICE division is grabbing domain names—the virtual equivalent of printing presses—citing half-baked legal theories and poorly researched factual claims without any advance notice or adversarial proceedings. This is exactly what we expect our government won’t do.

Yet, I haven’t seen a proportionate blowback. Why aren’t affected domain name owners suing the government for improperly seizing their printing presses? (This takes me back to the 2-decade-old Steve Jackson Games case and the EFF’s founding). Why aren’t there Congressional hearings asking DHS to defend its behavior? Where aren’t other parts of the administration forcing DHS to justify itself? Why aren’t judges pushing DHS to do a better job of demonstrating their cases on an ex parte basis? I’m a little baffled why there hasn’t been a revolt against the DHS’s baldfaced abuse of government power. I confess I’m part of the problem in that I haven’t grabbed the pitchforks either, but I’m not sure how I can best help. If you have any thoughts, I’d welcome them.

A linkwrap on this topic:

- Techdirt raises some general questions.
- One of the DHS affidavits. Techdirt deconstructs it.
- Sen. Wyden seems like our only legislator paying attention.
- Wendy Seltzer explores the due process problems.
- An ICE representative tried to defend its actions, with no success.
- Another 18 names seized.
- In a crackdown aimed at child porn, DHS took down 84,000 websites "by mistake." This is exactly the kind of “mistake” that would not happen if due process were followed and speech restrictions were subject to adversarial proceedings.
- EFF on what the repeated DHS screwups teach us about the "wisdom" of COICA:
- Techdirt: “ICE Boss: It's Okay To Ignore The Constitution If It's To Protect Companies”

* Private Career Training Institutions Agency v. Vancouver Career College (Burnaby) Inc., 2011 BCCA 69 (BC Ct. App. Feb 11, 2011): "The burden was on the appellant to satisfy the judge that there were reasonable grounds to believe that the respondents’ use of keyword advertising was actually or potentially misleading. He found as a fact that the appellant had not established that the respondents’ keyword advertising was actually or potentially misleading. He stated that the appellant had not persuaded him that the respondents’ use of its competitors’ names in keyword advertising “could...lead a student astray or into making a harmful error of judgment”. There was evidence to support those findings."

* NY S953: New York is trying yet again to ban domain name sales to terrorist groups. My prior blog post.

* Kim v. Coach: class action suit for Coach sending trademark takedown notices to eBay for the resales of legitimate goods. AP story.

* Joe Mullin recaps our efforts to crack open the Rosetta Stone v. Google joint appendix.

* LinkedIn allows ad targeting by company name. Competitive poaching, anyone? Will they be the newest defendants in keyword ad lawsuits?

* Rebecca covers an interesting and complicated dispute over a comparable drug being linked to a patented drug in a pharmaceutical reference database, with some parallels to keyword advertising.

* The Supreme Court denied certiorari in the latest appeal in Moseley v. V Secret Catalogue Inc. Prof. McCarthy on the ruling for which certiorari was sought.

* Law.com: Digital Chocolate and Zynga Settle over 'Mafia Wars'

* Ford sues Ferrari for naming one of its race cars "F150" in celebration of Italy's 150th anniversary of unification.

* Subway seeks to trademark "footlong."

* Las Vegas Sun: Double Down Saloon v. Double Down Lounge.

* Technolawyer tries to enforce a trademark in “SmallLaw.”

* Fleischer Studios v. AVELA (9th Cir. Feb. 23, 2011). The Ninth Circuit says that the Betty Boop character is in the public domain. This is quite a remarkable opinion, but I particularly call your attention to the discussion about trademarks and merchandising (cites omitted):

Even a cursory examination, let alone a close one, of “the articles themselves, the defendant’s merchandising practices, and any evidence that consumers have actually inferred a connection between the defendant’s product and the trademark owner,” reveal that A.V.E.L.A. is not using Betty Boop as a trademark, but instead as a functional product. Just as in Job’s Daughters [a 1980 9th Circuit case the majority cites even though it wasn't cited by either party or the district court], Betty Boop “w[as] a prominent feature of each item so as to be visible to others when worn . . . .” A.V.E.L.A. “never designated the merchandise as ‘official’ [Fleischer] merchandise or otherwise affirmatively indicated sponsorship.” Fleischer “did not show a single instance in which a customer was misled about the origin, sponsorship, or endorsement of [A.V.E.L.A.’s products], nor that it received any complaints about [A.V.E.L.A.’s] wares.”...“The name and [Betty Boop image] were functional aesthetic components of the product, not trademarks. There could be, therefore, no infringement.”

The court goes on to discuss Dastar:

If we ruled that A.V.E.L.A.’s depictions of Betty Boop infringed Fleischer’s trademarks, the Betty Boop character would essentially never enter the public domain. Such a result would run directly contrary to Dastar.

I applaud the majority opinion's spirit, and this could be quite a revolutionary opinion if it truly sets Ninth Circuit precedent. However, I’ve repeatedly criticized the Ninth Circuit for making up the rules panel-by-panel (I know I'm not the only one), and I suspect this is just another one-off. Kate Spelman thinks this is a good case for en banc review (I agree).

* WSJ: A quick survey of major legal issues in franchising law.

* Meth Lab Cleanup LLC v. Spaulding Decon, LLC, 2010 WL 5572397(D. Idaho Oct. 25, 2010): "the mere fact that resulting harm from the alleged confusion over the contents of the parties' websites may be incurred by an Idaho company is not sufficient to show that Spaulding “directed” its conduct toward Idaho."

* Walgreens is elevating the profile of its house-branded products.

* Index of WIPO UDRP Panel Decisions

* Oddee: 12 Hilarious Knock-off Fails

Trade Secrets

* Has the original Coca-Cola recipe leaked out?

* Reality Blurred: The producers of Survivor sue over leaked information about the upcoming season, but they drop the suit once they learn the leak source.

* David S. Almeling et al, A Statistical Analysis of Trade Secret Litigation in State Courts

Posted by Eric at 01:44 PM | Domain Names , E-Commerce , Internet History , Trade Secrets , Trademark | TrackBack

February 10, 2011

Comparative Domain Name and Keyword Regulation Talk Slides

By Eric Goldman

I have a busy semester of talks, so I will be rolling out some talk slides over the next few days. Today, I'm posting my talk slides from a talk I gave last month at the University of Houston as part of this event. I titled the talk "Domain Name and Keyword Regulation."

This is a newly updated version of a talk I gave in 2007 at McGeorge Law School. At the time, I was interested in how we codified various forms of domain name exceptionalism compared to other keyword navigation tools. (The impetus for that talk, in turn, comes from my Deregulating Relevancy article, where I make this point more fully). This time, I think I did a better job offering some reasons why domain names may truly differ from keywords, so perhaps the "exceptionalism" isn't as remarkable as I indicated in 2007 (or is justifiable in part).

Revisiting the talk after 4 years, what really caught my attention were the relative quantum of regulations targeted specifically at domain names and keywords, respectively. I did a search in Westlaw's federal and state statutory databases for "domain name," and I was overwhelmed with hundreds of search results. I'm amazed how many statutes call out domain names and, in some cases, subject domain names to exceptionalist regulation. I taxonomize these various types of domain name regulations in my slides.

In contrast, we still have virtually no keyword advertising-specific regulation. The only such law still on the books is the Alaska anti-adware law, a law that I believe everyone simply ignores (although perhaps it's been mooted by the demise of adware circa 2005). When I initially gave the talk in 2007, the Utah Spyware Control Act was still on the books, but Utah ultimately (and wisely IMO) repealed that law, and Utah's other flirtations with keyword regulations have fortunately petered out. Given how keyword advertising has eclipsed domain names in so many ways, I remain perplexed by this disparity in regulatory attention despite the distinguishing characteristics between the two.

Posted by Eric at 11:30 AM | Adware/Spyware , Domain Names , Internet History , Trademark | TrackBack

January 27, 2011

Top 5 Cyberlaw Developments of 2010, Plus a 2010 Year-in-Review

By Eric Goldman

Earlier this Fall, I posted my top 8 trends in Internet law, and that's a good place to start if you want to see how I think things are developing. Because of that post, this year I'm shaking up the format of my year-end recap post a little bit. We'll start with the top 5 Cyberlaw events of 2010, but then we'll move to other topics. (This is a variation of my post to InformIT on Tuesday).

Top 5 Legal Developments

#5: Google pulls out of China. China's native search engines rejoice, but is this really a win for China's long term prospects? Meanwhile, I keep hoping Google will do the same in the EU too given how much the EU regulators hate Google.

#4: COICA and the pre-enactment COICA workaround, ICE's lawless seizure of 82 supposedly pirate-oriented domain names. Showing once again that domain name censorship is irresistible to government regulators.

#3: Righthaven goes on a litigation frenzy on behalf of newspapers. Which do you think will happen first--bloggers stop discussing newspaper articles for fear of being sued, or newspapers go out of business? What's amazing is that newspapers don't realize that the first will accelerate the second.

#2: Oracle gets $1.4B+ from SAP for competitive scraping. Oracle hit a grand slam with the damages in this case, ranking highly on several all-time-largest-awards charts.

And the top cyberlaw story of the year goes to...

#1: Wikileaks. Wikileaks finally forces us to confront many of the cyberspace governance issues we were debating in 1996. I'm sad to say that our government, and many private businesses, failed the test.

Other Key Developments

* Tiffany v. eBay. The Second Circuit thumps Tiffany's pathetic arguments and gives eBay a clean bill of trademark health. However, this ruling just preserved the status quo, so for my money, the much more important secondary trademark rulings involved providing other services to alleged counterfeiters. See Gucci v. Frontline, potentially exposing credit cards and other payment service providers to secondary liability for providing payment services to alleged counterfeiters, and Roger Cleveland Golf v. Price, potentially exposing SEOs/web designers to secondary liability as well.

* Viacom v. YouTube and Arista v. Limewire. These companion cases told us what we already knew: YouTube + 512(c) defense = good, P2P file sharing software vendor - DMCA safe harbor = bad.

* Sony v. Tenenbaum. I'm still waiting to see if this case is a blip or a watershed. It has the potential to make every copyright statutory damages case into a constitutional due process inquiry.

* Legally, it was a good year for Google. Google got a favorable trademark ruling in the ECJ. Google got a decisive win in its Rosetta Stone AdWords trademark case (and, as mentioned before, the YouTube case as well). Most of the other trademark plaintiffs lost or simply gave up.

* Legally, it was a lousy year for Google. Everyone in the world seems to be considering if they can run Google's algorithms better than it can: EU antitrust regulators, French antitrust regulators, the Texas AG, private plaintiffs, the New York Times and so many more. Google got trapped in a dangerous antitrust litigation in the unfavorable venue of Ohio state court. Google Street View has been a legal train wreck world-wide. The DOJ busted up a possible hiring cartel among Silicon Valley companies, and Google almost immediately handed out 10% pay raises for everyone. Buzz was a lousy product with a horrible launch, and it led to a multi-million dollar litigation kicker.

* It was a quiet year for 47 USC 230 litigation. From my perspective, quiet is good! The biggest defense win of the year: Milgram v. Orbitz. The biggest plaintiff win of the year: Swift v. Zynga.

* Perfect 10 v. Google. Google gets yet another win in this case, this time on 512(d)--one of the few cases interpreting the 512(d) safe harbor for linking to infringing content.

Notice I didn't put *any* of the Ninth Circuit Internet law jurisprudence on the list. There were plenty of interesting rulings this year: Krottner v. Starbucks, MDY v. Blizzard, Vernor v. Autodesk, DSPT v. Nahum, the Freecycle naked licensing case, Advertise.com v. AOL, Toyota v. Tabari, Visa v. JSL, CRS Recovery v. Laxton, Office Depot v. Zuccarini. However, I have lost all faith that 3 judge panel decisions by the Ninth Circuit have any binding precedential on other panels, so every case is effectively a one-off.

Less-Heralded But Nevertheless Interesting Disputes of the Year

Some under-the-radar legal disputes that I thought were more interesting than the overhyped stories:

* Barclays v. theflyonthewall. A brokerage house gets an injunction against the republication of its stock recommendations based on a hot news doctrine. The case is now on appeal to the Second Circuit. The case exposes the precarious business model of brokerage houses: they are content publishers trying to monetize via a commodity service, and brokerage house stock recommendations were exactly the kind of information John Perry Barlow explored in his 1994 Economy of Ideas article. Will the hot news doctrine prop up a doomed business model?

* Anderson v. Bell. Electronic signatures count towards the requirements for an election petition. This could launch a new era of citizen petitioning of the government.

* Snap-on v. O'Neil. A company can't scrape its own data from its outsourced vendor, seemingly authorizing the vendor to play hold-up games for companies that don't handle the contract correctly. The Eventbrite v. Cvent case provided some interesting contrast.

* Goforit v. Digimedia. A court upholds domain name wildcarding and says the TM owner/plainitff pursuing those wildcarded domain names may have engaged in reverse domain name hijacking.

* Lara Jade Coton v. TVX. The blog post title said it all: "Tip for Clean Living: Don't Use a 14 Year Old's Self-Portrait in Advertising for Porn."

Most Overhyped Stories

This year, for the first time, I'm separately breaking out a category for most overhyped stories of the year.

* Craigslist shuts down its adult services category. A toxic mix: Craigslist took a legally defensible but nevertheless obstinate position, and state AGs love to show their constituents how much they hate the Internet. When Craigslist finally gave in and shut down its adult services category (with a whining F-U), people went crazy.

* Borings get $1 for their trespassing claim. Google's Street View contractors made a mistake, drove up a private driveway, and captured what they saw. Google posted the photos until it got a complaint, then the homeowners with the odd surname ("Boring") went on a litigation frenzy. Their payoff for several years of litigation? $1. Not even enough for extra foam on a Starbucks mochachino.

* The Supreme Court's tech docket. Several fizzled out non-decisions from SCOTUS this year: Bilski, Quon, Costco. The Supreme Court is taking a steady diet of tech-related cases, but they are gun-shy about actually resolving them.

* Mark Hurd. Mark Hurd, Hewlett Packard's CEO, had an inappropriate relationship with an HP contractor/former B-list softcore porn actress and maybe fudged his expense reports. When he tried to take a job at HP's frenemy Oracle, HP got litigious, but it turns out their fur can be smoothed for a few million.

* Lost iPhone Prototype. Stop me if you've heard this joke before: an engineer walks in a bar and...loses a super-stealthy prototype of one of the most important new consumer technology launches ever...? I realize it's an uber-cool phone, but still, IT'S A PHONE, PEOPLE!

Our Snarkiest Company-Specific Posts

Occasionally, we get snarky about specific companies' practices. It's not our norm, but these posts sure do boost traffic. Companies in our crosshairs this year:

* The Problems With Google House Ads. Google's response to this post was pathetic and embarrassing.

* Scribd Puts My Old Uploads Behind a Paywall and Goes Onto My Shitlist. I still use Scribd, but I have zero loyalty.

* Hypocrisy Alert?! Expedia, a "FairSearch" Member, Marginalizes American Airlines in Its Search Results. If you're going to wave the "Search Neutrality" flag, please keep it hypocrisy-free.

* Facebook pulls a rare hat trick of snark this year: Q2 2010 Quick Links Part 3 (Special Facebook Edition), Facebook's Anti-Spam Filter Blocks Legitimate Conversations about Power.com, Distrust in the Cloud Part #2: Facebook Blocks J.mp Links and Takes Down Lots of Status Updates in the Process. I'm officially no longer in love with Facebook. I post the exact same content to Twitter and Facebook, so please follow me at Twitter instead.

* My RapLeaf Profile is Amusingly Mistaken. This is What the Fuss is All About?. In response to an article in the Wall Street Journal's "What They Know"/privacy plaintiffs lawyers full-employment series of articles.

Most Popular Blog Posts of the Year

1) Scribd Puts My Old Uploads Behind a Paywall and Goes Onto My Shitlist. Nearly 2X the traffic of #2. Putting profanity in the post title still works as a traffic booster.

2) Deleted Facebook and MySpace Posts Are Discoverable--Romano v. Steelcase (Topsy 100). I still can't figure out why this post was so popular; it just reminded us of something we already knew. See also the related but overreaching Millen v. Hummingbird Speedway.

3 & 5) #3: Twitter Clarifies Usage Rules, but AFP Still Claims Unbridled Right to Use Content Posted to "Twitter/TwitPic". Venkat also had an end-of-the-year hit with the #5 post, "Court Rejects Agence France-Presse's Attempt to Claim License to Haiti Earthquake Photos Through Twitter/Twitpic Terms of Service -- AFP v. Morel." Both posts were Topsy 100.

4) Viacom v. YouTube Summary Judgment Motions Highlights. Not surprisingly, the gossip about the lawsuit is way more popular than the blog post on the actual ruling.

One other post reached Topsy 100: "Ripoff Report Defeats Extortion Claim, But Plaintiffs Keep Trying--AEI v. Xcentric."

Lists of Yore

Previous top 10 lists from 2009, 2008, 2007 and 2006. Before that, John Ottaviani and I put together a list of top Internet IP cases for 2005, 2004 and 2003.

Posted by Eric at 06:56 AM | Content Regulation , Copyright , Derivative Liability , Domain Names , Evidence/Discovery , Internet History , Licensing/Contracts , Search Engines , Trademark , Trespass to Chattels | TrackBack

January 25, 2011

Ad Networks Ordered to Drop Allegedly Infringing Site--Elsevier v. eNom

By Eric Goldman

Elsevier Ltd v. Whois Privacy Protection Service, Inc., 1:11-cv-10026-RGS (D. Mass. injunction dated Jan. 14, 2011). See the TRO from Jan. 6 and the complaint.

On the surface, this seems like a run-of-the-mill copyright enforcement. The plaintiffs Elsevier and John Wiley publish textbooks on pharmaceuticals and related topics. The website at issue, Pharmatext.org, allegedly republishes those copyrighted textbooks for free via an ad-supported website. If these were the only key facts, the publishers should be able to shut down the rogue site easily.

However, I think this is a pretty complicated case that isn't getting the nuanced legal analysis it requires. There are at least three major complexities to the case:

1) Pharmatext.org is now offline, but when I reviewed it in Google's cache, it looked like a linking site. In other words, the site itself wasn't hosting the allegedly infringing downloads but just linking to URLs where they were available. I didn't see anything in the complaint that connected the operators of Pharmatext to the uploads of the copyrighted material on third party servers.

Thus, this case could be about a website's liability for linking to infringing content. We might still conclude that Pharmatext is infringing, but we'd need to reach that through a secondary liability analysis, not a direct liability analysis. Of course none of this is mentioned in the materials I saw. The complaint does not clarify who is the direct infringer because those paragraphs are in the passive voice--is it the uploader, the individuals who download, or Pharmatext for unspecified activities that it did?

2) Pharmatext.com is owned by eNom as a privacy proxy (under its Whois Privacy Protection Service, the captioned defendant). I've previously blogged about domain name privacy proxies before and the legal troubles they are encountering (see my post on Solid Host v. NameCheap). The publishers sue WPPS for vicarious copyright infringement, alleging "it controls the domain name pharmatext.org and receives a direct financial benefit for doing so."

