Technology & Marketing Law Blog

May 28, 2009

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

By Eric Goldman

Solid Host, NL v. NameCheap, Inc., 2:08-cv-05414-MMM-E (C.D. Cal. May 19, 2009)

Facts

This case involves an alleged domain name theft. Solid Host is a web host and initial owner of the domain name solidhost.com, which it registered through eNom in 2004. Solid Host claims that in 2008, a security breach at eNom allowed an unknown interloper (Doe) to steal the domain name and move the registration to NameCheap. Doe also acquired NameCheap's "WhoisGuard" service, a domain name proxy service that masked Doe's contact information in the Whois database. Solid Host contacted Doe and sought the domain name; Doe asked for $12,000, and Solid Host took a pass. Instead, Solid Host demanded that NameCheap hand back the domain name and identify Doe, but Doe claimed that he had bought the domain name legitimately. NameCheap, apparently feeling like the cheese in a sandwich, demurred to Solid Host's requests. Solid Host then got a TRO ordering NameCheap to transfer the name and reveal Doe's identity, both of which occurred. For unclear reasons, Solid Host hasn't amended the complaint to name the Doe, but it is proceeding against NameCheap on various claims, including an Anti-Cybersquatting Consumer Protection Act (ACPA) claim.

The Opinion

Who is the Registrant?

My understanding of domain name proxy services is that the service acts as the legal registrant, thus supplying its contact information, but it registers the domain name for the benefit of its customer, making the customer the beneficial registrant. An analogy: a bank may take legal title of a property as part of securing a loan on the property, but the borrower retains beneficial title to the property.

So, for purposes of the ACPA, is the proxy service the “registrant” of the domain name? ICANN’s agreement with registrars seemingly contemplates this characterization in Section 3.7.7.3 of its Registrar Agreement, which says “A Registered Name Holder licensing use of a Registered Name according to this provision shall accept liability for harm caused by wrongful use of the Registered Name, unless it promptly discloses the identity of the licensee to a party providing the Registered Name Holder reasonable evidence of actionable harm.” However, it’s not clear to me that a proxy service “licenses” the domain name, especially if you accept my lender-borrower analogy above. Alternatively, if the proxy service is the “agent” of the customer, the licensing analogy also breaks down.

Whether the proxy service is the registrant matters a great deal to the legal outcome, and unfortunately, the court’s analysis of this important question was cursory, muddled, and possibly internally inconsistent.

In this case, the court’s inquiry is made more difficult by the fact that NameCheap acted as both the registrar and the proxy service provider. As a registrar, an ACPA claim against NameCheap should be squarely preempted by the domain name registry/registrar safe harbor enacted as part of the ACPA (15 U.S.C. §1114(2)(D)). For example, 1114(2)(D)(iii) says:

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

(This provision only moots damages, not an injunction, but since Solid Host has the domain name back in its possession, damages seem like the only remaining issue).

The court concludes that NameCheap is not eligible for the domain name registrar safe harbor because NameCheap is the domain name registrant. It says, "NameCheap is, by virtue of the anonymity service it provides, the registrant of a domain name that allegedly infringes Sold [sic] Host’s trademark." Thus, NameCheap is ineligible for the registrar safe harbor, which applies only when the registrar acts as a registrar.

But, having rejected the domain name registrar safe harbor because NameCheap was the domain name registrant, the court then inconsistently says that NameCheap is not the registrant for purposes of the prima facie ACPA claim. Instead, for ACPA purposes the court treats Doe as the registrant, leaving NameCheap exposed to a possible secondary ACPA liability claim. (The court acknowledges that NameCheap would defeat a direct ACPA claim because NameCheap did not have any bad faith intent to profit from the domain name. Offering the proxy service wasn't enough to qualify as a bad faith intent to profit).

Wait a minute—how can NameCheap simultaneously be both the registrant (no safe harbor) but not the registrant (thus, subjected to a secondary claim)? The court does not acknowledge or explain this apparent inconsistency.

Contributory Cybersquatting

Courts have rarely discussed a contributory ACPA claim. The only one cited by the court was a 2001 case (the Ford Motors vs. Greatdomains.com case) and I can’t think of any others. Perhaps this isn’t surprising because (1) as the Greatdomains.com case indicated, a contributory ACPA claim is available "in only exceptional circumstances," and (2) registrars are the most likely targets of a contributory ACPA claim, and the domain name registrar safe harbor effectively eliminates their contributory ACPA liability.

Adopting the analysis in the Greatdomains.com case, this court equates contributory ACPA liability with the Ninth Circuit’s 1999 Lockheed standard for online contributory trademark infringement (as opposed to ACPA liability), which requires that "a plaintiff must 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.'"

So how did NameCheap have the requisite control over Doe's instrumentalities? Good question. The court tosses out this gem: NameCheap was "the “cyber-landlord” of the internet real estate stolen by Doe." WHAT??? The court continues:

NameCheap’s anonymity service was central to Doe’s cybersquatting scheme. If NameCheap had returned the domain name to Solid Host, Doe’s illegal activity would have ceased.

The second sentence is true with respect to NameCheap, but it is also true of every registrar for every domain name they register--and we know from the 1999 Lockheed case that registrars lack control over the instrumentalities of their registrants. So the proxy service seems to make a legal difference, but how does the proxy service evidence NameCheap's greater control over the registrant's instrumentalities? I think something is amiss here.

To complete the prima facie contributory ACPA claim, in addition to control, Solid Host must show that NameCheap has the requisite knowledge of Doe's ACPA violation. The court sets a high scienter bar--mere notice from an aggrieved party isn't enough--but the court conclusorily says that the complaint alleged enough knowledge to survive the motion to dismiss.

Why This is a Troubling Ruling

As I trust is clear, I think the court's analysis is questionable at best. I’m also troubled about the normative implications. Most obviously, this case could portend the demise of domain name proxy services. Read literally, every proxy service is exposed to potential contributory ACPA liability for every domain name it services. I can’t imagine proxy service providers will be excited about that liability exposure, and some may choose to exit the business.

If proxy services evaporate, domain name registrants will have a tougher time maintaining their privacy. This could affect at least two groups. First, businesses seeking to register domain names for unlaunched new brands often want to procure the new brand's domain names without publicly announcing their intentions through the Whois database. (Of course, some businesses register such domain name through agents or shell companies, but at a much greater expense than a proxy service). Second, gripers, whistleblowers, critics and others may want to use proxy services to make it harder for their targets to unmask their identities. This ruling jeopardizes the potential privacy options available to both groups.

I’m also troubled by this ruling’s narrow reading of the domain name registrar safe harbors. There haven’t been many cases interpreting those safe harbors, and this case might influence other courts to read them narrowly.

A Mini-Trend of Lawsuits Against Registrars

I’ve noticed a small but troubling increase in lawsuits against domain name registrars in the past few months. In addition to this case, see the Vulcan Golf v. Google lawsuit (which named some registrars as defendants), OnlineNIC cases, Philbrick v. eNom and uBid v. GoDaddy. Personally, I believe this litigation trend mirrors the expansion of new and legally untested non-registration services offered by registrars. I explored this issue with Elliot Noss of Tucows in the most recent installment of TWiL (worth listening to, IMO). Discussing the uBid lawsuit, Elliott explained how registrars monetize dropped domain names before being returned to the available pool of unregistered domain names. The delay is putatively for the benefit of customers who mistakenly let a registration lapse; but this also has the happy (?) by-product of letting registrars create new ad inventory that they are monetizing.

In the past, a lot of the legal attention regarding domain names has focused on trademark owners vs. registrants. From my perspective, those lawsuits are becoming passé. The real litigation growth industry appears to be trademark owner vs. registrar lawsuits over new registrar service offerings that trademark owners don't like. Rulings like this one, with a broad reading of contributory ACPA liability and a narrow reading of the domain name registrar safe harbor, raise the specter that registrars may find more legal trouble than they anticipated.

UPDATE: Commentary from Domain Name News

UPDATE 2: A call for registrars to exit the domain name proxy business.

Posted by Eric at 03:27 PM | Derivative Liability , Domain Names , Privacy/Security , Trademark | TrackBack

May 20, 2009

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

By Eric Goldman

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

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

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

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

4) Find a service provider with backbone.

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

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

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

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

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

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

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

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

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

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

April 14, 2009

GoDaddy Sued for Cybersquatting for Parked Domain Names--uBid v. GoDaddy

By Eric Goldman

uBid, Inc. v. GoDaddy Group, Inc., 1:09-cv-02123 (N.D. Ill. complaint filed April 6, 2009)

Domain name parking programs have generated some lawsuits, including the Vulcan Golf v. Google lawsuit (plus several "me-too" lawsuits following in its footsteps) and the recent Philbrick v. eNom decision. Here, uBid (the online auction site) goes after GoDaddy for its parked domain name program when the domain names include a uBid trademark. In a mild surprise, uBid only claims an Anti-Cybersquatting Consumer Protection Act violation; it does not claim trademark infringement or the various junky unfair competition claims that often accompany a trademark claim. Maybe those claims are coming in an amended complaint. I'm also interested in the fact that uBid only sued GoDaddy and not the other providers of domain name parking services (of which I believe there are many)--what did GoDaddy do (or not do) to deserve special attention?

Tom O'Toole handicaps uBid's ACPA claim and raises some questions about the lawsuit.

From my perspective, I remain baffled by lawsuits over domain name parking programs and other programs to associate domain names with ads. First, although I understand that it's mostly a fight over cash, these lawsuits have always struck me as a manifestation of domain name exceptionalism in that the law treats domain names as having magical search powers compared to other keywords. If displaying ads triggered by the uBid marks in the domain name is so bothersome to uBid, shouldn't it also be chasing advertisers who buy its trademark for ad triggered at the search engines?

Second, as I explain my Deregulating Relevancy article, there has been a longstanding battle between domain name registries, domain name registrars, toolbar providers, computer manufacturers and others to control the ad inventory of inactive domain names. Even if GoDaddy "turns off" its parking program, others may try to fill the void and monetize the exact same domain names. As a result, I'm still not clear exactly what uBid hopes to accomplish with this lawsuit (other than to take some cash out of GoDaddy's pocket if it wins).

Posted by Eric at 07:25 AM | Domain Names , Marketing , Search Engines , Trademark | TrackBack

April 10, 2009

Q1 2009 Quick Links, Part 2

By Eric Goldman

Trademarks/Domain Names

* The ridiculous Jones Day v. BlockShopper case settled. The settlement agreement. The ABA Journal and Legal Blog Watch stories. Commentary from CMLP, Paul Levy, Tom O'Toole.

* The trial court denouement of the S&L Vitamins v. Australian Gold did not turn well for the defense--$6M jury award. The S&L Vitamins v. Australian Gold and Designer Skins v. S&L Vitamins cases subsequently settled. According to Ronald Coleman: "This settles, for our clients S&L Vitamins, Inc., the Australian Gold case and the related appeal in the Designer Skin case. All money judgments are vacated and parties bear their own fees. Our client agrees to move on to another line of work, however."

* Twelve Inches Around Corp. v. Cisco Systems, Inc., 2009 WL 928077 (S.D.N.Y. March 12, 2009). 17 USC 512(f) does not cover trademark takedown notices.

* Suarez Corp. v. Earthwise, 2008 U.S. Dist. LEXIS 92931 (W.D. Wash. Nov. 14, 2008). Including a competitor's name in a web page disclaimer creates initial interest confusion when the competitor's name is indexed by the search engines. Compare Promatek v. Equitrac, the 2002 7th Circuit case ordering the defendant to include the plaintiff's name on its web page as a cure for initial interest confusion.

* CRS Recovery v. Laxton, 2008 WL 4408001 (N.D. Cal. Sept. 26, 2008). Another California-based court says that domain names are property that can be converted. I'm amazed that these cases are still being brought.

* North American Bushman, Inc. v. Saari, 2009 WL 211932 (M.D. Pa. Jan. 27, 2009) The parties entered into a settlement agreement that "Plaintiffs further agree not to use, and in addition, to offer up or destroy, any material that includes, but is not limited to, the names, photos, images, embroideries, of likeness of [Defendant] James Saari and any of the a above named trade names and trademarks of Defendants." The court holds that this provision wasn't breached when third party users posted comments referencing the defendants in UGC areas of websites operated by the other party.

* Advice Co. v. Novak, 2009 WL 210503 (N.D. Cal. Jan. 23, 2009). Justia page. Stupid lawsuit alert! Attorneypages.com believes Attorneyyellowpages.com infringes its trademark. Case dismissed for lack of personal jurisdiction. Participating in Google AdSense doesn't automatically create jurisdiction in CA.

* DSW v. Zappos, which involved allegations of trademark infringement based on Zappo's affiliates, settled.

* An update on Google's AdWords woes in France.

* Kiva Kitchen & Bath Inc. v. Capital Distributing Inc., 2009 WL 890591 (5th Cir. April 2, 2009). The Fifth Circuit upholds enhanced damages under ACPA. Good discussion of the purpose of damages in the ACPA.

* Toys R Us buys the domain toys.com for over $5M. Is any domain name worth $5M any more?

* A 2007 interview with "Pokey" of Pokey.org fame. This is one of my favorite domain name disputes from the 1990s. A very smart cyberlawyer (Ian Ballon), on behalf of the trademark owners of Pokey & Gumby, unexpectedly got into a public tangle with a 12 year old kid nicknamed "Pokey" over the domain name pokey.org. Debating 12 year old kids in the press never turns out well.

Advertising/Marketing

* Some new material on behavioral advertising: an FTC report and a CRS report.

* Latest NYT article on human billboards. See my prior blog post.

* Privacy advocates are freaking out about Google Android and its ability to deliver location-based information and ads. But location-based information and ad targeting is inevitable...and a good thing.

* Action over mobile marketing: Mobile Messenger settled a false advertising suit with Florida for $1M, and another settlement. Google's response.

* The class in the "Vista Capable" lawsuit was decertified.

* Tsan's post on the latest FTC efforts to rein in testimonials on social networking sites and blogs. Unfortunately for the FTC, some of its efforts may be preempted by 47 USC 230.

* eBay v. Digital Point Solutions, 2009 WL 481269 (N.D. Cal. Feb. 24, 2009). eBay loses an intermediate round in its cookie stuffing lawsuit against Digital Point Solutions.

* e360, a serial defendant in spam cases, sued Choicepoint for selling it email addresses that led to the suits. Apparently neither e360 nor Choicepoint got the memo that the days of email list brokering are dead.

* 10 Creative Bathroom Ads.

Search Engines

* Study: Google's search lead not matched by loyalty. A critical response.

* Is Google giving big brands extra credit in its organic search results rankings? Compare: media giants complaining they don't get enough weighting in organic results.

* Sign of improving consumer search skills: search queries are getting longer.

* Yahoo reserves the right to "auto-optimize" advertiser accounts by changing ads and advertiser bids automatically. This is not a popular move.

* Wired: The Plot to Kill Google.

Posted by Eric at 10:20 AM | Domain Names , Internet History , Marketing , Search Engines , Spam , Trademark | TrackBack

March 16, 2009

Union Organizers' Activist/Gripe Sites Don't Support Trademark Claims--Cintas v. Unite Here

By Eric Goldman

Cintas Corp. v. Unite Here, 2009 WL 604099 (S.D.N.Y. March 9, 2009). The Unite Here press release.

Cintas, a Fortune 500 company, manufactures uniforms. The defendants are unions and affiliated folks interested in unionizing Cintas' workforce. This article indicates that the litigants don't like each other.

To advance their objectives, the defendants set up several websites that critique/criticize Cintas, such as cintasexposed.org (targeting Cintas' customers), uniformjustice.org (targeting Cintas' employees) and notonmytrack.info (targeting NASCAR fans). The cintasexposed.org website contained a disclaimer and also linked (directly and indirectly) to some sites with commercial aspects.

Among other things, Cintas sued the defendants for trademark infringement, dilution and cybersquatting. the court grants the motion to dismiss all three claims.

For the trademark infringement claim, the court starts with a standard likelihood of confusion multi-factor analysis, but the factors just don't work in a nominative/referential use situation like this. Unfortunately, the court doesn't mention the nominative use doctrine, which would have facilitated an analytically clean dismissal. Nevertheless, the court gets on the referential track, saying "Defendants are not using the “CINTAS” mark as a “source identifier”, but rather solely to criticize Cintas's corporate practices," which negates any consumer confusion. The court dismisses the initial interest confusion argument because there was no evidence of intentional deception.

The trademark dilution claim fails for a lack of requisite use in commerce (this theory could have helped dismiss the trademark infringement claim too, but the court didn't connect the dots). The court rejects the plaintiff's efforts to do link-counting to linked websites where referred users might be able to transact, saying "The twice-removed links to a union “store” is at least one bridge too far and insufficient to establish the use of the CINTAS mark for profit." (I severely criticize link-counting exercises from prior Internet trademark cases in this article). The cybersquatting claim similarly fails for lack of profit motive.

Posted by Eric at 09:38 AM | Domain Names , Trademark | TrackBack

March 04, 2009

Utah Trying to Regulate Keyword Advertising....Again!? Utah HB 450

By Eric Goldman

When I first heard that the Utah legislature is considering yet another law to regulate keyword advertising, I thought: Are you kidding me? After all, Utah has pursued these regulations twice with disastrous results. The first time, in 2004, Utah's attempt to regulate adware-mediated keyword advertising was declared unconstitutional, and Utah amended the law in 2005 to make it irrelevant. In 2007, Utah tried again, passing a law that restricted keyword advertising across-the-board. That law was a spectacular failure, garnering derision both within Utah--especially from angry Utah citizens shocked that their elected representatives passed a law that the state AG thought was unconstitutional and that was going to cost valuable taxpayer money to defend in court--and globally as everyone wondered if the Utah legislature was really that crazy. In 2008, the legislature tucked its tail between its legs and repealed the 2007 law.

With this track record, the Utah legislature wants to try regulating keyword advertising again...? Are you kidding me?

Then again, perhaps this latest foray really isn't all that surprising. My sources tell me that 1-800 Contacts is the prime mover behind this statute, and 1-800 Contacts has testified in support of the law. 1-800 Contacts has an hard-to-explain love/hate relationship with keyword advertising. 1-800 Contacts has been a repeat litigant against keyword advertising, including being the losing plaintiff in the landmark 1-800 Contacts v. WhenU case, and 1-800 Contacts has continued to bring other lawsuits against competitive retailers (such as the LensWorld case I blogged about a year ago). At the same time, 1-800 Contacts has been a buyer of trademarked keyword ads, and it was one of the companies that protested the 2007 law because it was concerned the law would limit its own advertising practices (although, at the last minute, 1-800 Contacts flip-flopped and tried to sneak in new restrictions on keyword advertising into the putative repeal of the 2007 law). Clearly, 1-800 Contacts has a complex attitude towards keyword advertising, although it might just be pure duplicity. Either way, with 1-800 Contacts’ flip in 2008 and its continued litigation against keyword advertising, it’s not unexpected that they might try to bend the ear of the apparently pliable Utah legislature.

The Proposed Law

The 2004-05 laws banned trademark-triggered pop-up ads triggered by adware. The 2007 law allowed trademark owners to register their marks with a newly created Utah administrative registry (which never got created) and prohibited keyword buyers and sellers from using registered marks as triggers for keyword advertising. HB 450, the proposed 2009 law, takes a very different approach than the 2007 law:

Fewer Defendants. The law only applies to keyword buyers (advertisers). Unlike the last two laws, keyword sellers such as search engines are immune from liability under this law. However, the law is expansive in other ways: the law expressly holds an advertiser liable for affiliates' keyword purchases (a currently open point in trademark law), and the law expressly references telephone directory assistance advertiser as being within its scope.

Opt Out. The law only applies after the trademark owner sends a takedown notice/cease & desist demand to the advertiser. Further, if the advertiser stops within 10 days of the takedown notice, it is not liable for any remedies under this law. (They might still be liable under other legal doctrines).

Limited Remedies. My reading of the law is that the only remedies against an advertiser are an injunction and attorneys fees--no damages. I'm not 100% sure about this because some states have laws that create damage claims outside the scope of any specific statute (I'm thinking of California B&P 17200). I don't know if Utah has a catchall provision like that.

Geographic Restrictions. One of the most deficient aspects of Utah's 2007 law was that it required advertisers throughout the country to check the new registry before buying keyword advertising on a third party trademark, even if the advertiser, the keyword seller and the trademark owner all had zero connection with Utah. This law tries much more clearly to restrict its reach to Utah. First, the law only applies to ads "in Utah," whatever that means. Second, the law only restricts keyword buys made from sellers that allow "an advertiser to limit the display of advertisements by geographic location." I'm not exactly sure what this means--after all, a site like eBay segregates its listing database by country; does that mean eBay gives advertisers geographic choices?--but it's clear that an advertiser purchasing ads from a seller that doesn't offer any geolocation choices isn't covered by the law. Third, the law doesn't apply if segregating Utah ad viewers from non-Utah ad viewers isn't "technologically feasible" or would impose "an undue financial burden." I'm not saying that this law will survive a dormant commerce clause challenge--personally, I think all state regulation of the Internet is inherently suspect--but the law certainly tried to limit its reach to Utah.

Narrow Scope. The law applies when "the delivery or display of an advertisement in Utah...is the product of a bad-faith attempt to profit from the registrant's mark by diverting a consumer from the registrant, the registrant's authorized licensees, or another source authorized by the registrant." The statute provides for a multi-factor evaluation of what constitutes a "bad faith diversion" by keyword advertising, with the first factor being that the ad "is likely to create an initial, misleading impression that the person is a legitimate source of the goods or services" (which itself is subject to another multi-factor evaluation). Personally, I don't think there is such a thing as bad faith diversion or initial misleading impressions with respect to truthful ad copy, so this ought to be a null set. Even so, the law lists a number of categorical exclusions from its coverage, including:

* advertiser belief that the ad is fair use. Note: the bill uses the term "fair use" several times, even though this term is not well-defined in trademark law. So it isn't clear to me if "fair use" meant descriptive fair use, nominative use, both, neither, or yet something else.
* the sale is permissible under the First Sale doctrine. This should exclude keyword buys by other parties in a trademark owner's distribution channel. However, as I recently blogged, courts are struggling with the First Sale doctrine's application to e-commerce.
* "(a) fair use of a mark in comparative commercial advertising or promotion to identify the competing goods or services of the owner of the famous mark; (b) noncommercial use of a mark; and (c) all forms of news reporting and news commentary." This is an interesting set of exclusions; it looks like the drafter tried to (incompletely) mimic the federal dilution exclusions. However, the implicit redundancy with the other fair use aspect mentioned above also raises a question why (a) only applies to famous marks. That's either a drafting error or a significant limitation on that prong.

So What Does This Law Do?

From my reading, it appears that this law does not apply to gripe ads or trademark conflicts within a distribution channel. Therefore, I think the law really only applies to advertising on competitors' trademarks, and even then, only some of the ads.

Given the application to competitive keyword advertising and the focus on an injunction as a remedy, this law covers only limited circumstances that are not already addressed by the search engines' trademark policies, which provide an extrajudicial "injunction." Indeed, this law is nearly co-extensive with Yahoo's and Microsoft's trademark policies. On the other hand, the law would govern situations that Google isn't remediating with its trademark policy because it could force advertisers off keywords that Google would happily sell. Furthermore, the ambiguous application of the law to keyword buys from places other than search engines, such as telephone directory assistance services, may implicate some keyword sellers who don't currently have trademark policies.

Conclusion

If I'm right that this law simply codifies current search engine trademarks policies and extends them some, then this law isn't as problematic as Utah's last two efforts. But it also makes me wonder--what's the point? Doesn't Utah have more important problems to solve???

Even if the law is less troublesome than the last two, let's be clear: this is not a good proposal. As with Utah's past two efforts, this law has nothing to do with improving consumer welfare. Instead, it would allow companies to suppress competition by helping companies keep their competitors from gaining exposure among the company's potential customers; meaning that companies won't have to work as hard competing on price and quality. I understand why companies such as 1-800 Contacts, who has a pattern of trying to use legal tricks to suppress competitors, would find it attractive to ply their local legislators for some corporate welfare. But why any legislator would waste their time with such an unabashed anti-competitive, anti-consumer request is simply beyond me. As I have explained elsewhere, policy-makers should be helping consumers get relevant content, not enacting laws to take it away from them.

The bill is making its way through the Utah House, and my observation of Utah legislative proceedings is that bills can be amended substantially from beginning to end. So this bill could get better, or it could get much worse. Fortunately, a coalition of Internet companies is lobbying against the bill, and the bill barely survived its first committee hearing on an 8-6 vote. Thus, it's not guaranteed that this law will make it through. My hope is that the Utah legislators will recognize the law’s depravity and their own poor track record in the area and squelch this latest effort.

Posted by Eric at 09:55 PM | Adware/Spyware , Derivative Liability , Domain Names , Marketing , Search Engines , Trademark | TrackBack

February 25, 2009

Domaining Registrar Defeats Cybersquatting Lawsuit--Philbrick v. eNom

By Eric Goldman

Philbrick v. eNom, Inc., 2009 WL 152127 (D.N.H. Jan. 22, 2009). The Justia page.

Philbrick's Sports is a New Hampshire retailer of sporting goods. eNom's customer registered two domain name variants of Philbrick Sport's website. When the customer didn't pay eNom, eNom took the names back for itself. Subsequently, eNom registered another domain name variant of Philbrick's website through a domain name tasting program. Each of these domain names were parked with Yahoo, who displayed sponsored ads on the domains. Philbrick's then sued eNom, claiming cybersquatting and trademark infringement.

Anti-Cybersquatting Consumer Protection Act (ACPA) and Trademark

The court sidesteps the complexities associated with the domain name registrar safe harbor when applied to a registrar holding the domain name for itself, but calls eNom's argument "troubling" (for a little more on this, see my blog post on OnlineNIC). Instead, the court finds that the Philbrick trademark is neither famous (thus not triggering the ACPA protection for famous marks) nor distinctive because it's a personal name and the plaintiffs failed to establish secondary meaning. The fame analysis is actually easy due to the geographically limited footprint of the business, although the court doesn't reference that.