Hold on a sec. This is a really dense statement that requires unpacking. WPPS is the domain name registrant on behalf of an undisclosed principal. It does not "control" the domain name. Even if it did, the normal test for vicarious infringement requires the "right and ability to supervise the infringing activities." How does a privacy proxy do that? It controls the domain name, not the associated servers. See the old 9th Circuit ruling in Lockheed v. NSI. And typically vicarious infringement requires a direct financial benefit from the infringement. Sure, as a service provider, the privacy proxy gets paid by the website operator--but the payment amounts don't vary with the amount of infringement. This is like saying the electric company gets paid by an alleged infringer to supply power to the infringing website. Yes, the electric company gets paid, but no, that's not direct financial benefit from the infringement. (Ironically, in fact increased infringing activity might boost the amount of electrical consumption, so the electric company is more likely to profit from infringement than a privacy proxy.)

Finally, recall that I believe Pharmatext is a linking site that isn't the direct infringer. So WPPS is a distant service provider to a possible secondary infringer. Tertiary liability, anyone?

The court's response? It orders WPPS to disable the domain name, fork over the principal's identity, and freeze any transfer of the domain name.

I am extremely bearish on the future of domain name privacy proxy services. It seems inevitable that IP plaintiffs are going to drive that particular service offering into the ground with their litigation.

3) The publishers also sued two ad networks, Chitika and Clicksor, for contributory copyright infringement. The supporting allegations? The ad networks directly profit from the infringement and provide the funds to enable Pharmatext.com to continue its existence.

Traditionally, contributory copyright infringement requires knowledge of the infringing activity and a substantial contribution to the infringing activity. I didn't see any allegations of knowledge by the ad networks at all--no assertions that the ad networks had figured out that Pharmatext,org was a rogue website, and no assertions that the copyright owners sent a C&D or takedown notice. (I don't think the ad networks qualify for a 512 safe harbor because of the way those safe harbors are worded; but a C&D/takedown notice would still help the publishers in arguing that the ad networks knew it was a rogue website). The ad networks' only "contribution" to the infringement is the payment of money to the site, and this was expressly rejected as sufficient for liability in Perfect 10 v. Visa, which concluded that even if the payment system stopped the flow of money, it would not automatically stop the website and any associated infringement on it.

Further, if Pharmatext was a contributory infringer for linking to infringement, this means the ad networks would be contributing to a contributory infringer--another tertiary liability argument.

The court's response: it ordered the ad networks not to pay any money to Pharmatext and to drop them as customers.

From the PACER report, it appears that the defendants haven't contested the publishers' claims. I hope that will change. This is a case where the publishers have clearly overreached, and if the judge won't call them on it himself, we need the adversarial system to expose the major gaps in the publishers' logic.

Meanwhile, this case illustrates two broad themes. First, it illustrates how plaintiffs are going after an array of supporting service providers to make them responsible for their customers' activities. On the trademark front in the past 12 months, see, e.g., Louis Vuitton v. Akanoc (web hosts), Gucci v. Frontline (payment service providers), Roger Cleveland v. Price (web designers/SEO), Microsoft v. Shah (software vendors that assist website development). Plaintiffs are reading secondary liability doctrines very, very broadly, and courts aren't always slamming down those arguments as emphatically as they should.

Second, several other lawsuits have tried to nail ad networks for providing advertising support to infringing sites. As another example (also in the trademark realm), see the Vulcan Golf v. Google lawsuit. The only successful case that I can recall involves Triton Media, a ruling that was so skewed by its facts that I didn't think it was worth a full blog post. Wendy Davis discusses the comparison more.

If this lawsuit ends with the current injunction, I'll consider this ruling an interesting oddity. Any further developments in this case warrant careful scrutiny.

Posted by Eric at 09:27 AM | Copyright , Derivative Liability , Domain Names , Privacy/Security | TrackBack

January 19, 2011

Court Allows Microsoft's Claims for Contributory Cybersquatting and Dilution to Move Forward -- Microsoft v. Shah

[Post by Venkat Balasubramani]

Microsoft Corp. v. Shah, et al., C10-0653 (W.D. Wash.; Jan. 12, 2011)

WSJ's Law Blog reports that Judge Martinez in the Western District of Washington (Seattle) issued an order allowing Microsoft to proceed on a novel theory of cybersquatting. Judge Martinez rejected defendants' motion to dismiss and held that Microsoft properly alleged claims for contributory cybersquatting and contributory trademark dilution.

The court's discussion of the background facts is brief (I've uploaded Microsoft's amended complaint to Scribd, which you can access here):

Defendants are alleged to have registered domain names containing Microsoft trademarks in order to drive traffic to their website. Consumers seeking a Microsoft website or product are mistakenly drawn to Defendants’ website through Defendants’ alleged use of Microsoft trademarks. Consumers who believe they are downloading a Microsoft product are then allegedly tricked into interacting with Defendants, who in turn solicit users to download emoticons. Defendants allegedly receive payment when a visitor clicks on links or advertisements displayed on their website, or when a visitor downloads or installs a product such as the emoticon toolbar.

Moreover, Defendants are alleged to have induced others to engage in infringement and cybersquatting by providing instruction on how to misleadingly use Microsoft marks to increase website traffic. Further, Defendants also allegedly sold a product that contained software to allow buyers to easily create websites incorporating Microsoft marks. This product allegedly included a video narrated by Defendant Shah.
[emphasis added]

Contributory Cybersquatting: Defendants moved to dismiss on the basis that claims for contributory cybersquatting and dilution are "not recognized." The court looks to two prior cases (Ford Motor v. Greatdomains.com and Solid Host v. Namecheap) and concludes that plaintiffs can assert claims for contributory cybersquatting. In Greatdomains, the district court discussed the "flea market" analysis but also found that since the cybersquatting statute required bad faith, a claim for cybersquatting would require a heightened standard - a cause of action against "cyber-landlords" would only be available in "exceptional circumstances." The court in Greatdomains declined to hold the defendant liable for contributory cybersquatting. Solid Host is a case where domain proxy registration services declined to turn over the identity of alleged thief and Solid Host brought contributory cybersquatting claims against the entity offering the proxy registration services. As an earlier blog post from Professor Goldman notes, the court there cited to the knowledge and control standard from the Ninth Circuit's Lockheed case, under which a plaintiff was required to prove:

that the defendant had knowledge and ‘[d]irect control and monitoring of the instrumentality used by the third party to infringe the plaintiff’s mark'.

In addition to these two cases, the court also cites to a recent case where the Ninth Circuit held - based on its view of an expansive reach of the ACPA - that a defendant who held on to a domain name to gain leverage in a business dispute (where the defendant claimed he was owed money) could be held liable under the ACPA. ("Holding on to a Domain Name to Gain Leverage in a Business Dispute Can Constitute Cybersquatting -- DSPT Int'l v. Nahum.")

Oddly, the court's discussion of the facts doesn't connect the dots. The court several times cites to the fact that the defendants sought to profit from "teaching others how to trade off the . . . recognition of [Microsoft's] mark in order to drive traffic to a given website," but the complaint doesn't seem to say that defendants sold any domain names to these third parties or helped these third parties acquire any domain names. The facts actually remind me of the SEO/web designer case Professor Goldman blogged about a couple of weeks ago where contributory trademark claims based on counseling and coaching were allowed to proceed against a web designer/SEO firm. (See "SEO/Web Design Consultant Faces Contributory Trademark Liability for "Copycat" E-Commerce Site--Roger Cleveland Golf v. Price".) Unless you have some revenue sharing arrangement going on, or benefit from the exploitation, it doesn't seem like giving someone the tools that would allow them to infringe should on its own subject you to liability.

Contributory Dilution: The court also declined to dismiss the cause of action for contributory dilution based on defendants "encourage[ment] of others to utilize the famous Microsoft mark in such a way that could cause dilution of the . . . mark." Plaintiffs consistently push for contributory dilution claims, and courts are not receptive to them. (See, e.g., the Second Circuit's result in Tiffany v. eBay: "eBay Mostly Beats Tiffany in the Second Circuit, but False Advertising Claims Remanded.") It's less than satisfying here for the court to recognize the cause of action, but treat the discussion of it as an afterthought.
__

The court gives lip service to the heightened test that is appropriate for a cause of action for contributory cybersquatting, but seems to give Microsoft a pass applying either of the tests to the allegations. It's tough to say whether this cause of action will alter the landscape for either cybersquatting or dilution, or whether this is a scenario where the court let the contributory claims move forward since Microsoft alleged primary claims for cybersquatting that on their face look strong. (Courts seem to have this bad habit.) If it sticks, it seems like a broadening of the scope of ACPA liability, which courts in the Ninth Circuit seem willing to do.

Other coverage:

"On Microsoft and ‘Contributory Cybersquatting’" (WSJ Law Blog)
"Microsoft Gets Green Light for Suit Asserting Novel Expansion of Cybersquatter Liability" (Law.com)
"Western District Denies Dismissal of Novel Trademark Theories" (Mike Atkins)

Posted by Venkat at 09:13 AM | Derivative Liability , Domain Names , Trademark

December 31, 2010

Nov.-Dec. 2010 Quick Links, Part 3 (Special Extra-Long Copyright Edition)

By Eric Goldman

* Oracle got a $1.3B jury verdict in its anti-scraping lawsuit against SAP. My prior blog coverage (1, 2, 3). This is one of the largest copyright damage awards ever (if not the largest), and it ranks highly on the list of largest verdicts of any kind. Oracle got another $16M+ in prejudgment interest, and Oracle and SAP settled Oracle’s other claims for an additional $120M. Oracle also got the non-monetary benefits of publicly tweaking its major rival (SAP), plus it was able to get a few digs into its frenemy Hewlett Packard over the testimony of AWOL former SAP exec Léo Apotheker. However you measure it, Oracle got a huge win here.

The jury’s verdict was partially a product of SAP’s litigation strategy, which included admitting responsibility for its subsidiary TomorrowNow’s behavior and admitting copyright liability—leaving only the question of damages for the jury. SAP’s basic argument to the jury was “Yes, we did it, just don’t make us pay a lot of money for it.” Those kinds of arguments rarely play well with juries.

Although the damages calculations raised some complex and novel doctrinal issues, because it’s a jury verdict, I don’t think this case is likely to have a significant precedential effect. However, the verdict does act as a cautionary M&A tale. SAP bought TomorrowNow for $10M; if the jury verdict stands, the true cost of TomorrowNow will be nearly $1.5B. What looked like a cheap deal for SAP turned out to be quite expensive.

Still unresolved is whether the US DOJ will bring any criminal charges against executives from TomorrowNow or SAP. It’s possible that the massive financial punishment already meted out civilly will partially alleviate the pressure to seek separate criminal punishment.

Good coverage from Am Law Daily and Bloomberg.

* In response to allegations that they facilitated copyright infringement, ICE seized—without warning—82 domain names in “Operation In Our Sites.” As we learn more about this seizure, it’s clear that ICE’s seizure was lawless. Techdirt sketches out some defects, and check out a seizure warrant application for yourself. Worse, some of the seized sites were busted for distributing music at the copyright owner’s request. Details at Techdirt (1, 2) and NYT. This provides yet more evidence that it’s become impossible to distinguish between “pirated” online files and files that copyright owners are deliberately “leaking” for the promotional value. YouTube can’t figure it out; ICE can’t figure it out; the copyright owners can’t figure it out. It’s time to abandon any pretense that online copyright infringement is “apparent” on its face. Meanwhile, this seizure reiterates why COICA, and any other efforts to cut off putatively illegitimate activity through domain name seizures, are irreparably ill-conceived.

* HarperCollins Publishers L.L.C. v. Gawker Media LLC, 2010 WL 4720396 (S.D.N.Y. Nov. 22, 2010). Prepublication excerpts of Sarah Palin's book on Gawker led to a TRO.

* I could have a whole post dedicated to Righthaven. A few tidbits:
- Failed Senate candidate Sharron Angle settled Righthaven's copyright infringement lawsuit.
- Sherman Frederick, the former publisher of the Las Vegas Review-Journal, got caught in a hypocritical situation.
- LA Times on Righthaven.

* The Supreme Court affirmed the Costco v. Omega appeal by an equally divided court in a one-line opinion. Also, Supreme Court certiorari denials include:
- Bryant v. Media Right Productions Inc. My prior blog post.
- Harper v. Maverick Recordings, with an interesting dissent from Justice Alito. Sheffner’s take.

* Heartland and Forest River are rival RV manufacturers locked in a litigation death match. My initial blog post. The latest ruling: RV floorplans aren't a protectable architectural work under the Architectural Works Copyright Protection Act, but republishing the competitor's floorplan in ad copy goes to trial.

* Faulkner Press v. Class Notes (N.D. Fla. Nov. 23, 2010). Some interesting discussion about the copyrightability of professor notes, the potential infringement by note taking services, and the liability for using the professor's name in marketing the notes.

* Capitol Records v. BlueBeat, 2:09-cv-08030-JST -JC (C.D. Cal. Dec. 8, 2010). A rogue online music website’s odd defenses get emphatically rejected.

* Google is "voluntarily" cracking down on copyright issues. An interview goes into more depth. News.com wonders if Google has “jumped sides in copyright war.”

In a possibly related move, Mastercard is supporting COICA. Is this a reaction to the Gucci v. Frontline case?

* US v. Crippen (C.D. Cal. Nov. 23, 2010). No fair use defense to a 1201 anti-circumvention prosecution. Update: the follow-on development and the dismissal.

* NYT on joke stealing via the Internet. “'The only way to battle a thief is to out-write and out-create them,’ said Patton Oswalt, a stand-up comedian and actor who has used the Internet as a bully pulpit to confront his imitators. ‘The good thing about the Internet is, it’s showing how much dumb thievery there is out there.’”

* I’m very delayed in mentioning BanxCorp v. Costco Wholesale Corp., 2010 WL 2802153 (S.D.N.Y. July 14, 2010), a case involving the IP protection for a numerical index. The court’s test for copyrightability: “to demonstrate that the final values produced from raw data are protectable by copyright, a plaintiff must demonstrate either that (1) the raw data used to create the final value were protectable; or (2) the method of converting the raw data into a final value was an original (but not necessarily novel) process that is neither widely accepted as objective, nor an industry standard; or (3) the final value did not attempt to measure an empirical reality.” Interesting FN7: “it is actually to be expected that the more acceptance a financial measure obtains (i.e. the more successful it is), the more ‘fact-like’ it becomes.” From my perspective, the court's approach, though thoughtful and nuanced, reflects how copyright doctrine has gone horribly wrong. The only doctrinally sustainable result is to say that final numerical values of a formula are categorically uncopyrightable—PERIOD. Otherwise, watch how this court contorts itself trying to deal with the copyright merger doctrine (the court doesn’t discuss fair use) and 1202 copyright management removal (how do you remove the CMI from a number???). The court also says the plaintiff’s hot news claim survives copyright preemption.

Posted by Eric at 08:09 AM | Copyright , Domain Names | TrackBack

December 17, 2010

Domain Name Privacy Protection Services Not Liable for Failure to Disclose Identity of Alleged Spammer -- Balsam v. Tucows

[Post by Venkat]

Balsam v. Tucows, No. 09-17625 (9th Cir.; Dec. 16, 2010)

Prolific spam litigant Dan Balsam sued the registrant of [adultactioncam.com] under California's spam statute for allegedly sending Balsam thousands of pieces of spam. Balsam obtained a default judgment in the amount of $1,125,000 (!) against Angeles Technology, Inc., who was listed as the registrant of [adultactioncam.com]. Balsam was ultimately unable to recover against Angeles and then sued Tucows. His beef with Tucows was that Tucows refused to turn over the identity of the registrant of [adultactioncam.com] (when he conducted his initial search, apparently, Angeles was the registrant, but at some point later, Angeles opted into Tucows' privacy protection services). He demanded that Tucows disclose the identity of the registrant "or pay the default judgment." Tucows predictably refused, and Balsam sued, trying to hold Tucows liable. I should note that the court's description of the facts is much better than mine, although it's somewhat charitable to Balsam. The court concludes its recitation of facts by saying that "[a]lthough [Balsam's] approach is novel and creative, it cannot survive a motion to dismiss."

Balsam's main argument is that Tucows as the registrar is bound by the ICANN registrar accreditation agreement, which contains the following provision (Sec. 3.7.7.3):

A Registered Name Holder licensing use of a Registered [domain] Name . . . shall accept liability for harm caused by wrongful use of the Registered Name, unless it promptly disclosed the identity of the licensee to a party providing the Registered Name Holder reasonable evidence of actionable harm.

As the court notes, Balsam's claim against Tucows depends on his status as a third party beneficiary to the RAA agreement between ICANN and Tucows. The court concludes that Balsam is not a third party beneficiary because among other things, the agreement contains an explicit "no third party beneficiary clause," and because the agreement itself does not contain terms applicable to ICANN or any registrar - it merely provides that a a registrar must include certain terms (including this one) in its domain name registration agreements. Balsam responded that the "no third party beneficiary" clause does not relieve Tucows of its obligation as a registrant (which it or one of its affiliated entities is in name when it provides privacy protection services) but the court rejects this argument as well. Tucows entered into the agreement as a registrar, and didn't agree to bind itself as a registrant.
__

Balsam has an uphill battle arguing that the RAA creates third party rights. See Register.com v. Verio, 356 F.3d 393 (2d Cir. 2004.) (Interestingly, Register v. Verio dealt with the use of WHOIS information where Verio sent unsolicited emails to Register registered domain names advertising Verio's services.) However, more relevant to the court's discussion is a recent case involving proxy registration services - Solid Host v. NameCheap - where the court found that NameCheap could be held liable for contributory cybersquatting based on the actions of the registrant-in-fact. Here's Prof. Goldman's post on the muddled ruling in that case: "Contributory Cybersquatting and the Impending Demise of Domain Name Proxy Services?--Solid Host v. NameCheap." As he mentions in that post, it's important to be clear about who is the registrar and registrant (and in what capacity a particular entity is acting when it's providing services). He raises the issue of whether registrars will shy away from providing privacy protection services. I don't know the answer to that, and although it may be early to assess the fallout (if any) of the NameCheap case, this case seems to indicate that proxy registrars don't roll over and readily disclose registrant information absent a court order.

In any event, I don't think Balsam had a strong argument here since Angeles's utilization of the privacy protection services did not contribute in any way to the alleged harm. Although the facts aren't crystal clear, it seemed like Balsam obtained a judgment (after having determined that Angeles was the registrant) and only then did Angeles opt in to the privacy protection feature. The damage (if any) was done by the time the privacy protection feature entered into the picture. Additionally, as the district court's order notes, the Angeles lawsuit was pending at the time Tucows declined to reveal the underlying registration info - Balsam had an obvious solution (which he failed to take advantage of). He could have issued a subpoena seeking the registrant information and could have easily obtained it. There may be some set of facts under which a refusal to reveal the registrant information could support a claim, but those facts were not present here.

This also raises the issue of the appropriate response from a company who provides private registration services. The registrars have an interest in not freely disclosing registrant information absent a court order, but NameCheap suggests that in some cases, a failure to disclose may result in liability to the provider of privacy protection services. (NameCheap raised the issue of whether the registrar was acting in its capacity as registrar or in another capacity - in its capacity as registrar, it may be able to take advantage of an ACPA safe harbor. As I mentioned in my previous post about this case, Tucows may have been able to take advantage of a Section 230 defense, although ultimately it didn't end up needing to invoke the protections of Section 230, given the court's ruling.) This case indicates that courts are reluctant to freely impose liability on a registrar who provides proxy registration services, which isn't necessarily a bad thing from the standpoint of protecting registrant anonymity and privacy. A finding of possible liability in this case could have resulted in registrars getting more nervous when they receive requests for the identity of the underlying registrant.

"Contributory Cybersquatting and the Impending Demise of Domain Name Proxy Services?--Solid Host v. NameCheap"

"Plaintiff Wins $7,000 Following Bench Trial on Claims Under California Anti-Spam Statute -- Balsam v. Trancos"

Posted by Venkat at 09:29 AM | Derivative Liability , Domain Names , Privacy/Security , Spam

December 11, 2010

Court Unlocks Allegedly Infringing Domain Name Based on Ineffectual Email Service -- Station Casinos, Inc. v. Murphy

[Post by Venkat]

Station Casinos, Inc. v. Murphy, 2:10-cv-01770-GMN-LRL (D.Nev.; Nov. 18, 2010) [pdf]

Plaintiff, who operates a family of Station-branded casino hotels and owns the "STATION CASINOS" mark, brought suit against Ryan Murphy, alleging that a website accessible via [stationcasinos.org] which was operated by Murphy infringed on plaintiff's trademark rights. The court granted an ex parte TRO which was fairly broad in scope. The order:

direct[ed] the current registrar to disable or change the domain name server (DNS) information for the allegedly infringing domain name and place the domain name on hold and lock for the pendency of the litigation.

Plaintiff also "requested that the current domain name registry place the Infringing Domain Name on Registry Hold status, thus removing Defendant from the TLD zone files maintained by the registry, which link the Infringing Domain Name to the IP address where the associated website is hosted." The court grants this request on an ex parte basis and allows plaintiff to serve defendant via email. However, the email sent by plaintiff's counsel bounced (was undeliverable) and as a result the court dissolves the TRO. [Added: Laura Wise pointed out that if the attempts at email service occurred after the TRO had been implemented (and the domain name disabled), it should come as no surprise that the emails bounced.]

Unfortunately for plaintiff, the defendant is located abroad, and this raises the possibility that the defendant transfers the domain name to a non-US registrar, which would complicate plaintiff's enforcement efforts.

The result in this case can be contrasted with the recent "seizure" of various allegedly infringing domain names by ICE. (I uploaded one of the warrants and seizure orders to Scribd: US v. Domain Names (LV-OUTLETSTORE.COM; LV-OUTLETS.COM; LV-OUTLETS.NET), 10-mc-00085 (D. Col.; Nov. 19, 2010) (Application for Warrant); (Warrant of Seizure).) From what I can tell, in those seizure actions, the courts issued an order (also ex parte) requiring a change in the DNS information which meant that people trying to access the domain names would now be directed to the following message:

[This] domain name [has] been seized by ICE - Homeland Security Investigations, pursuant to a seizure warrant issued by a United States Court.

For a good description of how this process worked, check out this post at Liberale et libertaire: "The Background Dope on DHS Recent Seizure of Domains." For a rundown of some Due Process issues that the ICE domain name seizures raise, check out this post by David Post: "Copyright Enforcement Tail Wags Internet Dog, Cont’d; or, What the Hell Ever Happened to Due Process?" (See also posts at Techdirt: "Who Needs COICA When Homeland Security Gets To Seize Domain Names?" and SearchEngineWatch: "Homeland Security Seized Torrent Domain That Gave Same Results Google Still Does.")

This also brings to mind whether improperly having a domain name locked can result in civil liability, and Eric posted about a case a couple of weeks ago that is relevant in this regard. In that case Tucows locked a slew of domain names in response to a demand by a trademark-plaintiff. This resulted in a rare ruling allowing a reverse domain name hijacking claim (against the plaintiff/trademark owner) to go forward. (Here's Eric's post on that case: "Wildcarding Subdomains Is OK; Reverse Domain Name Hijacking Isn't--Goforit v. Digimedia.")

This is a good a time as any to mention a few other domain name enforcement cases that are lurking around (some are a few months old, but still worthy of a mention):

Microsoft Corp. v. John Does 1-27, 10-cv-00156-LMB-JFA (E.D. Va.; Sept. 17, 2010) (R&R re default judgment); (Order adopting R&R): Microsoft obtains default judgment against unnamed defendants who allegedly used various domain names in connection with the Waledac botnet. Interestingly, the court awards Microsoft control over the domains. The case documents do not appear to have been physically served on defendants, but the court lets Microsoft slide, given (1) the extensive efforts at serving the case documents undertaken by Microsoft, and (2) the fact that Microsoft uploaded the pleadings to a website called [noticeofpleadings.com], coupled with evidence that someone who shared IP addresses with the offending domains accessed this site.

Chanel, Inc. v. Xuhui, et al., 10-cv-2040 (W.D. Tenn.; Nov. 4, 2010): Chanel obtains default judgment against an alleged seller of counterfeit items, after getting permission to serve via alternate means (email). Interestingly, the court orders a long list of domain names transferred to Chanel. The legal authority for a transfer is questionable (see "Domain Names as Property Subject to Creditor Claims--Bosh v. Zavala") but no one was around to raise this issue.

Xcentric Ventures, LLC v. Elizabeth Arden (Complaintsboard.com), No. C 10-80058 SI (N.D. Cal.; Oct. 1, 2010): Rip-off Report (which has garnered more than a few mentions on the blog) obtains a default judgment for copyright and trademark infringement against complaintsboard.com. It gets control over the complaintsboard domain name the old fashioned way - it takes the judgment to the Northern District of California where it obtains a writ of execution. Arden contested jurisdiction when Rip-off Report moved to enforce the judgment but the court rejected Arden's arguments. It's unclear as to whether the court orders the domain name transferred to Rip-off Report or whether Rip-off Report has to buy the name at an auction or from a receiver.

Righthaven v. Drudge: This just-filed complaint by Righthaven against Drudge hasn't produced any rulings, but it gets an honorable mention because Righthaven asks the judge to "lock the Drudge Report Domain and transfer control of the Drudge Report Domain to Righthaven." (See ArsTechnica.) It's safe to say that Righthaven's chances of getting Drudge's domain name range between slim and none.

Posted by Venkat at 01:36 PM | Domain Names

November 23, 2010

Wildcarding Subdomains Is OK; Reverse Domain Name Hijacking Isn't--Goforit v. Digimedia

By Eric Goldman

Goforit Entertainment LLC v. Digimedia.com LP, 2010 WL 4602549 (N.D. Tex. Oct. 25, 2010). See the related personal jurisdiction ruling from 2007 featuring a completely different but still ridiculously large and expensive cast of lawyers.

This is a super-interesting dispute involving two not-so-interesting litigants. The plaintiff Goforit runs a type of meta-search engine at goforit.com. After spending 5 minutes at the site, I couldn't identify a single reason why anyone would want to use it. Also inexplicably, Goforit appears to be quite pleased with its trademark rights in "Goforit," a term that seems more like an exhortation than a trademark.

The defendants own or operate many domain names, including "org.com," "com.org," "gov.org," and "org.net." All of these domain names have wildcarded subdomains, meaning that XYZ.com.org will lead to a working web page, no matter what "XYZ" is. (See my descriptive and normative discussion about wildcarding in my Deregulating Relevancy article). The resulting com.org web page presents a mostly useless directory of CPC links. I noticed that the pages now include a disclaimer at the top saying "xyz.com.org was not found on our servers. www.com.org is shown below" and a link at the bottom saying "Information on how you reached this site" which says:

Occasionally we receive inquiries from users who do not understand why they have accessed our site. Please be advised that you are not reaching our site as a result of spyware. We are not exactly sure why you have been directed here, however, we believe it is a result of the autosearch feature of Internet Explorer. If a site entered into the address bar cannot be accessed, Explorer apparently appends ".org" to the name and then tries to access that site. In the case of a search ending in .com, Explorer thus accesses our domain, "com.org."

Taking this statement at face value (which I recognize is questionable), this technical implementation seems like a goof by Microsoft and anyone else who automatically appends a TLD to an address bar entry. The court’s opinion doesn't mention either the disclaimer or the footer link, so they may post-date the lawsuit commencement. FWIW, the latest page in Archive.org from Aug. 2008 lacks the top disclaimer, although it does have the footer link.

Because the defendants are wildcarding their subdomains and various browsers or toolbars may be automatically adding ".com" or ".org" extensions, the net result is that users could enter "goforit" or "goforit.com" into their address bar and end up at the defendants' wildcarded com.org page, where they were presented CPC links. On the one hand, this wildcarding could have contributed to a type of consumer confusion--consumers putatively looking for goforit's navigational directory got the defendants’ navigational directory instead of, say, getting a 404. On the other hand, who cares? It's hard to believe many people were actually looking for goforit.com and yet had their browser redirect them to goforit.com.org, and those few brand-loyal users should have had no problem instantly spotting that they were in the wrong place.

So to boil the dispute down, a low-value no-name search engine is suing a low-value no-name domainer for a few allegedly misdirected users who quickly self-corrected. It's a little hard to work up a lot of sympathy in either direction. In this respect, the lawsuit vaguely reminded me of the unsympathetic marketers battling over dmv.org.

Two more oddities. First, making all favorable inferences for the plaintiff, how many users could possibly have been "diverted" from plaintiff to defendant? Second, after Goforit complained, the defendants "blocked" goforit as a wildcard, causing users who would have gotten to the defendants' site to get a 404 instead. So, adding it all up, exactly how much money could Goforit be legitimately seeking? I'm sure the defendants love the traffic they get from their scheme, but I can't imagine that the slice of their revenue attributable to "goforit" is greater than de minimis. And for this peppercorn, the plaintiff has been suing the defendants since 2006 through multiple courts--with no less than *TEN* lawyers from *THREE* different law firms listed as its counsel on this opinion. (FWIW, I count 4 lawyers from four different law firms working on the defense side, although there were multiple defendants who might have wanted their own lawyers). The entire litigation efforts seems like a nuclear flyswatter.

Fortunately, the parties' exorbitant expenditures do produce one good outcome: this opinion is one of the most conscientious and thoughtful ones I've seen this year. Huzzah for Chief District Judge Sidney A. Fitzwater!

Unfortunately for Goforit, the judge rules decisively in favor of the defendants. The court rejects Goforit’s claims over the wildcarding and sends defendants' counterclaims to the jury. I’m going to get into the minutiae of the opinion, so unless you are a hardcore domain name/trademark nerd, you should probably stop reading here.

ACPA Claim

The court rejects the cybersquatting claim because Goforit was complaining about third-level subdomains. The court says flatly: "as a matter of law, third level domain names are not covered by the ACPA." The court concludes:

Because third level domains--whether specifically designated or using Wildcard DNS--are not "registered with or assigned by any domain name registrar," a straightforward reading of the text shows that GEL cannot recover under the ACPA for defendants' use of Wildcard DNS in a third level domain.

Trademark Infringement

Goforit's trademark claim fails for lack of use in commerce. Goforit tried two arguments to establish use in commerce: "(1) defendants "used" the mark by registering a TLD website such as "com.org" and enabling Wildcard DNS, intending that third parties would enter addresses containing others' trademarks, such as "goforit.com.org"; and (2) defendants "displayed" the GOFORIT mark in the sale and advertising of their services by programming the address bar to display "goforit.com.org" after the Wildcard DNS directed the user to the "com.org" website."

On the first point, the court says that setting up a wildcarding scheme does not evidence the defendants' intent to use Goforit's trademarks. Citing the 2005 1-800 Contacts v. WhenU case, the court says:

Even if defendants could have foreseen that some third-party web users might type in a trademarked name to trigger the Wildcard DNS, the fact that the TLD websites' Wildcard function processes a trademarked input does not constitute a "use" in "sale or advertising" of services....the Wildcard function in the instant case does not handle the third-party user's trademark input as a trademark, but merely as a web address that internally redirects to the domain name's homepage....Defendants have never tried to leverage others' trademarks into profit by selling specific trademarked keywords to advertisers.

I note that the com.org website now shows the disclaimer--referencing the subdomain and possible trademark--on each page. I wonder if this would change the court's analysis.

On the second point, the court says:

A reasonable jury could only find that, in any instance when "goforit.com.org" appears in the address bar, this is because the user has somehow entered "goforit.com.org" into the address bar at some point, whether intentionally or by inadvertent misuse of shortcut keys, to trigger Wildcard DNS in the first place. It would be different if defendants had configured their website to display "GoForIt.com" on the user's address bar after redirecting users to the "com.org" site and displayed other indications of affiliation with GEL and its GOFORIT mark. But a reasonable jury could not find that there is anything deceptive in itself about calling a website what it actually is: when a user enters "goforit.com.org" into the address bar, the user may be redirected to "com.org," but that does not change the fact that the content the user is seeing is the actual content assigned to the "goforit.com.org" address.

False Designation of Origin

The court also rejects Goforit's claim that the defendants made a false designation of origin by retaining the goforit subdomain throughout a user's visit. The court says that Goforit did not produce any convincing evidence either of consumer confusion or any harm to it.

The court first does a traditional multi-factor trademark confusion test; a few comments about that:

Mark Strength: "Without any evidence of the GOFORIT mark's consumer recognition power, there is no proof that would enable a reasonable jury to find that any of the redirected users was even aware of GEL's GOFORIT mark."

Mark Similarity: the court says the relevant marks are "Goforit" compared with “com.org." The court effectively ignores the subdomain as irrelevant. Even if the Goforit trademark is compared with goforit.com.org, the court says a "reasonable jury could not find that a user would construe an address bar display, especially one that merely retains what was just inputted by the user, as a "mark" when nothing else in the page content indicates GOFORIT sponsorship or affiliation."

Product Similarity: "A reasonable jury could only find, however, that the similarity of product design is attributable to the fact that defendants' TLD Domain Name websites and GEL's GoForIt.com website are both web directories; the functional design choices are common to many web directory websites rather than distinctive to GEL, and GEL has not produced any evidence that defendants have copied any product feature that uniquely identifies GEL's services."

Actual Confusion: "According to Grant's testimony, users on message boards expressed confusion as to how they arrived at websites such as "com.org," but there is no summary judgment evidence that users mistook "com.org" to be affiliated with or approved by the websites they intended to reach. On the contrary, the fact that some users, after experiencing Wildcard DNS, suspected that they had been infected with spyware suggests that it was immediately apparent to users that defendants' websites, which lacked trademark and trade dress similarity with their target sites, were of a different origin." Perhaps this is one of the rare situations where being confused with spyware is a positive!

The court then turns to false advertising proper, saying "a reasonable jury could not find that the display of "goforit.com.org" is a literally false statement." The court considers implied falsity and rejects the elements of that:

GEL has failed to present any evidence that the redirected consumers would have found the display of "goforit" in the web address material in deciding whether to click on the advertisements on "com.org." Nor has GEL adduced evidence that would enable a reasonable jury to find that any of the affected users was even aware of "GoForIt.com" as a competing entity....because a reasonable jury could only find that "go for it" is a common expression in conversational English, and because myriad other websites unaffiliated with GEL incorporate "goforit" into their web addresses, a reasonable jury could not find that any of the users from the log files who typed "goforit" intended to go to GEL's website.

Reverse Domain Name Hijacking

After completely rejecting Goforit's claims, the court turns its attention to the defendants' counterclaims. Defendants sued for reverse domain name hijacking under 15 USC 1114(2)(D)(iv). As part of its scorched earth tactics, Goforit asked the defendants' registrar (Tucows) to impose a registration lock on all of defendants' domain names--including com.org and nearly 300 others.

Tucows did, in fact, impose the registration lock, which allegedly caused all kinds of problems for the defendants. I'm trying to figure out how Goforit convinced Tucows to lock all of the defendants' domain names. On the surface, Tucows isn't looking so great here either. [see update below]

The court says that even if Goforit had a plausible argument against com.org based on goforit.com.org (something the court left open), Goforit had no plausible argument that the other domain names violated its trademark rights. As a result, the court denied Goforit's summary judgment motion, putting the reverse domain name hijacking claim to a jury trial.

I did a little research on the ACPA reverse domain name hijacking provision. I found only 6 other cases in Westlaw citing to the damages provision in subsection (iv) (as opposed to the declaratory relief in subsection (v), which has been successfully invoked only a few times). As far as I can tell, no other (iv) case has resulted in a positive outcome for the domain name registrant. Therefore, I believe the defendants' success so far on the (iv) reverse domain name hijacking claim is the first of its kind.

Tortious Interference With Contract

The court also rejected Goforit's summary judgment on the defendants' claim for tortious interference with the defendants' contract with Tucows. There were some old cases that implied that the ACPA reverse domain name cybersquatting provisions preempted state law equivalents, so this ruling also appears to be novel.

UPDATE: I had an extended email discussion with Tucows about its role in this situation. My contact sent me the following statement:

"Tucows responded in this case as per our policy. When we receive notice of filed litigation, NOT simply a C&D or draft litigation, we lock the affected name(s). We also notify the registrant. Please remember that locking the name does not in any way disable the name, but simply ensures that the name stays in place while the rights are being sorted out. In these circumstances we are also happy to accommodate changes that a registrant may need to a setting such as DNS. Also, in the rare circumstance where this policy creates difficulties for a registrant, Tucows actively works with the registrant to find a solution that balances the registrant's rights with the need to see that an effective legal system sits behind all property rights, including domain names.

While we don't comment on specific matters, Digimedia is, and continues to be, a long time Tucows customer."

Posted by Eric at 10:04 AM | Adware/Spyware , Domain Names , Marketing , Trademark | TrackBack

November 08, 2010

Online Forum Operator Gets Easy 47 USC 230 Win--Two Plus Two v. Jacknames

By Eric Goldman

Two Plus Two Publishing LLC v. Jacknames.com, 2010 WL 4281791 (D. Nev. Sept. 30, 2010). The complaint. Steve Green's writeup of the initial complaint filing.

This one just showed up in my Westlaw queue. It looks like a cyberlaw brawl is going down in the poker community. Get a sense of the discussion here. That thread suggests this may be one of those lawsuits that makes no sense whatsoever.

Two Plus Two publishes poker-related content and runs (among other things) a poker-themed discussion forum. Jacknames and its principal Boyd appear to provide a variety of Internet services (hosting, registrar, domain name auction) to online poker-oriented businesses. Two Plus Two accused Jacknames of cybersquatting on the name twoplustwo.me. Jacknames countersued Two Plus Two for defamation and related torts based on user postings to the Two Plus Two online forum. This counterclaim was completely unmeritorious, and the court requires only 2 sentences to apply 230:

In this case, Boyd has alleged that the content was provided by unnamed parties on the Forums. Therefore, Plaintiff is immune from liability for Boyd's causes of action for defamation and intentional infliction of emotional distress.

Two other small points of note:

* Boyd claims to have registered the domain name in question in 2004, but the plaintiff didn't initiate the lawsuit until 2009. Boyd claimed laches, but the court credits the plaintiff's assertion that it didn't actually learn about the domain name until 2009, after which it sued within 5 months. I'd have to do some research on the appropriate starting point for an ACPA statute of limitations, but if the ACPA problem was registration of the domain name, it seems odd to see a lawsuit brought 5 years after registration.