To overcome the fact that Philbrick is the plaintiff's surname, the plaintiff makes a common argument that eNom intentionally copied the plaintiff's trademark, which the plaintiff argues should act as prima facie evidence that the mark has achieved secondary meaning (i.e., if the term is meaningless to consumers, why is the defendant mimicking it?). Philbrick's goes further to argue that Yahoo's auto-population of the links provides evidence that Yahoo recognizes the Philbrick's mark and is responding to it. The court rejects these arguments, correctly calling them "circular," and ultimately concludes they are unpersuasive. It was nice to see a court apply a rigorous scrutiny of secondary meaning considerations, rather than rotely rubber-stamping data that only acts as a proxy for consumer perceptions.

The net result is a painful outcome for the plaintiff. As we've seen before (e.g., the American Blinds lawsuit), the plaintiff walks out of court with fewer trademarked assets than it thought it had.

With Philbrick's marks declared non-distinctive for lack of secondary meaning, Philbrick's trademark infringement claim drops away. For good measure, the court independently concludes that there was no likelihood of consumer confusion.

Cyberpiracy

In an unusual move, the plaintiff brought a "cyberpiracy" claim for registering a domain name containing his personal name (15 USC 1129). This portion of the ACPA is lightly litigated because it only applies when the registrant obtains a domain name for profitable resale, and few domain registrants do that any more. Rather than ruling on this ground, the court says that the domain "philbricksports" is not substantially similar to the plaintiff's name of "Daniel Philbrick," and thus the claim fails for lack of similarity. This is a pretty narrow reading of 1129 because it seems to allow a personal name in the domain name so long as there is a substantial noun in the domain name as well. If this reading holds, we'll see even fewer 1129 claims in the future.

Other Points

A false advertising claim fails as well. The plaintiff claimed that the headline "Welcome to Philbrickports.com” was false, but because the domain was Philbrickports.com, this headline is unquestionably true.

In addition to the factual novelty of the case (the registrar as an ACPA defendant and the 1129 cyberpiracy claim), some other interesting angles to this case:

* I've repeatedly argued that lawsuits over domain names don't make economic sense, and we get more evidence of that here. The court cites evidence that one domain name generated $183.29 in revenue and a second domain name generated 70 cents of revenue. If Philbrick's doesn't get statutory damages from the court, with numbers like these, there is no possible way that a court will award enough damages to make this lawsuit economically rational.

* the case does not cite the limited precedents involving domainers and cybersquatting. Most conspicuous is the absence of a citation to Verizon v. Navigation Catalyst, which is the flagship plaintiff's win in the area. Verizon's other big win, with $33M in damages, didn't get a mention either.

* the court rejects any initial interest confusion argument with a nice shoutout:

it is worth noting that the initial interest confusion doctrine has been criticized as “predicated on multiple and empirically unsupported assumptions about searcher behavior” on the Internet, e.g., “that using a trademarked keyword means that the searcher wanted to find the trademark owner.” Eric Goldman, Deregulating Relevancy in Internet Trademark Law, 54 Emory L.J. 507, 555-56 (2005). That is yet a further problem with the proof in this case-apart from the one customer who encountered the “philbricksports.com” site while looking for the plaintiffs, there is no evidence to suggest how anyone else ended up there, and thus no basis to assume that they were necessarily trying to find the plaintiffs' business but became “lost,” even initially.

I love it when a court does good research! :-)

Conclusion

In the end, eNom wins summary judgment on all claims. According to this news report, Philbrick plans to appeal. From my perspective, that doesn't look like a prudent call. Putting aside the illogic of throwing more money at these not-worth-it domain names, the district judge missed a number of defense-favorable rationales to support its ruling. As a result, there is plenty of room for an appeals court to find alternative grounds to affirm.

UPDATE: Marty Schwimmer doesn't agree with this opinion or with me. Marty is right that the court was decidedly not generous with the secondary meaning analysis, although I did like that the court didn't just accept the plaintiff's arguments blindly.

Posted by Eric at 10:02 AM | Domain Names , Trademark | TrackBack

February 06, 2009

2008 Cyberlaw Year-in-Review

By Eric Goldman

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

Broad Themes

A few broad themes emerged last year:

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

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

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

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

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

Top 11 Cyberlaw Developments of 2008

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

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

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

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

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

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

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

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

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

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

Other Developments of Special Note

47 USC 230

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

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

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

Affiliate Liability

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

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

Trademarks/Domain Names

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

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

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

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

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

Others

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

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

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

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

January 20, 2009

Kentucky Reverses Seizure of 141 Gambling-Related Domain Names

By Eric Goldman

Interactive Media Entertainment and Gaming Association v. Wingate ex rel Kentucky, 08-CI-01409 (Ky. Ct. App. Jan. 20, 2009)

We see state enforcement agencies freak out about the Internet all the time, so I have a hard time determining which freakouts are more noteworthy than others. However, it definitely caught my attention when Kentucky tried to seize 141 domain names associated with worldwide gambling operations. Their objective was to shut down illegal gambling in Kentucky, but the domain name seizure would have the effect of shutting down those websites worldwide--even if the gambling site was legal with respect to some of its non-Kentucky users. This kind of extraterritorial impact should be categorically outside the province of individual states.

So it's a relief to see that the Kentucky court system has corrected its errors and rejected the seizure of the domain names. The judges don't agree on the matter, and we get 3 opinions out of a 3 judge panel. However, two of the judges emphatically agreed that domain names do not qualify as "gambling devices" under the statutory definition, making their seizure under the statute unlawful. Relying on this definition in the statute sidesteps the many important public policy issues underlying the case, but it's a good (and IMO correct) result nonetheless.

Posted by Eric at 02:59 PM | Content Regulation , Domain Names | TrackBack

Outdated Whois Information Might Lead to False Light Tort--Meyerkord v. Zipatoni

By Eric Goldman

Meyerkord v. The Zipatoni Co., 2008 WL 5455718 (Mo. App. Ct. Dec. 23, 2008)

It's a late entry, but this opinion may be a dark horse candidate for the most bizarre case of 2008.

Meyerkord was a Zipatoni employee and listed as the registrant on domain names at Zipatoni's Register.com account. Meyerkord left in 2003. In 2006, Zipatoni ran an astroturfing viral campaign for Sony to promote the Play Station Portable at the domain alliwantforxmasisapsp.com. A BusinessWeek story on the campaign and the Urban Dictionary entry.

Unfortunately for Sony--and Meyerkord--the campaign did not go well. Bloggers and others got suspicious of the overly colloquial site, unmasked the astroturfing and decided to "out" the people involved. They pulled up the Whois records, saw the outdated information that Meyerkord was the registrant, and mistakenly assumed he was involved in the campaign.

The case doesn't get into the specific treatment of Meyerkord, but it seems logical to assume that he was subject to a blogger firing squad circa 2006, i.e., shoot first and ask questions later (I'd like to think the blogosphere would be a little more circumspect circa 2009, but maybe not). For example, the Consumerist has its own category tag for alliwantforxmasisapsp, and it awarded Sony the "Lucky Golden Shit" award for best "flog" of 2006. In this post, the Consumerist "outs' Meyerkord and calls him a "douchebag" (which, for reasons my aging brain can't comprehend, has become the modern derogatory term of choice) until they modified the post, striking out his name and recanting "he is an innocent bystander in this sordid affair." Oops...a little late for that, don't you think, Consumerist?

In response to this rough justice from the blogosphere, Meyerkord sued Zipatoni for the privacy tort of false light. The lower court dismissed the complaint for failure to state a claim. In this ruling, the appellate court reverses the lower court and remands the case to allow Meyerkord to file an amended complaint if he can allege that Zipatoni acted with actual malice.

While I can see why the court was sympathetic to Meyerkord for being falsely associated with an astroturfing campaign, in my opinion, Zipatoni's real negligence was its failure to keep its domain name records updated FOR THREE YEARS! I feel silly mentioning the obvious and well-known practice pointer that you should keep your Whois records up-to-date; and especially remove any former employees from Whois records. Not only does outdated Whois information pose a major security risk, but it could allow former employees to assert ownership over the domain. Now, keeping them on the record may be tortious to the former employee as well. In any case, for having a former employee listed on its domain names for three years, Zipatoni deserves whatever punishment they get.

One more oddity: alliwantforxmasisapsp.com now is a promotional site for Haagen Dazs ice cream. Huh? I presume Haagen Dazs bought the residual traffic from all of the links bashing the domain, but (1) the association between PSP and Haagen Dazs doesn't make any sense, and (2) I would have thought a big brand like Haagen Dazs wouldn't want the implicit taint of benefiting from an astroturfed website.

Posted by Eric at 07:08 AM | Domain Names , Marketing , Publicity/Privacy Rights | TrackBack

January 08, 2009

December 2008 Quick Links, Part 2

By Eric Goldman

Social Networking Sites/Cyber-Bullying/Sexual Predation

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

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

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

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

Google

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

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

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

Marketing

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

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

* Sony busted for COPPA violations.

* New advertising medium: school exams.

Miscellaneous

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

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

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

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

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

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

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

January 07, 2009

December 2008 Quick Links, Part 1

By Eric Goldman

Copyright

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

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

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

Trademarks/Domain Names

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

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

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

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

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

* WSJ on the growth in numerical SLDs.

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

Linking

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

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

Some Personal Notes

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

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

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

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

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

January 02, 2009

OnlineNIC Loses One Lawsuit and Gets Sued in Another

By Eric Goldman

Two anti-domainer developments involving OnlineNIC occurred over the holidays.

Yahoo! Inc. v. OnlineNIC, Inc., 5:08-cv-05698-PVT (N.D. Cal. complaint filed Dec. 19, 2008)

Yahoo has sued domain name registrar OnlineNIC and some Does for cybersquatting, trademark infringement, trademark dilution and related causes of action. This lawsuit caught my eye because OnlineNIC is a registrar, and normally lawsuits against registrars are barred by 15 USC 1114(2)(d)(iii). However, that immunization does not apply if the registrar has a "bad faith intent to profit from such registration or maintenance of the domain name." Here, Yahoo alleges that OnlineNIC registered the domain names for itself (i.e., it was both the registrar and the registrant--see Para. 47) and used a variety of covers and fronts to mask that it was the true registrant. I also think many of Yahoo's allegations of "abusive" domain name tasting and domain name kiting support a bad faith argument if Yahoo chooses to go that route.

Verizon California, Inc. v. OnlineNIC Inc., 5:08-cv-02832-JF (N.D. Cal. Dec. 19, 2008)

The same day Yahoo sued OnlineNIC, Verizon won a "record" $33+M default judgment against OnlineNIC. The Verizon press release. It was a slow news week before Christmas, so Verizon got a lot of press coverage (see, e.g., WSJ, NYT, News.com) for its victory.

Although it's hard to divine much insight into future jurisprudential developments from a default judgment order, Judge Fogel's brief opinion does conclude that OnlineNIC violated the Anti-Cybersquatting Consumer Protection Act:

Defendant’s actions with respect to Verizon’s trademarks undoubtedly violated the ACPA. Defendant has registered hundreds of domain names that are designed to attract web users seeking to access Verizon’s legitimate websites. Moreover, Defendant has refused to alter its behavior, and its bad faith is further evidenced by its machinations to avoid detection through the use of fictitious business entities, shell corporations, and kiting of its domain names.

This builds on Verizon's early win against Navigation Catalyst that certain domaining practices can constitute impermissible cybersquatting.

Three Brief Observations

FIrst, Verizon's sizable award against OnlineNIC is a pretty empty public gesture. Good luck collecting that, Verizon. (InternetNews has more on the likelihood of collection). It's a little like Facebook's recent $873M default judgment against spammers using its private messaging system. As we used to say in the old days, these multi-million judgments plus a nickel will buy you a cup of coffee. (I recognize Starbucks is more like $5/cup, but you get the point). Yahoo shouldn't bank on any big paydays either, even if it wins.

Second, earlier this year, I suggested the Verizon v. Navigation Catalyst case could be a turning point in the legal battles over domaining, and the latest ruling might reinforce that. Even though Verizon's latest win has no real financial implication, it does help accrete the anti-domaining legal precedent. I expect to see nothing but bad legal news for abusive domaining in 2009.

Third, I can't avoid observing how interesting it is to see Yahoo and Verizon bringing plaintiff-side lawsuits over domaining. After all, Verizon sells ads on mis-typed domain names when its consumers use its browser (i.e., on its mobile devices), and Yahoo is still fighting a lawsuit over having placed ads on domaining sites.

Posted by Eric at 12:02 PM | Domain Names , Marketing , Search Engines | TrackBack

December 19, 2008

Vulcan Golf v. Google Class Certification Denied

By Eric Goldman

Vulcan Golf, LLC v. Google Inc., 1:07-cv-03371 (N.D. Ill. Dec. 18, 2008). Previous blog posts: initial complaint filed, ruling on motion to dismiss

This is a complex lawsuit by trademark owners attacking domaining and the role of the Google AdSense for Domains program in funding domaining activity. When I first blogged on the case in 2007, I wrote:

the lawsuit could effectively fall apart if the judge rejects formation of a class. Trademark class action lawsuits are rare for good reason-- trademark owners must establish the validity of their marks, the famousness of their marks (for dilution) and the similarity between their marks and the defendants' usage. These are all intensely fact-specific questions; none of which seem susceptible to class adjudication

Yesterday, the court ruled on class certification, and perhaps not surprisingly, the court denied certification--giving Google and the other defendants an early Christmas gift. Happy holidays! This ruling doesn't completely squelch the lawsuit, but without class certification, the case becomes a whole lot less interesting to the plaintiff's lawyers. For that reason, it also wouldn't surprise me to see them appeal the class certification denial.

The ACPA and Trademark Infringement Claims

The court rejects class certification for the trademark infringement and Anti-Cybersquatting Consumer Protection Act claims because the individual questions of fact predominate over the common questions of law.

The court blanches at the thought of trying to determine the owners of the applicable trademarks. The plaintiffs said that TESS could answer any ownership questions, but the court rightly realizes that TESS is not a definitive and comprehensive source of trademark ownership information. As a result, the court says "Even if the court has to conduct hearings regarding ownership on even a tiny fraction of the potentially millions of registered and unregistered marks or personal names of the putative class members, such an undertaking would render proceeding as a class unmanageable."

The court also rejects the verifiability of trademark "distinctiveness." The plaintiffs argued that a trademark registration could suffice as evidence of distinctiveness, but the court rightly points out that registration only provides rebuttable evidence of distinctiveness. The court also points to problems with unregistered trademarks and personal name marks. The court thus concludes "were the class to be certified, the court would be required to engage in thousands (or more) of individual inquiries as to whether a class members’ mark is distinctive," which would be a "staggering" undertaking with respect to the unregistered and personal name marks.

The court also assesses the prospects for adjudicating various affirmative defenses, such as abandonment or fair use. The court says "the affirmative defenses related to the putative class members’ marks simply add another layer to an already fact-specific inquiry that the court must delve into with respect the putative class members’ marks or names."

The Unjust Enrichment Claim

The court bounces the unjust enrichment claim because unjust enrichment laws vary by state. The plaintiffs tried to say California law applies categorically due to Google's involvement, but the court correctly points out that there are plaintiffs and defendants who have nothing to do with California and therefore would not be appropriately governed by CA law. Once CA law is out of the picture, the court confronts the state-by-state variations in unjust enrichment law and concludes that those variations are enough to deny class certification.

Whether Class Action Relief is Superior to Other Methods

In addition to these legal problems, the court has some interesting discussion about the plaintiffs' desired remedy. The court expresses some frustration that the plaintiffs seem to vacillate between saying they want damages and saying they only want injunctive relief. If the plaintiffs only want injunctive relief, the court says that a class action lawsuit is inferior to the extrajudicial options to plaintiffs of pursuing a UDRP action and opting-out of Google's and the domainers' program (which the plaintiffs have already done to some degree). This is the first time I can recall a court favorably citing either the UDRP or a search engine trademark policy as a substitute for judicial action such that it curtails legal recourse. The court also notes the availability of direct non-consolidated actions against the defendants, including large statutory damages plus attorneys fees under ACPA, as another substitute for the class action.

Some Further Implications

First, this case reinforces the difficulty of establishing class action lawsuits to enforce trademark rights. They are possible, but so often the idiosyncrasies of each trademark preclude summary adjudication.

Second, this case might have some utility for the multitudinous other class action lawsuits against Google and the other search engines over their advertising practices, such as the CLRB Hanson case and the string of advertiser lawsuits against Google over AdSense placement on domainer sites. Although this ruling principally turns on the vagaries of trademark law and the other lawsuits typically involve contract interpretations, this court signaled some clear discomfort with class litigation where there are meaningful factual differences between the plaintiffs. To that extent, this case does not suggest favorable outcomes for class certification in those cases either.

Posted by Eric at 02:30 PM | Domain Names , Marketing , Search Engines , Trademark | TrackBack

December 02, 2008

November 2008 Quick Links

By Eric Goldman

Trademark

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

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

* Domain name tasting down 84%?

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

Copyright

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

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

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

Advertising/Marketing

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

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

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

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

47 USC 230

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

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

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

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

Spam

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

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

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

* Venkat: Unsolicited Marketing Extravaganza in the Ninth Circuit.

Miscellaneous

* eHarmony settles claim that it discriminates against gay singles.

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

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

November 18, 2008

October 2008 Quick Links, Part 2

By Eric Goldman

Spam

* Kramer v. Perez. An Iowa court awards $236M in damages in a spam case. Venkat's comments.

* After the government lost its jury trial against Impulse Media, the court denied Impulse Media attorneys fees.

Contracts

* AT&T put its own emailed notice of amended contract terms into its spam folder. Whoops! Due to spam filters and other automated blocks, it is becoming almost impossible for websites to communicate with their users by email.

* An estimate of the massive "tax" imposed on consumers by reading privacy policies. Of course the financial drain is overstated because many people make a rational decision not to read every privacy policy, plus not every person has to read a privacy policy for marketplace responses to be effective.

* The Blizzard v. MDY WOWGlider case has reached a stipulated damages amount of $6M.

* Pulaski & Middleman, LLC v. Google Inc., 5:2008cv03888 (N.D. Cal. complaint filed August 14, 2008). The Justia page. Yet another me-too lawsuit against Google over serving ads to parked domains and error pages.

* An Israeli GPL enforcement action settled.

Trademarks/Domain Names

* Kentucky v. 141 Domain Names. Is a domain name property? Yes. See the Sex.com case. Can a plaintiff seize a domain name pursuant to a favorable judgment? Yes. Is it appropriate for Kentucky to seize domain names for gambling websites available in Kentucky? Of course not, because this would effectuate an extraterritorial reach by curtailing non-Kentucky residents from making possibly legal uses of the domain name. More recently, the seizure was stayed.

* Speaking of inappropriate seizures, the Feds are trying to seize the trademarks of the Mongols motorcycle group. DOJ press release. LA Times article.

* Best Western Intern., Inc. v. Doe, 2008 WL 4630313 (D. Ariz. Oct. 20, 2008). Prior blog post in this case. The judge is losing patience: "These filings are wasteful in the extreme. The Court is not a forum for the parties to expend every possible dollar seeking to litigate every conceivable issue, no matter how insubstantial. The Court will no longer tolerate the excesses of this case."

* The Verizon v. Navigation Catalyst Systems domainer lawsuit settled.

* 50 Cent brings yet another questionable lawsuit. (1, 2).

Advertising

* Goddard v. Google Inc., 2008 WL 4542792 (N.D. Cal. Oct. 10, 2008). The case against Google for deceptive mobile phone ads will stay in federal court.

* Eyeblaster, Inc. v. Federal Insurance Co., 2008 WL 4539497 (D. Minn. Oct. 7, 2008). This is a collateral lawsuit to Sefton v. Eyeblaster alleging that Eyeblaster distributed spyware. Eyeblaster tendered the claim to its insurer. This court holds that the CGL policy doesn't apply because the claim relates to software problems, not physical damage to the users' computers. Further the E&O policy doesn't apply because Sefton alleges that Eyeblaster intentionally installed the spyware, bumping Eyeblaster into one of the policy's exclusions.

* Are consumers becoming more tolerant of pop-up ads? For more on consumer acceptance of new advertising formats, see here.

* A big damages award in NetQuote v. Byrd.

Posted by Eric at 06:42 AM | Adware/Spyware , Domain Names , Licensing/Contracts , Marketing , Privacy/Security , Search Engines , Spam , Trademark | TrackBack

October 10, 2008

September 2008 Quick Links, Part 1 (Special Trademarks/Domain Names Edition)

By Eric Goldman

For some reason, September was an unusually busy Cyberlaw month, so I'm going to have at least 3 installations of my quick links series. This post focuses just on trademark- and domain name-related items from last month.

* Dozier Internet Law v. Riley. The Dozier Internet Law Firm is at it again. I last blogged about John Dozier for his claim that websites infringe copyright by republishing cease-and-desist letters. Now, he’s suing for trademark infringement because, among other things, a website put the Dozier law firm’s name into anchor text without the link going to the firm website. Fortunately, superstar trademark defense litigator Paul Levy of Public Citizen has taken up the matter and initiated a declaratory judgment lawsuit to stop the nonsense.

* Paul Levy is also taking on an “I-can’t-believe-it” trademark enforcement action by the Jones Day law firm. See Paul Levy’s post and their amicus brief. Wendy Davis piles on.

* adidas America, Inc. v. Payless Shoesource, Inc., 2008 WL 4279812 (D. Or. Sept. 12, 2008). The blockbuster trademark infringement damages award of over $300M has been reduced to “only” $65M.

* Miyano Machinery USA, Inc. v. MiyanoHitec Machinery, Inc., 2008 WL 4145649 (N.D. Ill. Sept. 5, 2008). More initial interest confusion silliness, including the court's belief that a defendant’s disclaimer tacitly admits IIC.

* Healix Infusion Therapy, Inc. v. Murphy, 2008 WL 4155459 (S.D. Tex. Sept. 2, 2008). Previous blog coverage of this case. A domain name registrant who isn’t aware of the plaintiff’s trademark lacks the requisite bad faith to constitute ACPA cybersquatting.

* Richard D. Salgado, Piracy and Chaos in the Marketplace of Ideas: Why Money Cannot Be Everything When Assessing Initial-Interest Confusion and Nonprofit Trademark Holders, 61 Ark. L. Rev. 241 (2008). I generally ignore most articles on initial interest confusion, especially those that actually think the doctrine is a good one. However, this one caught my eye because of this paragraph:

This article argues that courts err when they require financial gain as part of the initial-interest analysis where the trademark holder's enterprise is noncommercial. This requirement undermines the value of a trademark for a wide range of potential trademark holders. These holders include nonprofit organizations, churches, schools, and political organizations. These sanctions are what amount to cyber terrorism against others' valuable ideas, messages, and expressions. This problem is particularly relevant in any election year as the Internet floods with websites on behalf of issues and candidates, selling nothing more than an ideology or identity. (emphasis added)

Cyber-terrorism??? Wow. Call Homeland Security pronto.

* The Power of Internet Gripe Sites: Managing the Destructive Potential of "BrandSucks.com." Destructive potential....? Really. Once again, I ask, just how many people still type "[tm]sucks.com" into their web browser?

* I got an email from GoDaddy's PR department touting: "New Go Daddy Product Helps Domainers Get Sites Developed." I'll be interested to see how this plays out. First, given GoDaddy's history of having an itchy trigger finger when it comes to taking down its customers (see, e.g., 1 and 2), I wonder how many domainers are willing to rely on them? Second, if GoDaddy's domainer customers get sued for trademark infringement, I wonder how a court will evaluate a domainer service provider so closely connected to the site content. See the Vulcan Golf v. Google lawsuit.

Posted by Eric at 09:21 PM | Domain Names , Trademark | TrackBack

September 29, 2008

Delayed Enforcement Blocks Domain Name Lawsuit--Southern Grouts v. 3M

By Eric Goldman

Southern Grouts & Mortars, Inc. v. 3M Co., 2008 WL 4346798 (S.D. Fla. Sept. 17, 2008)

I'm often baffled by lawsuits over domain names and keywords because they just don't seem to make any economic sense. This lawsuit is especially perplexing given the plaintiff's delays and the seeming impossibility of the plaintiff reaching a profitable outcome, even if it won in court. What was the plaintiff thinking?

Background

3M and SGM compete in the field of "quartz aggregate products for surface finishes." SGM has a federal trademark registration for "Diamond Brite." In 2000, 3M bought an unrelated business whose assets included a trademark in "Diamond Brite" and the domain name "diamondbrite.com." For a while, 3M redirected the domain name to the home page of the other business unit it owned. No later than July 2002, the domain name stopped resolving, but 3M continuously renewed its domain name registration. Ultimately, 3M migrated the new unit to its existing trademarks and let its acquired trademark in "Diamond Brite" lapse.

Meanwhile, in 2005, 3M did a 3 week trial buying "diamond brite" in Google AdWords, but the lawsuit only involves the domain name, not the AdWords purchase.

SGM contacted 3M three times about the diamondbrite.com domain name. No later than July 2002, SGM emailed 3M asking if it could acquire the domain name. In Feb. 2005, SGM sent a cease-and-desist letter, which 3M rejected. Then, in July 2007, SGM wrote to 3M again proposing an amicable solution, and 3M continued to resist. SGM then sued 3M in Sept. 2007.

Laches

From my perspective, this is an easy laches case. Taking 5 years to pursue the matter, with nothing resembling an ongoing dialogue, is simply too long. 3M wound down use of the domain name, so its economic expectations aren't disturbed like a typical laches case, but there is still the increased litigation costs due to the 5 year delay. The court rejects that either the AdWords purchase and the domain name renewals resetted the laches analysis.

Unfair Competition on the Merits

The court says that the mere possession of the diamondbrite.com domain name without any further use does not constitute a "use in commerce" sufficient to support Lanham Act violations. Along the way, the court distinguishes a veritable who's-who list of junky domain name cases from the turn of the century, including PACCAR, Brookfield, PETA v. Doughney, OBH and Planned Parenthood v. Bucci. The court distinguishes most on the fact that 3M didn't have an active website resolving to the domain name, but it goes further with the OBH and Bucci cases:

OBH and Planned Parenthood[] are both nearly a decade old. As with any widespread change in technology, there is a learning curve. Even if those cases were correct when decided, I decline to adopt the position today that internet users of any significant number would be frustrated or hindered by merely not arriving at the expected site the first time a web address (domain name) was typed in... With the advent of multiple, and increasingly powerful search engines, it is unlikely that a potential consumer of SGM's products would be turned away by not finding a website at diamondbrite.com. In any event, SGM has presented not a scintilla of evidence to show that consumers have been prevented from accessing SGM's own website, or prevented from obtaining any of SGM's goods or services. (emphasis added)

The bolded language, of course, is true and has been for a number of years, but it's nice to see a court expressly acknowledge that "technological facts" embedded in the precedent are now out-of-date. It's also nice to see the court clearly recognize the substitutability of the domain name system and search engines and to realize that consumers prefer search engines.