* In the same paragraph where it acknowledges the 230 immunity, the court says:

Plaintiff incorrectly argues that the Digital Millenium Copyright Act (“DMCA”) provides a safe harbor provision for internet content providers and Plaintiff is essentially immune from suit on these causes of action. The DMCA only covers alleged acts of copyright infringement, not the defamatory statements at issue here.

Normally in a low-stakes dispute like this, I would brush off the doctrinal mistake as the product of typical lay person legal misunderstandings. However, the Westlaw report lists the national powerhouse law firm of Greenberg Traurig as plaintiff's counsel. Did they really make such an obvious mistake? Or were they trying to make some exceptionally clever argument? Hmm...

[Note: I will blog another 230 case, Swift v. Zynga, soon.]

Posted by Eric at 05:28 PM | Derivative Liability , Domain Names | TrackBack

November 06, 2010

Holding on to a Domain Name to Gain Leverage in a Business Dispute Can Constitute Cybersquatting -- DSPT Int'l v. Nahum

[Post by Venkat]

DSPT International v. Nahum, Case No. 08-5506 (9th Cir.; Oct. 27, 2010)

This case involves the familiar story of a company leaving the domain name registration in the hands of someone who performed web design services (in this case, the registration was left in the name of the web designer's brother) and the registrant later refusing to turn over the domain name due to a dispute over unfulfilled obligations to the registrant.

DSPT is men's clothing importer which was founded by founded by Paolo Dorigo. Dorigo "brought his friend Lucky Nahum into the business." To serve a "younger market with somewhat 'trendier, tighter fitting fashion,' the company created the EQ brand name in 1999." Lucky's brother handled the web design, and the domain name for DSPT's website (eq-italy.com) was registered in Lucky's name. Over time, the website grew in importance to DSPT's business. In 2005, Lucky and Dorigo did not see eye to eye on the terms of their relationship and parted ways. Lucky declined to renew his agreement with DSPT and went to work for a competitor. Shortly thereafter, DSPT's website disappeared, and when customers who went to access the website saw the following message:

All fashion related questions to be referred to Lucky Nahum at: lnahum@yahoo.com.

DSPT sued Lucky alleging a variety of claims, including for cybersquatting. Lucky turned around and counter-claimed for the $14,936.86 in commissions that he claimed he was owed. The jury found for DSPT and awarded it $152,000.00. It also rejected Lucky's claim for unpaid commissions.

On appeal, the key question was whether Lucky's actions fit the statutory definition of cybersquatting - i.e., whether the domain name was registered or used with a "bad faith intent to profit from the plaintiff's mark." Lucky argued that there was no "bad faith intent to profit" from DSPT's trademark because he only used the domain name to try to get money which he was rightfully owed, and even if he intended to profit from something, it was not from DSPT's goodwill in the mark. The Ninth Circuit disagreed, construing the statute broadly, to find that holding the domain name hostage "to get leverage in a business dispute can establish a violation." The court notes that while the initial registration of the domain name was obviously not in bad faith, Lucky's subsequent "use" of the domain name in bad faith was enough to constitute a violation. Interestingly, the court acknowledged that Lucky never actually offered to "sell" the domain name back to DSPT:

Though there was no direct evidence of an explicit offer to sell the domain to DSPT for a specified amount, the jury could infer the intent to give back the site to DSPT only if DSPT paid Nahum the disputed commissions. The 'intent to profit' . . . means simply the intent to get money or other valuable consideration. "Profit" does not require that Nahum receive more than he is owed on the disputed claim. Rather, profit includes an attempt to procure an advantageous gain or return.

Lucky also argued that DSPT's trademark was not distinctive, the domain name was not confusingly similar to DSPT's mark, and that there was insufficient evidence to support the jury's $152,000 verdict. The court doesn't give much credence to any of these arguments.
__

The court's conclusion on the core ACPA issue relies on a liberal reading of the statute. One element of the statute is that the defendant must act with "bad faith intent to profit from [the] mark" [emphasis added], and it's not hard to find cases construing the statute narrowly. (On the other hand, some Ninth Circuit cases have taken a broad view of the ACPA. See, e.g., Bosley Medical Institute v. Kremer (CMLP page).) Here, there was no explicit offer to sell the domain name back to the plaintiff, and it's far from clear that Lucky "used" the domain name in any way. The court was likely influenced by the equities of the situation and the fact that the jury sided with DSPT. Lucky was allegedly owed approximately $14,000 and after going to work for a competitor, he effectively shuts down DSPT's website, which is one of DSPT's main channels of business. Although the precise amount of DSPT's losses are the subject of dispute, they far eclipsed the $14,000 which Lucky sought to recover.

Another issue which the court did not focus on was whether DSPT's mark was famous or distinctive at the time of registration of the domain name (as required under the ACPA). Richard Santalesa takes a look at this issue here: "Surprising Cybersquatting Domain Name Dispute in the Ninth Circuit."

The obvious (but always worth repeating) takeaway is that registration of a company's domain name should always be in the company's name. Another would be that holding a domain name hostage to gain leverage in a business dispute is a risky course of action.

Additional coverage:

Richard Santalesa: "Surprising Cybersquatting Domain Name Dispute in the Ninth Circuit."

Michael Atkins: "Bad Faith Intent to Profit After Innocent Registration Constitutes Cybersquatting." Mike also covers another factually similar decision (web designer / client dispute) from the Ninth Circuit that arrived at the opposite result. This time the dispute was between the law firm and its web designer, and the law firm lost after a jury trial because it failed to show secondary meaning for the marks in question: "Ninth Circuit Affirms Dismissal of Seattle Law Firm's Cybersquatting Case."

UPDATE from Eric: A few analogous cases:

* Web Developer Didn't "Convert" Website--Conwell v. Gray Loon
* Outdated Whois Information Might Lead to False Light Tort--Meyerkord v. Zipatoni
* Taking Intangible Electronic Files is Criminal Fraud--NM v. Kirby
* Cautionary Tale of Website Co-Ownership--Mikhlyn v. Bove
* Another Cautionary Tale of Joint Website Ownership--TEG v. Phelps

Posted by Venkat at 11:56 AM | Domain Names , Trademark

November 05, 2010

October 2010 Quick Links

By Eric Goldman

Copyright

* Greg Sandoval discusses copyright trolls with Cindy Cohn. You may recall I had an "interview" with Cindy as a guest lecture in my Internet Law course. And a belated congratulations to Cindy for her recognition by the CA State Bar IP Section. BTW, have you considered supporting the EFF financially? I do, because I sleep better at night knowing Cindy and her colleagues are on the beat looking out for our interests.

* Triton Media settles with movie studios for providing too much support to pirate movie websites.

* Did you know that California has a law (Educ. Code 66450-66452) prohibiting the commercialization of class notes from academic courses? It raises interesting First Amendment, copyright preemption and 47 USC 230 issues.

Trademarks

* The initial interest confusion doctrine appears to be infecting EU trademark law.

* Reuters reports on buying counterfeit goods from China over the Internet.

* News.com: Trademark issues on Etsy.

* DSPT v. Nahum (9th Cir. Oct 27 2010). "Even if a domain name was put up innocently and used properly for years, a person is liable under 15 U.S.C. § 1125(d) if he subsequently uses the domain name with a bad faith intent to profit from the protected mark by holding the domain name for ransom. The evidence sufficiently supported the jury’s verdict that Nahum did so, causing $152,000 in damages to DSPT."

* Hearts on Fire v. Blue Nile settled in January. Prior blog post.

* WaPo on universities cracking down on high school teams copying the university's logos.

* An interview with Google's chief trademark counsel Terri Chen.

Content Regulation

* Lichter v. Martin, 2010 WL 3913601 (Cal. App. Ct. Oct. 7, 2010). Blog post protected by anti-SLAPP laws.

* Eoin O'Dell discusses secondary online defamation liability in Ireland. The post illustrates why we should be grateful for 47 USC 230.

* Kash Hill reports on a professor who got busted for possessing child porn, some of which allegedly was collected for an academic research project.

* The Register published an important and thought-provoking article on restitution in child porn cases.

* Doe v. Shurtleff (10th Cir.). Utah law requiring sex offenders to turn over their usernames to the government survives First Amendment challenge.

Consumer Protection

* NYT: "Under the deal with the French Competition Authority, Google agreed to adopt conditions, including a three-month notification period, when it rejected some ads from appearing next to its search results in France. The specific conditions apply only in France, and concern only ads for tools aimed at helping drivers avoid speeding tickets." Search Engine Land has more.

* Target avoids class certification in lawsuit over its website's allegedly inaccurate but obscurely presented references to "Made in the US." Rebecca's coverage.

* PA Bar Opinion: "It is the opinion of the Pennsylvania Bar Association Unauthorized Practice of Law Committee that the offering or providing [in Pennsylvania] of legal document preparation services as described herein (beyond the supply of preprinted forms selected by the consumer not the legal document preparation service), either online or at a site in Pennsylvania is the unauthorized practice of law and thus prohibited, unless such services are provided by a person who is duly licensed to practice law in Pennsylvania retained directly for the subject of the legal services."

* Rebecca on the Ewert v. eBay class certification.

* The Supreme Court denied cert in Tricome v. eBay, Inc., 2010 WL 3525737 (U.S. Nov. 1, 2010)

Miscellaneous

* Streaming video version of Alex Macgillivray's lecture at SCU from a month ago.

* Mike Godwin has left his role as Wikimedia's GC.

* Virtual world enthusiast Greg Lastowka has posted his new book Virtual Justice under a CC license.

* Pelican Trading Inc. v. Proskauer Rose LLP, 2010 WL 3905750 (D. Nev. Sept. 28, 2010). A law firm's blog post about a Nevada law did not help confer jurisdiction in Nevada.

* School district settles spy webcam case. Surprise! Lawyer gets 70% of the money.

Posted by Eric at 06:51 AM | Copyright , Domain Names , E-Commerce , Trademark , Virtual Worlds | TrackBack

October 12, 2010

Blog Host Can't Be Bound by TRO for User Posts (Blockowicz redux)--Bobolas v. Does

By Eric Goldman

Bobolas v. Does 1-100, 2010 WL 3923880 (D. Ariz. Oct. 1, 2010)

This lawsuit involves Bobolasgate.info, a Greek-language blog/website that appears to criticize Greek real estate and media mogul George Bobolas (ranked as one of the top 10 wealthiest Greeks in 2009). I say "appears" because the site is in Greek and Google's translation was indeterminate. Given the blog is in Greek and targets Greece-focused issues, it's not clear which, if any, bloggers are located in the US, but the court assumes that one or more Does are US residents.

Bobolas seeks a TRO against both the blog authors and against non-party GoDaddy, which appears to host the blog and act as its domain name registrar.

The court asks why Bobolas didn't sue GoDaddy. Bobolas' attorney correctly replied that 47 USC 230 immunizes GoDaddy (see, e.g., GoDaddy's easy win in the Kruska case), but the court then observes that "Plaintiff has cited no authority suggesting that GoDaddy cannot be named as a defendant solely for purposes of effectuating injunctive relief." I've consistently taken the position that 230 preempts all form of relief, both monetary and injunctive, so I would cite the statute as the authority the judge seeks. Indeed, I would argue that suing GoDaddy for provisioning services to the blog should be sanctionable, so Bobolas' attorneys got it 100% right proceeding with GoDaddy as a non-party.

But Bobolas' attorneys got it 100% wrong thinking they could bind GoDaddy to injunctive relief as a non-party. I last addressed this issue in connection with the Blockowicz opinion from almost a year ago. FRCP 65 binds non-parties to injunctive orders only when the non-parties are related to the defendants, such as their agents or acting in concert with the defendants. As a garden-variety service provider to the blog, GoDaddy isn't anywhere close to the required level of interaction sufficient to be bound by FRCP 65. The court says:

Plaintiff's counsel argued that GoDaddy is an agent of Defendants given its role as website host and domain name registrar, but Plaintiff has made no such allegation in the complaint and provides no factual or legal proof on this point in its papers. As a result, the Court cannot enter a TRO against GoDaddy.

The court goes on to cite the Blockowicz precedent, saying "some courts have held that injunctions requiring defendants to remove defamatory statements from a website cannot be enforced against non-party website hosts like GoDaddy....Plaintiff does not address this authority."

The court doesn't say it outright, but the net effect of this ruling is that (like in Blockowicz) the plaintiff may end up with no ability to judicially force the content off the Internet. Bobolas may not be able to find the Does, or they may not be in countries that will recognize Bobolas' claims, or US courts may not recognize a foreign injunction (see Global Royalties v. Xcentric). If the content is truthful, this is a great outcome; if the content is wrong, it is less than optimal.

Of course, even without judicial compulsion, GoDaddy could help out Bobolas voluntarily. I've noted before that GoDaddy is not the fiercest champion of its users' interests (1, 2). As a result, a more likely scenario is that GoDaddy will intervene in deference to even minimal judicial provocation. In contrast, the Blockowicz conundrum arose only when Ripoff Report declined to honor a default judgment.

In any case, seeking a TRO against critical content is misdirected. The court rejects the TRO against the US Does, saying that Bobolas hasn't been able to show that the allegedly defamatory posts were made by them and did not provide enough evidence to support that the published statements were actionable defamatory (as opposed to non-actionable opinions or lacking the requisite scienter). The court also rejects a request to shut down the blog entirely, properly noting that doing so would be an impermissible prior restraint.

UPDATE: Paul Levy adds some thoughts about the lack of jurisdiction.

Posted by Eric at 01:45 PM | Content Regulation , Derivative Liability , Domain Names | TrackBack

August 05, 2010

9th Cir. Smacks Down AOL's Advertising.com Trademark as Likely Generic -- Advertise.com v. AOL

[Post by Venkat]

Advertise.com, Inc. v. AOL Advertising, Inc., Case No. 10-55069 (9th Cir; Aug 3, 2010).

The Ninth Circuit handed AOL a preliminary trademark loss, finding that ADVERTISING.COM is likely generic for internet advertising services.

Background: AOL owned trademark registrations for ADVERTISING.COM, and brought trademark claims against Advertise.com. The district court found AOL's mark to be descriptive (and thus protectable) and granted AOL's request for an injunction, barring Advertise.com's use of a confusingly similar design (to AOL's ADVERTISING.COM) and also enjoining Advertise.com from using the designation and trade name ADVERTISE.COM. Advertise.com appealed the latter portion of the district court's order.

Discussion: The crux of the appeal - as framed by the Ninth Circuit - was whether AOL's mark was descriptive, as the district court concluded, or generic. The parties agreed that AOL offered "online advertising" or "internet advertising" services.

The court initially concludes that taken individually, "advertising" is generic. AOL argued that when considered together, the mark should be viewed as distinctive. The court wasn't persuaded. The court first looked to the "who-are-you/what-are-you" test and noted that AOL (or this particular division) was "an advertising dot-com." The court also noted the rule that the addition of .com or another TLD "to an otherwise unprotectable term will only in rare circumstances result in a distinctive composite." (See discussions of Hotels.com (TTABlog®) and Mattress.com (MediaPost) for recent cases on this.) AOL unsuccessfully tried to argue that this was one of those rare circumstances.

AOL also argued that the addition of a TLD alters the analysis because only one entity can hold the rights to a domain name at any time - i.e., adding a .com could turn an otherwise unprotectable term into a protectable one, because only one entity could practically use the TLD version of the term. Not surprisingly, the court was unpersuaded by AOL's argument that "a per se rule that the addition of a TLD to a generic term results in a protectable mark." As the court notes, the rule proposed by AOL would grant the domain name owner greater rights than the domain name - i.e., it would potentially allow them to go after the other TLD versions, which would be a bizarro result.

Finally, AOL argued that refusing to protect these types of marks would result in parasite marks, such as "addvertising.com," which would divert business from "advertising.com." The court's reaction to this:

this is the peril of attempting to build a brand around a generic term.

It's not necessarily the end of the road for AOL and its mark. This ruling comes at a preliminary stage, so AOL may put forth evidence to win the day. I'm skeptical, but it's possible.

AOL knew its mark was weak at best. The PTO requested a disclaimer of the standard text version of the mark. Although AOL was able to register the stylized version of the mark without a disclaimer, it abandoned its attempt to register the standard text mark. Which is one aspect of the ruling I found puzzling. Since AOL didn't have a word mark, could the stylized version of the mark support issuance of an injunction over use of the words? I didn't think this was the case, but the court didn't really touch on this at all.

One interesting part of the opinion was the discussion about how "dot com" is a generic way of describing an internet business in ordinary conversation:

When any online advertising company . . . is asked the question "what are you?" it would be entirely appropriate for the company to respond . . . "an advertising dot-com." . . . . We see strong evidence of this in the common use of ".com" to refer to internet businesses. For example, the American Heritage Dictionary defines "dot-com" as "of or relating to business connected on the Internet: dot-com advertising." [Ouch - rough for AOL that the dictionary chose to use this particular example to illustrate the definition!]

This has potential to affect many domain names. Domain names that are generic for the services offered are on shaky ground to begin with, but this passage will not help in efforts to secure trademark protection.

At the end of the day, getting a trademark over a .com term is of little use (at least the .com part), and if the underlying mark is weak, the addition of .com doesn't do much for you and may even work against you.

Posted by Venkat at 09:04 AM | Domain Names , Trademark

August 03, 2010

Baidu Can Maintain Negligence Claims Against Register.com for Lax Security Practices Which Allegedly Facilitated Cyber-Attack - Baidu v. Register.com

[Post by Venkat]

Baidu, Inc. v. Register.com, Inc., Case no. 10 Civ. 444 (DC) (S.D.N.Y.) (July 22, 2010).

Background: Baidu registered the domain name with Register.com, a domain name registrar, which provided Baidu with "Internet traffic routing services." A third party launched a cyber-attack against Baidu - the third party gained unauthorized access to Baidu's account with Register and re-directed Baidu's website to a webpage "showing an Iranian flag and a broken Star of David." The webpage stated that the Baidu site "had been hacked by the Iranian Cyber Army."

The cyber-attacker gained access to Baidu's account with Register through engaging in an online chat with a Register customer service representative. The representative asked the intruder for Baidu's security verification information. The intruder did not provide the representative with the correct information, "but the [representative] nonetheless emailed a security code to the email address that Baidu had on file." When asked for the security code, the intruder did not provide the correct code (the intruder did not have access to the Baidu email address on file). Notwithstanding the discrepancy in the security codes, at the intruder's request, the representative changed the email address on file (to "antiwahabi2008@gmail.com"). From here, the intruder was easily able to access the account, by utilizing the "forgot password" function.

Discussion: Baidu brought claims for breach of contract, negligence (gross negligence), recklessness, and contributory trademark infringement.

The limitation of liability clause: Register pointed to the limitation of liability clause in its Master Services Agreement. The clause provided that Register would not be held liable for, among other things, "termination . . . or modification of [the Services,] . . . inability to use the Service[s], . . . loss incurred in connection with [the customer's] services," or "any other matter relating to [customer's] use of the Service[s]." The agreement also contained a limitation of liability clause that limited Register's liability at five hundred dollars, and also provided that it was the customer's "responsibility to safeguard the User name, password and any secret question/secret answer . . . from any unauthorized use."