The court also rejects the precedent by pointing out that there cannot be likelihood of consumer confusion when the domain name owner doesn't resolve at all. As the court says, "The seven factors use to determine whether a likelihood of confusion exists become irrelevant if there is no “use” to compare the mark to." There is plenty of stupid precedent to the contrary (including those predicated on initial interest confusion, which the court expressly rejects), but this court nails it.

ACPA on the Merits

In my opinion, the ACPA claim is an easy defense win because 3M (and the predecessor company) had legitimate trademark interests in "Diamond Brite" prior to the domain name's registration. The court still courteously goes through the "bad faith" ACPA analysis before concluding that 3M had none. Along the way, the court soundly rejects a pretty silly argument that the domain name registration pointing to an unresolved domain name would divert consumers because frustrated consumers would do a Whois lookup query for the defunct domain, learn that 3M was the registrant and seek out 3M to transact with. Some arguments are better left unmade.

In the end, the court grants summary judgment to 3M and dismisses the lawsuit.

Lawsuit Futility

I understand how matters like this can sit on an in-house counsel's desk for years, only resurfacing every couple of years and prompting a "ping" to the other side. But I simply can't understand how, in 2007, after 5 years of irresolute progress, SGM thought the economic upside justified the expense of a lawsuit.

On the benefit side, a domain name like "diamondbrite.com" has some value, especially when it's associated with a product line bearing that name. But how much value? Assuming a lawsuit like this costs at least six figures, I can't imagine that the domain name is worth anywhere close to that. Indeed, any incremental selling power from the domain name could be cost-effectively replicated through a combination of SEO and SEM on the term "diamond brite." Better yet, SGM could have poured the money into product sales and marketing, which I'm confident has a substantially higher ROI than suing or gaming the search engines.

As further evidence of the weak value of the domain name, SGM did not cite any harm from not owning the domain name, and the matter only rose to the top of SGM's in-house personnel's desk 3 times in 5 years. Clearly, this is not a "must have" domain name,

On the expense side, these types of lawsuits are costly. In addition to the normal attorney's fees, SGM obtained at least one expert witness (and, to add insult to injury, the court bounced the expert's report), did some expensive discovery (including obtaining and reviewing 3M's portfolio of 13,000 domain name registrations) and tied up key internal personnel on the lawsuit (including testimony from the "head of information technology and the executive vice-president of SGM"). The cost of a lawsuit isn't measured just by out-of-pocket attorney expenses but by overall opportunity cost, and on that basis, this lawsuit tied up valuable resources.

Finally, the rational decision-maker multiplies the cost-benefit amount by the probability of winning, and it seemed clear to me that this lawsuit had bad odds from the get-go. The ACPA claim was destined to lose because on the high "bad faith" standards (it also makes me wonder why SGM didn't try the UDRP first) and the fact that 3M had clear legitimate rights at the beginning. The potential success of the unfair competition claim is naturally less clear, but even if SGM won this claim, they had almost no chance of recovering meaningful damages or attorney's fees. As a result, I can't see a scenario where this was a breakeven lawsuit from the beginning. Given the low odds of success, this just seems like a clearly futile waste of money from day 1.

[A personal note: I'm out for the rest of the week for the Jewish holiday and a trip to the heartland. I'll probably next see you again next week. L'shanah tovah tikatev v'taihatem!]

Posted by Eric at 09:53 AM | Domain Names , Marketing , Search Engines , Trademark | TrackBack

September 10, 2008

DMV.org Hit With SEO-Degrading Injunction--TrafficSchool.com v. eDriver

By Eric Goldman

TrafficSchool.com, Inc. v. eDriver, Inc., 2008 WL 4000805 (C.D. Cal. June 4, 2008). Permanent injunction entered Aug. 28, 2008.

[Note: I missed this case when it first came out. I recently learned about the case from Rebecca, and it's such an interesting case that it's worth blogging about at this comparatively late date. Also, just today the defendants signaled their intent to appeal, so the case is still very much alive and active.]

This case involves websites referring consumers to traffic schools and driver's education courses, a business that appears to be both lucrative and cutthroat. The plaintiffs allege that the operators of DMV.org, a referral site, engage in false advertising. The gist of the plaintiff's argument is that DMV.org falsely implies an affiliation with government DMVs, and therefore consumers believe that linked-to vendors are being recommended by a government agency. Naturally, the implicit government imprimatur on a traffic school or driver's ed course should significantly bolster consumer demand, so the plaintiffs feel disadvantaged in the marketplace. Oddly, both parties agreed that the plaintiffs' websites had better conversion than DMV.org.

70-80% of DMV.org's traffic comes from search engines due to favorable search engine indexing (in 2006, the site was the #2 organic Google link for "DMV") and aggressive search engine advertising. Consumers who reached DMV.org were shown text and graphics designed to enhance the site's credibility/authority and perhaps exacerbate visitors' perceptions that a government agency operated the site, although there was a small footer disclaimer. After the lawsuit, DMV.org was redesigned to reduce the possibility of consumer confusion about any government affiliation, but the court recounts anecdotes that consumers were confused both before and after the redesign. As a result, the court finds that the plaintiffs established a prima facie case of 43(a) false advertising.

However, the court determines that the plaintiffs have "unclean hands" because they too had registered and used various domain names containing "DMV" and had explored advertising on DMV.org. Due to their unclean hands, the court denies the plaintiffs any damages or attorney's fees.

The court does grant an injunction requiring DMV.org to display a mandatory "acknowledgement page" (we might call it an interstitial or landing page) telling consumers that the site is unrelated to any government agency and requiring them to affirmatively click through. See the page here. My hypothesis is that such an acknowledgement page wrecks DMV.org's search engine indexing by preventing the robots from seeing the page content (unless DMV.org uses grey hat/black hat techniques to present a different page to search engine robots). In partial support of that argument, when I searched today for "DMV" at Google, the site was 4th in the organic results--still excellent for such a popular term, but down from their #2 ranking in 2006. (Their continued good placement may be due to their PR7--which has been juiced by links from state government agencies that mistakenly thought it was an official site). Thus, an injunction requiring a mandatory acknowledgment page effectively will dramatically reduce the traffic--and the value--of an SEO-driven site. The defendants have also made post-injunction filings saying that a lot of visitors are backing away due to the acknowledgement page. Accordingly, the defendants are claiming that the injunction could be fatal to their business.

This suggests a possible lesson to learn from this case. The defendants had a great domain name (DMV.org) that they managed to build nicely, but they may have too aggressive about stoking consumer expectations about their affiliation with the government. The consequence of that aggressiveness is a potentially business-ending injunction, rendering the domain name nearly worthless. If the defendants hadn't played so close to the line, perhaps they would have lost some revenue but might have been able to maintain the domain name's value in the long run.

Today, the defendants filed a variety of motions indicating that they plan to appeal the ruling and asking the court to stay the injunction during the appeal. If the defendants can get the traffic-killing injunction lifted on appeal, I suspect they will consider it a win even if they have to write a check for damages.

Rebecca has more on the case.

Posted by Eric at 10:01 PM | Domain Names , Marketing , Search Engines | TrackBack

August 01, 2008

Domainer Loses Cybersquatting Lawsuit--Verizon v. Navigation Catalyst

By Eric Goldman

Verizon California, Inc. v. Navigation Catalyst Systems, Inc., 2008 WL 2651163 (C.D. Cal. June 30, 2008). The Justia page. A page with some of the early filings.

[Sorry for the delay blogging this--it just showed up on my radar screen]

This is an extremely interesting and potentially precedent-setting case regarding domaining and domain name tasting. The court condemns both practices, leading to a preliminary injunction against the domainer and its registrar based on the Anti-Cybersquatting Consumer Protection Act (ACPA). As far as I can recall, this is the first time that a domainer has lost an ACPA lawsuit in court, and it provides an important data point confirming that domaining can be cybersquatting (a previously unresolved issue). I also believe that this is the first time a domain name registrar has lost an ACPA lawsuit. Although the court wasn't asked to assess damages (it was just an injunction request), it's clear from the strongly worded opinion that Verizon will get paid if the case gets that far. As a result, this is a major loss for domainers and might very well force them to change their practices.

The defendants are Navigation Catalyst, a domainer, and Basic Fusion, its registrar. Navigation Catalyst engaged in some common domainer practices, including:

* high volume automated domain name tasting. Many of the registered domains have nothing to do with anyone's trademark, but some were typographical error versions of Verizon's trademarks (allegedly, nearly 1400 were variations of Verizon's trademarks)
* trademark "scrubbing" of domain names during the tasting period (both an automated blacklist and a manual review)
* disabling ads on any challenged domains and offering to transfer those domain names to the trademark owner

Despite the scrubbing, Navigation Catalyst registered and kept 126 domain names that Verizon alleges infringe its trademark. Navigation Catalyst also tasted nearly 1300 other challenged domains, and as the court points out, made some money from those domains during the tasting period.

Navigation Catalyst's main defense is that it merely reserved the domains during the tasting period instead of "registering" them (the ACPA statutory requirement) because they hadn't paid for the domains prior to the end of the grace period. Not surprisingly, the court is completely unimpressed with this sophistry.

Further, the court determines that domain tasting is a bad faith intent to profit under the ACPA:

It is clear that their intent was to profit from the poor typing abilities of consumers trying to reach Plaintiffs' sites: what other value could there be in a name like ve3rizon.com? Further, the sites associated with these names often contained links to products directly competitive with Plaintiffs' cellphone and internet businesses, potentially diverting consumers who would otherwise have purchased goods or services from Plaintiffs away from Plaintiffs.

Finally, the defendants tried to argue that Verizon had unclean hands because of Verizon's monetization of wildcard traffic in its FIOS service. Despite some pretty apparent duplicity on Verizon's part, this argument also fell on deaf ears.

While this is a big loss for the domainer, it's a shocking ruling against the registrar. After all, the ACPA specifically limits injunctions against domain name registrars (see 15 USC 1114(2)(d)(i)(II)), and the court did not discuss this section at all or otherwise why an injunction against the registrar was appropriate. I suspect the registrar should be able to get the court to clarify or reconsider its ruling if it asks.

It will be interesting to see how this ruling affects the domainer industry. There is absolutely no good news for them in this ruling. This court rejected the standard risk-management that domainers claim protect them from cybersquatting liability. Further, the big win will only encourage Verizon--already one of the most aggressive plaintiffs against domainers--to keep suing, and it might spur other trademark owners to join the party. Although a single ruling like this often doesn't change an industry overnight, I wouldn't be surprised if we look back in a couple of years and point to this ruling as the beginning of the end of standard domaining practices circa 2007-08.

Posted by Eric at 10:10 PM | Derivative Liability , Domain Names , Trademark | TrackBack

July 01, 2008

June 2008 Quick Links

By Eric Goldman

Trademarks/Domain Names

* Utah Lighthouse Ministry v. Foundation for Apologetic Information and Research, 2008 WL 22043807 (10th Cir. May 29, 2008). CMLP writeup. Nice 10th Circuit win for a gripe site against trademark infringement and cybersquatting. This case, plus the SKI VAIL case, indicate that the 10th circuit is making progress undoing the harm it created in the Australian Gold v. Hatfield case.

* Georgia has a new anti-phishing law (16-9-109.1) that acts as a para-trademark law. See my comments on the analogous California anti-phishing law.

* After initiating a trademark lawsuit against a consumer review site and soundly losing in court, Lifestyle Lift paid $17,500 to settle its own lawsuit and avoid claims for legal fees under Rule 11 and the Lanham Act.

* Marty reports on a German case saying that white-text-on-a-white-background is a trademark use.

* Update on the battle over the trademark registration for "SEO."

* Will TLD proliferation lead to a new open era in domain name administration, or will the resulting anarchy just reinforce that top search engine placement is the really important online real estate? It seems like the currently limited number of TLDs has some benefits from a bounded rationality standpoint, and those benefits will be lost in a cacophony of unknown TLDs.

Patents

* My colleague Colleen Chien has posted "Patently Protectionist? An Empirical Analysis of Patent Cases at the International Trade Commission" (forthcoming William & Mary Law Review). She empirically demonstrates that the ITC mostly involves disputes between two domestic litigants, making it a redundant battleground with federal district court but nevertheless an attractive venue for plaintiffs due to a number of procedural advantages. She makes a number of recommendations to eliminate the litigation gamesmanship offered by having parallel venues. Check it out.

Search Engines

* Udi Manber, chief algorithm keeper for Google, reiterates why it's silly for lawyers and judges to put too much legal emphasis on the relative placement of search engine results, saying "it's definitely the case that if you do the same search on a different cluster, you may get slightly different results at a given time. It's also the case that if you do the same search on different days you may get different results, because some of the results are things we indexed five minutes ago."

(Over)Regulation

* In response to an enforcement effort by the NY AG's office, several Internet access providers have blocked access to newsgroups that are putatively sources of child pornography. See the NYT story and the NY AG press release. In practice, this means wholesale takedowns of newsgroups that may have nothing to do with child porn. For example, Verizon is killing all USENET hierarchies except comp.*, misc.*, news.*, rec.*, sci.*, soc.*, and talk.*. Wired suggests this is the death of online intermediary freedom as conceptualized in 47 USC 230. Of course, 230 never protected intermediaries from criminal exposure for child porn, and this isn't the first time that an access provider has knuckled under to the NY AG's office. See the BuffNet enforcement action from 2001.

* Ohm, Paul. The myth of the superuser: fear, risk, and harm online. 41 UC Davis L. Rev. 1327-1402 (2008). A neat article on how regulators manufacture a fake bogeyman, the unbeatable "superuser," as a justification for expansive regulatory power.

* No evidence that data breach disclosure laws actually help reduce identity theft. Surprised?

* The FTC wants civil enforcement authority for spyware actions. Haven't they heard that the adware battle is already over...and they won?

Contracts

* Mark Radcliffe expresses concern about the ALI's proposed software licensing project on open source licenses.

* Sarah Bird on a messy contract lawsuit involving an SEO contractor.

Anonymity

* Tendler v. www.jewishsurvivors.blogspot.com, 2008 WL 2352497 (Cal. App. Ct. June 10, 2008). A subpoena request to identify a blogger doesn't support an anti-SLAPP cause of action.

* In the AutoAdmit lawsuit, Doe 21's motions to squash the subpoena and proceed anonymously were both denied. David Hoffman provides an update on the case.

Event Tickets

* Chicago has moved against eBay for reselling tickets in violation of its amusement tax law.

* The Ticketmaster v. RMG case ended with a default judgment granting a permanent injunction and $18.2M in damages.

General

* Vanity Fair: How the Web Was Won.

* Paul Levy blogs about a plaintiff's effort to bypass 230 by suing the authors of complaints about the vendor and then joining the consumer complaint site as a necessary party as a cost-increasing tactic.

* BusinessWeek on emerging technological tools to protect workers' attention against unwanted/untimely interruptions.

* Text message-savvy kids educate the North Carolina DMV about the meaning of the term "WTF," which was used on a license plate example on the DMV's website.

* I have one free pass to OMMA Behavioral in San Francisco July 21. First person to send me an email asking for the pass gets it.

Posted by Eric at 12:32 PM | Adware/Spyware , Content Regulation , Derivative Liability , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Patents , Privacy/Security , Search Engines , Trademark | TrackBack

June 02, 2008

May 2008 Quick Links, Part 1 (Trademarks/Domain Names Edition)

By Eric Goldman

* Syncsort Inc. v. Innovative Routines Intern., Inc., 2008 WL 1925304 (D.N.J. April 30, 2008). Including a third party trademark in a keyword metatag qualified as nominative use. (Along the same lines, see the Designer Skin case that I will blog about later this week).

* Punch Clock, Inc. v. Smart Software Development, 2008 WL 936889 (S.D. Fla. April 7, 2008). In a default judgment, a judge awarded the trademark owner the right to obtain 7 years of corrective advertising (a total of over $1M), calculated by what it would take for the trademark owner to buy the top spot in Google AdWords. Tom O'Toole sorts through this mess.

* A new ruling in the V Secret v. Moseley case. Rebecca puts it in context.

* Matthew Nelson, Comment, Utah's Trademark Protection Act: Over-Reaching Unconstitutional Protectionism or Decisive Clarifying Legislation?, 2007 Utah L. Rev. 1199. A couple of months after the Utah legislature repealed the Utah Trademark Protection Act, a Utah law student says the law is unconstitutional. His conclusion:

The Utah Trademark Protection Act places an undue burden on interstate commerce and the courts should find it unconstitutional under the dormant Commerce Clause using the Pike balancing test. Apart from the constitutional problems, the Act is bad policy for Utah businesses and Utah consumers. Although the unpredictability that currently exists in the courts makes it difficult for Internet advertisers and advertising sellers to mitigate risks and set efficient policy, these risks are far outweighed by costs to consumers and business. The Act sacrifices fair use, comparative advertising, and noncommercial use to gain certainty. These trademark functions are more important than the additional protections afforded mark holders under the law, protections that go too far and encourage anticonsumer policy rather than furthering the competitive environment trademark policy seeks to create.

Uses of keywords to trigger advertising that are unfair, deceptive, and contrary to trademark policy can still be pursued under the current common law. Trademark law is effectively evolving to handle these new challenges. If there should be legislation, it should be at the federal level because this issue so profoundly affects interstate commerce. The refining process that is occurring in the courts will provide Congress, should it choose to act, with valuable insight into how to handle all the competing interests in the rapidly growing area of Internet advertising.

* Tdata Inc. v. Aircraft Technical Publishers, 2008 WL 2169353 (S.D. Ohio May 21, 2008). Initial interest confusion does not substitute for actual confusion when considering if damages are appropriate under the Lanham Act. See my prior post on this case. See also the related Gibson Guitar case.

* I'm not exactly sure what's going on in France, but a French court has asked the European Court of Justice to opine on the legitimacy of keyword advertising.

* Verisign has obtained a patent for its defunct SiteFinder tool. Domain name wildcarding was taking place for years before VeriSign tried it, so I wonder about the prior art to this patent.

* NYT: Can a Dead Brand Live Again? This article discusses the development of a secondary market for well-recognized but defunct brands. Says the market maker: "We're taking consumers' memories and starting entire businesses."

* Todd Davies, A Behavioral Perspective on Technology Evolution and Domain Name Regulation, PAC. MCGEORGE GLOBAL BUS. & DEV. L.J. 21, 1-25 (2008). See my previous blog post about this paper.

Posted by Eric at 10:36 AM | Domain Names , Patents , Search Engines , Trademark | TrackBack

April 22, 2008

March 2008 Quick Links, Part II

By Eric Goldman

Copyright

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

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

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

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

Trademark

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

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

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

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

State Regulation of the Internet

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

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

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

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

Other Stuff

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

* FTC busts Goal Financial for inadequate security practices.

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

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

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

March 02, 2008

Feb. 2008 Quick Links

By Eric Goldman

Advertising

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

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

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

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

Google

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

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

Spam

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

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

Domain Names

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

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

47 USC 230

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

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

Pornography

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

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

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

User-Generated Content

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

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

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

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

Reputation

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

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

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

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

Patents

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

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

Copyright

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

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

Miscellaneous

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

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

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

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

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

February 13, 2008

Jan. 2008 Quick Links (IP Edition)

By Eric Goldman

Trademarks and Domain Names

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

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

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

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

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

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

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

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

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

Copyright and File-Sharing

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

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

* Lots of action over takedown notices:

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

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

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

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

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

December 14, 2007

Oct.-Nov. 2007 Quick Links, Part 2

By Eric Goldman

Marketing/Branding

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

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

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

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

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

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

Copyright

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

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

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

Blogging

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

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

E-Commerce

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

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

Miscellaneous

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

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

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

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

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

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

* BusinessWeek: 101 Best Web Freebies.

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

October 06, 2007

September 2007 Quick Links Part I

By Eric Goldman

Marketing

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

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

* You may recall the lawsuit over James Frey's A Million Little Pieces, a non-fiction story that was a little fictional. The case settled with a class remedy of a refund for book purchasers who went through a fairly complicated process. Care to guess how many purchasers tendered claims? Try 1,345--meaning about $20,000 of actual cash will go into the hands of "harmed" class members. Transaction costs to award this $20,000 of relief? Lawyers want almost $800,000, plus the costs to communicate with the class were about $335,000--in total, about $56 for every $1 of relief.

* In this article, I discussed how intermediaries would seek to mine a person's various methods of communication as source material for ad targeting (that is, unless the law restricts the intermediaries' ability to mine such data sources). The latest example? Pudding Media, which provides free Internet-based calls for the opportunity to deliver contextually relevant ads triggered by the contents of the phone call.

* The "perfect schwag"? One obvious option that didn't make the list...slinkies!

Intellectual Property

* We usually assume that copyright owners won't license their content to critics seeking to disparage them; hence, fair use is needed to permit such critical secondary uses. But a counterexample from the NYT: Naomi Klein licensed the Canadian "National Post" to display excerpts of her book alongside a critical review. There is some evidence Klein didn't know the hatchet job was coming, but even if she did, would it have been a bad choice on Klein's part? Not necessarily. See this study showing that even a critical New York Times book review lifts sales.

* Chang v. Virgin Mobile USA (D. Tex). See the NYT article on this case. Virgin Mobile allegedly downloaded photos from Flickr to use in an advertising campaign without getting publicity consents from the individuals depicted. This is a lawsuit by one of the depicted individuals. I'm very surprised by this apparent oversight because most ad agencies are thoroughly aware of publicity rights issues. Maybe someone mistakenly thought that Flickr's Creative Commons license extended to publicity rights?

* Freecycle Network, Inc. v. Oey (9th Cir. Sept. 26, 2007). Defendant does not make a trademark "use in commerce" when his actions were not "made to promote any competing service or reap any commercial benefit whatsoever."

* WSJ: "Web-Address Theft Is Everyday Event"

* WSJ: Some franchisors are loosening restrictions on franchisees’ ability to make independent choices.

Posted by Eric at 10:10 PM | Copyright , Domain Names , Marketing , Publicity/Privacy Rights , Trademark | TrackBack

September 06, 2007

August 2007 Quick Links, Part I

By Eric Goldman

Search Engines

* Google extended its ad serving technology to consider a user's past search phrases in addition to their current search term.

* Greg Linden: "Google is teasing too many lions."

* BusinessWeek: Some VCs are cranky that Google is competing with them by actively investing in start-up deals.

* From Answers.com's press release in August: "Answers Corporation (NASDAQ: ANSW) announced today that, due to a search engine algorithmic adjustment by Google, Answers.com has seen a drop in search engine traffic starting last week. As a result, overall traffic is currently down approximately 28% from levels immediately prior to the change...This change only demonstrates the sound business rationale behind our agreement to purchase Dictionary.com, because it underscores a primary motivation for the deal: to secure a steady source of direct traffic and mitigate our current dependence on search engine algorithms."

Intellectual Property

* Question: Any theories why the Copyright Office hasn't yet issued "final" regulations for the DMCA 512 registration of an agent for notice...9 years after the DMCA passed?

* From the EFF: RIAA v. the People: Four Years Later. A terrific overview/recap of the RIAA's campaign against online dissemination of music. I'm planning to assign this report to my Cyberlaw students when we discuss file-sharing.

* New York Mercantile Exchange v. Intercontinental Exchange, No. 05-5585-cv (2d Cir. Aug. 1, 2007). Second Circuit says that mercantile exchange settlement prices are not protectable due to the copyright merger doctrine. It would have been better if the court had said that prices aren’t copyrightable, but perhaps we should take our victories where we can find them. HT Patry.

* Bensbargains.net, LLC v. XPBargains.com, 2007 WL 2385092 (S.D. Cal. August 16, 2007). Plaintiff aggregated various "deals" into a website and claimed a copyright in the aggregation. Defendant took the deals and integrated them into its website. Copyright infringement? The judge sets an arbitrary cutoff: "there is insufficient similarity to survive summary judgment where either the percentage of Plaintiff's deals that were copied or the percentage of Defendants' deals that were derived from Plaintiff's website is less than 70%." Evan has more.

* Lennar Pacific Properties Management, Inc. v. Dauben, Inc., 2007 WL 2340487 (N.D. Tex. August 16, 2007). Trademark owner gets an ex parte TRO against a domainer. More from Evan.

* WSJ: The KSR case has noticeably improved prospects for patent defendants.

* The EFF is challenging UMG's practice of stamping a "promotional use only, not for resale" label on promotional CDs.

Marketing/Advertising

* NYT on car ad-wrapping. See my previous post where I proclaimed ad wrapping as a relic of the dot com boom. It looks like the practice still lives! Open invitation: anyone who would like to pay me $800/mo to wrap my car, please call me! For that amount of cash, I'll drive the ugliest ad imaginable.

* There was a new ruling in NetQuote v. Byrd, which I styled as the “lead fraud” case. Rebecca recaps the action.

* Apparently, in Florida, a lot of senior citizens dining out at restaurants will ask for some lemon wedges and a glass of water, then add a few Sweet-and-Low packets to create their own tableside-brewed lemonade for free instead of ordering a drink off the menu. One restaurant owner got fed up and charged a diner $1.29 for the unadvertised menu item of self-brewed lemonade. Now, the sparks are flying!

* More unfortunately placed ads.

Contracts

* Cohn v. TrueBeginnings LLC, No.B190423 (Cal. Ct. App. July 31, 2007). Another court upholds a mandatory clickthrough even when the actual terms are hyperlinked. Tom O'Toole comments and provides screenshots.

* Ken Adams demonstrates, step-by-step, how he edits a contract.

Lexicon Watch

* New word alert: "bacn" = transactional email from websites you have a relationship with. Personally, I think we need to get off the meat metaphors.

* William Gibson says the prefix "cyber" is passe.

Posted by Eric at 04:27 PM | Copyright , Domain Names , Licensing/Contracts , Marketing , Patents , Search Engines , Trademark | TrackBack

July 31, 2007

July 2007 Quick Links, Part I

By Eric Goldman

Search Engines

* According to this study, up to 40% of search queries are "re-finding queries" (i.e., the searcher is trying to re-find previously viewed information). The implication: "Because people repeat queries so frequently, search engines should assist their users by providing a means of keeping a record of individual users' search histories, perhaps via software installed on the user's own machine." As I've said before, search engines necessarily will need client-side software to see more consumer behavior if they want to improve relevancy for consumers. HT Greg Linden.

* People are spoofing the Googlebot.

* Hal Varian, a first-rate scholar at Berkeley's SIMS, is now Google's chief economist. I don't know how many other Internet companies have economists-on-staff, but I could see this as a growth area.

Intellectual Property

* Prediction: at least one person will go to jail for prereleasing the new Harry Potter book. It's just too conspicuous for the feds to ignore. Indeed, at this point, it seems unavoidable that every launch of an eagerly anticipated copyrighted work will also involve criminal prosecutions for unauthorized prereleasing (see, e.g., this post). Meanwhile, BusinessWeek is marveling at how many websites are now cooperating with copyright owners rather than fighting them.

* Capitol Federal Sav. Bank v. Eastern Bank Corp., 2007 WL 1885134 (D. Kan. June 29, 2007). Kansas TM owner lacks jurisdiction in Kansas over New England bank allegedly committing TM infringement, even though the New England bank bought keyword ads on the trademark (but, those ads were geo-targeted to Massachussetts). Along the way, the court (as usual) cites to Zippo but rejects the "website doing business" prong, instead requiring the plaintiff to show that the website was doing business in the forum jurisdiction.

* Masterson Marketing, Inc. v. KSL Recreation Corp., 2007 WL 1975425 (S.D.Cal. April 13, 2007). Oh man, what a crazy lawsuit. Freelancer takes product shot of hotel and licenses photo to hotel. Hotel then provides photo to third party websites (such as Expedia) as a way of promoting the hotel. The freelancer claims the hotel breached the license and proceeds to sue what seems like every website in the travel industry. This case is now going on 5 YEARS...over a product shot. (Disclosure note: I worked a little on the case when I was affiliated with Epinions, which is one of the defendants. Yes, it's that old). This ruling deals with the hotel's attempt to recreate the product shot with a different photographer. The court grants SJ to the defendants on the copyright infringement of a recreated shot (per ETS-Hokin). The court also makes it clear that the plaintiff isn't going to get any of the plaintiff's profits, which I assume means the plaintiff is going to get bubkus damages (plaintiff isn't eligible for statutory damages).

* From the NY Times: Mr. Skin is a website that provides subscribers with access to pictures and videos of naked actresses taken from movies. Mr. Skin doesn't normally get permission from copyright owners, seemingly making it a prime target of a business-ending copyright lawsuit. It tries to justify the wholesale republication of clips and stills under the guise of fair use because it claims to be a movie review site, but I doubt that many judges would find that argument very persuasive. However, movie studios have realized that promotion via Mr. Skin increases demand for the movies ("sex sells"), even if Mr. Skin is already showing the "money shot" on its site. As a result, instead of getting lots of C&D letters, Mr. Skin gets lots of promotional copies from movie studios.

* Microsoft is trying to patent what Ars Technica describes as the "mother of all adware." Microsoft is also trying to patent a system for tracking people to deliver relevant advertising. People may find these patents a little creepy, but I see them as both inevitable and ultimately a good thing.

* Washington Post: a new website is trying to position the purchase and resale of exclusively branded fashion items (e.g., Birkin purses) as an investment. And to stabilize the investment decisions, the website screens out the knock-offs and certifies authenticity.

* Domaining to become a $4B/year industry?

Posted by Eric at 12:40 PM | Copyright , Domain Names , Internet History , Patents , Search Engines , Trademark | TrackBack

July 02, 2007

June 2007 Quick Links

By Eric Goldman

Email

* Spam cases are coming at a regular clip, and it's tricky divining the latest state of the law. Two recent cases that caught my attention:
- US v. Impulse Media Group, 2007 WL 1725560 (W.D. Wash. June 8, 2007). This case involved a porn site that used affiliate marketers who didn't comply with the porn spam labeling requirements. The government argued that the advertiser should be strictly liable for this breach, but the court fairly emphatically rejected that (same as Cyberheat). But the news isn't all good for the defense, as the court also rejected its SJ motion, showing that the question of scienter about affiliate behavior remains a tough one for courts. Venkat's writeup.
- Kleffman v. Vonage Holdings Corp., No. 07-2406 (C.D. Cal. May 22, 2007). A nice complement to the Facebook v. ConnectU case, each holding that aspects of California's anti-spam laws are preempted by CAN-SPAM. In this case, the targeted behavior was the fact that the emailer may have used multiple email addresses to bypass electronic spam filters, but there wasn't anything false/deceptive about each email itself. See the BNA write-up and Venkat's writeup. I've lost track of the preemption cases, but it seems like state anti-spam laws are really getting munched after the Mummagraphics case.

* NYT on the pros/cons of captchas.

* Goodmail has expanded its pay-to-email system to Comcast, Cox, Roadrunner and Verizon.

Intellectual Property

* In Explorologist v. Sapient, involving the posting of a video deconstructing Uri Geller's act, the defendant is arguing (per CCBill) that 47 USC 230 preempts British copyright law.

* A rushed high school yearbook editor downloads lots of Facebook photos and adds them to the yearbook to fill space. Not a good idea!

* Techdirt: Who owns the right to license the design of military weapons to toy manufacturers?

* Marty on intellectual property protection for sexual activity.

Contracts

* A California man claims he bought a Gateway computer that never displayed text properly. Is he bound to the clickthrough agreement displayed on bootup? If this is the only way Gateway presented its contract, the answer should be no.

* At a conference at Southwestern Law School, I heard Prof. Lon Sobel talk about "idea submission" law. He illustrated the phenomenon that "where there's a hit, there's a writ": he suggested that hit TV shows produce an average of 6 "you stole my idea” demand letters. The great 1980s movie Coming to America produced 12 such letters, which resulted in 7 actual lawsuits. Interestingly, Prof. Sobel made the case (implicitly, not explicitly) that there is no separate law of "idea submissions," but rather any such doctrines are subsumed within standard contract law.

eBay

* eBay has changed its stance towards fighting counterfeiters, and it now does more policing itself.

* eBay shill bidder pays $400k to settle with NY AG.

Social Networking/Blogs

* The NCAA kicked a reporter out of the stadium for live-blogging the event. Tip to NCAA: It’s neither possible nor wise to control the flow of real-time information. Get over it. HT: Techdirt.

* Just came across this article: Stacey Schesser, MySpace on the record: The admissibility of social website content under the Federal Rules of Evidence, First Monday, volume 11, number 12 (December 2006).

* Wired: 7 MySpace sex offenders busted.

Marketing/Advertising

* AMCO Ins. Co. v. Lauren-Spencer, Inc., 2007 WL 1795970 (S.D. Ohio June 20, 2007). Insured offers jewelry from a website. Third party claims that the insured's jewelry constituted copyright infringement. Insured tenders the lawsuit to her insurance company under the advertising injury policy. Insurance company seeks a DJ of no coverage. The court says that the website constitutes advertising for the products, and so the policy applies to photos of the allegedly infringing jewelry items, even if the photos themselves were created by the insured. Observation #1: The advertising injury policy is very helpful to web businesses. Observation #2: Due to cases like this, I suspect insurance companies are reducing their willingness to offer advertising injury coverage to web businesses.

* Taylor v. XRG, Inc., 2007 WL 1816142 (Ohio App. Ct. June 21, 2007). The defendant was a vendor retained by bulk fax senders that handled consumer responses, including opt-outs from future faxes. Court held that the vendor wasn't liable for any TCPA/state anti-junk fax laws allegedly broken by the fax sender.

* Newish ad format: ads running 2 seconds in duration.

Search

* It's taken me a while to digest some of Google's new efforts. First, Google released two tools (a new toolbar button and a new personalized tab) to anticipate searchers' needs based on their past searches. Second, Google expanded its search history to incorporate all aspects of a user's searching through its services (what it calls "web history"). Meanwhile, Google has reduced its storage of personalized search data from 18-24 months to 18 months before that data gets anonymized. FWIW, I've been using Google personalized search since November 2005 (presumably, some of my data will be flushed any time now). Google has now captured almost 12,000 searches (with a high so far of 255 searches in a single day). Despite this, Google still doesn’t do a good job making predictions for me.

* Another great study from Jim Jansen (see the last one I blogged about). This one presented identical search results branded from different search engines and found that consumer ratings of relevancy varied based on the brand (Yahoo and Google came out on top). The logical inference--branding does matter to perceptions of relevancy. HT: SEL.

* Matt Cutts on the various ways humans affect Google search.

Domain Names

* Denmark's .dk TLD registry has enacted rules targeted at wiping out domainers. See here (Sec. 8.3.6).

* What's hotter than iPhones? iPhone-related domain names.

Adware/Spyware

* Declan on the latest legislative rally against spyware, the Senate's Counter SPY Act.

* The FTC issued final approval for the DirectRevenue settlement of $1.5M. Commissioner Leibowitz dissented, saying the cash payment was too light.

Online Reputations

* Avvo has filed a motion to dismiss the lawsuit over its ratings of attorneys. The motion is very heavy on the 1st amendment and very light on 230. HT: WSJ Law Blog.

* The Washington Post gushes about Reputation Defender and its competitors, without really acknowledging the value of reputational accountability or the potential for takedown/pushdown abuse.

* Entrepreneurs figured out a way to game FICO scores. Fair Isaac will try to close the loophole.

* Ed Magedson of Rip-Off Report was the victim of a vicious harassment campaign demanding that he remove complaints from the site.

* Lengthy NYT article on Wikpedia. Not much new there, but it does hint at the young age of Wikipedians, and it talks about how "pride of ownership" motivates Wikipedians.

Other

* June 26 was the 10 year anniversary of the classic Reno v. ACLU Supreme Court opinion.

* The NYT has launched a new technology blog called BITS.

Posted by Eric at 02:37 PM | Adware/Spyware , Content Regulation , Copyright , Derivative Liability , Domain Names , Internet History , Licensing/Contracts , Marketing , Search Engines , Spam , Trademark | TrackBack

June 27, 2007

Google Sued in Domainer Lawsuit--Vulcan Golf v. Google

By Eric Goldman

Vulcan Golf, LLC v. Google, Inc., No. 07CV3371 (N.D. Ill. complaint filed June 15, 2007) [WARNING! the complaint is a 4.3MB PDF]

Domainer litigation is heating up, and this lawsuit may be the most ambitious anti-domainer lawsuit to date. First, it is a putative class action lawsuit. Second, in addition to naming four leading domainer firms, the plaintiffs provocatively go after Google for providing ads to domainer sites. I believe this is the first lawsuit against Google for its domainer relationships.

The complaint itself is a 121 page, 638 paragraph (with one paragraph enumerating 47 defined terms), 4.3MB behemoth alleging trademark infringement and dilution, ACPA violations, RICO and other claims.

Much of the lawsuit focuses on Google's "AdSense for Domains" program specifically catering to domainers and domain name parkers. Google's program is somewhat obscure and unusual. It is only available to domain names that don't have any content (other than the ads provided by Google), and Google effectively takes control of the pages itself. As the program’s FAQ says, "AdSense for domains customers redirect traffic from parked domains to the AdSense for domains service. When Google receives the request, it processes the domain name and returns formatted HTML that includes contextual ads and related searches. Customers can either display the full page HTML or include it in a frame." The plaintiffs argue that, as a result, Google is effectively the domain name licensee, which enables plaintiffs to assert an ACPA claim against Google.

Functionally, the complaint says that a "domain name is not a search query" (para. 312). However, from my perspective, Google in fact treats the domain name exactly like a search query; the domain name acts like a keyword to trigger ads, no different from the way Google treats a searcher's keywords as a trigger for ads on its website. (I explain my view of the interrelationship between domain names and keyword triggers in much more depth here).

Whether domaining is a good or bad thing policy-wise depends on your view:

Con: Trademark owners complain about the typosquatting nature of most domainer pages. Indeed, Google is uncharacteristically solicitous of trademark owners upset by parked domains--in contrast to Google's normal policy that it won't disable trademarked keywords, Google will completely disable ads on parked domain names at the trademark owner's request. This raises the lurking issue about whether search engines can impose opt-out obligations on IP owners. At the same time, it makes me wonder if the class could get its desired results simply from following the complaint procedures. (The complaint rejects this approach, calling the trademark complaint procedures "audacious" and "illusory.")

Pro: Google and the domainers could point out that consumers who access these domain names are either going to see a 404 or a page of putatively relevant paid links, and the latter is more useful to them. In fact, according to this study, ads on parked automotive-related domains convert at 2X ads on search engines. So, perhaps these ad pages are more helpful to consumers than 404 pages.

There is a lot of interesting detail in the complaint, but I’ll just point to one more tidbit. The complaint notes that Google has repeatedly gone after typosquatters on the Google mark. It says "Defendant Google...has engaged in precisely the same illegal conduct ... that Google itself complained of....In fact, Defendant Google has taken the illegal conduct to a new and more egregious level" because (among other things) it profits from hundreds of thousands of illegitimate domain names and uses a "sham" and "illusory" trademark complaint procedure.

It’s hard to tell if a complaint like this will have legs. The plaintiffs’ attorneys did extensive research and provide a lot of detail, so the complaint lacks some of the deficient elements we often see in lawsuits against search engines. At the same time, the lawsuit could be gutted if the judge rules that none of the parties engaged in a trademark use in commerce—an open legal question that has not been resolved in the domainer context. Further, the lawsuit could effectively fall apart if the judge rejects formation of a class. Trademark class action lawsuits are rare for good reason-- trademark owners must establish the validity of their marks, the famousness of their marks (for dilution) and the similarity between their marks and the defendants' usage. These are all intensely fact-specific questions; none of which seem susceptible to class adjudication.

Posted by Eric at 05:20 PM | Domain Names , Search Engines , Trademark | TrackBack

June 26, 2007

New Cyberlaw Fad--Real Estate Developers v. Griping Homebuyers

By Eric Goldman

We appear to be seeing a mini-trend of homebuilders suing griping homebuyers. Overlawyered's Walter Olson succinctly aggregated some cases, including:

* RSA Enterprises v. Bad Business Bureau and Google, a lawsuit doomed to failure (at least in Google's case) due to 47 USC 230.

* WBG Builders v. ConsumerAffairs.com and Garlic. Depending on the facts, ConsumerAffairs.com may be protected by 47 USC 230, but the news report indicates that WBG is suing the posters as well.

* While not exactly a developer v. buyer lawsuit, a home contractor (Sieber/SCS Contracting) sued a number of defendants for defamation based on postings to Angie's List. According to the DC Superior Court website, Sieber v. Mattera (Case # 2007 CA 002063 B) and Sieber v. Hammock (Case # 2007 CA 001726 B) each settled a month after filing, although Hammock's lawsuit against Sieber for contract breach is still pending (see Case # 2006 CA 006940 B). Sieber also sued Angie's List and some other defendants for malicious interference. Sieber v. Brownstone Publishing, Case # 2007 CA 002549. I think this claim is clearly barred by 47 USC 230 if it's based on user postings. The lawsuit was dismissed May 31 but revived; then all of the individual defendants (but not the named defendant) were dismissed June 11.

What's going on here? First, homebuilders are wasting their time suing sites that republish buyer complaints; those lawsuits should be preempted by 47 USC 230. Second, developers appear to be a little touchy. People always complain about their homes; as readers, we know that and can evaluate others' complaints accordingly. So a developer's lawsuit may appear to offer moral vindication, but chances are it's a bad economic decision (assuming the developer has legitimate reason to complain in the first place).

The latest developer v. buyer case is Taylor Building Corp. v. Benfield, 2007 WL 1748694 (S.D. Ohio June 15, 2007). This lawsuit relates to a gripe site set up at the domain name "www.taylorhomes-ripoff.com" in 2003 that was taken offline in 2004. The developer sued for defamation, tortious interference and trade dress infringement. The court carefully rejects most of the defamation claim (for being substantially truthful) and the tortious interference claim for lacking the requisite scienter. The court also rejects the trade dress claim on several grounds, including the website’s nature as a gripe site:

Benfield clearly hoped to drive customers away from Taylor by posting his complaints about the home builder. Thus, it is arguable that he intended to cause Taylor economic harm. However, in keeping with the logic of Taubman and Lamparello, the Court concludes that, even if Benfield's use of the website was commercial, his website was a forum for criticizing the builder. Accordingly, there is no likelihood of confusion and, thus, no Lanham Act violation.

The court also rejects the initial interest confusion claim because the site didn't sell or promote any products, and no one would be confused by a domain name containing the word "ripoff."

Despite the significant good news for the defendant, two potentially defamatory statements survived the SJ motion. A reminder to gripers: you own your words, so pick them carefully.

Tying these cases together, it appears that developers are the latest industry to realize the power and danger that online word of mouth poses to their businesses. Coping with this revelation requires some care. Historically, publicity-enhancing lawsuits may not have been the best way to respond to negative reputational information, but in the networked era, they are almost guaranteed to be a poor choice. So developers will need to adapt their practices--and perhaps their expectations--to accommodate the modern information ecosystem.

Posted by Eric at 08:37 AM | Content Regulation , Derivative Liability , Domain Names , Trademark | TrackBack

June 12, 2007

Domain Names Can't Be Trespassed--Utube.com v. YouTube

By Eric Goldman

Universal Tube & Rollform Equipment Corp. v. YouTube, Inc., 2007 WL 1655507 (N.D. Ohio June 4, 2007)

Boy, this case got a lot of attention when it was first filed (which isn't surprising; YouTube lawsuits usually do). You may remember the story: the plaintiff is a dealer of used tube mills, used pipe mills and used pollforming machines. The plaintiff operated a website at utube.com. As you might expect, like most other industrial B2B vendors' websites, utube.com had a small but targeted audience.

With the phenomenal and quick rise in popularity of YouTube, a lot of web users mistyped youtube.com and entered utube.com instead, causing utube.com to suddenly experience disproportionate popularity. Unfortunately for the plaintiff, few of these visitors were interested in pollforming machines--as the opinion starts out, "This is a case about two very different types of “tubes.”" As a result, the plaintiff was paying big bandwidth charges for customers who weren't buying. In some cases, the plaintiff claimed that the traffic overwhelmed the servers, causing utube.com to be offline and preventing the plaintiff's real customers from conducting business with the plaintiff.

The plaintiff sued YouTube for trademark infringement, trespass to chattels and related claims. Last week, the court addressed YouTube's motion to dismiss. The net result is that the court allowed some of the plaintiff's trademark and related claims to survive, but the court dismissed several other claims (with leave to amend).

Trespass to Chattels

Most interesting to me is the court's dismissal of the plaintiff's claims that YouTube "trespassed" utube.com. The court correctly says that trespass to chattels (TTC) claims require physical contact, so it is not possible to trespass intangible property like a domain name. While this is the right result, I can't help but note the Ninth Circuit's holding that domain names can be converted like personal property (in the Sex.com case), and the recent Thyroff case, which also said that digital files could be converted. But here we're talking about a smaller possessory interest than conversion, and the court rightly understands that TTC could become a bypass to trademark infringement. As a result, this decision channels unhappy domain name owners towards trademark claims instead of some TTC bypass.

Even if the domain name itself can't be trespassed, the plaintiff can still claim that the computer servers attached to the domain name were trespassed. The court dismisses the claim for two independent reasons:

1) The plaintiff uses a third party web host, and the court says that the plaintiff didn't allege an adequate possessory interest in its host's equipment.

This may just be a pleading issue that gets corrected in an amended complaint, but it raises an interesting question about TTC standing that I don't recall seeing discussed before. Assuming that TTC is occurring to a site hosted by a third party vendor, does the TTC claim rest with the website operator, the vendor, or no one? I had always assumed that the website operator and the vendor EACH had standing for TTC because each has shared possessory interest in the computers, but I can see outer limits to this. For example, a person using a free web host vendor who is one of a zillion customers shouldn't have standing if there's a TTC to the vendor's computers. OTOH, if a customer is paying a vendor to operate a dedicated computer, and the customer will bear all economic charges associated with that computer's usage, I think the customer has standing. In that circumstance, perhaps the vendor does as well.

In my case, I pay a nominal amount to my web host for shared computer usage, but I pay bandwidth charges associated with my domain name. I think that if a third party were trespassing my website, and I bore the economic consequences from bandwidth usage, I should be able to claim TTC even though I only "lease" the computer space and I share that computer with other sites. Perhaps this warrants more thought.

2) Independently, the court correctly says that YouTube's customers, not YouTube itself, are "contacting" utube.com, and therefore YouTube isn't committing the actus reus. This result also appeared to be designed to channel this complaint into trademark law.

Nuisance

Some pundits have theorized about the existence of a nuisance claim that would parallel (or supplant) online TTC claims. These nuisance claims are occasionally pleaded (for example, a nuisance claim was made initially in the Intel v. Hamidi case, though Intel voluntarily dropped it), but this argument has not gotten any traction in court. This court's terse rejection of the claim is typical:

Universal has provided virtually no legal support for its contention that a private nuisance can exist when no land is involved. Nor has Universal shown any support for the proposition that a domain name, a website, or a computer that hosts a website somehow constitutes real property. There being no such support or other basis for its nuisance claim, that claim will be dismissed.

Other Claims

The court also dismissed the plaintiff's attempt to cancel (in district court) YouTube's trademarks and claims for negligence and violation of state RICO laws. The court rejected YouTube's motion to dismiss for unfair competition, state dilution, and deceptive trade practices, so those claims are still active (plus any causes of action revived with an amended complaint).

Posted by Eric at 09:59 AM | Domain Names , Privacy/Security , Trademark | TrackBack

June 03, 2007

May 2007 Quick Links

By Eric Goldman

Spam

* MySpace Inc. v. The Globe.com Inc., No. CV 06-3391 RGK (C.D. Cal. Feb. 27, 2007). This case has some personal interest because theglobe.com was one of my flagship clients before I left the law firm in 2000. This ruling held theglobe.com liable under CAN-SPAM, California's anti-spam law and the user agreement for spamming within the MySpace network. See the BNA writeup. Among other remarkable angles of this ruling, the court upholds the liquidated damages clause based on the anti-spam restrictions in the contract. Based on this adverse judgment, in April the parties settled for over $2.5M —basically, all of theglobe.com’s remaining cash, leaving its survival in serious jeopardy.

Domain Names

* Domainers are hot. Business 2.0 article on Kevin Ham, a major domainer who has wildcarded Cameroon's .cm TLD. NYT article on NameMedia, which owns 725,000 domains.

* From the AP: Entrepreneurs loaded up on Virginia Tech- and victim-related domain names following the massacre.

Marketing

* Broadway producer Scott Rudin was annoyed that the New York Times' website published user-submitted reviews of his play. To tweak them for doing so, the play cherry-picked some comments from the users' submissions and ran them in ads for the play with the attribution "The New York Times Online." An NYT editor objected to that attribution because it connoted an editorial judgment of the paper, rather than the paper's readers. Read the fun back-and-forth between Rudin and the editor.

* From the Washington Post: Billboards are the second-fastest growing ad category (after the Internet) due to increased traffic congestion and new digital billboard technology. And a technologist has developed eye-tracking technology that may let billboard advertisers accurately count eyeballs.

* Optima Funding, Inc. v. Strang, 2007 WL 1430699 (Cal. Ct. App. May 16, 2007). A mortgage company said it never sent unsolicited faxes or authorized anyone to do so on its behalf, but it did use lead generation companies. Strang sued Optima repeatedly in small claims court for TCPA violations. Optima struck back with a 17200 claim, basically saying that Strang was falsifying evidence to connect Optima to the faxes. In this ruling, the California Appellate Court upholds Strang's anti-SLAPP motion to strike.

* NYT: Custom postage stamps haven't really caught on. (Note: I just tested on them in my IP course exam).

* NYT: "The High Price of Creating Free Ads." Advertisers may not save any money by relying on user-generated ads. See my previous blog post about the legal costs of UGC ads.

* Rebecca discusses false advertising developments in one of our least favorite 1201 cases, Static Control v. Lexmark.

* AP: Wisconsin bar owner gets a ticket for serving Coors Light beer using a Miller Lite-branded tap. He should have known better than to cross the only major brewery still in Brewtown by serving Colorado beer.

Search Engines

* Brodsky v. Yahoo (C.D. Cal. complaint filed May 11, 2007). A stockholder derivative lawsuit against Yahoo alleging that Yahoo inflated its stock price by hyping its ad businesses. I read through the lengthy complaint and found it mostly nonsensical. For example, consider this allegation of wrongdoing: "whereas Yahoo!’s rivals were paying high-traffic vendors to route traffic through their Web sites, Yahoo! was charging large vendors for access and was dependent on that revenue to make its revenue targets, making Yahoo!’s Web site a less desirable location for vendors to drive traffic to." Huh? Search Engine Land has more.

* Google has blacklisted all term paper websites from its AdWords program. Reminds me a little of Macellari v. Carroll

Intellectual Property

* Grisman v. YouTube, Inc., C-07-2518 (N.D. Cal. May 10, 2007). Second class action lawsuit against YouTube (and third major broadside, including the Viacom lawsuit). Appears to be highly derivative of the Football Association Premier League lawsuit (see the WSJ Law Blog for more on this).

* Clark v. Amazon.com, CIV S-05-2187 (E.D. Cal. May 10, 2007). Clark published a book, sold 187 copies and gave away 234. He sued Amazon (and other online booksellers) claiming that he alone had the exclusive right to distribute the book, so their resales were infringing. Amazon responded that the resales were covered by the First Sale doctrine. Clark responded by saying that Amazon sold more copies than he sold/gave away, but that's because Clark mistakenly believed that a seller's lifetime transactions rating were all based on sales of his book. Summary judgment for Amazon.

* Like other content producers, pornographers are feeling the sting of online competition--especially due to the low barriers to entry of amateur-produced content.

* From Washingon Post: Appraisers are going to war over recycling of data they generate during appraisals, which they claim violates promises made to them. When I was guest-blogging at Concurring Opinions, I blogged on the possible IP angles of this dispute.

* BusinessWeek: "Faking out the Fakers: Faced with a tidal wave of counterfeit goods, companies are turning to secretive sci-fi technology. But crooks catch on fast." It's like the analog version of DRM.

* The USPTO's collection of aural TMs.

Miscellaneous

* Bray v. QFA Royalties LLC, 2007 WL 1306517 (D. Colo. May 3, 2007). Posting a suicide note on a private franchisee-group's website isn't grounds for termination of franchises. See Wiggin and Dana's writeup.