The court held that as a general matter, courts in New York enforce limitations of liability clauses, particularly where these limitations are contained in a contract entered into by "those of equal bargaining power." However, New York courts do not enforce such limitations where they purport to limit liability for willful or grossly negligent acts. This "gross negligence exception" applies even to agreements between sophisticated commercial parties, although the standard for gross negligence is somewhat higher in this context. The court held that the complaint satisfied this standard, in alleging that:

(1) the rep proceeded with processing the intruder's request even though the intruder provided an incorrect response to the security question; (2) the rep didn't even bother to compare the code provided by the intruder with the security code on file; (3) the rep failed to notice the red flags raised by the rep providing the "antiwahabi2008@gmail.com" email address (which was tied to Google, a Baidu competitor); and (4) the rep ultimately provided the intruder with Baidu's user name.

Ultimately, the court found that Register's failure to follow its own security procedures (or any minimal security procedures, for that matter) were sufficient to get Baidu past the gross negligence hurdle. Register also pointed to the provision in the contract that the customer was responsible for maintaining the security of any password/security information and thus Register had no duty to maintain any security procedures with respect to Baidu's account. The court rejects this argument, noting that although Register may not have had any duty to provide any security, once it undertook to do so, it was required to do so in a non-negligent manner:

The attack by the Intruder was reasonably foreseeable - it was precisely because these cyber attacks are foreseeable that the security measures were adopted.

Lanham Act Claim: With respect to the Lanham Act claim, Register argued that it was entitled to immunity as a registrar and in any event Baidu failed to adequately allege the elements for contributory trademark infringement.

The court rejects the registrar immunity argument out of hand (registrars are only entitled to immunity when they act as registrars - i.e., "when [a registrar] accepts registrations for domain names for customers"). However, the court agreed with Register that Baidu failed to allege the elements for contributory trademark infringement. Citing to Inwood Labs., Inc. v. Ives Labs., Inc. (a flea market case) the court notes that contributory liability only attaches where the defendant either intentionally induces infringement or continues to supply products or services to the infringer where the defendant knows or has reason to know that the infringer is engaged in infringement. The court also cites to the Tiffany v. eBay case (discussed by Professor Goldman here).

___

The interesting aspect of this case is the fact that Register's broad contractual protections did not protect it against Baidu's claims. It's unclear as to whether the court's ruling would encompass a situation where someone just plain hacked into Register's system and gained access to Baidu's accounts. I would think not. Disclaimers often insulate service providers (see Duffy v. The Ticketreserve and Grace v. Neeley) but here the facts alleged by Baidu with respect to Register's negligence were pretty egregious. Given the exception in New York law for gross negligence and reckless conduct, I'm not sure any sort of limitation/disclaimer could have saved Register here.

The trademark claims are curious. To be honest, I can't even see where there's basic trademark infringement by the cyber-attacker. The cyber-attacker was not interested in selling any products or services, and the Baidu webpage text clearly stated that the website had been hacked. Moreover, any finding of infringement would have been based on the much-discredited initial interest confusion doctrine. In any event, it's tough to see - given Baidu's allegations of an attack - how Register would have harbored the requisite knowledge to have been able to prevent the infringement.

It's worth noting also that this isn't a typical domain name conversion case (a la sex.com). The case is really about failed security procedures, and the ease of gaining access to an account through social engineering. There's a big lesson in the Register rep's alleged dealings with the cyber-attacker.

Added: This interview with Elisa Cooper by Dancho Danchev ("Hundreds of High Profile Sites Unprotected From Domain Hijacking") looks at the efficacy of using Verisign's "Registry Lock Service." Some interesting bits from the interview:

1. The Registry Lock Service offers protection at the registry-level so even if the registrar account is compromised, the attacker will not be unable to update any domain settings.
2. Elisa notes that DNS hijacking may only amount to a PR/brand hit unless the website is collecting information or conducting transactions.
3. "[D]omains that are registered by large retail registrars are . . . highly vulnerable to social engineering attacks." [That's exactly what happened in the Baidu case.]

Of course, the registrar does not have an obligation to implement the additional security measures that are mentioned in the interview. It would be up to the registrant to do so.

Posted by Venkat at 11:54 AM | Domain Names , Licensing/Contracts , Privacy/Security , Trademark

July 26, 2010

Facebook's Anti-Spam Filter Blocks Legitimate Conversations about Power.com

By Eric Goldman

On Friday, Venkat and I posted about the latest ruling in Facebook v. Power.com. After Venkat or I make a blog post, I typically post the blog headline and URL to Twitter. I have enabled the app that makes my Twitter posts into my Facebook status reports as well, so the headline and URL on Twitter should automatically propagate to Facebook. On Friday, I tweeted the following:

"Blog Post: Important ruling on California's anti-computer trespass statute--Facebook v. Power.com http://bit.ly/bM7hQT"

However, I noticed that the Twitter-to-Facebook app didn't work properly and the headline didn't appear. So I tried to manually enter the headline and URL and got this message from Facebook:

"This message contains blocked content that has previously been flagged as abusive or spammy. Let us know if you think this is an error."

I do think that's an error, and I reported the problem through Facebook's automated reporting tool on Friday. Not surprisingly, I still haven't gotten a response to that. But I was baffled how my headline and URL could have been "flagged as abusive or spammy." Who flagged it? Why?

After a little more experimentation, I discovered that every instance of the character string "power.com" is blocked in Facebook. Therefore, every time I put "power.com" into my status reports or in comments to those status reports--even if it's the only content in the post/comment--I get the "blocked content" message. However, it's easily avoided; I can post "power . com" (notice the spaces before and after the period) just fine. Basically, Facebook is using a very dumb word filter.

I emailed my PR contacts at Facebook about this. They pointed to their anti-spam filter and this blog post from June. The blog post explains that "we've been working to improve our warnings and make them more clear" and that "people misunderstand one of these systems. They incorrectly believe that Facebook is restricting speech because we've blocked them from posting a specific link."

So this is where things have gone wrong. Facebook told me it has blocked Power.com because "we found that Power was spreading links to its pages in a way that violated our Statement of Rights and Responsibilities. For example, when a Power user accessed Facebook, Power would automatically create an event on Facebook (typically called 'Power.com Party' or something similar) without the person's knowledge or permission. It would then send invitations to all of the user's friends." Fair enough, and I'm glad Facebook is trying to keep its system safe for users.

However, Facebook's dumb word filter block means that every reference to "power.com," even if it's in plaintext and not linkable, is still treated as a link and therefore is blocked as well. The messaging then disparages the plaintext reference as "blocked content that has previously been flagged as abusive or spammy" when, in fact, a link to the URL, not the plaintext reference I made, has been flagged. So much for clearer error messages.

I pointed out to Facebook's spokespeople the difference between a plaintext reference to a company's name ("Power.com") and a spammy URL/link. Their response? "Spammers turning their malicious urls into plain text is the oldest trick in the book. Not blocking all of the variations of a bad URL leaves a gaping hole."

There is a kernel of truth to this, of course. A plaintext URL is not materially different from an active hypertext link--if the user chooses to cut-and-paste the link into the browser (or right-clicks on it, or whatever). However, Facebook's method of blocking spammy links by blacklisting every instance of the character string actually has the effect of blocking *every* discussion of a blacklisted company with the name [noun].[tld]. Because the main word in the name is a noun (e.g., "Power"), referencing the name without the TLD can lead to semantic ambiguity. However, the system prevents me from using the complete name (Power.com) because it can't distinguish between a link and a plaintext reference to a company's name that acts as a URL. I received a private email that another Facebook user encountered a similar block with the string seppukoo.com, the Facebook suicide tool.

In my case, the net consequence is that Facebook automatically blocks any conversations involving the string "power.com"--including my headline to my blog post--and provides an error message telling me that I am posting spammy/abusive content when I try to make the posting, which makes me feel like I did something wrong. With all of the bright engineers at Facebook, I bet they could figure out a way to more precisely tune the filter so that a plaintext reference to [noun].[tld] gets through while active links to that URL, or more fulsome plaintext URLs, remain blocked.

That is, assuming Facebook actually wants to enable Facebook users to talk about Power.com or Seppukoo.com or other enterprises that threaten the Facebook franchise. Frankly, I haven't seen much evidence of Facebook's interest in those conversations. In light of Power.com's antitrust challenges against Facebook, the fact that Facebook's system suppresses legitimate conversations about Power.com (whether it had a censorious intent or not) struck me as particularly noteworthy.

Posted by Eric at 10:33 AM | Content Regulation , Domain Names , Privacy/Security , Spam | TrackBack

July 14, 2010

Funky Ninth Circuit Opinion on Domain Names and Nominative Use--Toyota v. Tabari

By Eric Goldman

Toyota Motor Sales, U.S.A., Inc. v. Tabari, 2010 WL 2680891 (9th Cir. July 8, 2010)

Every time I see a federal appellate opinion on domain names, I'm vaguely reminded of the Country Joe song I-Feel-Like-I'm-Fixin'-To-Die Rag, whose chorus goes "And it's one, two, three, what are we fighting for?" Fortunately, domain name disputes do not lead to the senseless loss of life we experienced from the Vietnam War. Unfortunately, lengthy domain name litigation usually has little more strategic value. Invariably, the domain name litigation has less to do with rational economic decision-making and more to do with chest-beating and posturing.

I bring this up because the Ninth Circuit's latest domain name opinion involves litigation that makes no financial sense for either side. The Tabaris are independent auto brokers that help their customers find and buy Lexus vehicles from an authorized Lexus dealer. They run a business called Fast Imports from the domains buy-a-lexus.com and buyorleaselexus.com.

What is Lexus’ problem with those domain names? The Tabaris are helping people buy Lexuses, so Lexus is going to get its fair share no matter what. The appellate opinion did not indicate that the Tabaris are crooks or trying to divert Lexus customers to other brands. So Lexus, why sue your friends? The opinion hints that Lexus was trying to improve dealer relations by squelching a broker who plays dealers off each other, but hey, that’s fair competition.

From the Tabaris’ perspective, losing these domain names should not be intrinsically fatal to their business. The Tabaris could set up shop at any number of other domain names, in which case they would lose only the built-up clicks from existing links to the site (I wonder how many of those there were in this case) and any extra Google juice from having a seasoned domain name with the trademark in it. I always find it weird when appellate courts treat a defendant’s domain name as the dispositive linchpin of communication between interested parties rather than just one of many SEO tools.

Refreshingly, this opinion does not overestimate the domain name’s value. However, it doesn’t see any reason to consider a switch either: "the Tabaris needed to communicate that they specialize in Lexus vehicles, and using the Lexus mark in their domain names accomplished this goal. While using Lexus in their domain names wasn’t the only way to communicate the nature of their business, the same could be said of virtually any choice the Tabaris made about how to convey their message."

While the opinion focuses on domain names, the Tabaris' websites also, at some point, used copyrighted Lexus photos and displayed the Big L logo. Normally, a photo rip and unauthorized logo display will get a district court judge to rule in favor of the IP owner. Before Lexus sued, the Tabaris cleaned up those issues, so the Ninth Circuit panel focuses solely on the two domain names (because an injunction was the only remedy at issue). This is a logical move by the Ninth Circuit, but most courts will not be so forgiving of sites that borrow the official logo and copyrighted photos.

With the Tabaris' use of the two domain names in their auto brokerage business the only issue on appeal, this should be an easy call per the nominative use doctrine. However, the words "easy" and "nominative use doctrine" go together like peanut butter and artichokes. Personally, I still have no idea when businesses outside a manufacturer's authorized channel can legally include the manufacturer's trademark in their name. Each case seems to be sui generis.

To segregate legitimate from illegitimate uses of third party trademarks in domain names, the opinion lays out a surprisingly lucid taxonomy with 3 categories of presumptively illegitimate domain names:

1) "When a domain name consists only of the trademark followed by .com, or some other suffix like .org or .net, it will typically suggest sponsorship or endorsement by the trademark holder." This makes sense intuitively, but (A) the court doesn't address the seemingly contradictory Lamparello case, and (B) the opinion’s reasoning remains predicated on dicey assumptions about consumer search behavior, such as consumers typing in trademark.com into their web browser address bar—an assumption that has grown dicier with the rise of omniboxes.

2) "Sites like trademark-USA.com, trademark-of-glendale.com or e-trademark.com will also generally suggest sponsorship or endorsement by the trademark holder."

3) "domains like official-trademark-site.com or we-are-trademark.com affirmatively suggest sponsorship or endorsement by the trademark holder and are not nominative fair use"

By implication, other domain names generally should be eligible for nominative use. At minimum, buy-a-TRADEMARK.com and buyorleaseTRADEMARK.com should be fair game for resellers and related parties like buying agents. In support of this, the court rejects Lexus' argument that there was something untoward about the Tabaris brokering other auto manufacturers if their customers decided they didn't want a Lexus. For more on this, see my Brand Spillovers article.

The opinion suggests that the following domain names should qualify for nominative use or otherwise be permissible as well:

* mercedesforum.com
* mercedestalk.net
* starbucksgossip.com
* frys-electronics-ads.com
* mercedesboots.com
* mercedeshomes.com [although I wonder about dilution with these two]
* comcastsucks.org

Procedurally, the opinion addresses several key issues about the interaction between the nominative use test and the likelihood of consumer confusion test. The opinion says that an evaluation of consumer confusion is implicitly built into the New Kids on the Block nominative use test. Therefore, "if the nominative use satisfies the three-factor New Kids test, it doesn’t infringe" without needing to consider the likelihood of consumer confusion test at all. Thus, "nominative fair use 'replaces' Sleekcraft as the proper test for likely consumer confusion whenever defendant asserts to have referred to the trademarked good itself." Further, once a "defendant seeking to assert nominative fair use as a defense...show[s] that it used the mark to refer to the trademarked good," the trademark owner bears the burden of disproving nominative use. All of these procedural points have been hotly contested in prior cases.

The court concludes that the district court's injunction against the Tabaris using "Lexus" in domain names was too broad and remands the case to the district court to try again. Although the court doesn't tell the district court exactly what to do, it does indicate: "At the very least, the injunction must be modified to allow some use of the Lexus mark in domain names by the Tabaris."

This is a rich and multi-faceted opinion written in a confident and emphatic style…perhaps too emphatically, as the opinion swings around like a bull in a china shop, breezily overturning or sidestepping numerous 9th Circuit precedents on both domain names and nominative use. Were this opinion to become the definitive 9th Circuit statement on either domain names or nominative use, this case would be a landmark opinion. However, the 9th Circuit's Internet trademark jurisprudence has awkwardly accreted on a case-by-case basis for more than a decade, and I doubt this opinion will meaningfully affect the next 9th Circuit panel’s considerations.

Even so, this case has to be good news for shopbots. Although the Tabaris were “manual” shopping agents, the case's reasoning should apply equally well to all shopbots comparison search engines and review sites that use third party trademarks as part of their taxonomy. These sites regularly get nastygrams from trademark owners. It will be interesting to see if this case helps turn that tide.

A final oddity: Judge Kozinski wrote both this opinion and the recent eVisa decision. Although the opinions involve different trademark doctrines applicable to domain names (a nominative use defense instead of dilution), their spirit couldn't be more different. The eVisa case was decidedly pro-plaintiff, while this opinion is very defense-favorable. I wonder if Kozinski bent over backwards to help a pro se litigant (the Tabaris represented themselves), or perhaps Lexus' anti-competitive intent set him off. Otherwise, although the split opinions in theory can be harmonized on numerous bases, they struck me as schizophrenic.

More comments from Rebecca Tushnet (smart and challenging, as always—especially about the numerous empirical deficiencies in the opinion), Ryan Gile and Tom O’Toole.

Posted by Eric at 01:08 PM | Domain Names , E-Commerce , Marketing , Trademark | TrackBack

July 08, 2010

Griper Gets Attorneys' Fees After Successful Defense--Career Agents v. Careeragentsnetwork.biz

By Eric Goldman

Career Agents Network, Inc. v. Careeragentsnetwork.biz, 2010 WL 2632298 (E.D. Mich. June 29, 2010). The CMLP page.

The underlying dispute involves a non-commercial gripe site. The trademark owner sells a type of "business in a box" (like a franchise). The defendant was an unhappy buyer of the "business in a box." The defendant set up a gripe site, warned potential buyers that they weren't likely to recoup their investment, and then SEOed the gripe site. In late February, the court dismissed trademark infringement and ACPA claims on summary judgment. Career Agents Network v. careeragentsnetwork.biz, 2:09-cv-12269-RHC-MJH (E.D. Mich. Feb. 26, 2010). I didn't blog the February decision because it seemed rather straightforward, but other people covered the decision (Wendy Davis, Tom O'Toole, Ars Technica).

Having dispatched the underlying lawsuit, the defendant moved for attorneys' fees under the Lanham Act fee-shifting provision. The court says that the plaintiff's ACPA claim became objectively unreasonable when plaintiff realized that the griper was a disgruntled customer (i.e., bummed-out business buyer) rather than a competitor or cybersquatter (cite to the Sixth Circuit's 2004 Lucas Nursery case, binding law on this court). The trademark claim was "weak but colorable" because the domain name didn't include the "sucks" suffix. (In this era, try to find me a trademark case that isn't colorable at some level). In terms of the plaintiff's subjective intent, "the court finds that Plaintiff's principal motivation was to silence Defendant White's criticism of Plaintiff's business." The court also praises the defendant's persistence given his counsel's settlement advice and an initial TRO loss.

In theory, the court could have just awarded the ACPA fees and excluded the trademark fees, but the court says the entire lawsuit "stood on thin ice" and therefore gives the whole enchilada to defendant. The court does take a haircut on the fees associated with seeking the fee award--too high an hourly fee for too many hours for a fee request motion the court unfairly characterizes as "only as difficult as shooting fish in a barrel." Nevertheless, the defendant got a lot of what it asked for--a total fee award of $23k. All told, this is another case where a plaintiff picked a fight only to end up writing a check to the defendant. Another poor enforcement decision by a plaintiff.

UPDATE: Paul Levy provides a behind-the-scenes look at this ruling.

Posted by Eric at 08:36 AM | Domain Names , Trademark | TrackBack

July 06, 2010

Puzzling 9th Circuit Dilution Opinion Over eVisa.com--Visa v. JSL

By Eric Goldman

VISA International Service Ass'n v. JSL Corp., No. 08-15206 (9th Cir. June 28, 2010)

A number of us in the trademark community are scratching our heads at last week's Ninth Circuit trademark dilution opinion, authored by Judge Kozinski. The case involves evisa.com, run by Joseph Orr. The domain name's origin is explained:

Orr traces the name eVisa back to an English language tutoring service called “Eikaiwa Visa” that he ran while living in Japan. “Eikaiwa” is Japanese for English conversation, and the “e” in eVisa is short for Eikaiwa. The use of the word “visa” in both eVisa and Eikaiwa Visa is meant to suggest “the ability to travel, both linguistically and physically, through the English-speaking world.”

We might be skeptical of this explanation, but the case poses two doctrinal problems for dilution. First, eVisa.com is not the same trademark as "Visa." As the opinion says, the "marks here are effectively identical." Well, yes and no. We have a line of cases ignoring the top level domains in trademarks, and many cases ignore an "e" or "i" prefix in Internet-related trademarks. But they are not literally identical, and given dilution's power to preempt all uses of a trademark irrespective of confusion, we have to tread carefully when extending protection beyond truly identical uses. The opinion treats this issue too breezily.