* Nazaruk v. eBay, Inc., 2007 WL 1417287 (10th Cir. May 15, 2007). In a non-substantive opinion, the 10th Circuit upheld the venue clause in eBay's user agreement. My post on the district court opinion.

* Washington Post article on individuals declaring "email bankruptcy," i.e., deleting everything in their in-box and starting afresh.

* To mitigate risk, the Concurring Opinions multi-contributor blog has been converted into an LLC.

* University of San Francisco has created a single page aggregating blogs from the entire USF community.

Posted by Eric at 12:59 PM | Content Regulation , Copyright , Derivative Liability , Domain Names , Internet History , Licensing/Contracts , Marketing , Search Engines , Spam , Trademark | TrackBack

May 09, 2007

Utah Trademark Protection Act Updates (from BNA)

By Eric Goldman

As I previously reported, Utah legislators met with industry representatives to discuss the Utah Trademark Protection Act on April 25. BNA [BNA subscription required] provides a fresh update on developments since the April 25 meeting. According to the BNA article:

the governor has directed the Division of Corporations and Commercial Code in the state Department of Commerce to hold off on implementing the law "for at least a couple of months" while changes to the legislation are considered....If an agreement is reached soon, changes could be enacted during a special session likely to occur this summer.

I like the way that Paul Rogers, a lobbyist for some of the technology companies, summarized his take-away from the April 25 meeting:

"I don't think they had thought it through, in terms of how it will affect the consumers' interests," he said. "We told them we're not going to comply--we're going to sue. They said, 'Don't sue--we get it, we've gone too far. Let us see if we can fix it or repeal it.' "

Personally, I recommend option #2.

Posted by Eric at 09:57 AM | Adware/Spyware , Domain Names , Search Engines , Trademark | TrackBack

Messing with Oscar -- Academy Sues Oscarwatch.com

By John Ottaviani

Academy of Motion Picture Arts and Sciences v. Stone, No. CV07-02846 RGK CA (C.D. Cal.)(complaint filed May 1, 2007)

Last week, the Academy of Motion Picture Arts and Sciences ("AMPAS"), the organization that organizes the Academy Awards, demonstrated that it still has no sense of public relations or perspective when it filed a trademark infringement law suit against Sasha Stone, the owner of the web site OscarWatch.com.

According to the Complaint (the first four pages can be found here [see update below]), the web site was initially operated as a "fan site," but later converted to a "commercial site." Apparently, what has the AMPAS concerned is the "recent transition of OscarWatch from a blog content only site to a commercial venture featuring paid advertising." All this, despite a prominent and explicit disclaimer above the masthead on the OscarWatch.com web site that it is not affiliated with AMPAS. The Complaint alleges claims for violation of the Anticybersquatting Consumer Protection Act, trademark dilution, trademark infringement, and false designation of origin under Section 43(a) of the Lanham Act.

If anyone has a copy of or a link to the rest of the Complaint [see update below], we would appreciate seeing it to see if there is anything else going on here. Otherwise, this sounds like the sports leagues all over again, forgetting that there are a whole host of uses of trademarks that are not infringing or dilutive. Whether these uses are called "fair use" or "not a trademark use" or something else, the fact remains that there is little, if any likelihood of confusion or dilution in this case. Moreover, it would seem that OscarWatch.com is generating advertising revenue, not from any perceived tie-in with the "Oscars" name, but from its compelling content about films and the industry that attracts loyal readers.

UPDATE: An electronic copy of the complaint.

Posted by John Ottaviani at 08:51 AM | Domain Names , Trademark | TrackBack

April 18, 2007

Judge Kozinski Talks About Cyberlaw

By Eric Goldman

Last October, Judge Alex Kozinski of the Ninth Circuit chatted with me in my Cyberspace Law course for 75 minutes. If you listen to the recording, you'll hear Judge Kozinski's humorous thoughts on receiving gifts when he speaks (he auctions them on eBay), selling on eBay (he's very proud of his feedback rating), blogging (he hates bloggers--told me that right to my face at breakfast after I told him I was a blogger) and being a judicial male "superhottie," as well as a less spirited discussion about the law of virtual worlds and the Sex.com case (it's hard to pin down sitting judges on substantive legal doctrines). Hope you enjoy the interview.

Posted by Eric at 04:05 PM | Domain Names , Publicity/Privacy Rights , Virtual Worlds | TrackBack

April 09, 2007

March 2007 Quick Links Part 2

By Eric Goldman

Yesterday I posted the Google edition of my list of interesting items from March. Today I post the remainder of items that caught my eye last month.

Trademarks/Brands

* Bosley Medical Institute v. Kremer, 2007 WL 935708 (S.D. Cal. Mar. 22, 2007). On remand from the Ninth Circuit, the district court denies Kremer's motions to dismiss/for SJ. Michael Atkins recaps the ruling and case's history.

* Milbank Tweed Hadley & McCloy LLP v. Milbank Holding Corp. d/b/a Milbank Real Estate Services, No. CV 06-187-RGK (JTLx), (C.D. Cal. Feb. 23, 2007). After passage of the Trademark Dilution Revision Act, the court rejects the existence of "niche fame" as support for a dilution action. I’m a little surprised that this plaintiff would bring this losing argument.

* ICANN votes down a .XXX TLD. Again.

* NYT on the increasing challenges of creating a unique global brand in very crowded namespaces.

* Trademarked Sentences: A tool that helps you generate poetry by mixing trademarked slogans.

Blogs/UGC

* BidZirk v. Smith, No. 06-1487 (4th Cir. March 6, 2007). The Fourth Circuit, in a non-substantive opinion, denied a company's request for an injunction against a griping blogger's use of its trademarks. My initial write-up of the case. With this loss, the plaintiff's ill-advised decision to appeal the case is now even more clearly a complete waste of the plaintiff's money and our judicial resources.

* Chapman v. Merchandise Mart Properties, 2007 WL 922258 (D. Vt. Mar. 23, 2007). Woman tries to get TRO against physical-space trade show based on trademark interests in the term "GreenStyle," which is her blog’s title. The court rejects the request, but interestingly doesn't seem fazed by the argument that she may have a trademark interest generated from her blog name. Blog names can be trademarkable with sufficient use in commerce, a factor the court ignored completely.

* Sifry: "70 million weblogs. About 120,000 new weblogs each day, or...1.4 new blogs every second."

* A nice retrospective on the history of blogging.

* Wikipedia is requiring some credentialing after getting burned by a pseudonymous contributor who falsely claimed he was a professor.

* Ed Felten has some terrific observations about building distributed reputation systems like Digg (and, for that matter, Epinions). Ed is 100% correct that reputation systems need substantial stabilization; they don't just work deus ex machina.

Contracts

* Dorr v. Yahoo, No 3:07-cv-01428-MJJ (N.D. Cal. complaint filed March 7, 2007). Yahoo offered a premium subscription service allowing users to send email without Yahoo's ads attached. Then, allegedly, they changed the service's terms, and some of the paying customers were unilaterally bumped to a tier where Yahoo's ads were again attached to their email. Steve Bryant has more. In general, if people pay to eliminate ads, during that period of time, Yahoo should not be able to unilaterally amend the terms so that the user is paying but still getting ads.

* Ken Adams blogs on Affinity Internet, Inc. v. Consolidated Credit Counseling Services, Inc., 920 So. 2d 1286 (Fla. Dist. Ct. App. 2006), where the court held that a contract clause saying "This contract is subject to all of SkyNetWEB's terms, conditions, user and acceptable use policies located at http://www.skynetweb.com/company/legal/legal.php" was insufficient to incorporate an arbitration clause contained in the referenced document. Ken's suggested fix: "The SkyNetWEB user agreement located at http://www.skynetweb.com/company/legal/legal.php constitutes part of this agreement."

Government Agencies

* The National Do Not Call Registry: Annual Report to Congress for FY 2006 Pursuant to the Do Not Call Implementation Act On Implementation of the National Do Not Call Registry (April 2007): "The Commission believes that the fundamental goal of the National Do Not Call Registry — to provide consumers with a simple, free, and effective means to limit unwanted telemarketing calls — has been realized." My curmudgeonly take on why the do-not-call registry isn’t great policy.

* Implementing the Children's Online Privacy Protection Act: A Federal Trade Commission Report to Congress (February 2007). The FTC remains pretty pleased with itself about COPPA, but it's worried about social networking sites and the continuing lack of age verification technology. I'm not as impressed with COPPA as the FTC is; see here and here. In any case, if you're doing COPPA research, this report helpfully recounts the 12 COPPA enforcement actions to date.

* Hard to believe, but payola busts are still being made. The latest: a $12.5M settlement. See the NYT and WaPo .

* Terrific post by the EFF’s Seth Schoen about a misguided report on P2P file sharing by the USPTO and the issues with empowering users to control their computers. A must-read.

Miscellaneous

* ACLU v. Gonzales, No. 98-559 (E.D. Pa. March 22, 2007). On remand from the Supreme Court, the court once again holds that the 1998 Child Online Protection Act is unconstitutional.

* CRS Report for Congress: An Overview of Recent U.S. Supreme Court Jurisprudence in Patent Law, March 16, 2007, discussing the last 8 Supreme Court patent cases.

* We've all heard about the magic of network effects. But as this Mercury News article explains, when an Internet start-up company's network takes root principally overseas, it can leave the company with a large audience of unmonetizable users.

* Jacob Loshin, Property in the Horizon: The Theory and Practice of Sign and Billboard Regulation, 30 Environs 101 (2006). A thoughtful discussion of the history of billboard regulation and some regulatory considerations.

* Coca-Cola's launch campaign for "Coke Zero" is premised on the idea that the executives of Coca-Cola want to sue the executives of Coke Zero (i.e., other executives within the same company) for "taste infringement" because the taste is so similar. Personally, I find commercials about faux lawsuits HILARIOUS. Ha ha ha. Except...if there isn't currently a cause of action for "taste infringement," with the expansion of IP rights, it may only be a matter of time... This turns the joke about how hard it would be to establish taste infringement on its head. Ironically, the commercial features Coke's actual lawyers. Yet more on this sorry story.

Posted by Eric at 09:14 AM | Content Regulation , Copyright , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Patents , Privacy/Security , Trademark | TrackBack

March 16, 2007

Dumb Domain Name Dispute Du Jour--Korb v. Maxmedia

By Eric Goldman

Korb v. Maxmedia, Inc., 2007 WL 734423 (E.D. Mich. Mar. 9, 2007)

I rarely blog on domain name disputes for two reasons. First, there are too many of them, and each one tends to look like the others. Second, most of them are completely stupid in that the parties spend way too much money to fight over an asset worth far less than the litigation costs.

With those principles in mind, this domain name dispute nevertheless caught my eye because of the omigod mistakes by both parties. Here's the background: Both Korb and Maxmedia are in the "interactive media" business and both (apparently independently) adopted the "maxmedia" trademark in 1996. Korb scored the domain name maxmedia.com in Nov. 1996. The opinion doesn't say what kinds of interactions the parties had from 1996 to 2005, but in April 2005, Maxmedia approaches Korb, first to buy the domain name and then to propose an employment relationship. On May 19, 2005, the parties sign a 1 year employment agreement that includes a $10,000 "signing bonus" that was conditioned on Korb's transfer of the domain name. The check is cut and Korb apparently changes the domain name's IP address, and Maxmedia launches a website under its new domain name. However, Korb didn't change the domain name's registrant information.

Not surprisingly, the relationship doesn't work out, and Maxmedia fires Korb on Sept. 1, 2005. But surprise! Maxmedia can't control the domain name, and suddenly Korb is nowhere to be found. Litigation ensues, with both parties suing each other. In this March 9 ruling, the court addresses Korb's effort to dismiss Maxmedia's claim that Korb is infringing Maxmedia's trademark. The court says that the trademark issue is a fact issue that can't be dismissed on summary judgment.

OK, but let's rewind. How many mistakes can we find in this scenario? Based on the court's description of the facts, some obvious mistakes on Maxmedia's part:

1) Bundling the employment and domain name acquisition. This leaves open the question of whether the signing bonus was just a signing bonus, or was it an acquisition payment for the domain name? It would have been better to use separate agreements to keep the domain name acquisition independent of the employment arrangement. Otherwise, the documentation appears to leave open the possibility that the domain name transfer will fail if Maxmedia ended the employment relationship early (as it did).
2) Not buying the trademarks as part of the domain name. A domain name buyer should always acquire any trademark rights of the seller--especially in a case like this, where the parties apparently co-existed/competed for 9 years.
3) Not completing the domain name transfer ASAP. This is an easy one. A domain name buyer should require the seller to fill out the transfer paperwork as part of the transaction documents--and DEFINITELY before the check is cut.
4) Not doing housekeeping before terminating Korb. Another obvious one. Before you can an employee, you make sure you've identified all of the assets in the employee's control and taken as many steps as possible to get those assets back in your possession. Because, as we know, a canned employee typically isn't a cooperative former employee.

And how about Korb's mistakes? Based on the court's writeup of the facts, there's no way that Korb is going to keep the domain name (probably based on breach of contract, but maybe other theories too). So this looks like a doomed-to-fail attempt to extract some extra cash for a domain name that he already sold once. Or, if he can find a way to keep the domain name, it seems pretty likely that he's going to have to cough up the $10,000 bonus. Either way, what a waste of time and money.

Posted by Eric at 10:23 AM | Domain Names , Licensing/Contracts | TrackBack

March 01, 2007

February 2007 Quick Links

By Eric Goldman

* The California Highway Patrol (which, for reasons unclear to me, has investigatory power here) has concluded that the Angelides campaign did not break any laws when they reverse-guessed URLs on Schwarzenegger's website and found an unrestricted page with a video of the Gov wondering about Assemblywoman Bonnie Garcia's "hot'' temperament because of her mixture of "black blood'' and "Latino blood'' and referring to Assembly Republicans as a "wild bunch." The CHP did recommend that Schwarzenegger's team tighten up their website security. Silly reminder: if you really want keep information a secret, don't put it on a website without password protection.

UPDATE: Greg Haverkamp points me to this document, which explains that the CHP has enforcement power over Penal Code 502 violations involving state computers. Interesting. In my mind, I see Erik Estrada revving up his PowerBook to bust some baddies...

* Voda v. Cordis Corp., 2007 WL 269431 (Fed. Cir. Feb. 1, 2007). Patent owner can't litigate infringement of foreign patent rights in US court as part of supplemental jurisdiction over a US patent infringement claim. Patry's writeup.

* NYT on how YouTube indirectly motivates teens to deliberately do stupid things just for the opportunity to post them and perhaps get notoriety. I had a first-hand observation of this when I trolled through YouTube looking for a Listerine commercial that I might show in class while teaching a case involving Listerine. A search for the word "Listerine" in YouTube produces video after video of people doing stupid things with Listerine, like eating big stacks of their breath film or snorting the breath spray and then writhing in pain. Watching video after video of people repetitively doing stupid stunts, I felt like shouting to these people: "IF YOU'RE GOING TO DO SOMETHING STUPID ON YOUTUBE, AT LEAST BE ORIGINAL!"

* From Steve Bryant at eWeek: Shannon Stovall sues Yahoo for including her photo in Yahoo's welcome email, claiming Yahoo violated her rights of publicity/privacy to the tune of $10M compensatory damages and $10M punitive damages.

* Digg users may mark content they don't agree with as "spam." The most recent example is Danny Sullivan's post on SEO, which got Dugg and then was eliminated when anti-SEO Digg users flagged it as spam. If a website defers content grading to its users, it has to trust that they are reporting their feedback accurately. If they aren't, the whole user grading process breaks down. And speaking of breakdowns, there is an active secondary market for Digg votes--check out how Annalee Newitz bought front page placement on Digg for about $100.

* The always-colorful Chris Hoofnagle has released a new paper, "The Denialists' Deck of Cards: An Illustrated Taxonomy of Rhetoric Used to Frustrate Consumer Protection Efforts." By his standards, I suspect I've dealt a full house with some of my rhetoric! Now, I wonder if he's going to create a complementary deck for bogus rhetorical tactics used by consumer protection "advocates"?

* From the EFF: "Debbie Foster, a single mom who was improperly sued by the RIAA back in 2004 for file sharing, has won back her attorneys' fees." Capitol Records v. Foster, No. 04-1569-W (W.D. Okla. Feb. 6, 2007). Unfortunately, that hasn't stopped the plaintiff from advancing nonsense arguments in the case, including the specious argument that a computer owner is automatically responsible if third parties use the computer to infringe copyrights. Fred at the EFF rightly debunks this argument.

* Wikipedia article: "Wikipedia is Failing." Your perspective about success or failure may be influenced by the impressive traffic gains that Wikipedia is experiencing--Wikipedia is now one of the top 10 most trafficked websites. Most of that traffic is coming from Google.

* Doe v. Josef Silney & Assoc., No 07-04167CA15 (Fla. Cir. Ct. complaint dated Feb., 13, 2007). Golfer Fuzzy Zoeller sues an alleged vandal of his Wikipedia page for defamation and related torts. Fortunately, he left Wikipedia out of the suit. However, he only knows the IP address of the person who modified the page, and that IP address is registered to the defendant. Is owning the IP address enough to establish liability? Or is this like an RIAA blunderbuss sue-first, ask-questions-later approach? It seems like the lawsuit should have been against a Doe, with a subpoena to find out who actually edited the page using that IP address.

* US v. Twombly, 2007 U.S. Dist. Lexis 12664 (S.D. Cal. Feb. 22, 2007). A spammer challenges some criminal provisions of CAN-SPAM as vague and overbroad, but the judge has no problems reading the statute to facilitate sending spammers to the slammer. Venkat's writeup.

* CDT groks (and mostly bashes) a variety of online kid-protection bills proposed in Congress.

* From the NYT: Nancy Pelosi posted some videos from C-SPAN to her blog. The Republicans immediately attack her for "pirating" the videos. Turns out that those videos were actually recorded by the government, so they are in the public domain. Whoops! The Republicans had to issue a mea culpa retraction. However, Nancy did grab a C-SPAN-owned video elsewhere which she had to take down. If our legislative leaders can't figure out what video they can recycle, how in the world can less-trained lay people do so? Patry has more.

* A bearish view on domain name speculation from CircleID. I share the sentiment that domain names don't matter, so domaining and typosquatting strike me as a short-term arbitrage opportunity that inevitably will be mooted by a variety of forces. Thus, the idea of paying 40 or 60 years worth of revenue for a domain name is laugh-out-loud funny to me.

* The Long Tail notes that some brands, trying to build a more esoteric image, try to hide their ownership by mainstream mass-market brands, a phenomenon he calls "brand dis-synergy." Examples: Dagoba Organic Chocolate, Joseph Schmidt, Cacao Reserve and Scharffen Berger chocolates (all owned by Hershey) and Converse (owned by Nike).

* Veritas busted for manufacturing revenues via round-tripping with AOL (Veritas bought AOL ads and AOL bought Veritas software; each at inflated prices).

* What does "or" mean? According to the 8th Circuit, it can mean "and." Ken Adams is on the case.

* Ricky Hoggard Holman, a 18 year old high schooler in Sudbury, Canada, correctly blogged all 24 of the American Idol finalists. How? Online research, such as researching the MySpace pages of contestants and emailing their MySpace friends. He also talked to some of the booted final 40 contestants, a few of whom broke their punitive-laden confidentiality agreement to dish some dirt. Maybe he wasn't studying, but clearly he's learned a few things about the power of good old-fashioned research. (The article says he's a straight A student, so he clearly can balance many things). Nice job, Ricky!

Posted by Eric at 12:03 PM | Content Regulation , Copyright , Derivative Liability , Domain Names , Licensing/Contracts , Marketing , Patents , Privacy/Security , Publicity/Privacy Rights , Search Engines , Spam , Trademark | TrackBack

February 24, 2007

Domain Name Regulation Talk and McGeorge ICANN Conference Recap

By Eric Goldman

Yesterday, I went to the McGeorge conference on ICANN and domain names. My slides from my talk entitled Keyword Regulation and Domain Name Exceptionalism. I made the point (first outlined in my Deregulating Relevancy article) that domain names are just a subset of navigational keywords, yet we've developed a pretty extensive list of domain name-specific regulations. I argued that we should harmonize the regulatory treatment of keywords by deregulating domain names.

A couple of other noteworthy talks from the event:

* Dr. Filomena Chirico from Tilburg University spoke about "Restrictions on Competition in Internet Governance"--basically, an antitrust analysis of the domain name market. The analysis was nicely presented but, I think, misses a critical point--she focuses on domain names as a standalone market, while I think there's significant cross-elasticity of demand between domain names and other types of marketing/keyword purchases.

* Dr. Todd Davies of Stanford gave an excellent talk entitled "Communication Infrastructure and Information as Forms of Private Property: A Behavioral Perspective on Technology Evolution." Effectively, this was a behavioral economics analysis of developing IP regulations. He then applied these principles to ICANN, showing that establishing ICANN creates a number of predictable problems from a behavioral economics approach, so we would be better off without ICANN trying to regulate domain names. He brought a number of interesting and valuable social science tools to the process of developing IP regulations. For example, he pointed to the psychology principle of "loss avoidance" and showed that endowing a person with IP rights creates the prospect of loss avoidance if that person feels like they are being deprived of their property. I've seen a lot of discussions about the problems of creating IP rights, but I'm not sure if I can recall seeing the loss avoidance principle raised as part of the reasons why IP owners fight so hard to protect their rights and howl whenever there is a proposed scale-back of rights. This looks worth exploring.

* Clark Kelso, California's Chief Information Officer (and a professor at McGeorge), gave the lunchtime keynote talk. He started the talk by listing a parade of horribles about Internet content/behavior (porn, spam, security threats, etc.) which led him to characterize the Internet as a "sewer" that needed substantive regulation to clean it up. In Q&A, I asked him if the Internet was more of a sewer than any other communication medium (his response indicated that he probably didn't understand my point). I shudder to think that he might be advancing the "Internet-as-sewer" meme throughout the corridors of power in Sacramento. Clark also came out swinging against net neutrality regulation. It will be interesting to see if the Schwarzenegger administration takes a more aggressive stance in that debate.

Posted by Eric at 08:52 AM | Adware/Spyware , Domain Names , Search Engines , Trademark | TrackBack

February 22, 2007

The Most Effective Anti-Terrorism Law EVER

By Eric Goldman

I really don't understand the way legislators think. The latest example of proposed laws that make me wonder "is that really necessary?": NY A5026/S631 (search here; apparently this law was also introduced in 2006 but died in committee). The bill's main operative provision proposes:

A person is guilty of criminal sale of an internet domain name to a terrorist group when he or she knowingly sells or provides without charge an internet domain name to any organization included on the list of organizations engaged in terrorist activities or who pose a terrorist threat compiled, maintained and updated by the state office of homeland security pursuant to paragraph (t) of subdivision two of section seven hundred nine of the executive law. Criminal sale of an internet domain name to a terrorist group is a class A misdemeanor.

Are they serious? Do the sponsoring NY legislators actually think they will single-handedly stop terrorism by criminalizing domain name sales? The law doesn't distinguish between individual sellers and retail registrars, so I wonder if registrars have the requisite scienter through automated processing of orders. If the law doesn't restrict registrar sales, then what exactly does it do? (presumably, govern the random one-off resale?) But even if it restricts registrars, I wonder if terrorist groups will think to register the domain name under a different name...

Posted by Eric at 11:23 AM | Domain Names | TrackBack

February 02, 2007

January 2007 Quick Links

By Eric Goldman

* Marketers (including Microsoft) are paying authors to write Wikipedia entries. Surprised?!

* Also on the topic of Wikipedia and marketers, Wikipedia has tagged all of their pages NOFOLLOW so that there's no way a marketer or website can get PageRank credit from inserting a link in Wikipedia. A reporter emailed me to ask "Do you think this move staves off the potential demise you have predicted?" My response: "No. This was actually raised in the comments to my initial post on the topic in Dec. 2005. Two points: (1) People who recycle Wikipedia content on their own site (such as Answers.com) may not use the nofollow attribute, so there still may be a PageRank payoff by inserting links on Wikipedia pages. (2) More importantly, marketers may want Wikipedia traffic directly (rather than the indirect boost in search engines). Wikipedia is already highly placed in the search engines, so it is a big traffic source in its own right."

* Speaking of my prediction of Wikipedia’s future, NPR picked up on it.

* Now that MyBlogLog is owned by Yahoo and thus increasing its traffic, Greg Linden reports that it's getting spammed.

* I previously reported that ICANN was thinking about retiring some TLDs. The first casualty? .um (for US Minor Outlying Islands, such as the Midway and Johnston Atolls), which got chucked because the registry operator didn't want to continue operating it and there were no registrations in the TLD.

* "The Search Tax: Are Search Engines Leeches?" This article discusses the role of search engines as intermediaries between consumers and marketers, able to charge marketers for access to consumers (hence, the "tax" reference). The article also discusses the value of buying trademarked keywords:

What's difficult for marketers to swallow, however, is the clear evidence the search engines (and affiliate marketers with good organic rank on brand terms) have the power to insert themselves between the consumer and the brand, even when consumers clearly have an interest in the brand (as indicated by their search query containing the brand or trademark).

Marketers' temptation may be to refuse to pay for brand keywords, sticking instead to the generic keywords that are also clearly aimed at any given target audience. In every case we've tested (and I have tested many and will likely test many more), that would be a mistake, even when the marketer has high organic rank on his brand. The results of every test we've executed indicate the incremental gain received when paying for traffic on a brand term has a very high net ROI (define) because: [1] Significant additional screen real estate on the SERP is gained. [2] The total control over title and description allows for greater offer control. [3] Top positions on one's brand usually aren't very expensive due to the engines' relevance algorithms. [4] The ability to control and tune the landing page results in a conversion rate percentage in many cases is higher for the combined pages than for one alone.

* We might consider the contrast between the prior post and this one: "Should Google Pay Off Brand Owners With Cut Of Keyword Sales?"

* Brand advertisers resist using Google because Google doesn't allow third party ad serving technology. But compare a BusinessWeek article reporting that big brands are buying up CPC inventory and pricing out small- and medium-sized advertisers.

* Google revised its algorithm to eliminate most of the famous Googlebombs (like "miserable failure"). Danny's recap. Google hasn't specified details, but I'm assuming that Google has somehow reduced the weight given to anchor text.

* A search engine marketer predicts the death of SEO with the emergence of personalized search. I agree! (HT: Greg Linden).

* eBay is blocking the auction of virtual assets due to the "legal complexities" of such sales. Because of its differentiated EULA, Second Life virtual assets can still be auctioned. The News.com article suggests that these transactions will move from eBay to other trading fora. Even so, this might inhibit the liquidity of these secondary market transactions, which could reduce the return of virtual asset speculators.

* According to Jakob Nielsen, about 1/2 of online giftcard recipients either junked their email notification or didn't trust it (i.e., thought it was phishing).

* HER, Inc. v. Re/Max First Choice, LLC, 2007 WL 43747 (SD Ohio Jan. 5, 2007). Competitor 1 registers domain names containing Competitor 2's trademarks, Competitor 2's principals' names and the principals' home address and phone number. The domains roll over to Competitor 1's website. Competitor 1 then sends a couple of gripe spam to Competitor 2's employees from some of the registered domain names bashing Competitor 2's business practices. The court isn't sympathetic, granting a PI based on ACPA and trademark infringement. While this type of competitor-bashing isn't permissible (and, frankly, registering domain names with the target people's home address and phone number is bizarre), Competitor 1 should have been able to find ways to deliver the same content without running afoul of the law.

* Google has lost an appeal at the OHIM in Europe over the rights to use the trademark "Gmail" for its email services.

* Does a "lactivist's" t-shirt saying "the other white milk" infringe the Pork Board's trademark in "the other white meat"? No, and what a dumb question!

* The RipOffReport.com has appeared on this blog several times (see here and here, among others). The Phoenix New Times (the local Phoenix alternative weekly) runs a lengthy and interesting story about the Ripoff Report and its principal, Ed Magedson. Worth reading.

Posted by Eric at 02:08 PM | Domain Names , E-Commerce , Licensing/Contracts , Marketing , Search Engines , Spam , Trademark , Virtual Worlds | TrackBack

January 10, 2007

December 2006 Quick Links

By Eric Goldman

* JP Enterprises, Inc. v. HDVE, LLC, 1:06-cv-01046-REB-PAC (D. Colo.). In June 2006, JP Enterprises sued Yahoo for selling its trademarks for keyword-triggered ads. In December, JP Enterprises and Yahoo stipulated a dismissal of the case against Yahoo (the remaining defendants weren't affected), presumably based on a settlement.

* Domain name valuations continue to rise. The latest overvalued domain name? Vodka.com, selling for $3M. This totally perplexes me. Can you imagine what $3M of well-spent PPC advertising would do?

* Amidst the TLD proliferation, ICANN is thinking about retiring some TLDs, such as .su for the (extinct) Soviet Union.

* According to ClickTales, "76% of the page-views with a scroll-bar, were scrolled to some extent[, and] 22% of the page-views with a scroll-bar, were scrolled all the way to the bottom." From a legal standpoint, currently we assume that content “below the fold” usually is legally irrelevant. However, if users routinely scroll down on pages, this may require rethinking.

* Forbes' special report: "Books." Especially interesting stories:
- The Secret Life Of An Online Book Reviewer
- Cory Doctorow, Giving It Away
- Stop Worrying About Copyrights
- Publish And Perish (about picking storage media to archive human knowledge)
- The Networked Book (about using blogs as a complement to the book authoring process)

* How about this manipulative practice? Yelp, the local consumer review guide, pays "marketing assistants" to leave positive comments for review authors to "help make Yelp appear to be a vibrant and outgoing community in hopes that it will actually become one." As the BusinessWeek article says, "Some reviewers may be turned off by the notion that an ostensibly disinterested fellow user is getting paid to compliment their writing." Ya think? Hiring professional back-patters crosses my line.

UPDATE: I got the following email from Jeremy Stoppelman, founder of Yelp:

The Businessweek article is misleading so I can understand how you got that impression. Our system breaks down as follows:

Community Managers - responsible for local marketing & pr, organizing yelp events (offline) and for welcoming people to the site. People who are active in the community generally know this person (and that they are an employee) since they are organizing local events and emailing users all the time.

Marketing Assistants - the first people in a new market (that has little-to-no community), they are paid to update our crappy yellow pages data and write some of the first reviews (e.g. make the site not empty). We initially suggested they get active (post on talk, compliment if someone shows up), but turned away from that quickly (for the same concerns you raised).

The only critique left is that these people aren't badged and I totally understand this issue (minor, but real). Therefore we decided before Christmas break we should badge all our marketing & community staff. This change should be out later tonight.

* The magazine Nature has ended its experiment with an open peer review process. Why? According to the AP, "The journal concluded that many researchers were either too busy or had no real incentive in evaluating their colleagues' work publicly. In addition, none of the editors found the posted comments influenced their decision whether a paper gets published." No point in manufacturing metadata if it's not going to change the decision anyway! But this raises a related question--what incentives are needed to produce useful metadata?

* As written up in the NYT, Sao Paulo has outlawed a wide variety of outdoor advertising, including billboards, leaflets, advertising on the sides of buses/taxis, and via airplanes and blimps, and has promulgated strict rules on commercial signage. This is a radical experiment in the effort to reduce visual clutter by squelching the availability of a major class of advertising. But Chris Hoofnagle (who pointed out the article to me) wonders, where are these ad dollars going to go? Presumably they will be redirected into different ad media, with uncertain consequences. For more on the effect of regulation in one advertising medium on advertising in other media, see my Coasean Analysis of Marketing article.

* In response to the Google/China flap, the State Department in February 2006 established the Global Internet Freedom Task Force (GIFT). On December 20, the GIFT issued a press statement outlining its "GIFT Strategy" consisting of 3 principal points:
- MONITORING Internet freedom in countries around the world
- RESPONDING to challenges to Internet freedom.
- ADVANCING Internet freedom by expanding access to the Internet.
I wonder if this effort will moot the need for the Global Online Freedom Act?

* BusinessWeek article on domain tasting (with the wildly hyperbolic title "The Great Internet Brand Rip-Off"--an editor ran amok!). Domain tasting always has struck me as a silly issue. Of course if you offer marketers a way to get exposure to consumers for free, some of them will abuse it! But I just have to believe that the legitimate utility of the 5 day refund period is low, if not zero. So the refund period should be killed, and consumers who make a typographical error when registering domain names should be SOL (much like it's almost impossible to fix an error if a consumer buys the wrong non-refundable airline tickets).

* Rick Skrenta: "RIP DMOZ: 1998-2006."

* AP Story updating the Steinbuch v. Cutler case. The case is in discovery now, and there's no sign that it will avoid a trial.

* Tom Smedinghoff wrote an excellent recap of last year's developments in the field of information security law: Where We're Headed — New Developments and Trends in the Law of Information Security.

* In December, Shuman (Google's click fraud czar) reportedly said that Google's click fraud rates were less than 2%, but then Google backpedaled and obfuscated about what Shuman had really said. In yet another terrific post, Danny sorts through the mess and tells us what we know and don't know about click fraud rates. Read the whole thing.

* Jeffrey Rohrs is one of the people I trust for expert opinions. I don't agree with his plaintiff-side orientation, but I respect his perspectives. He's written an analysis of the click fraud issue that he calls the Sausage Manifesto. A recap of Google's responses to the manifesto.

* Jennifer Granick predicts that EULAs and the law of mass surveillance will be the hot legal issues of 2007. Both seem good bets; I'd add to that list that this year we'll spend a lot of time irresolutely chasing our tail on the net neutrality issue.

Posted by Eric at 10:00 AM | Domain Names , General , Licensing/Contracts , Marketing , Privacy/Security , Search Engines , Trademark | TrackBack

January 08, 2007

Kremen Loses Challenge to ARIN's IP Address Allocation Policies--Kremen v. ARIN

By Eric Goldman

Kremen v. American Registry For Internet Numbers, Ltd., No. C 06-02554 JW (N.D. Cal. Dec. 20, 2006)

In a previous post about the Sex.com saga, I mentioned that Kremen had sued ARIN for its refusal to transfer over a block IP addresses assigned to Cohen without unwanted conditions. (ARIN was willing to transfer the IP addresses, but only on conditions that Kremen did not accept). I indicated that this case was potentially significant because ARIN's IP address allocation practices have not been judicially critiqued before, and such a review might lead to unexpected results.

Unfortunately, this case may not give us any greater insight into the legitimacy of ARIN's practices. Instead, the judge threw out Kremen's case on a technicality--expired statutes of limitations (SOLs). The judge, in a tersely worded opinion, concluded that the SOL commenced November 2001 when ARIN initially refused to assign the IP address blocks in response to Kremen's demands, and there were no new transgressions that reset the SOLs. All of Kremen's claims had 3 or 4 year SOLs (expiring no later than November 2005), and Kremen sued in April 2006, so the judge granted ARIN's motion to dismiss all of the claims.

However, Kremen's past litigation history suggests that he may very well appeal this ruling, so this case may not be over yet.

Posted by Eric at 08:53 AM | Domain Names | TrackBack

October 30, 2006

Sex.com -- An Update

By Eric Goldman

Judge Alex Kozinski recently guest lectured in my Cyberspace Law course, which prompted me to reread Kozinski's opinion in the Kremen v. Cohen Sex.com case. Because that opinion came out in 2003, it made me curious--what's happened to the lawsuit and the domain name since then?

Before getting into specifics, a quick recap. The Sex.com story has been oft-told, yet it's such a classic tale that it bears repeating. In early 1994, an enterprising Gary Kremen registered Sex.com with Network Solutions back when registrants could register domain names for free with just an email. In Oct. 1995, an interloper, Stephen Cohen, "stole" the domain name by submitting forged transfer papers to NSI. When Kremen discovered the transfer and demanded that NSI fix its mistake, NSI shrugged its shoulders and said to Kremen that he would have to go to court to resecure the domain name. Kremen did exactly that, sparking a decade-long legal battle over perhaps the most valuable domain name of all time. In the interim, Cohen allegedly reaped enormous profits (at least $40M, maybe hundreds of millions) from Sex.com during the time he possessed it.

The legal battle can be organized into 3 different fronts.

Kremen against Stephen Cohen

Kremen's first attack was against the interloper, Cohen. Kremen won a $65M judgment (which included a $25M punitive damages award) against Cohen in 2001. However, as I stress in my Cyberspace Law course, winning a judgment is a win only if it's enforceable. In this case, Cohen did everything possible to frustrate collection by fleeing the country (to Mexico, then Monte Carlo, and back to Mexico) and using clever machinations to move his money offshore and out of reach. Kremen was able to execute against 2 homes of Cohen's, including a house in upscale Rancho Santa Fe outside of San Diego that Kremen still uses as a personal residence. Meanwhile, based on Cohen's repeated acts in contravention of the judge's orders, the judge issued a contempt order and arrest warrant for Cohen.

After Kremen unsuccessfully offered $50,000 to bounty hunters to find Cohen, there was a break in the case in October 2005. Cohen was located in Tijuana, arrested by the Mexican police and extradited to the US. The judge has demanded that Cohen spill the beans about the location of the money, and Cohen refuses to do so. As a result, Cohen still sits in jail on the contempt order.

Kremen against Network Solutions

When it looked like Cohen wasn't going to pay up, Kremen went after Network Solutions as the domain name registrar, alleging breach of contract and conversion. The district court rejected the claims, but on appeal, Judge Kozinski reversed the conversion claim dismissal, concluding that California law permits intangible assets to be converted. The case was remanded to district court, but NSI settled the case in 2004. The settlement amount was confidential, but reports have put the amount at $20M.

Reading through the opinion again, I was struck by how Kozinksi's arguments could be used to support a conversion claim for other types of intangible assets, such as virtual world assets. I probed Kozinski on this very point in my class, and in his mind there's a distinction between assets taken within the game rules and outside the game rules.

I think this is right, but it may depend on the defendant. In the Kremen v. NSI case, the defendant was the service provider; but this was a truly unique situation where the customer (Kremen) and the service provider (NSI) didn't have a valid contract for the domain name registration because domain names were free. Thus, there was no consideration from Kremen for the domain name registration contract. In contrast, there is typically an airtight contract between the VW user and the service provider, and that contract will likely contain provisions that protect the service provider from any liability for asset conversion. I don't think Kozinski's reasoning could be read to extend conversion liability to the service provider in the face of such a contract. However, some other interloper who takes a virtual world asset outside of game rules could face conversion liability under the Ninth Circuit rule.

One more point about this case. When Kozinski's Ninth Circuit decision was issued, a number of commentators hailed it as a landmark case on protection of cyberproperty. It might ultimately be that, but I did a citation count and there are actually a surprisingly small number of cases citing to it so far (and none of particular note). So I personally think the Ninth Circuit decision is so fact-specific (service provider conversion of an intangible asset without any governing contract) that it's unlikely to be a true watershed decision.

Kremen against ARIN

The Sex.com battle has quietly spilled onto a third front. As part of Kremen's 2001 judgment against Cohen, the court imposed a constructive trust on all of Cohen's assets, including a large block of IP addresses assigned by ARIN. ARIN has refused to transfer the block as Kremen has asked, instead directing Kremen to follow ARIN's internal transfer policies, which Kremen apparently refuses to do. So in April 2006, Kremen sued ARIN for antitrust violations, conversion, unfair business practices and breach of fiduciary duties. See the complaint in Kremen v. American Registry for Internet Numbers (N.D. Cal.).

This is a case worth watching. ARIN is a relatively obscure and insular group, and over the years I have heard lots of frustration about their IP address block allocations and restrictions on transfer. This lawsuit has the potential to challenge these practices and change the process for IP address block allocations.

The Status Today

In Jan. 2006, Kremen sold the domain name to a low-profile pornography company, Escom, for $12M-14M. As a result, Kremen has received, so far, over $30M and 2 properties for the domain name, plus a pending $65M judgment (now over $80M including interest) against Cohen, plus any ongoing revenues he generated during the time he possessed the domain name. Talk about a lucrative domain name!

Earlier this month, Escom announced a strategic partnership with Playboy Enterprises, with the practical consequence that Sex.com has turned into a marketing portal for Playboy's content. Given the apparent value of this domain name, I'm sure we haven't heard the last word on its exploitation.

If you are interested in more of this story, Kieren McCarthy is publishing a book, Sex.com, in Britain in 2007.

UPDATE: Violet Blue writes an entertaining recap.

Posted by Eric at 05:44 PM | Domain Names , Internet History , Licensing/Contracts , Virtual Worlds | TrackBack

September 07, 2006

Adware, Spam and Some of My Other Favorite Topics

By Eric Goldman

There has been a flurry of interesting legal developments in the last few days:

* The plaintiffs voluntarily and unilaterally dismissed (with prejudice) Simios v. 180solutions, one of several putative class actions against adware vendors. See the 180solutions press release.

* The Battaglia v. DirectRevenue lawsuit, another of the putative class actions against adware vendors, has preliminarily settled. As David Fish points out, the settlement offers very little additional value for consumers beyond the settlement in the Sotelo case. Plaintiff's counsel gets $45,000--a pretty small payday for a case like this.

* The FTC case against Enternet Media has reached a stipulated order/settlement, including a $2M+ payment to the FTC. Enternet Media allegedly was one of the companies flashing banner/pop-up ads warning that your computer was infected and they would help; when users took advantage of their "help," they allegedly installed a bunch of harmful software onto users' computers.

* Jaynes v. Virginia, 2006 WL 2527678 (Va. App. Ct. Sept. 5, 2006). Virginia's intermediate appellate court upheld Virginia's harsh anti-spam law against both jurisdictional and First Amendment challenges. I believe Ethan Ackerman will guest-blog a more thorough analysis of this case soon. For now, Venkat has a thoughtful discussion. According to the Washington Post, Jeremy Jaynes will appeal the appellate ruling. If he can't overturn the ruling, he's facing an incredible 9 years in jail.

* Lands' End, Inc. v. Remy, 2006 WL 2521321 (W.D. Wis. Sept. 1, 2006). An affiliate registers some typosquatted domain names as a way of "diverting" consumers through those URLs to get the affiliate commission. The court denies the defendants SJ on the ACPA, fraud and breach of contract claims, but they do get SJ on the false advertising claim. Rebecca has the recap.

* According to Reuters, Bertelsmann is paying $60 million to settle Vivideni's lawsuit over Bertelsmann's investment in (and support of) Napster. (It's not clear how this settlement relates to Vivendi's acquisition of BMG). This lawsuit was particularly interesting because it tested the boundaries of investor liability for investing in copyright-infringing companies (a liability normally we expect to be precluded by the corporate veil). John O's discussion of some previous rulings in this case. Note that Bertelsmann was not the only investor-defendant in the case, so it may still be ongoing.

* The lawsuit over the fictional status of James Frey's putatively non-fiction book A Million Little Pieces has preliminarily settled. Buyers can get a full refund, but only if they jump through some significant hoops (like sending in an actual part of the book or packaging, plus a sworn statement that the purchaser would not have bought the book if they knew it was partially fiction). The publisher's liability is capped at $2.35M, which includes refunds, attorneys' fees and a donation to charity. Note that the publishers had offered rescission earlier in the case, but some plaintiffs were seeking compensation for their lost time/attention. It appears the publisher successfully limited its liability to rescission, and by making the barriers high enough, the publisher won't even have to make rescissions across-the-board.

Posted by Eric at 10:43 AM | Adware/Spyware , Copyright , Derivative Liability , Domain Names , Spam , Trademark | TrackBack

July 13, 2006

Trademark Travesty of the Month--SMJ Group v. 417 Lafayette Restaurant

By Eric Goldman

SMJ Group, Inc. v. 417 Lafayette Restaurant LLC, 2006 WL 1881768 (S.D.N.Y July 6, 2006)

I've read so many horrible trademark decisions that I barely notice the garden-variety judicial screw-up. But this case is so exceptional and outrageous that it made my jaw drop.

The Facts

The plaintiff is a restaurateur. The defendant is a non-profit organization that promotes restaurant workers' rights. The defendant created a pamphlet that it distributed in front of the plaintiff's restaurants. On the front, the pamphlet displayed the plaintiff's logos and the words "SPECIAL FOR YOU." Inside the pamphlet, the left side said "DO YOU REALLY WANT TO EAT HERE?" and the right side read:

Workers from this restaurant company have sued the company in Federal Court for misappropriated tips and unpaid overtime hours worked. More than 50 current and former workers from the restaurant company approached the Restaurant Opportunities Center of New York, complaining of misappropriated tips, unpaid overtime wages, racial and gender discrimination, sexual harassment, harsh working conditions in the restaurant, and retaliation for speaking up for their rights. SUPPORT THE WORKERS IN THEIR STRUGGLE FOR DECENT WORKING CONDITIONS! FOR MORE INFORMATION, PLEASE CALL ROC-NY (THE RESTAURANT OPPORTUNITIES CENTER OF NEW YORK) AT 212-343-1771.

The back read:

The Restaurant Opportunities Center of New York (ROC-NY) is a non-profit organization that seeks improved working conditions for restaurant workers citywide. ROC-NY assists restaurant workers seeking legal redress against employers who violate their employment rights. ROC-NY seeks to provide customers and the public with information about the litigation in this restaurant through these handbills, not to picket or interfere with deliveries. ROC-NY is not a labor organization and does not seek to represent the workers or be recognized as a collective bargaining agent of the workers at this restaurant.

You can see a copy of the leaflet as the exhibit to this affadavit.

So, we have a classic griper situation. The griper wants to communicate information to interested consumers to help them make informed marketplace decisions. Rather than set up a gripe website that would reach a small fraction of the restaurants’ consumers, the griper stands in front of the targeted businesses and hands relevant literature directly to potential consumers. Sure, the griper could have avoided using the plaintiff's logos on the brochure (or, for that matter, any reference to the restaurants by name). Nevertheless, there’s no mistaking the leaflet’s griping purpose, and I believe the marketplace mechanism depends on the robust flow of this unflattering information.

To squelch the griper, the plaintiff sues for trademark infringement and dilution. But the defendant engaged in non-commercial griping, so this seems like an easy case for the defense, right? Read on...

Trademark Infringement

Use in Commerce

The court takes its first wrong turn by equating trademark “use in commerce” with the scope of Congress' commerce clause powers. First, this is just a misreading of the Lanham Act but one that, unfortunately, has built a decent pedigree of similarly misguided precedent. See Uli Widmaier's deconstruction of this issue. Second, there is the lurking question of whether non-chain restaurants really engage in interstate commerce (I’m reminded of the old Blue Note Internet jurisdiction case of the mid-1990s).

Third, how did the dissemination of griping literature meet the inappropriately broad definition of trademark use in commerce? Here, the court's opinion is just bizarre--it concludes that distributing griping leaflets is the defendant's "service":

Plaintiffs' marks are clearly displayed on the front of the pamphlets distributed by defendants, and the distribution of those educational leaflets is a service under the Lanham Act. Accordingly, defendants' use of plaintiffs' marks is in connection with services as defined by the Act.

This can’t be right. Otherwise, tautologically, every griper is engaged in the “service” of griping. As a result, this court’s illogic would mean that every griper uses the target’s trademark in commerce when the griper references the targeted trademark as part of its griping literature.

Likelihood of Confusion

Even though the court muffs the "use in commerce” analysis, there's no way that the court can find a likelihood of consumer confusion…right?

Both parties agreed that, because of the logo on the front, readers initially will think that the leaflet was associated with the target restaurant. Both parties also agreed that all confusion is dispelled immediately when the reader opens the leaflet. As a result, the court bypasses the traditional multi-factor test because it says "the parties essentially agree that there is confusion." Instead, the court turns to the initial interest confusion doctrine to evaluate the legal significance of that initial confusion.

Superficially, this is a logical jump. The only “harm” here is the momentary confusion where the reader tries to figure out determine the “special” associated with the logo. Presumably, the reader may think that there’s a coupon or other special savings inside, and in that sense the consumer has been “duped.” On the other hand, the court could (and, I believe, should) look at the leaflet in total—evaluating the leaflet piecemeal is like considering only the first five seconds of a 30 second broadcast commercial.

In any case, once the court applies to the initial interest confusion doctrine, the defendant’s chances of success went down substantially, The IIC doctrine is very pro-plaintiff. First, it finds consumers were harmed without any rigorous evidence that consumers were affected in any way. Second, the doctrine lacks a single well-accepted definition, so it’s easy for plaintiffs to find favorable definitions and hard for defendants to combat an amorphous doctrine.

Trying to avoid the application of the pro-plaintiff doctrine, the defendant argues that IIC requires competitive diversion, citing to the Lamparello case. However, the court says that IIC isn't so limited, saying that there is no textual support to limit the Lanham Act's application to activities that have a commercial advantage.

This conclusion is flawed on multiple grounds. First, it's ironic that the court concludes there is no textual requirement of commercial advantage, given that IIC doesn’t have any textual basis in the statute itself. Second, the Lanham Act does have textual requirements for commercial advantage--it's in the "use in commerce" analysis that the court flubbed earlier (a point completely understood by the Lamparello court). Third, the multi-factor LOC test makes the commercial activity requirement clear (see the Bally Fitness v. Faber case to see what happens when a court tries to fit a non-commercial actor into the multi-factor test), but the court conveniently bypassed that test.

Finally, the court rejects the defense argument that they were not diverting customers. Instead, the court says:

defendants are redirecting customers to their goods and services [which the court defined as "the distribution of leaflets to educate the public about plaintiffs' employment practices"]. That redirection occurs as a result of confusion, and therefore defendants' use of plaintiffs' marks causes confusion under the Lanham Act.

With such a broad and misguided definition of "use in commerce," many online gripers tautologically commit initial interest confusion when they use domain names or keyword metatags with the plaintiff’s trademark. In that respect, this case undoes a lot of progress in griper trademark law made through cases like Lamparello and Bosley.

The First Amendment

There is no blanket First Amendment defense to trademark infringement, so these defenses often fail—as it did here. The court says simply: "defendants use plaintiffs' marks as a source identifier, and therefore defendants' use is not protected by the First Amendment."

Dilution

The court rejects the dilution argument for a variety of reasons, including the lack of requisite fame and evidence of actual dilution. Ironically, the court also cites the defendant's lack of "commercial use in commerce," saying "plaintiffs present no evidence that defendants' use of the marks is commercial. Indeed, while plaintiffs argue that defendants' use satisfies the Lanham Act's "in commerce" and "goods and services" requirements, their briefing is void of any mention of § 1125(c)'s special "commercial use" requirement." The fact that the court distinguishes the dilution “commercial use in commerce” standard from the trademark infringement “use in commerce” standard shows how easy it is for courts to go astray!

The Injunction

By contorting the law, the court concludes that the plaintiff has shown a likelihood of success on the trademark infringement claim. Normally, an injunction would follow as a matter of course. Yet, the court has one more contortion left--it concludes that this is the exceptional case where an injunction doesn't issue even though the plaintiff established a likelihood of success.

The court correctly notes that there's a presumption in favor of injunctions, but that injunctions aren't automatic (note the parallels to the MercExchange v. eBay Supreme Court case in the patent context). Here, the court says that the typical rationales supporting an injunction do not apply:

* because the defendant didn't gripe for profit, profit disgorgement calculations will not be speculative (there weren’t any profits)
* there is no risk that consumers will have lingering confusion from the leaflet
* "defendants' use of plaintiffs' marks is unlikely to cause plaintiffs to lose any sales due to defendants' infringement"--the message in the leaflet might cost sales, but the confusion that causes consumers to pick up the leaflet won't. As the court explains, this distinguishes the typical IIC case, where the unfair "foot in the door" advantage diverts consumers.
* on top of the foregoing, an injunction here would act as a prior restraint on speech (which would be germane to the First Amendment argument that the court summarily rejected earlier)

I've tried to do the best I can to summarize the court's reasoning about the injunction, but you have to read the whole thing yourself. In discussing the injunction, the court makes a variety of cogent arguments why this is not the typical case of initial interest confusion and why any harm to the plaintiff isn't appropriately actionable under the Lanham Act. However, the court only marshals up this cogency when discussing the injunction, when it would have been far more germane to the plaintiff’s prima facie case. Why the court did this Jekyll-and-Hyde routine-- contorting the law against the defendant on the substantive merits, only to fully grasp the sociopolitical consequences of the case when evaluating the injunction--remains a mystery.

Even though the court eventually recognizes that the defendant’s conduct doesn't fit the typical trademark infringement standards, the court's final outcome is bizarre. The defendant technically won this case by avoiding the preliminary injunction, but because the court determined that the plaintiff has a substantial likelihood of winning the trademark infringement claim, the defendant potentially could be liable for damages due to the infringement. It may be that the court won't award damages in any event (the injunction discussion suggests that the court doesn't think any damages occurred). However, if the court really wanted to stiff the plaintiff, there would have been far easier ways to rule for the defendant.