Second, and perhaps more importantly, the word "Visa" already has several dictionary definitions. This poses a problem for the blurring analysis. Visa the trademark can't co-opt the existing dictionary meanings. So does dilution-by-blurring mean that Visa the trademark can preempt every non-dictionary commercial use of the word? That seems to be a logical implication of this opinion. The court says "despite widespread use of the word visa for its common English meaning, the introduction of the eVisa mark to the marketplace means that there are now two products, and not just one, competing for association with that word."

Even so, the defendant argued it was using eVisa to invoke the dictionary meaning of the term Visa, i.e., Visa as a passport for Japanese who are going to travel to an English-speaking country. If the dictionary meaning isn't covered by the trademark, it seems logical that everyone should be free to suggest the dictionary meaning in their own trademarks. On that basis, if we believe the defendant's explanation for how it ended up using eVisa.com, the defendant should be in the clear.

Yet, instead, Visa the trademark wins the blurring case. The opinion treats the defendant's suggestion of the dictionary meaning as a "multiplication" of the word's meaning: "these allusions to the dictionary definition of the word visa do not change the fact that JSL has created a novel meaning for the word: to identify a 'multilingual education and information business.'" Apparently, any use of a dictionary word for anything other than a literal invocation of its dictionary meaning could now support a dilution claim.

This case has been floating around since 2002, so perhaps it's not surprising that the entire dispute seems a little old-school. The ruling reminded me a lot of the 1990s pre-ACPA domain name disputes where courts were so frustrated with cybersquatters that they stretched dilution law well beyond its intended scope because dilution was the only tool to effectively nail cybersquatters. Many of those dilution-stretching cases dropped away after the ACPA provided a better anti-cybersquatting tool for judges, and in some ways, the 2006 TDRA has made it even harder to use dilution in a domain name enforcement action. That makes this case that much more anomalous. Putting aside the law, it's logical to say that Visa the trademark should be the owner of eVisa.com. Yet, because infringement and the ACPA weren't getting the job done, the panel expands (bastardizes?) dilution law to make it happen. The outcome may make sense, but the intellectual shortcuts along the way are still a little cringe-inducing.

One final sour note in the opinion. The opinion says that plaintiffs can rely solely on intuition-based arguments to support their likelihood of dilution cases. The court says "a plaintiff seeking to establish a likelihood of dilution is not required to go to the expense of producing expert testimony or market surveys; it may rely entirely on the characteristics of the marks at issue." This is deeply troubling ruling for 9th Circuit law (now reversible only through an en banc opinion). We have never been clear what evidence was required to support a plaintiff's "likelihood of dilution" showing, but I had always assumed the plaintiff had to show some evidence, i.e., greater than zero. So now, what exactly must a plaintiff show to establish its prima facie dilution case? Under the 9th Circuit's standard, apparently anything that can convince a judge.

This case's tortured application of dilution law is a good excuse for me to remind you: if you haven't been there before (or recently), check out the materials from the High Tech Law Institute's 2007 academic symposium on trademark dilution, where we attempted to come up with good rationales for the dilution doctrine and largely struck out.

Posted by Eric at 11:20 AM | Domain Names , Trademark | TrackBack

June 10, 2010

Google Can't Shake Cybersquatting Claim--Vulcan Golf v. Google

By Eric Goldman

Vulcan Golf, LLC v. Google Inc., 1:07-cv-03371 (N.D. Ill. June 9, 2010). My 2007 blog post when the complaint was filed. My 2008 blog post on the denial of a motion to dismiss. My 2008 blog post on denial of class certification.

A year ago I blogged about Solid Host v. NameCheap, a case that raised the specter of a "contributory cybersquatting" claim under the ACPA. This case also deals with a type of contributory cybersquatting. It might represent the vanguard of increased trademark owner efforts to proliferate ACPA cybersquatting claims against a wider range of defendants.

This long-running case involves Google's AdSense for Domains program, which the plaintiffs believe violates their trademark rights when the parked domains contain their trademarks or variations thereof. The case appears to be entering the home stretch. In late 2008, the plaintiffs were denied class certification, which substantially narrowed the scope of the lawsuit. All other defendants have now settled, leaving only Google's liability for resolution. This ruling addresses Google's unsuccessful attempt to knock out the ACPA claim on summary judgment. As a result, the ACPA claim is queued up for trial unless the parties settle.

Google's ACPA liability turns on whether it is an "authorized licensee" of the parked domains. If so, the ACPA is clear that a licensee of a cybersquat domain name can be on the hook. The court holds that if there is a license agreement that calls itself a license, then the ACPA applies to the agreement. However, the court will not infer a licensing agreement from some less explicit arrangement, i.e., presumably not from a parking arrangement where the ad provider (Google) does not expressly license the domain name. Therefore, it appears that where Google licensed the domain name from the parker (a seemingly unnecessary step for delivering ads to parked domains), Google put itself into the ACPA liability chain.

With the legal standard established, normally this should be an easy case to resolve on summary judgment. However, apparently Google and the plaintiffs can't agree on the accurate copy of the applicable agreements with domain parkers (specifically Dotster). If the parties can work out the confusion over documents, the ACPA claim is ripe for a settlement.

Posted by Eric at 07:05 AM | Derivative Liability , Domain Names , Licensing/Contracts , Search Engines , Trademark | TrackBack

May 10, 2010

Geographic Trademark Leads to Interesting (& Tortured) Injunction--Skydive Arizona v. Quattrocchi

By Eric Goldman

Skydive Arizona, Inc. v. Quattrocchi, 2010 WL 1743189 (D. Ariz. April 29, 2010).

A jury found that the defendants had committed trademark infringement, false advertising and cybersquatting and awarded $2.5M in damages, which the judge doubled. Unfortunately, the court's opinion does not precisely spell out what the defendants did wrong. This story gives a little background,and this site shows that the defendants are pretty unpopular. The opinion indicates there was testimony that the defendants had sold bogus gift certificates for the plaintiffs' offerings and had offered inferior services using the same name as plaintiffs'. The court also says "numerous websites operated by Defendants falsely claimed Defendants owned or operated skydiving centers in Arizona, Phoenix, Tempe, Scottsdale, Mesa, Glendale, Yuma, Flagstaff, Chandler, Peoria, and Tucson when Defendants neither owned nor operated any such facilities. Additionally, the Court found that Defendants engaged in unfair competition by using photographs of Plaintiff's business on their website."

The main trademark at issue appears to be "Skydive Arizona," one of those lousy trademarks that sits right at the border of descriptive and generic. See, e.g., the Boston Duck Tours case. With such a crummy trademark at issue, the court sliced injunctive relief carefully. On the question of Internet marketing, the court says:

Plaintiff also requests that this Court prohibit Defendants from using the “Skydive Arizona” trademark or other confusingly similar terms in links or keywords on their websites. The Court finds that such relief is appropriate, especially because Defendants' business primarily utilizes the internet, and will extend Plaintiff's request to include the phrases “Arizona Skydiving” and “Skydiving Arizona” as well. Persons searching for Plaintiff's business should not be erroneously led to Defendant's website due to these marks placement in a meta tag or other link on Defendant's websites. See, e.g., Bernina of America, Inc. v. Fashion Fabrics Intern., Inc., 57 U.S.P.Q.2d 1881, 1884 (N.D.Ill.2001) (preliminarily enjoining defendant from using plaintiff's trademark in meta tags); DeVry/Becker Educ. Dev. Corp. v. Totaltape, Inc., 2002 U.S. Dist. LEXIS 1230, *7-8 (N.D.Ill. Jan. 22, 2002) (enjoining use of plaintiff's trademark in internet links and keywords, and “in any other manner in connection with the internet that would cause consumers to believe erroneously that [defendant's] goods or services are somehow sponsored by, authorized by, licensed by, or in any other way associated with [plaintiff]”.). In taking this step, the Court is not unaware of Defendants' concerns that the generic nature of the words “skydive” and “Arizona” will unfairly prevent Defendants from practicing their business in Arizona. The injunction, however, is not a blanket prohibition against using these words on its website or in meta tags. It merely prohibits Defendants from using “Skydive Arizona,” “Arizona Skydiving,” “Skydiving Arizona,” and any other combination of those words that is confusingly similar to that mark. There is, for example, a difference between using those words in combination as proper nouns, and merely utilizing them individually or in the course of a sentence. The former, depending on the circumstances, is likely prohibited by this injunction, but the latter usage probably is not.

This translates into the following injunction:

from using the trademark “Skydive Arizona,” or any marks that are confusingly similar to or colorable imitations of that trademark, and from using “Skydiving Arizona,” and “Arizona Skydiving,” on or in connection with or as part of any website, including in meta tags, keywords in pay-for-placement or payfor-rank search engines, in source code or other computer code, for the retrieval of data or information or as search terms, in the domain names of any websites, in any titles, headings, statements, links or other text appearing on any page of any website in any location on any websites registered, owned, or used, directly or indirectly, by any of the Defendants

I find the fretting about metatags anachronistically amusing (in a cynical way), but I wonder about the specific contours of this injunction. For example, is it a violation for the defendants to broad-match "skydive" or "skydiving" and geographically restrict the ad to Arizona? It also appears that the site can include statements like "Skydiving in Arizona" or "If you're in Arizona and want to skydive, visit us." I appreciate that the judge recognized the speech restriction concerns of an overbroad injunction, but these types of language contortions are a good sign that the trademark may not have deserved the protection it apparently is getting.

The court also rejected some other overreaching plaintiff requests, such as that the defendants be barred from using the word "Arizona" in any domain name or website and limiting the defendants to operating only 1 skydiving-related website. The defendants also get to keep skydivinginarizona.com.

Posted by Eric at 02:09 PM | Domain Names , Search Engines , Trademark | TrackBack

April 12, 2010

Ninth Circuit Applies California law to Domain Name Ownership Dispute and Remands for Determination of Whether "Innocent Purchaser" Defense Applies -- CRS Recovery, Inc. v. Laxton

[Post by Venkat]

CRS Recovery, Inc. v. Laxton, 9th Cir. (April 6, 2010).

Background: Mayberry registered rl.com through Network Solutions in 1995. At the time, mat.net was also registered to him. Mayberry provided dale@mat.net as the email address for the registrant and administrative contacts. The mat.net domain name ultimately expired and was later registered by Li Qiang. Qiang - who the court notes is probably judgment proof - receives an email (at dale@mat.net) from Network Solutions relating to rl.com. Qiang then transfers rl.com to himself and then sells rl.com to Barnali Kalita, an Indian citizen, who later sells rl.com to Laxton, the defendant below.

[Keeping your registration information current is common sense, but if there's ever a case that illustrates the importance of it, this is definitely one of them!] [Eric's addition: the Meyerkord v. Zipatoni case really highlighted this point IMO]

Once Mayberry realizes that he has lost control of rl.com he tracks down the current registrant, which happens to be Laxton, and requests that Laxton transfer the name back to Mayberry. Laxton - having just spent significant resources prevailing in a WIPO domain name proceeding brought by Ralph Lauren - understandably declines. Mayberry sues, and the trial court grants Mayberry summary judgment and orders the domain name transferred back to Mayberry. The trial court concludes, over Laxton's objection, that California law applies. On appeal, the Ninth Circuit affirms that California law applies, but remands for a determination of whether theft or fraud resulted in the original loss of the domain name. If Laxton obtained the property from someone who obtained title by fraud, the "innocent purchaser" defense comes into play, and Laxton cannot be held liable for conversion.

The Ninth Circuit Beats Up on Umbro: The key threshold question addressed by the court was whether California law or Virginia law applied. Mayberry, a citizen of Virginia, argued that California law, and not Virginia law should apply. Although Laxton was a citizen of California, he argued that Virginia law should apply because the domain name was "located" in Virginia. (Here's a post discussing Office Depot v. Zuccarini, a recent Ninth Circuit case which looked at where creditors can levy against domain names.) Laxton also argued that Virginia law should apply, because Virginia law provided for a different outcome:

Laxton argues that a garnishment case from the Supreme Court of Virginia, Network Solutions, Inc. v. Umbro . . . holds that domain names are contract rights under Virginia law.

The Ninth Circuit rejects Laxton's argument, abrogating (or at least drastically minimizing the applicability of Umbro), noting that "Umbro tells us only about how Virginia law treats domain names in garnishment actions . . . Umbro does not compel the conclusion that Virginia considers domain names to be contracts rights for purposes of conversion suits . . . ." This is nice to see, since (as discussed in a previous post talking about whether creditors can levy against domain names) Umbro is often mistakenly cited for the proposition that domain names are not property.

Innocent Purchaser Defense: The court next discusses whether Laxton can be held liable under California law. The common law rule provides that Laxton assumes the risk of whether the domain name had good title; however, this is subject to an "innocent purchaser defense." The innocent purchaser defense allows an innocent purchaser who lacked notice of any underlying improprieties to escape liability for conversion where the vendor procured the goods in question through fraud. The key question is whether the underlying transfer to Qiang was procured through fraud or whether it was just mere theft. The court concludes that it's unclear from the record as to whether Qiang procured initial transfer of rl.com through fraud or theft.

Did Laxton Abandon the Domain Name: The Ninth Circuit also breathes life into an argument which the district court treated as a throwaway argument. The court notes that it's not so clear that "Mayberry's failure to change the contact information . . . [does not constitute] an affirmative abandonment of his rights to the domain." A dissenting Judge Noonan takes issue with the majority's abandonment argument, likening it to a position where a plaintiff who throws away a bank statement containing bank account information is deemed to have abandoned the underlying bank account.
__

This is an interesting case which illustrates the downside of Kremen v. Cohen, the Ninth Circuit case which found that domain names are property which may support a conversion action. The factual scenario and the court's ruling here, leaves domain name purchasers in a tricky situation. They will have a tough time determining whether they have clean title. It didn't seem like Laxton, the purchaser here, did anything wrong. He even testified that he checked the WIPO domain name ruling records prior to the purchase to see if the domain name he purchased was subject to a dispute. It wasn't. Nevertheless, he's being put in a situation where he may be liable for conversion and have to return the domain name. It's easy to say that purchasers have to conduct due diligence and obtain adequate representations from sellers, but this factual scenario illustrates why, in practice, that's not always feasible. A blemish to the title that goes back several transactions can be particularly difficult to ferret out. Obviously, given the existence of multiple judgment proof-looking defendants, someone is going to be out some money.

The prospect of multiple state laws coming into play to determine the ownership of domain names with disputed title is also worrisome.

[Eric's addition: Venkat's post reinforces the weakness of the WHOIS database as a record of chain of title. I'm not aware of a way to see archival versions of a WHOIS record; the database only shows the most current record. Compare other government-operated databases for recording property title, where it's possible to see the chain. I wonder if WHOIS should make it possible to see a chain of records as well? UPDATE: this tool offers historical WHOIS information for a fee. That's useful, but I think the info should be treated equivalent to a public record and searchable for free.]

Posted by Venkat at 09:30 AM | Domain Names

March 31, 2010

March 2010 Quick Links

By Eric Goldman

Internet Exceptionalism

* Stern v. Sony Corp., CV 09-7710 PA (C.D. Cal. Feb. 8 2010) "to the extent Plaintiff is suing Sony as a manufacturer of video games, and the provider of online services, Sony is not a ‘place of public accommodation’ and is therefore not liable for violating Title III of the ADA" Nice complement to the Estavillo case. My prior post on Internet exceptionalism.

Online Competition

* Microsoft’s head algorithms guru says that Google's search engine beat Microsoft because Microsoft ignored the long tail of search queries. If Google and Microsoft made different product design choices and the marketplace liked Google's choices better, doesn’t this make it hard for Microsoft to complain about Google’s "anti-competitive" practices? I wonder if this talk was pre-cleared by Microsoft’s antitrust counsel.

* SJ Mercury News: Google's most recent 10-K lists some new self-identified competitors, including Yelp, Kayak & WebMD. By identifying some vertical players as competitors, such as Kayak and WebMD, does Google lend credence to the arguments by TradeComet and myTriggers that Google does compete with vertical search engines?

* In re eBay Seller Antitrust Litigation, 2010 WL 760433 (N.D. Cal. March 4, 2010). eBay wins summary judgment in an antitrust challenge: "Despite the voluminous briefing permitted in connection with both of the instant motions-which includes hundreds of pages of supporting documents-Plaintiffs have not drawn the Court's attention to any actual proof of antitrust injury caused by eBay's alleged anticompetive acts-on an individual or a classwide level."

Online Pornography

* U.S. v. Beckett, 2010 WL 776049 (11th Cir. March 9, 2010). A man posed as a 17 year old girl on MySpace and AOL, engaged boys in discussions, induced them to send nude photos, and then coerced them to have sex with him to prevent his dissemination of the photos.

* Miller v. Mitchell, No. 09-2144 (3rd Cir. March 17, 2010). This is the case where the government prosecutor threatened to bring felony charges against girls for "sexting." The court upholds a preliminary injunction against requiring the girls to go through an education program in lieu of felony prosecution.

* U.S. v. Durdley, 2010 WL 916107 (N.D. Fla. March 11, 2010). No privacy expectations in a flash drive left in a public computer.

Online Security

* Cormac Herley of Microsoft Research, "So Long, And No Thanks for the Externalities: The Rational Rejection of Security Advice by Users." In my observations, users are actually intensely rational when it comes to privacy and security issues, and privacy and security advocates who don't fully account for this user behavior do so at their peril.

* Reuters takes a deep look at Innovation Marketing, a Russian scareware operation.

User-Generated Content

* Who does what on Wikipedia.

* Josh King explains why Avvo supports the proposed federal anti-SLAPP law.

* T.V. ex rel. B.V. v. Smith-Green Community School Corp., 2010 WL 935574 (N.D. Ind. March 11, 2010). Denying class formation for a lawsuit in response to a ridiculously harsh school suspension for a MySpace photo of ribald off-campus activity.

* Melton v. Boustred, 2010 WL 881919 (Cal. App. Ct. Mar 12, 2010). Boustred throws a ragin' party and advertises it via a MySpace open invitation. The plaintiffs show up and were beaten and stabbed at the party by unknown assailants. The court concludes that Boustred isn't liable for the physical injuries. Note to self: stay away from parties advertised via MySpace.

* Yelp Litigation Mania!
- Cats & Dogs Animal Hospital v. Yelp first amended complaint
- LaPausky v. Yelp complaint. A write-up.
- Levitt v. Yelp complaint.
- ClickZ: Ex-Yelper Helps Law Firms Go After Yelp

Anonymity

* Park West Galleries, Inc. v. Global Fine Art Registry, LLC, 2010 WL 742580 (E.D. Mich. Feb. 26, 2010). Using an online pseudonym can lengthen the defamation statute of limitations.

* White v. Baker, 2010 WL 1009758 (N.D. Ga. March 3, 2010). Mandatory reporting of Internet usernames by registered sex offenders violates the First Amendment.

Advertising and Marketing

* ClickZ: New Facebook Policies Clamp Down on 'Loose' Ad Copy.