Conclusion

This case reinforces that the Lanham Act requires two immediate fixes. First, the statute’s multiple definitions of "use in commerce" needs to be harmonized/fixed to make it clear that defendants actually must be engaged in commercial activity. Second, the abominable initial interest confusion doctrine needs to be eliminated. It adds nothing to trademark infringement analysis, it confuses too many judges, and it allows judges to reach wacky results like this one.

Here, between the court's multiple errors and the socially beneficial speech jeopardized by the ruling, I rank this case as one of the five worst initial interest confusion cases of all time. As a result, I plan to contact defense counsel to see if further proceedings are likely and if I can marshal any helpful resources in those proceedings. If you're interested in being part of that effort, please email me (egoldman@gmail.com).

UPDATE: On Aug. 30, there was a follow-on ruling where the court dealt with various motions to dismiss. The court granted the motion to dismiss the TM dilution and deceptive business practices claims but denied the motion with respect to the TM infringement, injurious falsehood, unfair competition and tortious interference claims.

Posted by Eric at 12:05 PM | Domain Names , Trademark

May 08, 2006

Yahoo "Syndication Fraud" Lawsuits--Crafts by Veronica v. Yahoo and Draucker Development v. Yahoo

By Eric Goldman

Crafts by Veronica v. Yahoo, Inc., No. 2:06-cv-01985-JCL-MF (D. N.J. complaint filed May 1, 2006)
Draucker Development v. Yahoo, Inc., No. CV06-2737 (C.D. Cal. complaint filed May 4, 2006)

Two companion lawsuits against Yahoo for what the plaintiffs characterize as "syndication fraud." These complaints allege that Yahoo made false promises about where it would put advertisers' pay-per-click (PPC) ads. Specifically, Yahoo ran the plaintiffs' ads via adware and on typosquatting pages when advertisers believed that their ads would not appear in such formats (and presumably paid a premium to avoid such placement).

However, despite the serious-sounding use of the term "fraud," this is actually a fairly garden-variety breach of contract action, and a weak one at that.

The Complaint and Its Deficiencies

The complaint levels three principal charges against Yahoo: Yahoo promised that (1) advertisements would be “highly targeted,” (2) Yahoo would run ads on “popular” and “high-quality” sites, and (3) the ads would appear along with “relevant articles [and] product reviews.” Yahoo purported violated these promises by placing advertisers’ ads in adware and on typosquatted pages.

Let’s look more closely at these allegations.

Highly Targeted

The complaint repeatedly says that Yahoo promised that the ads would be highly targeted. But there’s a big problem: Yahoo didn’t say this, according to the plaintiffs’ own evidence. The complaint points to the following language from one of Yahoo's marketing pages:

You already know how Yahoo!'s flagship product Sponsored Search delivers highly targeted customer leads to your business by allowing you to control placement within sponsored search results across the Web.

Notice the bolded language—Yahoo says it delivers highly targeted customer leads, not highly targeted ads. If Yahoo promised highly targeted ads, arguably it was promsing a certain type of placement--but it didn't promise this. Thus, the difference between targeted ads and targeted leads could be fatal to the complaint—the plaintiffs never allege that they got poorly targeted customer leads, so the plaintiffs’ allegations don’t make a prima facie case of a breach.

This raises an interesting question—plaintiffs clearly know what Yahoo said, so why do the plaintiffs repeatedly mischaracterize Yahoo’s statement throughout the complaint? At best, this is sloppy work by the plaintiffs. At worst, the plaintiffs are blatantly and intentionally misleading the court. Either way, there’s a certain irony when plaintiffs in a misrepresentation case misrepresent the facts to the court, isn’t there? (Maybe Yahoo should bring an action against the plaintiffs for “complaint fraud”?).

My hypothesis is that the plaintiffs don’t want to litigate over lead quality because doing so would destroy the class. To determine lead quality, the court would have to look at each individual plaintiff’s situation to see what leads they got and how they converted, and thus there may not be enough commonality of interests to support a class action. To avoid this pitfall, perhaps the plaintiffs decided that the only way to keep a class action would be to misrepresent what Yahoo said. Other explanations could account for the misrepresentation, but I’m skeptical that it was mere sloppiness.

Let’s put aside the plaintiffs’ misdirection and assume that somewhere Yahoo has actually promised that the ads would be highly targeted. The words “highly targeted” are capable of multiple meanings. For example, the ads were targeted by keyword rather than by category or demographics, so arguably the ads were highly targeted regardless of where they were displayed.

However, the plaintiffs offer no basis to suggest why their interpretation is better than any other interpretation—they don’t cite to any evidence of the term’s meanings (such as private definitions created by the parties, or course of conduct, or industry convention). Instead, the plaintiffs only cite their subjective definition of the term. I’m not sure if this is enough to survive a motion to dismiss.

Popular and High-Quality Websites

Yahoo's marketing page also says:

The Content Match distribution network consists of popular, high-quality sites such as Yahoo! and MSN.com, providing you with better leads that are more likely to convert to sales.

Below this statement, the page gives some more examples that the complaint cites, including sites like Microsoft, CNN and the Wall Street Journal. I’ll stipulate that these sites should fulfill anyone’s definition of popular and high-quality. However, intermixed with these examples, Yahoo gave more examples of what it meant by “popular” and “high-quality,” including sites that I’ve never heard of, such as Away Network and Go2Net. By selectively cutting and pasting only the most prominent sites, the complaint tries to overstate Yahoo’s promise. Instead, plaintiffs who read this page should have gotten the impression that Yahoo’s network included a range of sites, some well-branded and others relatively obscure.

Articles and Product Reviews

Yahoo also says that:

Content Match™ complements your Sponsored Search campaign by displaying your existing listings along with relevant articles, product reviews and more, thereby providing an additional source of targeted leads.

Yahoo uses this same language in other places, such as the very lengthy Yahoo! Search Marketing Advertiser Workbook (see the glossary on page 97—referenced as page 98 in the complaint and labeled as page 109 in the file).

Notice what Yahoo actually said: “and more.” The complaint repeatedly omits those two words because it prefers to focus on the other words. But what do the words “and more” mean? They seem to contemplate that Yahoo would put ads in other contexts, and this negates the claim of a breach.

What Did the Contract Say?

The complaint works hard to pull in language from various marketing collateral, but interestingly it does not mention (not even once!) the centerpiece document in any breach of contract action: the contract that Yahoo and the advertisers actually entered into. I've not seen Yahoo's contract, but I'm assuming it has standard provisions such as a disclaimer of warranty and an entire agreement clause that may squash these extra-contract statements. Also, I wouldn't be a bit surprised if it specifically disclaims promises about where the ads would go or the likelihood of conversion. Either way, plaintiffs will have an uphill battle getting traction from language outside of the contract when the language in the actual contract may shut down these arguments pretty squarely.

Did the Plaintiffs Monitor Their Campaigns?

Let’s assume that plaintiffs read Yahoo’s marketing collateral and didn’t read their contract. Did the plaintiffs monitor their campaigns? There was lots of opportunity for plaintiffs to realize what Yahoo was doing if they monitored their campaign, and their resulting choices would be very telling. When plaintiffs learned of the purported deception, did the plaintiffs terminate the campaign or complain to Yahoo? Or did they keep on buying new ads despite their new-found knowledge? Recall the irony when a click fraud plaintiff (Click Defense) claimed that Google engaged in click fraud while it kept on advertising via Google.

Two Other Observations

(1) The plaintiffs had a massive mound of material to mine for misstatements by Yahoo—Yahoo’s website, securities filings, press releases, press quotes, etc. While not required, typically plaintiffs put the most egregious, most shocking misstatements by the defendant right into the complaint. Yet, given the universe of Yahoo’s public statements, I think it’s telling that the plaintiffs could marshal up language that, I think, is pretty feeble overall. To make the prima facie case, the plaintiffs pulled a few minor statements from some secondary marketing collateral and then heavily manipulate those statements (such as leaving out the “and more,” omitting some of the obscure syndication partners that Yahoo expressly enumerated, repeatedly mischaracterizing the “highly targeted” reference) to try to establish some basis for arguing breach. If this is the worst language that Yahoo communicated, I think they did pretty well (a lot better than I could do when I was an in-house counsel at Epinions!).

(2) Under standard contract law, “puffery” isn’t actionable. For example, if a car salesperson says “this is a wonderful car” in the sales process, the buyer can’t sue later if the buyer thinks the car wasn’t wonderful. The language cited by the plaintiff looks a lot like puffery, especially statements like “popular” or “high quality.”

Conclusion

Let’s be clear what this complaint isn’t about—it’s not about protecting consumers. Consumers may hate adware or typosquatting but this lawsuit doesn’t protect consumers from either. Instead, this is a dispute between Yahoo and advertisers over how much advertisers should pay for the advertising they got. And on that front, there’s little evidence that advertisers didn’t get exactly what they bargained for. They wanted advertising; they got advertising. There’s not even an assertion that the advertising performed poorly. I’m struggling to see a real problem here.

As a result, I think these lawsuits are nothing more than a shakedown for cash. Even unmeritorious class action lawsuits are expensive to defend, so the plaintiffs’ lawyers can exploit those defense costs for their personal largesse. They can make this argument to defendants: settle with me for a fraction of your total expected defense costs, and we’re both better off (defendants save some defense costs, plaintiffs’ lawyers grab some personal loot).

In particular, I’ve been trying to figure out why the plaintiffs (and a largely overlapping group of plaintiffs’ lawyers) filed two separate but virtually identical lawsuits. However, it does make sense as part of a shakedown. By opening up two battlefronts, the plaintiffs increase Yahoo’s defense costs, which should increase the incentive to settle (and the dollar value of a settlement).

It may be cheaper for Yahoo to settle than fight, but I hope Yahoo doesn’t reward the extortionists. Extortion shouldn’t pay, and I hope the plaintiffs find this out the hard way.

UPDATE: Evan Schaeffer offers a different possible explanation for why the plaintiffs filed overlapping lawsuits:

it's possible the plaintiffs' lawyers filed similar lawsuits in different forums because they plan to ask the MDL panel to consolidate the cases. By being in control of the majority of the transferred cases, it increases the likelihood that the lawyers will be able to control the litigation once the cases are consolidated

Posted by Eric at 01:00 PM | Adware/Spyware , Domain Names , Licensing/Contracts , Search Engines , Trademark | Comments (1)

February 24, 2006

Barrett on Internet Trademark Use

By Eric Goldman

Margreth Barrett, a law professor at UC Hastings, has published Internet Trademark Suits and the Demise of "Trademark Use," 39 U.C. Davis L. Rev. 371 (2006). The article makes a persuasive argument that the trademark use doctrine on the Internet has gone too far.

The abstract:

"The Internet has provided countless new ways for ingenious businesses and individuals to refer to a plaintiff’s mark in a manner that impacts the plaintiff’s business. These new methods may not directly associate the mark with goods or services that the defendant is offering for sale and may be completely hidden from consumers’ view. In evaluating the numerous trademark infringement and dilution suits that these unauthorized references have generated, courts have often failed to focus on the appropriate role of the “trademark use” requirement, which has traditionally limited the scope of the trademark infringement (and more recently, trademark dilution) cause of action. Some courts appear to have completely ignored the trademark use limitation, while others have acknowledged the limitation but construed it in a manner that undercuts or distorts it. This has given rise to a number of splits in the Circuit Courts of Appeals. This Article undertakes to bring some focus and coherence to the trademark use issue in the Internet context. It provides an in-depth examination of the history and purpose of the limitation and proposes a modern, general definition of “trademark use” in light of that history and purpose. It then demonstrates how this definition should apply in several important contexts on the Internet."

You might consider reading this article in conjunction with Dogan/Lemley's Houston article, Uli Widmaier's Hofstra article and Jennifer Rothman's Cardozo article (and, of course, my own!). This wave of articles over the past 18 months represents an uncoordinated but distinct academic reaction to judicial excesses in Internet trademark law.

Posted by Eric at 09:54 AM | Derivative Liability , Domain Names , Search Engines , Trademark | Comments (1)

February 21, 2006

Top Cyberspace IP Cases of 2005

By John Ottaviani (with help from Eric)

Cyberspace continues to present fascinating and novel intellectual property issues. What follows is our attempt at identifying some of the more significant “Cyberspace Intellectual Property” decisions of 2005. Once again, it was quite a year, with the Supreme Court’s decision in the Grokster case heading the list. (The Grokster case is the only one to make our “Top 10” list in each of 2003, 2004 and 2005!) Cyberspace intellectual property law is maturing, as evidenced by the fact that among our top ten cases are one U.S. Supreme Court and five U.S. Circuit Court of Appeals cases. And we are also seeing the courts struggling with the boundaries of trademark law, as they recognize that not every use of someone else’s trademark in Cyberspace provides a basis for an infringement claim.

Here are our “top ten” cases (thirteen, actually), followed by other cases which we felt are significant enough to mention. This list is not meant to be exhaustive, nor are the cases presented in any particular order of importance.

1. Supreme Court Finds Grokster Liable For Inducing Copyright Infringement “On A Gigantic Scale”

• Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., ___ U.S. ___, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005). Leave it to the U.S. Supreme Court to figure out a way to find Grokster liable for inducing copyright infringement “on a gigantic scale” without overturning or affirming the 1984 Sony decision. The Supreme Court’s unanimous holding is pretty succinct: “We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” The Court also limited the Sony decision to situations where a claim of liability is based solely on distributing a product with alternative infringing and non-infringing uses, with knowledge that some users would follow the unlawful course. The concurring opinions analyze the case in terms of Sony, with Justice Ginsberg concluding that ten percent non-infringing use probably would not be enough to avoid liability, while Justice Breyer concludes that ten percent probably would qualify as substantial non-infringing use.

2. Not Seeing Eye-to-Eye – Use of Trademark in Directory That Triggers Pop-Up Ads Is Not Trademark Infringement

• 1-800 Contacts, Inc. v. WhenU. Com, Inc., 414 F.3d 400 (2d Cir.), cert. denied, 126 S.Ct. 749 (2005). The owner of a website and the mark “1-800 Contacts” sued a competitor and WhenU.com, to enjoin them from delivering to computer users competitive “pop-up” Internet advertisements, in violation of federal and state copyright, trademark, and unfair competition laws. As reported in our list of Selected 2003 Cyberspace Intellectual Property Cases, the District Court held that: (1) 1-800 Contacts failed to establish a likelihood of success on its copyright claims, but (2) 1-800 Contacts established a likelihood of success on its trademark infringement claims.

On appeal, the Second Circuit threw out the trademark claims: “We hold that as a matter of law, WhenU does not “use” 1-800’s trademarks within the meaning of the Lanham Act, 15 U.S.C. §1127, when it: (1) includes 1-800’s website address, which is almost identical to 1-800’s trademark, in an unpublished directory of terms that trigger delivery of WhenU’s contextually relevant advertising to [computer users]; or (2) causes separate, branded pop-up ads to appear on a [computer user’s] computer screen either above, below or along the bottom edge of the 1-800 website window.” This brings the Second Circuit law in line with that of other federal courts that have found that WhenU’s use of the trademarks in a database that is not seen by the computer user is not a “trademark use.” See U-Haul International, Inc. v. WhenU.com, Inc., 279 F. Supp. 2d 723 (E.D. Va. 2003); Wells Fargo & Co., Inc. v. WhenU.com, Inc., 293 F. Supp. 2d 734 (E.D. Mich. 2003), (both of which appeared in our list of Selected 2003 Cyberspace Intellectual Property Cases).

Disclosure Note: In the Second Circuit appeal, Eric filed an amicus curiae brief on behalf of the Electronic Frontier Foundation urging reversal of the district court decision.

3. When Will It All End? – Maintaining An Index of Infringing Works, Without More, is Not Distribution of Infringing Works.

• In re Napster, Inc. Copyright Litigation, 377 F. Supp. 2d 796 (N.D. Cal. 2005). After the “old” Napster was shut down for infringing the record companies’ copyrights, the record companies have continued to pursue the entities that invested in Napster before it ceased operations. The record companies have alleged that, by investing in Napster and assuming control of the operation of the Napster file-sharing network, the investors contributorily and vicariously infringed the record companies’ copyrights.

In order to find the investors liable for contributory or vicarious infringement, the record companies first have to prove that there was an act of direct copyright infringement. The record companies have offered three theories of direct infringement as a basis for their secondary claims against the investors: (1) the Napster users who uploaded and made MP-3 files available on the Napster network engaged in the unauthorized distribution of the record companies’ copyrighted works in violation of Section 106(3) of the Copyright Act; (2) the downloading of MP-3 files by Napster users infringed the record companies exclusive rights to reproduce their copyrighted works under Section 106(1) of the Copyright Act; and (3) that Napster itself violated the record companies exclusive distribution rights under Section 106(3) by indexing MP-3 files that its users posted on the Napster network.

In this decision, Judge Patel shot down the third theory. The record companies relied primarily on the Fourth Circuit’s 1997 decision in Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199 (4th Cir. 1997), pointing to language that a copyrighted work is “distributed” within the meaning of Section 106(3) whenever it is “made available” to the public without authorization of the copyright owner. Judge Patel distinguished Hotaling, because the infringing works in this case never resided on the Napster system, while the library in that case had possession of the infringing copies in addition to listing them in its index. Interestingly, she went on to find that, to the extent that the Hotaling decision suggests that a mere offer to distribute a copyrighted work gives rise to liability under Section 106(3), that view is inconsistent with the text and legislative history of the Copyright Act. As a result, maintaining an index of infringing works, without more, is not “distributing” the infringing works. The case proceeds with further discovery on the “uploading” and “downloading” theories, however, so stay tuned next year for updates.

Editorial Note: John has never liked the Hotaling decision so he hopes Judge Patel’s decision stands.

• In re Napster Copyright Litigation, No. M:00-CY-61369-MHP, slip op. (N.D. Cal. May 11, 2005). Prior to deciding the summary judgment motion, Judge Patel denied the record companies’ leave to file a supplemental memorandum in opposition to Napster’s summary judgment motion, arguing that the recently passed Artists’ Rights and Theft Prevention Act of 2005 (“Art Act”) supported their argument that maintaining the index of downloadable files does infringe the distribution right under §106(3) of the Copyright Act. Judge Patel ruled that the record companies could not file the supplemental brief, because she found that the Art Act did not change anything as to how §106(3) should be interpreted.

4. Incredible Hulk Rescues Paragon City! Use Of Comic Book Character Names By Players For Video Game Characters Is Not Trademark Infringement.

• Marvel Enterprises Inc. v. NCSoft Corp., 74 U.S.P.Q. 2d 1303 (C.D. Cal. 2005). NCSoft creates, markets, distributes and hosts “City of Heroes”, a computer video game that allows players to play online and create characters that are virtually identical in name, appearance and characteristics to the comic book characters owned by Marvel. There are a number of procedural motions dealt with in this opinion, but the interesting discussion is the court’s dismissal of the contributory trademark infringement and vicarious trademark infringement claims. Although game users create character names that are the same as Marvel’s registered trademarks, the court concludes that the game users are not using these names in commerce in connection with any “sale or advertising of goods and services.” Thus, there is no “use in commerce” of the marks, so there is no direct trademark infringement on the part of the game users for which NCSoft could be contributorily or vicariously liable, and these claims were dismissed. Marvel was allowed to proceed on its contributory and vicarious copyright infringement claims theories.

• Marvel Enterprises Inc. v. NCSoft Corp., No. CV 04-9253-RGK (C.D. Cal. Aug. 22, 2005). In a later ruling, NCSoft’s claims that Marvel sent bogus takedown notices under the false DMCA notification provisions of 17 U.S.C. §512(f) survived a motion to dismiss. The court also rejected Marvel’s argument that a “service provider” under Section §512(f) has to be “passive” and “innocent.” Among other things, NCSoft alleged that Marvel employees created the infringing knock off characters that Marvel then demanded be removed from NCSoft’s network.

• The case settled in December 2005. The terms of the settlement have not been publicly reported.

5. Making a Mark – Patent Marking Statute Applies To Websites

A pair of patent cases illustrates how the traditional patent concept of “marking” should be applied in Cyberspace. Under 35 U.S.C. §287(a), one who owns a patent is entitled to recover damages from the time when it actually notifies the infringer of its infringement, or when it begins marking its products with a patent notice containing the number of the patent and otherwise complying with §287(a), whichever is earlier. This “marking statute” does not apply to patent claims that are addressed to a method of doing something (as opposed to a tangible article or apparatus), because ordinarily there is nothing to mark. When a patent contains both method and apparatus claims, the patent owner is required to mark “to the extent that there is a tangible item to mark by which notice of the asserted method claims can be given.” Am. Med. Sys., Inc. v. Med. Eng. Corp., 6 F.3d 1523, 1537 (Fed. Cir. 1993).

• Soverain Software LLC v. Amazon.com, Inc., 383 F. Supp. 2d 904 (E.D. Tex. 2005). In this case, Soverain alleged that Amazon.com infringed three patents owned by Soverain covering a network based sales system that included a buyer computer, a selling computer, a payment computer and virtual shopping cart. All of the patents contained both method and apparatus claims. Amazon moved for partial summary judgment to limit its damages, claiming that Amazon did not have notice of the alleged infringement until the suit was filed because Soverain did not comply with the marking statute. The court rejected Soverain’s argument that a website is an intangible object for which marking is not required. The court took notice of numerous websites that contain patent notices, and found in favor of Amazon on this issue.

• IMX, Inc. v. Lending Tree, LLC, No. Civ. 03-1067-SLR, 2005 WL 3465555 (D. Del. Dec. 15, 2005). IMX alleged patent infringement against Lending Tree for infringement of a patent owned by IMX for a method and system for trading loans in real time and placing loan applications up for bid by a plurality of potential lenders. The patent was implemented through software that was accessed through an Internet website, but the website itself was not part of the patent claims. Information on the website talked about “patented technology,” but one reached the patent number and a copy of the patent only after a number of obscure links. Lending Tree moved for partial summary judgment limiting damages, due to IMX’s failure to comply with the patent marking statute. IMX tried to distinguish Soverain by arguing that the website itself was not the patented invention, and did not practice the patent, but was just a means through which the public and the brokers accessed the patented technology. The court, however, found that the website is “intrinsic to the patented system and constitutes a tangible item to mark by which notice of the asserted method can be given,” and granted Lending Tree’s motion.

6. GripeSites I – Use of Expressive Domain Names That Are Unlikely to Cause Confusion Is Not Trademark Infringement

• Faegre & Benson, LLP v. Purdy, 367 F. Supp. 2d 1238 (D. Minn. 2005). Yet another chapter in the long-running saga between the Minnesota law firm and an anti-abortion activist, who is of the opinion that Faegre & Benson is supporting abortion and is attempting to silence his speech criticizing his alleged support of abortion. Purdy typically posted his opinions on a webpage that mimics Faegre’s webpage, generally with a disclaimer such as “Official Faegre Website Parody” or similar language. The source code of his counterfeit pages also contained metatags, including the trademarked term “Faegre & Benson” and some meta-descriptions taken from Faegre’s webpage. Faegre & Benson obtained a preliminary injunction in January 2004. After Mr. Purdy continued his behavior, Faegre & Benson filed a motion for contempt. After reviewing the situation, the court found: (1) there is no trade dress infringement because of the overall dissimilarity of the webpages and the clear disclaimer; (2) that Purdy has the right to use “expressive domain names that are unlikely to cause confusion” (such as faegre-law-love-democraticjudgemichaeldavis-judgeanmontgomery.com), even if they include the term “Faegre” or “Faegre & Benson,” because this constitutes a statement of Purdy’s opinion rather than a bad faith intent to profit from Faegre’s protected mark; and (3) that Purdy could legitimately use Faegre’s trademarks in the metatags for his webpages in order to refer to Faegre and to describe the content of his website (but not in order to divert Internet users from Faegre’s website).

7. Yes, Virginia, Unauthorized Downloading Of Copyrighted Music Does Constitute Copyright Infringement

• BMG Music v. Gonzalez, 430 F.3d 888 (7th Cir. 2005). Ms. Gonzalez downloaded more than 1,370 copyrighted songs during a few weeks and kept them on her computer until she was caught. She tried to argue that, despite the assumption in Grokster and Aimster that people who download music are primary infringers, her activities were protected by the “fair use” defense under the terms of 17 U.S.C. §107. With respect to 30 songs in question in this lawsuit that she downloaded, played and retained on her hard drive (and which she did not previously own), the court rejected her fair use argument. In doing so, the court noted that there are various alternative ways for Ms. Gonzalez to have sampled songs for purchase on an authorized basis, including radio, streaming Internet radio, iTunes, and other Internet licensing intermediaries such as Yahoo!, Real Rhapsody and SNOCAP.

8. Avalanche! Software Developers Contracted Away Their Right To Reverse Engineer Blizzard’s Games

• Davidson & Associates d/b/a Blizzard Entertainment, Inc. v Jung, 422 F.3d 630 (8th Cir. 2005). Blizzard creates and sells software games for personal computers, and operates “battle.net”, a 24-hour online gaming service available exclusively for purchasers of its computer games via the Internet or local area networks. In order to play the game contained on a CD-ROM, a user must first install the game onto a computer and agree to the terms of an end-user license agreement and terms of use, both of which prohibit reverse engineering, by clicking on an “I agree” button during the installation process. First time users of battle.net are also shown terms of use which, among other things, prohibit reverse engineering. The outside of the package for the game contains a statement that use of the game is subject to the end user license agreement and that use of battle.net is subject to the terms of use. The defendants are lead developers for a volunteer project that developed a service that emulates the battle.net service and permits users to play on line without use of battle.net. The developers attempted to mirror all of the user visible features of battle.net. In order to make its service compatible with battle.net and Blizzard’s game software, defendants used reversed engineering to learn Blizzard’s protocol language and to make sure the new service worked with Blizzard games.

After the parties settled a number of claims, the district court granted summary judgment for Blizzard and determined that: (1) Blizzard’s software end-user license and terms of usage agreements were enforceable contracts; (2) the defendants waived any “fair use” defense; (3) the agreements did not constitute misuse of copyright; and (4) the defendants violated the anti-circumvention and anti-trafficking provisions of the Digital Millennium Copyright Act.