* Coyote Pub., Inc. v. Miller, 2010 WL 816936 (9th Cir. March 11, 2010). Upholding the constitutionality of Nevada's restrictions on advertising prostitution.

Trademark

* WSJ: It's a crowded namespace for bands.

* 1-800Contacts, Inc. v. Memorial Eye, P.A., 2010 WL 988524 (D. Utah March 15, 2010). It was not objectively baseless for 1-800 Contacts to bring a trademark enforcement action over competitive keyword advertising.

* Rhea Drysdale tells how she busted the trademark application for "SEO."

* The Utah governor has signed SB 26, which (among other things) creates a bastardized version of ACPA. My initial comments on the proposed bill.

Copyright

* James Grimmelmann on Reed Elsevier v. Muchnick.

* Ben Sheffner has some updates in the Scribd lawsuits. My initial post on Scott v. Scribd.

* Ars Technica on an experiment to block users who are using ad blocking software from accessing its site.

General

* Hudson v. University of Puerto Rico, 2010 WL 1131462 (D. Minn. March 23, 2010). Passive blog does not confer general jurisdiction.

* Doe 1 v. AOL LLC (N.D. Cal. Feb. 1, 2010). "Plaintiffs' claims for violation of the ECPA (Count I), unjust enrichment (Count VI) and for public disclosure of private facts (Count VII) are subject to the forum selection clause because none are California consumer law claims." Prior blog post.

* Commonwealth v. Interactive Media Ent’mt and Gaming Ass’n, Inc., No. 2009-SC-000043-MR (Ky. Mar. 18, 2010). Challenge to Kentucky's seizure of 141 gambling-related domain names tossed on standing grounds. Prior blog post.

Posted by Eric at 08:42 AM | Content Regulation , Copyright , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Privacy/Security , Search Engines , Trademark , Virtual Worlds | TrackBack

March 02, 2010

February 2010 Quick Links

By Eric Goldman

Copyright

* Mavericks Recording Co. v. Harper (5th Cir. Feb. 25, 2010). 17 USC 402(d) precludes an innocent infringement defense in P2P downloading case when the record companies place proper copyright notices on their works. This is consistent with language from BMG v. Gonzalez in the Seventh Circuit.

* Perfect 10 and Amazon settle on confidential terms; Perfect 10 v. Google will keep going. Previous blog coverage of this case (1, 2, 3, 4, 5).

* Veoh won in court (1, 2, 3) but still got knocked out of the marketplace.

* Project DoD, Inc. v. Federici, 2010 WL 559115 (D. Me. Feb. 11, 2010). In a 512(f) lawsuit I blogged about in December, the judge upheld the magistrate report dismissing for lack of personal jurisdiction because the plaintiff had moved and no longer had ties to Maine.

* MCS Music America, Inc. v. YAHOO Inc., 2010 WL 500430 (M.D. Tenn. Feb. 5, 2010). MCS sued Yahoo over infringement of its songs, and the court says that it can only get statutory damages for each song infringed. This means that if Yahoo performed 8 different covers of the song, MCS is only entitled to statutory damages for one infringed work.

Trademark

* Monex Deposit Co. v. Gilliam, 2010 WL 325570 (C.D. Cal. Jan, 25, 2010). The courts says a gripe site called "MonexFraud.com" may cause initial interest confusion of the Monex trademark. Are you kidding me?

* Typographically erroneous phone numbers always struck me as a much greater problem than "typosquatters."

Contracts

* Jacobsen v. Katzer settles.

* Asch Webhosting, Inc. v. Adelphia Business Solutions Investment, LLC (3rd Cir. Jan. 25, 2010). 3rd Circuit upholds consequential damages waiver in B2B Internet connectivity contract. Prior blog discussion.

Blogging/Social Networking Sites

* Cats & Dogs Animal Hospital v. Yelp (C.D. Cal. complaint filed Feb. 24, 2010). The plaintiffs allege that Yelp violates California B&P 17200 by using a pay-for-play scheme.

* Rick Frenkel speaks about his Troll Tracker blogging days.

* In re Perry, 2010 WL 374770 (Bankr. S.D. Tex. Feb. 3, 2010). Emailing links to a third party's defamatory blog constituted "publication" of the blog for defamation purposes. The court doesn't discuss 47 USC 230 at all!

* Cunningham v. West Virginia, 2010 WL 415257 (S.D. W.Va. Jan. 26, 2010). MySpace does not impermissibly discriminate against sex offenders.

* Evans v. Bayer, 2010 WL 521119(S.D. Fla. Feb 12, 2010). A student's off-campus creation of a Facebook Group called "Ms. Sarah Phelps is the worst teacher I've ever met" may not be an appropriate grounds for school discipline.

* Snowball fight leads to a rampage at Macy's? Blame Facebook!

* Marshall v. City of Savannah, 2010 WL 537852 (11th Cir. Feb. 17, 2010). A probationary firefighter posted an official fire department photo on her MySpace page. After a reprimand, the employment relationship deteriorated and she was fired. The 11th Circuit affirms the dismissal of her discrimination and retaliation claims.

* BoingBoing gets an anti-SLAPP win--including its attorneys' fees--in a defamation lawsuit over one of its blog posts. The anti-SLAPP ruling.

* Berkery v. Estate of Stuart, 2010 WL 610631 (N.J. Super. A.D. Feb. 23, 2010). "The investigative function an author performs is not substantively different from an investigative journalist. The dispositive element is not the form of the investigative process. In an era marked by a diminution of the classic newsmedia and the print investigative journalist and the proliferation of investigative reporting in media such as cable television, documentary journalism-both televisions and movies-internet reporting and blogging, the need for protection remains the same. Whether Hornblum was writing a book, news article, a screenplay or a blog, the substance of his body of work remains the same."

Search Engines

* After some innuendo about Microsoft’s role in harassing Google on antitrust/competition issues, Microsoft effectively admits as much. Also see this Wall Street Journal article on the Microsoft-Google tussles.

* Search Engine Land: Google AdSense Using Search History In Contextual Matching

* Munger v. State, 2010 WL 537641(N.C. App. Feb. 16, 2010). Rejecting a taxpayer challenge against a NC law designed to provide financial incentives for Google to build a facility there.

* Lengthy Wired article on Google's algorithm.

* Nature: Chinese researchers don’t want to lose access to Google. My blog post on this topic.

* Business Insider: In Case You Had Any Doubts About Where Google's Revenue Comes From

Advertising

* Thomas O'Toole: Does "No Contract" Really Mean No Contract?

* MediaPost: Start-Up Links 65 Million IP Addresses To Users, Readies Targeting Platform. This is not going to end well.

* More troubling words for online advertisers from FTC BCP Director David Vladeck.

* Zelotes v. Rousseau (Conn. Grievance Committee). Attorneys participating in an Internet lead generation system that allocated leads geographically didn't violate the attorney Rules of Professional Conduct.

Online Crimes

* F.T.C. v. Pricewert LLC, 2010 WL 329913 (N.D. Cal. Jan. 20, 2010). FTC gets a default injunction against an Internet access provider that allegedly provided connectivity for activities such as child pornography, botnets, spyware, and viruses.

* US v. Little. The Eleventh Circuit disagrees with the Ninth Circuit regarding the appropriate geographic scope to measure the obscenity of Internet material.

* 3 Google executives were convicted in Italy of criminal privacy violations for a user-uploaded video to Google Video. NYT article. Google's response. A refresher on the Felix Somm conviction from 1998.

* Online ticket sellers are getting the smackdown. Criminal prosecutions of online ticket brokers who allegedly played dirty in jumping the queue. The FTC cracks down on Ticketmaster and warns other online ticket sellers.

Posted by Eric at 05:04 PM | Content Regulation , Copyright , Derivative Liability , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Search Engines , Trademark | TrackBack

March 01, 2010

Ninth Circuit: Creditor Can Execute Against Domain Name Where Registry is Located -- Office Depot v. Zuccarini

[Post by Venkat]

The Ninth Circuit affirmed the district court's ruling in Office Depot v. Zuccarini [Scribd link], agreeing that a creditor may levy against a domain name in the jurisdiction where the domain name registry is located. The decision is significant for two reasons. First, it affirms (or reaffirms) that domain names are property subject to the claims of creditors. Second, it allows creditors to proceed against domain names where the registry is located, thus allowing creditors to proceed against domain names in one proceeding and more importantly levy against domain names located abroad (where the registry is located in the United States). Overall, this makes getting at a domain name much easier for creditors.

Background: Office Depot originally obtained a judgment against frequent cybersquatting defendant John Zuccarini. Office Depot then assigned the judgment to DS Holdings. Office Depot obtained the judgment in 2000 and it's surprising that 10 years later the judgment is finally being enforced against something. Although Zuccarini is proceeding pro se, it seems like he was or became well versed in putting up roadblocks and delaying resolution of the litigation.

DS went after 190 .com domain names that were registered in Zuccarini's name. DS originally tried unsuccessfully to have the domain names transferred directly to it. (This was the technique successfully used by the plaintiff in Bosh v. Zavala.) Later, DS sought to have a receiver appointed over the domain names. The district court granted DS's request to have the receiver appointed, and Zuccarini appealed. Zuccarini's appeal focused on whether it was proper to appoint the receiver in the Northern District of California, since the domain names were not necessarily "located" there.

The court's ruling: The court runs through basic principles of in rem jurisdiction and what rules apply. The court then looks to federal rules to determine where the receiver should be appointed in this case. Finding no applicable federal rule, the court looks to California law. California law provides that a writ of execution may be issued "in the county where the levy is to be made." With this in the background, the two questions presented by the court are: (1) "are domain names property that is subject to execution?" and (2) "if so, where are the domain names located for purposes of execution?"

With respect to the first question, the court cites to Kremen v. Cohen, and easily concludes that (under California law) "domain names are intangible property subject to a writ of execution." Kremen undermined Network Solutions, Inc. v. Umbro Int’l, Inc., 259 Va. 759, 770 (Va. 2000), a Virginia case widely cited for the proposition that creditors cannot get at domain names because domain names are contract rights rather then property. To the extent Kremen did not refute Umbro, this decision definitely provides the necessary ammunition to creditors. (Again, collection is state-specific, and apart from the analysis of the nature of domain names, the outcome in these cases turns on the statute in question, which vary from state to state. That said, I think given the robust marketplace in domain names, Umbro's conception of the domain name as a personal services agreement seems outdated, and most courts will easily recognize this.)

With respect to the second question, the court acknowledges that "attaching a situs to intangible property is ... a legal fiction," and the determination must be made in a "context-specific" manner. Fairness was relevant to the court's determination of the appropriate situs, and the court was understandably not receptive to Zuccarini's policy arguments that allowing a court to issue an order directed to the registry would mean that every .com and .net domain name could be levied through courts in the Northern District of California. The court also looked to the ACPA, which provides for in rem jurisdiction over certain cases where the "registrar, registry, or other domain name authority" is located. Although this was not an ACPA case, the court found the structure set up by the statute persuasive and that the writ was appropriately issued from Northern District of California since VeriSign (the registry for .com domains) is located there.

My reaction: The decision clears up two things. Although post Kremen v. Cohen there shouldn't have been much dispute that domain names are property which are subject to the claims of creditors, the case clears up any lingering doubt that may have existed. (Kremen and this case applied California law, but the result shouldn't vary much across other states.) Second, the decision makes clear that a court which has jurisdiction over the registry can issue an order allowing the creditor to get at the domain names. The case also implicitly affirms that getting a receiver appointed to sell the domain names is the appropriate route for the creditor. Getting the name transferred to the creditor is not a remedy allowed under California law (Palacio Del Mar Homeowners Ass'n, Inc. v. McMahon). Additionally, a transfer of domain names from a cybersquatter to a judgment creditor raises some issues around potential infringement of third party rights through sales or other exploitation of the domain names. (See this post on Bosh v. Zavala for some discussion of those issues.) The method ultimately used by DS in this case (a receiver) avoids all of these issues, or at least shifts them over to the receiver rather than the creditor.

One of the more significant aspects of the case is that the ruling makes clear that regardless of whether a domain name is registered through a foreign registrar, a court having jurisdiction over the registry can issue an order directing transfer of the domain names to a receiver. With respect to .com and .net domain names, this means that creditors can try to get at these domain names through proceeding in the Northern District of California (as the court notes, VeriSign is the registry for .com and .net domain names and is headquartered in Mountain View). While the ACPA allows plaintiffs to file in rem suits where the registry is located, it's nice (for creditors) to have a similar ruling in the post-judgment context, and one from the Ninth Circuit as well.

Will this cause a rush of similar claims to be filed in the Northern District of California? It's tough to say, but even post Kremen, it does not seem like there's been a ton of post-judgment collections activity with respect to domain names. From a practitioner's standpoint, it's certainly nice to have this rule on the books.

An odd footnote: Zuccarini is a colorful character whose internet exploits have gotten him in trouble with the law. He was arrested in 2003. (Here's a post at CircleID rounding up reactions to his arrest.) According to his Wikipedia entry which contains a link to a Bureau of Prisons search, he was released in 2005.

Previous post: "Domain names as property subject to creditor claims -- Bosh v. Zavala"

Additional coverage: Mike Atkins covers the ruling in a post here.

Posted by Venkat at 06:58 AM | Domain Names , Internet History , Trademark

January 27, 2010

Utah May Repeal Its Spyware Control Act--SB 26

By Eric Goldman

It's that time of year again. The Utah legislature is back in session and cooking up new schemes to regulate the Internet. So far I only see one Internet-specific bill in queue, SB 26. Surprisingly, it does not directly attempt to regulate keyword advertising.

SB 26 is sponsored by Sen. Stephen H. Urquhart, who rocketed to national cyberlaw fame (infamy?) in 2004 when he sponsored Utah's Spyware Control Act. It was such a misguided law that it motivated me (in part) to write a 71 page magnum opus explaining its policy deficiencies. It was also hampered by its fairly obvious unconstitutionality, which was confirmed by a Utah court a few months after passage. (Note: I helped write an amicus brief in that court challenge, so you might interpret my assessment as an advocacy statement). Following the judicial thumping, then-Rep. Urquhart shepherded an amendment to the Spyware Control Act in 2005 that effectively neutered the law. Since then, I believe the law has sat largely dormant. The only court citation I know of was in the 2008 Overstock v. SmartBargains case, easily rejecting Overstock's mystifying attempt to make a claim under the superseded 2004 version of the law.

Among other items I'll discuss in a moment, SB 26 proposes to repeal the Spyware Control Act entirely. If passed, that would be a remarkable development because most legislators let their failed laws sit on the books unused. It takes some work to repeal a law, plus it can be a little embarrassing to repeal a law--especially after hyping up the law to get it passed initially (Urquhart had a lot of tough talk about spyware/adware in 2004-05, see, e.g., here). Kudos to Sen. Urquhart for having the fortitude to admit and fix his errors publicly.

While repealing the law would be a remarkable step on its own, it's even more remarkable in the context of the Utah legislature's track record of Internet regulation. By my count, repealing the Spyware Control Act would be at least the THIRD Utah Internet law that its legislature repealed in the past few years--the other two being Utah's 1995 digital signature act and its infamous Trademark Protection Act. For a legislature that meets only a couple of months a year, a trifecta of repealed Internet laws in the past couple of years is a stunning waste of scarce legislative resources. Wow.

As bad as that is, the three repealed laws don't even tell the full story of the Utah legislature's incompetence when it comes to Internet regulation. Recall Utah's failed attempt to line its coffers by taxing email (which turned into a big money-loser), and don't forget its repeated attempts to regulate Internet content that have spawned years of costly litigation (see, e.g., Free Speech Coalition v. Shurtleff). From my perspective, anyone looking objectively at the Utah legislature's track record of regulating the Internet would logically conclude that they should cut their losses and focus on other legislative priorities.

Unfortunately, SB 26 indicates that either hope springs eternal in the Utah legislature or they are doomed to forget the lessons of history. Despite doing some good by putting down the Spyware Control Act, the bill amazingly proposes more regulations of the Internet! To Sen. Urquhart's credit, the bill is largely clone-and-revise proposals from other places and not drafted from scratch, which may contribute less from a regulatory standpoint but at least they aren't quite as error prone. The proposed law has three main components:

1) anti-phishing/anti-pharming restrictions. I'm not sure where the original text came from. California has an anti-phishing law but I don't think this is a clone-and-revise of that law. Maybe it's cloned from another state's anti-phishing law. In any case, the anti-"phishing" proposal is noteworthy because the regulation doesn't restrict itself to email (presumably to avoid any risk of CAN-SPAM preemption). As a result, as currently drafted, it's an unlimited anti-pretexting law applicable to both online and offline conduct.

2) anti-spyware restrictions. After wiping out the Spyware Control Act, the new anti-spyware proposals are based on the California model of state anti-spyware laws, which have been followed by a couple dozen other states. The California model regulates various types of "intentionally deceptive" conduct regarding software activity. This is what Utah should have done in 2004-05 rather than trying to develop its own sui generis law. I generally don't have a problem with regulating intentionally deceptive software behavior, but it seems a little late to be enacting the laws now. Most of the regulations contemplate practices more common in 2003-06 and largely defunct now, so Utah is showing up late to a party that ended years ago.

3) a state version of the federal Anti-Cybersquatting Consumer Protection Act. I know some other states have enacted domain name protection laws (California comes to mind), but it's not clear what benefits these state laws have. As far as I know, California's law is almost never used. Tom O'Toole speculates that this bill will make it easier for Utah trademark owners to bring in rem lawsuits, but it's not clear to me how much this law will help given the rarity of ACPA in rem lawsuits (UDRPs are usually cheaper and faster for the same results) and already expansive jurisdictional principles under ACPA. Further, I wonder if this law is preempted either by the dormant commerce clause or via field preemption of the federal ACPA.

I should add that I’ve observed that Utah bills can change radically from draft to draft with little warning, even if the law is on the legislative floor for a final vote, so we'll have to see if this law transmogrifies through the process. And I am keeping a vigilant watch for any resurrected attempts to regulate keyword advertising.

Posted by Eric at 09:58 AM | Adware/Spyware , Domain Names , Internet History , Spam , Trademark | TrackBack

January 11, 2010

Top Cyberlaw Developments of 2009 (Eric's List)

By Eric Goldman

Guest blogger John Ottaviani recently dropped by to offer his perspectives on 2009’s top Cyberlaw developments. While I like his list a lot, I independently developed my own top 10 list that has a different emphasis. You might enjoy the contrasts. My list:

#10: Louis Vuitton v. Akanoc. After the judge ordered a web host to stand trial, a jury awarded the trademark owner $32 million due to the web host’s contributions to trademark infringement by its customers. This case stands out for the big damages award and as a rare example where an online provider was held liable under a contributory trademark liability theory. Many trademark practitioners are scratching their heads trying to figure out the import of this case, however. Does this case represent a dangerous new frontier of online liability? Was this a bad jury verdict fueled by poor defense lawyering? Or was this an appropriate outcome because the web host actually engaged in bad behavior that distinguishes it from most “legitimate” web hosts? 2010 may help us understand if this case is part of a new trend or an aberration.

#9: Gordon v. Virtumundo. We’ve seen a lot of silly anti-spam litigation, including the emergence of an entirely new group of entrepreneurs called “spam litigation entrepreneurs” who try to make a living on anti-spam lawsuits. These folks have a true love-hate relationship with spam; they hate it so much that they devote their lives to fighting it, but they love getting spam because each one is a potential revenue source. In general, judges hate spam a lot too, so over the years we have seen a number of doctrinally unsupportable results where judges bent the law to make sure spammers lost.

However, the judicial pendulum has swung in the opposite direction, and in Gordon v. Virtumundo, the Ninth Circuit destroyed a serial anti-spam plaintiff’s entrepreneurial business in a doctrinally questionable but strongly worded opinion. In short order, a number of other spam litigation entrepreneurs have seen their lawsuits shut down with emphasis. Due to this ruling, the era of anti-spammers partying in courts may be on the wane.

#8: Zango v. Kaspersky. The question raised in this issue is simple to state but hard to answer: who should decide what constitutes spam, spyware or a virus? Vendors of software designed to curb these threats would like unfettered discretion to make their classifications; businesses who are classified as a threat would like judges to overturn adverse decisions. As it turns out, in a relatively obscure provision (47 USC 230(c)(2)), in 1996 Congress said that software vendors get to make classifications decisions and unhappy businesses can’t complain about them. In June, the Ninth Circuit upheld Kaspersky’s decision to classify Zango’s software as a threat and rejected Zango’s efforts to take the classification decision out of Kaspersky’s hands. This ruling gives enormous freedom to vendors of anti-spam/anti-spyware/anti-virus software to do their best to keep us safe.

#7: Columbia Pictures v. Fung. This case came out just before the Christmas holiday, so it got lost in the holiday hoopla a bit, but it’s a case of potentially significant import. First, it held that the specific torrent sites at issue induced copyright infringement. Second, the court denied the torrent sites’ eligibility for the DMCA online safe harbors. In part, the court said that an inducing website was categorically disqualified from the DMCA online safe harbors. Like the Akanoc case, it’s not entirely clear if this result was a legal aberration or an appropriate reaction to the defendants’ poor choices. Either way, it is possible that more “legitimate” websites may change their behavior to minimize their exposure based on the legal precedents in this case. If they do, this case could have a major impact on UGC websites.

#6: Lori Drew’s acquittal. Megan Maier’s suicide remains a heartbreaking tragedy, but unfortunately, overzealous prosecutors compounded the tragedy by prosecuting Lori Drew using bogus legal doctrines. The tragic facts got a jury to convict Drew of some misdemeanor crimes. Fortunately, the judge recognized the legal errors of the prosecution’s theory and the jury’s conclusions and granted Drew an acquittal despite the jury findings. The judge finally got to the right result as a matter of Cyberlaw, but the case remains a chilling testament to prosecutorial power.

#5: Harris v. Blockbuster. The rule is really clear. Service providers can't amend online user agreements in the provider’s sole discretion without notice. As the Ninth Circuit informed us in 2007, those contracts don’t fare well in court. So although these provisions are in just about every online user agreement, they don’t work--as Blockbuster found out the hard way.

As part of the litigation detritus from the Facebook Beacon experiment, users sued Blockbuster for sharing their rental transactions with Facebook and all of their friends, allegedly in violation of the Video Privacy Protection Act. Blockbuster tried to bust the class action by invoking the contract’s arbitration clause. Instead, because Blockbuster had the impermissible amendment provision in its user agreement, the court said the contract was illusory and refused to send the case to arbitration.

This case should signal the end of the ridiculous amendment clauses. We’ll see how long it takes the lawyers to give the provisions up.

#4: Battles Over the First Sale Doctrine. We have seen numerous legal battles this year over the First Sale defenses in both copyright and trademark law.

Copyright owners try to engage in price discrimination by carving up the world into geographic territories with different prices for the same product. If they can use copyright law to keep the cheap products from entering the other geographic market, this keeps the product from effectively price-competing with itself.

This year, two cases involved European textbooks which were functionally equivalent to the textbooks being sold in the United States at higher prices. Entrepreneurs were buying the cheap European texts, shipping them to the US and then selling them online. The entrepreneurs invoked the First Sale doctrine, which says that copyright law can’t prohibit the legitimate purchaser of a tangible copyrighted item from reselling the item to whomever they want at whatever price they want.

However, copyright law has another provision that allows copyright owners to block the importation of copyrighted works into the United States. In the 1998 Quality King case, the US Supreme Court said that the First Sale doctrine trumped the importation right when the goods were manufactured in the US, sold overseas, and then imported back to the US. However, in Pearson v. Liu and John Wiley & Sons v. Kirtsaeng, the judges said that the importation right trumps the First Sale doctrine when the goods were initially manufactured overseas. This issue is ripe for further adjudication, though. A similar importation case, Costco v. Omega, is pending before the US Supreme Court, which is deciding whether or not it wants to hear the case. If it does, we may get clearer instructions about the interplay between the First Sale doctrine and the copyright importation right.

Copyright’s First Sale doctrine was also at issue in Vernor v. Autodesk, where the purchaser of a software disk wanted to resell the disk on eBay despite restrictions in the software licensing agreement barring such resales. The court held that the First Sale doctrine applied and allowed the resale. There are other cases percolating through the court system involving the resale of tangible media contained copyrighted material despite contractual restrictions on resale, so this issue remains a hot one.

Trademark owners also try to prevent competition with their products that leak out of their official channels of distribution. eBay has been the site of a couple battles over the First Sale doctrine in trademark law. In Mary Kay v. Weber, the court held that the trademark First Sale doctrine may not permit the eBay resale of expired cosmetics by a Mary Kay independent beauty consultant. In Beltronics v. Midwest, a trademark owner shut down the eBay resale of radar detectors that had leaked out of the manufacturer’s channel and were being sold (at a cheaper price) without the manufacturer’s warranty.

Clearly, the First Sale doctrine matters a lot to eBay and other consumer-to-consumer e-commerce websites. With a possible pending Supreme Court case and lots of IP owners looking to stifle competition from goods they have already profited from, expect the First Sale doctrines to get lots of attention in 2010.

#3: 47 USC 230. In my opinion, 47 USC 230 is the most important Cyberlaw statute, so new 230 developments will make my top 10 list for the foreseeable future. This year, there were three federal appellate court rulings interpreting 47 USC 230(c)(1):

* in Barnes v. Yahoo, the Ninth Circuit held that 230 protected a website’s negligent delay in removing user content. However, if the website had promised removal to the user, the user could have a viable claim for promissory estoppel that would not be preempted by 230.
* in FTC v. Accusearch, the Tenth Circuit held that a website’s resale of pretexted phone records—even if those records were supplied by third party suppliers—did not qualify for 47 USC 230 protection because of their illegality.
* in Nemet Chevrolet v. ConsumerAffairs.com, the Fourth Circuit held that a consumer review website was not liable for user-supplied reviews, even when the website worked with the user to submit the review, and despite the plaintiff’s unsubstantiated claims that the website had fabricated the reviews itself.

Really, the big 47 USC 230 news in 2009 is the absence of big news. Specifically, 2009 reinforced that the Ninth Circuit’s 2008 Roommates.com decision—one of the most significant defense losses under 47 USC 230—did not rip open a major hole in the statutory protection of websites. Of the 13 cases that I have seen that have cited the Roommates.com en banc opinion, eleven have cited the case in favor of the defense. (See the list here). The two exceptions are the Accusearch case, mentioned above, and the New England Patriots’ lawsuit against StubHub over season ticket resales, an odd opinion that may not have much influence. Therefore, despite our fears about Roommates.com, the 47 USC 230 immunity remained healthy and vibrant in 2009. For more on this topic, see my special recap of 47 USC 230's year-in-review for 2009.

#2: Keyword Advertising Battles. Keyword advertising battles are another perennial topic on these year-in-review lists. A multi-billion dollar a year industry has sprung up around the sale of keyword-triggered advertising, including some keywords that may be third party trademarks, and trademark owners don’t like it at all. This has led to a multi-front battle between trademark owners, keyword advertising sellers (such as Google), and keyword advertising buyers.

One of the biggest Cyberlaw cases of the year was the Second Circuit’s ruling in Rescuecom v. Google. In the district court in 2006, Google won an easy victory against a trademark owner because the court said that Google did not make the requisite “use in commerce” of the trademark. The Second Circuit reversed the district court, sending the case back for further proceedings. The reversal does not ensure Google’s defeat; Google will now litigate other legal doctrines and might very well win on one of those. However, the Second Circuit’s opinion largely spells the end of any “use in commerce” defense by either keyword advertising sellers or buyers.

Because of the “use in commerce” defense’s demise, keyword advertising cases will now likely turn on whether the advertisements create a likelihood of consumer confusion. One case, Hearts on Fire v. Blue Nile, offered up a new and complicated test for gauging consumer confusion. If other courts adopt this test, keyword advertising cases will get even more expensive and complicated—highlighting how important it was that the Rescuecom case eliminated an easy way to end these lawsuits early.

Meanwhile, despite the fact that keyword advertising battles have been taking place for at least a decade, we have not heard what a jury thinks about the practice—until the November jury ruling in Fair Isaac v. Experian. In that case, the jury found for the defense that the keyword-triggered ads did not create the requisite likelihood of consumer confusion. It remains to be seen if other juries reach the same conclusion. If they do, keyword advertising lawsuits should slowly fade away over time because the trademark owners can’t win in the end.

As for now, keyword litigation is going strong and hardly fading away. In Spring, Google made two changes to its trademark policies where it voluntarily agrees to take down certain types of ads at the trademark owner’s request. In May, Google extended its more liberal US-based policy to nearly 200 other countries, replacing the more restrictive policies it had in place there. Shortly thereafter, Google modified its US policy to do less for trademark owners in situations involving product resales, review websites and sales of complementary/replacement parts. Trademark owners were none too pleased with these changes. In response to these changes and the door opened by the Second Circuit Rescuecom decision, Google got hit with about a dozen new lawsuits, including some class action lawsuits, of which I believe 10 are currently still active.

Finally, all of the wrangling in court and over voluntary trademark policies could be mooted by legislative action, and for the third time, the Utah state legislature considered resolving the keyword advertising issue itself. A law regulating keyword advertising passed the Utah house but died in the Utah senate. Expect the pro-regulatory forces to round up the troops for a fourth try in 2010.

#1: FTC Endorsement Guidelines for Bloggers. The Obama administration has breathed new life into a pro-regulatory FTC, and the FTC sure is interested in all things Internet. The FTC has been nosing around Internet privacy and Internet marketing practices pretty carefully, and I expect 2010 to bring more FTC pronouncements designed to tackle the Internet.

But nothing stirred up a hornet’s nest of confusion and anger in 2009 like the FTC’s Endorsement and Testimonials Guidelines. I think it’s fair to say that the FTC’s guidelines rollout was a complete failure. As usual, the FTC’s guidelines were mealy-mouthed and filled with conditional statements (the FTC hates to lay out bright line rules that might constrain their future discretion). However, the FTC’s general gist was clear: bloggers should disclose when they receive financial or other consideration for their blog posts.

Unfortunately, this general principle leaves open some fairly fundamental questions, like when is disclosure required in situations less clear than straight cash-for-posting, and where should disclosure be made, especially in space-constrained media like Twitter. Needless to say, unhappy bloggers can be very noisy, so blogger response to the FTC’s announcement was loud and vituperative. The FTC tried to backpedal a little by saying that it did not intend to pursue individual bloggers, but this announcement only reinforced that bloggers do not understand what the FTC wants from them.

Meanwhile, the FTC’s proposed guidelines also took an interesting position about an advertiser’s liability for rogue blogger’s posts. This position is generally consistent with government enforcement agencies’ views that commercial players can be legally responsible for content they endorse or link to (see, e.g., my comments on the SEC’s liability-for-linking policy), but this position runs directly contrary to 47 USC 230’s provisions that say A isn’t liable for B’s online content. As a result, I believe that part of the FTC’s proposed guidelines violate 47 USC 230 and would not survive a court challenge.

Overall, the firestorm over the FTC’s Endorsement and Testimonials guidelines is a small part of a larger effort to regulatorily separate advertising from content. The Internet has collapsed those distinctions, perhaps irreparably, so regulators may be trying to accomplish the impossible. Nevertheless, the FTC seems determined to prop up the distinction, and I expect 2010 will bring more FTC efforts on this front.

* * * * *

While that concludes my top 10 list, there were a number of other interesting developments in 2009 that are worth a brief note:

* Moreno v. Hanford Sentinel. A woman trashed her hometown in an obscure but public MySpace posting and learned there is no “do-over” for Internet content publication. My vote for the most factually interesting Cyberlaw case of 2009.

* Google’s keyword metatag announcement. Courts generally treat the inclusion of third party trademarks in keyword metatags as per se trademark infringement. But Google has confirmed that it ignores keyword metatags. Will courts get the message?

* Google Book Search settlement. If the Google Book Search settlement ever gets approved, it may reshape the book industry, redefine libraries, and make all kinds of other socially significant changes. But the list of opponents to the settlement is long and growing. Professor James Grimmelmann of New York Law School is our community’s maven for all things “GBS.”

* Kindle book deletion. The Kindle store sold e-books it didn’t have the right to sell, so it took them back. Users learned of a key factual difference between physical books and e-books—the vendor can remotely make e-books go poof.

* States’ efforts to impose sales tax efforts based on marketing affiliates. For years, states have been looking for ways to make online retailers collect sales tax for them. They are generally stopped by Supreme Court precedent, but in 2008 New York finally figured out a workaround. The New York statute said that marketing affiliates were like traveling salespeople and thus created the physical nexus required for a state to impose sales tax collection obligations. The New York statute survived its first legal challenge, which opened the floodgates of other states passing similar laws hoping to get their piece of the action. Meanwhile, online retailers aren’t just rolling over; instead, they are threatening to cut off (or actually cutting off) marketing affiliates in states that enact these laws—thus potentially costing the states income tax from the marketing affiliates’ revenue, and creating the potential for the entire affiliate industry to be torn apart.

* Maine kids privacy law. Maine thought it could pass a law banning marketing to kids. It was wrong. The state had to withdraw the law and go back to the drawing board.

* UMG v. Veoh. Veoh won another nice DMCA online safe harbor victory.

* US v. Kilbride. The Ninth Circuit says that online obscenity prosecutions need to evaluate national attitudes towards obscene content, not local community standards.

* Kentucky domain name seizure. Kentucky tried to grab 141 domain names that enabled Kentucky residents to engage in illegal gambling. But those domain names also serviced customers for whom the gambling was completely legal, so the Kentucky courts are rethinking the grab.

* FTC v. Sears. As another example of the new pro-regulatory winds blowing through the FTC, the FTC cracked down on Sears for installing spyware on users’ computers that looked at the users’ hard drives, even though Sears paid the users for the installation and disclosed the spyware’s snooping in the user agreement (though in an inconspicuous manner). This case has made a lot of lawyers concerned that adverse disclosures in user agreements won’t satisfy the FTC.

* Facebook the Drama Queen. Ah, Facebook. Love it. Hate it. Facebook is a pretty nifty site and part of my daily routine, but boy, they sure do have a knack for stirring up trouble.

- In February, they made a relatively modest change to their user agreement that caused people to freak out.
- In response to this, Facebook took the provocative step towards user self-governance. Facebook let users vote on some choices and promised to be bound by the results, but with an asterisk: Facebook decided what options users could vote on, and Facebook would honor those choices only if a prohibitively large number of users exercised their franchise. Still, it was a nice gesture towards cyberspace community self-governance.
- In summer, they tried to settle their Beacon litigation, but that also reminded folks of how much Beacon irritated them in the first place.
- Summer also brought allegations of click fraud on Facebook, and lawsuits followed.
- Finally, in Thanksgiving, Facebook rolled out some changes to its privacy options that it pitched as giving users more choices, but it also took away some choices and defaulted users into some options that surprised them.

Given this track record, is it unrealistic to expect more Facebook drama in 2010?

* Estavillo v. Sony. Speaking of self-governance, virtual world enthusiasts would love to establish the legal proposition that virtual worlds are legally equivalent to governments and therefore obligated to restrain their actions just like governments are. One virtual world enthusiast sued Sony for kicking him off the network, claiming that Sony was legally governed as a “company town” and therefore lacked the discretion to kick him off. WRONG (and it wasn’t even close).

* Wikipedia's policy change. In August, the English-language Wikipedia announced that it was going to tighten up its editorial policies, and people Freaked Out. (In fact, I have predicted that Wikipedia cannot avoid increased editorial restrictions over time, so this change should not have been surprising). However, it turns out that everyone got it wrong, and Wikipedia’s editorial changes are far less dramatic (and consequential) than initially reported. I will post a separate recap on Wikipedia shortly.

If you would like a stroll down memory lane, you can see my previous top 10 lists from 2008, 2007 and 2006. Before that, John Ottaviani and I put together a list of top Internet IP cases for 2005, 2004 and 2003.

Posted by Eric at 10:46 AM | Content Regulation , Copyright , Derivative Liability , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Publicity/Privacy Rights , Search Engines , Spam , Trademark ,

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January 27, 2012

Top Internet Law Developments of 2011

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August 29, 2011

Levi Strauss's Trademark and Domain Name Claims May Block Unauthorized Resales -- Levi Strauss v. Papikian

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June 2011 Quick Links, Part 1 (Copyright & Trademark Edition)

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Keyword Advertising and Domain Name Law Slides

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Another Defense-Favorable Righthaven Ruling--Righthaven v. Choudhry

April 08, 2011

March 2011 Quick Links, Part 3

March 01, 2011

Jan.-Feb. 2011 Quick Links, Part 3 (Trademarks, Domain Names and Trade Secrets Edition)

February 10, 2011

Comparative Domain Name and Keyword Regulation Talk Slides

January 27, 2011

Top 5 Cyberlaw Developments of 2010, Plus a 2010 Year-in-Review

January 25, 2011

Ad Networks Ordered to Drop Allegedly Infringing Site--Elsevier v. eNom

January 19, 2011

Court Allows Microsoft's Claims for Contributory Cybersquatting and Dilution to Move Forward -- Microsoft v. Shah

December 31, 2010

Nov.-Dec. 2010 Quick Links, Part 3 (Special Extra-Long Copyright Edition)

December 17, 2010

Domain Name Privacy Protection Services Not Liable for Failure to Disclose Identity of Alleged Spammer -- Balsam v. Tucows

December 11, 2010

Court Unlocks Allegedly Infringing Domain Name Based on Ineffectual Email Service -- Station Casinos, Inc. v. Murphy

November 23, 2010

Wildcarding Subdomains Is OK; Reverse Domain Name Hijacking Isn't--Goforit v. Digimedia

November 08, 2010

Online Forum Operator Gets Easy 47 USC 230 Win--Two Plus Two v. Jacknames

November 06, 2010

Holding on to a Domain Name to Gain Leverage in a Business Dispute Can Constitute Cybersquatting -- DSPT Int'l v. Nahum

November 05, 2010

October 2010 Quick Links

October 12, 2010

Blog Host Can't Be Bound by TRO for User Posts (Blockowicz redux)--Bobolas v. Does

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August 03, 2010

Baidu Can Maintain Negligence Claims Against Register.com for Lax Security Practices Which Allegedly Facilitated Cyber-Attack - Baidu v. Register.com