On appeal, the Seventh Circuit rejected the defendants’ argument, relying upon Vault v. Quaid Software Ltd. 847 F. 2d 255 (5th Cir. 1988), that the state breach of contract claims were preempted by federal copyright law, The Seventh Circuit distinguished the Vault decision because the state contract law in Blizzard neither conflicted with the interoperability exception of the DMCA (17 U.S.C. §1201(f)), nor restricts rights given under federal law. Citing Bowers v. Bay State Technologies, Inc., 320 F. 3d 1317 Fed. Cir. 2003), the Seventh Circuit stated that private parties are free to contractually forego the limited ability to reverse engineer a software product under the exemptions of the Copyright Act. By agreeing to the terms of use under the end user license agreements, the court concluded that the defendants expressly relinquished their rights to reverse engineer.

The Seventh Circuit also affirmed that the defendants’ reverse engineering violated the anti-circumvention and anti-trafficking prohibitions of the DMCA, and were not protected by the “interoperability” exception because the circumvention in this case constitutes infringement.

9. GripeSites II – Another Gripe Site’s Prayers Are Answered

• Lamparello v. Falwell, 420 F.3d 309 (4th Cir. 2005). Lamparello registered the domain name www.fallwell.com after hearing Reverend Jerry Falwell give an interview in which he expressed opinions about gay people and homosexuality that Lamparello considered offensive. The site contained in depth criticism of Reverend Falwell’s views. The home page prominently stated “this website is not affiliated with Jerry Falwell or his ministry” and provided a hyperlink to Reverend Falwell’s website. Lamparello never sold goods or services on his website. After receiving cease and desist letters from Reverend Falwell, and losing a UDRP arbitration proceeding over the domain name, Lamparello filed an action seeking a declaratory judgment of non-infringement in order to avoid losing the domain name. The District Court granted summary judgment to Reverend Falwell on his claims of trademark infringement, false designation of origin, federal and state unfair competition and violations of the Anti-cybersquatting Act.

On appeal, the Fourth Circuit reversed. The Fourth Circuit found that Lamparello’s use of Reverend Farwell’s name was not likely to cause confusion as to the source of the website and found that www.fallwell.com did not infringe. Important factors in the court’s decision were: (1) the websites looked nothing alike; (2) Lamparello clearly created his website intending only to provide a forum to criticize Reverend Falwell’s ideas, not to steal customers; (3) Reverend Falwell and Lamparello offer opposing ideas and commentary, not similar goods and services; and (4) anecdotal evidence indicated that those searching for Reverend Falwell’s site and arriving at Lamparello’s site quickly realized that Reverend Falwell was not the source of the content.

In an interesting discussion, the Fourth Circuit expressly refused to adopt “the “initial interest confusion” doctrine and interpreted the use of that doctrine by the Ninth Circuit as applying only in cases involving one business’s use of another’s mark for its own financial gain, not in cases involving gripe sites. The Fourth Circuit also rejected the ACPA claim because Reverend Falwell could not demonstrate that Lamparello “had a bad faith intent to profit from using the www.fallwell.com domain name, citing TMI, Inc. v. Maxwell, 368 F.3d 433 (5th Cir. 2004) and Lucas Nursery and Landscaping, Inc. v. Grosse, 359 F3d 806 (6th Cir. 2004) [both of which appeared in our list of Selected 2004 Cyberspace Intellectual Property Cases].

10. GripeSites III – Bosley Medical Scalped By Ninth Circuit

• Bosley Medical Institute, Inc. v. Kremer, 403 F.3d 672 (9th Cir. 2005). Mr. Kremer was dissatisfied with the hair restoration services provided to him by Bosley Medical Institute. To get even, Mr. Kremer started a website at www.bosleymedical.com, which was uncomplimentary of Bosley. Shortly after registering the domain name, and before posting its content, Mr. Kremer went to Bosley’s office and offered Bosley an opportunity to discuss the issue but did not mention domain names or make any references to the Internet.

The Ninth Circuit held that Kremer’s use of “Bosley Medical” in the domain name was non-commercial and unlikely to cause confusion, and affirmed the dismissal of Bosley’s trademark infringement and dilution claims. “We hold today that the noncommercial use of a trademark as the domain name of a website---the subject of which is consumer commentary about the products and services represented by the mark---does not constitute infringement under the Lanham Act.” The court found that Congress intended that the Lanham Act and the Federal Trademark Dilution Act apply only to marks used “in connection with the sale, offering for sale, distribution, or advertising of any goods or services”. The court found that Kremer’s website contained no commercial links and at no time offered for sale any products or service, nor contained paid advertisements from any other commercial entity. The Ninth Circuit also rejected an argument that one could reach a discussion group site, which in turn contained advertising, by following links from Kremer’s website as being “too attenuated”. The Ninth Circuit also rejected Bosley’s claims that Kremer used the mark in connection with Bosley’s goods and services, because Kremer’s use of Bosley’s mark was in connection with the expression of his opinion about Bosley’s goods and services, not in connection with the sale or advertising of goods and services. The court also reversed the dismissal of the ACPA claims because the ACPA did not contain a commercial use requirement and remanded this claim to district court.

Here are several other cases that did not make the “top 10” but are also of interest:

American Girl, LLC. v. Nameview, Inc., 301 F. Supp. 2d 876 (E.D. Wis. 2005) (domain name registrar who simply accepts the registration of a domain name generally is not liable for trademark infringement or dilution, unfair competition or ACPA violations) (citing several other cases with consistent holdings).

Egilman v. Keller & Heckman, LLP, 401 F. Supp. 2d 105 (D.D.C. 2005) (accessing a computer system through unauthorized use of validly created user name and password does not “circumvent a technological measure” in violation of anti-circumvention provisions of DMCA).

Century 21 Real Estate Corp. v. Lending Tree, Inc., 425 F.3d 211 (3d Cir. 2005). Third Circuit joins Ninth Circuit in expressly adopting “nominative fair use” defense to trademark infringement claims. See New Kids on the Block v. News America Pub. Inc., 971 F.2d 302 (9th Cir. 1992). Third Circuit adopted a two-part test: (1) first, a plaintiff must prove that confusion is likely due to the defendant’s use of plaintiff’s mark; (2) then the burden shifts to the defendant to show that its use of the plaintiff’s mark is nonetheless “fair.” Relevant factors for the second step are: whether use of the plaintiff’s mark is necessary to describe plaintiff’s and defendant’s products and services; whether only so much of plaintiff’s mark was used as is necessary to describe plaintiff’s products and services; and whether defendant’s conduct or language reflect the true and accurate relationship between plaintiff’s and defendant’s products and services.

SMC Promotions, Inc. v. SMC Promotions, 355 F. Supp. 2d 1127 (C.D. Cal. 2005). License agreement that allows a wholesaler’s retail customers to download wholesaler’s copyrighted product images and descriptions onto the retailers’ websites, was not broad enough to cover the retailers’ practice of engaging a third party vendor to download images on the retailers’ behalf as part of the process of creating websites for the retailers.

Posted by Eric at 07:07 AM | Copyright , Domain Names , Patents , Trademark

December 28, 2005

Google Sued for Trademark Infringement Based on Third Level Subdomain--Jews for Jesus v. Google

By Eric Goldman

Jews for Jesus v. Google, Inc., 05-CV-10684 (SDNY complaint filed Dec. 21, 2005)

It's no surprise that Google has been sued again for trademark infringement, but the basis of this lawsuit is surprising. Rather than another lawsuit over the sale of trademarked keywords to deliver ads (along the lines of the GEICO, American Blinds, Rescuecom and JTH Tax cases, or the dozens of international lawsuits), this lawsuit is based on a Blogspot blog URL. Because of its comparative novelty, this lawsuit raises some complex and unsettled legal issues.

Background

The basis of this lawsuit is a Blogspot-hosted blog at jewsforjesus.blogspot.com. Until the lawsuit, this blog was basically dormant--there were 3 posts between Jan. 30, 2005 and May 9, 2005, and there had been no posts for over 7 months. The first three posts suggest a tone of mild criticism against the organization, as does the username ("Whistle Blower").

Why Did the Plaintiff Sue?

I'm not exactly clear why Jews for Jesus cared about this blog enough to tangle with the mighty Google. Thinking out loud, I can hypothesize four possible reasons (none of them especially compelling).

First, maybe the organization wanted to shut down a griper. If so, a lawsuit against media darling Google is one sure-fire way to counterproductively ensure that the griper's words will be seen by all the world.

Also, using trademark law to shut down a griper never produces very good results. At best, a successful lawsuit causes the griper to find a new home under a different name; but the content can remain online, and the lawsuit gives the griper more grist for the mill (such as, in this case, reinvigorating a dormant blogger).

It does bear noting that Jews for Jesus has gone after an Internet griper before in an early and influential Internet trademark case, Jews for Jesus v. Brodsky. Ronald Coleman has some comments about that.

Second, maybe the blog was getting too good search engine placement. This doesn't seem too likely given the blog's low PageRank of 2. The blog didn't show on the first page of Google search results for "Jews for Jesus" (although it may have been pushed down by all of the well-placed articles about the lawsuit now showing up on that term). The blog did show up as the 5th search result for "jewsforjesus," but I wonder how many people search for that term. All told, I suspect the blog doesn't get much search engine traffic.

Third, maybe Jews for Jesus believes that it needs to bring a lawsuit to adequately police its trademark rights. Trademark owners do have some obligations to enforce their rights against known infringers at peril of losing some or all of their trademark rights, so there is a concern here. However, I find that this policing obligation is often way overstated (usually as a business development tool for trademark lawyers), and I'm skeptical that Jews for Jesus' failure to go after a griper using a third level subdomain would have any implications for their future trademark rights. But perhaps bright minds would disagree on this point.

My fourth and final hypothesis is that Jews for Jesus wanted some low-cost press. Suing Google is a press strategy; it's guaranteed to get your name slathered in headlines, and we've seen this Google-lawsuit-as-PR tactic used by others such as JTH Tax and Click Defense. Of course, this works only if you subscribe to the view that there is no such thing as bad press. Dubious lawsuits against well-funded defendants based on socially-protected speech often play poorly in the press...and in the courts.

The Trademark Infringement Claim

As for the merits of this lawsuit, blog names can give rise to trademark infringement. A blog can be a vehicle for social commentary, an entrepreneurial venture, or both. In the case where bloggers are building a business, the blog name can be a trademark. In that respect, a blog name is no different from the business name or a domain name that acts as the source identifier. And if a commercial-oriented blog's name is confusingly similar to someone else's trademark, the name can support a trademark infringement claim.

However, there may be a difference between a second-level domain name (blogspot.com) and a third-level subdomain (jewsforjesus.blogspot.com). It's not entirely clear that consumers attach equal importance to third-level subdomains when seeing the domain name unattached to the content. And certainly, by the time anyone arrived at the blog, it was clear that the blog wasn't run by the organization. (The "About" box now reads "This blog is not authorized by, affiliated, connected, or otherwise associated with the California non-profit religious organization Jews for Jesus," although I don't know if this was always the case--there's no entries in archive.org for the blog).

To overcome the relative unimportance that many consumers may place on third-level subdomains, the plaintiff makes a pretty laughable assertion that people guess third-level domain names (para. 41). It says: "someone searching for a blog about a particular subject or company is likely to try to find such a blog by guessing at a URL at a popular blog-hosting domain such as blogspot.com." Are they kidding? Second-level domain name guessing has been on the wane for over a half-decade, and I find it incredible to believe that people go around guessing third-level subdomains. I'll go one step further--I'm 99% confident that NO ONE has EVER guessed the domain jewsforjesus.blogspot.com (other than perhaps people affiliated with the organization prepping the lawsuit). I'd sure like to see some empirical evidence from the plaintiff supporting this assertion!

The main trademark infringement claim has other challenges as well. There has been a smattering of trademark infringement lawsuits involving parts of a URL other than the second-level domain. Two immediately come to mind: Patmont Motors v. Gateway Marine, 1997 WL 811770 (N.D. Cal. 1997) and Interactive Products Corp. v. a2z Mobile Office Solutions, Inc., 326 F.3d 687 (6th Cir. 2003). I suspect there are a few others. Both cases were defense wins, so the plaintiff in this case will have to do some work to distinguish them.

Depending on how the plaintiff tries to distinguish the precedent, the plaintiff may run headlong into 15 USC 1114(2)(D)(iii), which reads:

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.

Per 15 USC 1127, a "“domain name” means any alphanumeric designation which is registered with or assigned by any domain name registrar, domain name registry, or other domain name registration authority as part of an electronic address on the Internet" (emphasis added).

Read literally, a domain name registrar isn't liable for trademark damages for registering someone else's domain name (absent bad faith intent to profit). But is Google a domain name registrar in this context? Normally I would say no, but the definition of domain name covers more than second-level domains. Further, the complaint makes a point of referencing the URL as a domain name.

Therefore, if the plaintiff tries to get around the Interactive Products and Patmont cases by saying that this case involves domain names while those cases involved post-domain URL paths, I think the plaintiff runs squarely into the 1114 exculpation clause. If so, the plaintiff has to show that Google had a bad faith intent to profit, and I don't think the alleged facts support that.

(I recognize that the registrar exculpation language in 1114 probably wasn't intended to cover third-level subdomains, but I don't see any reason why it can't apply based on the statute's plain language).

Finally, the complaint can't decide if Google is the direct infringer or a contributory infringer. This is a pretty significant legal issue, but at least the plaintiff isn't alone in waffling on this point (see the Ninth Circuit's punt on this precise question in the Playboy v. Netscape case). I think the plaintiff will have significant difficulty proving that the blogger was a direct infringer--there isn't any evidence of commercial activity by the blogger, so there may not be any trademark use in commerce. Even if there is a TM use in commerce, I think the court will have difficulty finding likelihood of consumer confusion (see the Lamparello case for almost identical facts). So I think the plaintiff's only hope is to treat Google as a direct infringer. However, given that the blog currently doesn't have any ads, I'm not sure how Google has made a trademark use in commerce itself.

Other Claims

The complaint makes a host of other claims, some of which would be laugh-out-loud funny if they didn't border on Rule 11 violations. The complaint alleges contributory dilution (a theory that has been soundly rejected by the courts that have expressly considered it) and vicarious dilution (I believe this is a wholly novel cause of action), contributory and vicarious unfair competition (huh???) and other junk claims that will get a guffaw (and perhaps even a sanction or two) from the judge when granting the motion to dismiss.

Even if Google doesn't get any sanctions, I expect Google will countersue the plaintiff. Google's past litigation behavior has been pretty aggressive, and they like to go on the offensive. Fortunately for Google, this complaint may have enough junky claims to give them some grounds to do so.

Conclusion

This lawsuit shares one strong commonality with the Google keyword lawsuits--the plaintiff is suing the wrong party. If Jews for Jesus really believes that the blog is infringing its trademark, sue the blogger, but leave the blog service provider out of it.

This isn't to say that Google doesn't have some involvement in the matter. In this regard, I find it disconcerting how Google tries to play the innocent (a point I'll address in more detail when I blog on search engine bias). For example, in its terse response to the plaintiff's cease and desist letters, Google says "Blogger is a provider of content creation tools, not a mediator of that content." This is true as far as it goes, but Blogger does far more than that--Blogger hosts the content and provides various marketing resources. Google isn't nearly as passive as it would like to think it is.

However, even if Google isn't a passive receptacle for blogger content, blog service providers are in a lousy position to police third party trademarks. Blogs change their content all the time, so it's impossible to know a priori if the blog name accurately describes the contents. Plus, the service provider has no idea how the blogger is marketing the blog (or its name).

In this respect, consider the analogy to an email service provider. Someone may register an email address that contains a third party trademark--the email address isn't inherently infringing, but an email user could commit trademark infringement based on how it uses the email address (e.g., to send spam for knockoff goods). Email service providers shouldn't be liable for these infringements based on user-selected user names, just like blog service providers shouldn't be liable for blogger-selected blog names.

UPDATE: Cédric Manara pointed out that Exhibit C of the comnplaint (page 39) shows that the blog did not always have its extensive disclaimer. I don't think the disclaimer's absence means much legally. I still think there was a trivial risk of consumer confusion without the disclaimer, and there's still no evidence of TM use in commerce. However, the disclaimer makes it even less likely that consumers will be confused. Read Cédric's other remarks about the case and analogous French case law. Cédric also finds other possible problematic blogs at Blogspot.

Posted by Eric at 05:02 PM | Derivative Liability , Domain Names , Search Engines , Trademark | Comments (1)

September 07, 2005

The FCC Proclaims Itself the UDRP for 800 Numbers

By Eric Goldman

From Kevin Poulson's Wired story: An entrepreneur registers 800-RED-CROS[S]. He claims to have done so because it has the same number as 800-RED-ARMS, and he was running a business by that name at the time. When he realizes the fortuitous overlap, he sets up relationships with local Red Cross affiliates so that phone calls from local residents are routed (for a fee) to the local affiliate. The entrepreneur claims that half of Red Cross' local affiliates signed up to the program.

Trademark infringement? No. A useful business (in terms of making matches between interested donors and local affiliates)? Modestly. Problematic when everyone in the world is saying that the way to help Katrina victims is by donating to the Red Cross?

Apparently, the FCC thinks so. After negotiations between the entrepreneur and the Red Cross to redirect the phone number broke down, the FCC invoked its (otherwise unknown?) power to prevent the "warehousing, hoarding and brokering of toll-free numbers" and gave the phone number to the Red Cross for one year.

Am I the only person who thinks this is exactly what the Takings Clause was designed to prevent? (I think Lauren Gelman is uncomfortable too, but maybe not based on the takings doctrine). I recognize that we might feel uncomfortable treating the entrepreneur as having a property right in a telephone number (although we have a number of cases saying that registrants have a property right in domain names--see Kremer v. Cohen), but I'm even more uncomfortable with the FCC undercutting an entrepreneur's investment decisions when a non-profit can't work out an acceptable private ordering negotiation.

Posted by Eric at 06:27 PM | Domain Names , Marketing | Comments (2)

August 25, 2005

Gripers 1, Initial Interest Confusion 0--Lamparello v. Falwell

Lamparello v. Falwell, No. 04-2011 (4th Cir. Aug. 24, 2005).

Following on the Ninth Circuit Bosley opinion from earlier this year, gripe sites won another important victory yesterday in the Fourth Circuit. This ruling is significant not only because it vindicates gripe sites, but also because it squarely confronts the Initial Interest Confusion doctrine (which so many other courts have ducked recently).

The Facts

Lamparello built a site at fallwell.com that criticized Jerry Falwell's views. The home page contained a disclaimer and a link to Falwell's site; at some point Lamparello had commercial outlinks. The parties agreed that Lamparello had very little traffic (200 hits/day) and no diversionary effect.

No Likelihood of Confusion

The court discusses, and then sidesteps, the argument that Lamparello's site was non-commercial and therefore outside the scope of the Lanham Act. Instead, the court says it does not need to resolve that question because there was no likelihood of confusion.

In support of this, the court does a very efficient multi-factor analysis. There is not sufficient similarity between the "products" because the websites look totally different and offer opposing, not similar, views. Further, there is no evidence that consumers were actually confused; instead, the anecdotal evidence showed that misdirected searchers quickly realized they were at the wrong site.

While I don't disagree with this conclusion, this type of analytically efficient multi-factor analysis shows exactly why trademark law should not apply to non-commercial gripe sites at all. The factors really don't make sense because Lamparello was not marketing goods or services in commerce. Thus the court has to resort to analytical tricks like comparing the source of the "content" rather than the source of "goods or services." So, from my view, the court should have disposed of the case because there was not sufficient "use in commerce" to meet the threshold standards for trademark infringement.

Initial Interest Confusion

Having concluded that there was no likelihood of confusion under the multi-factor test, the court then addressed the initial interest confusion (IIC) doctrine. Plaintiffs have routinely attempted to use the IIC doctrine as a bypass to the multi-factor test, and in some cases the courts have let this go to absurd results.

In this case, the court had to address IIC because of the Fourth Circuit PETA v. Doughney precedent. In that case, a parody website called "People Eating Tasty Animals" operated at peta.org was deemed to infringe the trademark of People for the Ethical Treatment of Animals. Although the Doughney case never used the phrase "initial interest confusion," the case was entirely consistent with an IIC analysis.

The court trashes the IIC doctrine in a variety of ways. It calls the doctrine "relatively new and sporadically applied," even though there have been at least 100 cases referencing the doctrine over more than 3 decades.

It then takes the position that the Fourth Circuit has never adopted the IIC doctrine. While this is technically true, this is a very generous characterization of Asia Apparel, LLC v. Cunneen, 118 Fed. Appx. 782 (4th Cir. Jan. 11, 2005) (which affirmed without comment a lower court opinion predicated on IIC) and the Doughney case (which was an IIC case in every respect except that it didn't use the words "initial interest confusion"). The court then severely limits the Doughney precedent, saying that the case merely evaluated whether Doughney's peta.org was a good enough parody. In any case, the court says that IIC is not a bypass to the multi-factor test; instead, the entire context must be considered.

One would think the court had said enough at this point. The court sidestepped the "use in commerce" inquiry. The court said there was no likelihood of confusion. The court said that the Fourth Circuit does not recognize an IIC bypass to the multi-factor test. What's left to say?

Too much! The court then spends 3 more pages in a surprisingly academic discourse trashing the IIC doctrine, articulating a completely confusing definition of IIC, and generally going where no dicta should ever go.

Having concluded that IIC was not recognized in the Fourth Circuit, the court then says that even if it was, there was no IIC in this case because all prior appellate courts applying IIC to the Internet have done so when the mark was being used for financial gain.

While I think this is technically true, this is a confusing statement. Almost all trademark infringement cases take place in the context of one party using a trademark for financial gain because of the "use in commerce" requirement. If the trademark is not being used for financial gain, usually there isn't use in commerce, which means the plaintiff's case should fail before even reaching the question of likelihood of confusion/IIC.

So the court's delineation (no financial gain, no IIC) should apply to a null set of cases (or a very small number of cases). So this statement, while seemingly important to this case, has very little predictive consequence for most other cases (besides the fact that it's dicta).

In any case, the court then uses this definition of IIC to conclude that the "critical element--use of another firm's mark to capture the markholder's customers and profits--simply does not exist when the alleged infringer establishes a gripe site that criticizes the markholder." Of course, these factual conditions are not opposites; one could imagine a gripe site that also is for-profit (see, e.g., badbusinessbureau.com). Nevertheless, the court says that giving the trademark owner too much power here would allow the owner to insulate itself from criticism, and that's not permissible.

In a footnote, the court specifically attacks two early IIC-style cases--Planned Parenthood v. Bucci and Jews for Jesus v. Brodsky--both of which held gripe sites liable for infringement. The court said that these cases failed to consider the site's content in considering if the domain name was infringing.

To recap, the court reaches the following key points in its dicta:

* the Fourth Circuit may not recognize the IIC doctrine
* the IIC doctrine requires that the alleged infringer make a financial gain using the trademark
* to assess IIC, the domain name and the website associated with it must be reviewed together
* thus, a gripe site does not commit IIC

I am no fan of the initial interest confusion doctrine, a point I've explained in great detail elsewhere. So I'm certainly not going to complain about any ruling that takes swipes at the IIC doctrine. However, this opinion is deficient in at least two key respects.

First, as discussed earlier, the limitation of IIC to "financial gain" situations does very little to constrain the doctrine.

Second, the court says that IIC cannot be evaluated without looking at the underlying website--this is fine, but why call that initial interest confusion? The court could have said--and should have said--that it was simply refusing to recognize IIC at all. Instead, its implicit standard--look at both the domain name and the website to determine IIC--sounds less like IIC and more like standard likelihood of confusion. So why didn't the court skip the IIC charade and just say that the standard likelihood of confusion test should be applied to the domain name + website combination?

After the dangerous dicta digression, the court concludes that there is no likelihood of confusion, so the court grants summary judgment to Lamparello.

ACPA

The court also rejected Falwell's ACPA claim. In this respect, this case is even better for gripe sites than the Bosley case, which left the ACPA claim open. The court says there is no way for Falwell to show that Lamparello had a bad faith intent to profit from the domain name and does a fairly efficient application of the multi-factor bad faith test in ACPA.

More interesting is how the court distinguishes Doughney. The court notes that Doughney had a portfolio of 50-60 domain names and had told PETA to "make him an offer" suggesting a desire to get paid. Through these distinctions, I think the court again severely limits the precedential impact of Doughney.

Conclusion

This has been a good year for trademark defendants--two major victories for gripe sites (Bosley and Lamparello) and major win for adware vendors (1-800 Contacts). This trend suggests that the courts are correcting the silly doctrines that were an overreaction to the dot com speculative bubble, and we should applaud this development. In particular, this court does serious violence to Doughney as a precedent and undercuts the Bucci and Brodsky cases as well--all welcome corrections from my perspective.

However, the combination of the three cases still leave far more questions than answers. Exactly what constitutes a "use in commerce" in the online context? Exactly what constitutes IIC? These major opinions continue to sidestep these important issues rather than resolving them, leaving us with continued uncertainty about the scope of these doctrines. I trust eventually we'll get cases that make clear and strong pronouncements, but for now we're left waiting.

On that front, the press reports indicate that Falwell is seeking an en banc rehearing. So we may not have heard the last of this case.

UPDATE: In April 2006, the Supreme Court denied cert, so the case is over.

Posted by Eric at 05:56 PM | Domain Names , Trademark

August 08, 2005

Search Tidbits from ABA Annual Meeting

At the ABA Annual Meeting, I was on a panel with Rose Hagan of Google and Allison McDade of Dell. A couple of tidbits from the presentations that caught my attention:

1) Rose said that Google has now been sued 23 times in France over keyword advertising. These suits, of course, follow several Google losses in court. One can only imagine the feeding frenzy that would take place in the US if TM owners thought that they could win a TM case against Google.

2) In the Q&A, Mark Partridge of Pattishall had an interesting proposal. He pointed out that the UDRP had a substantial effect on cybersquatting, so could we put into place a similar expedited administrative process was put into place for keyword advertising disputes? Perhaps an administrative procedure where the major search engines would agree to honor the instructions of a neutral.

Two obvious questions with Mark's proposal. First, what substantive law would the neutrals apply? We would need to develop a common set of definitions of abusive advertising techniques, and I don't think we have this yet. Indeed, right now we have a major split between Google and Overture's policies about TM complaints (Google removes TM references from ad copy, while Overture looks at the relationship between the ad's TM use and the promoted URL). Further, I'm not 100% convinced yet that courts will bless either practice as absolving the search engine of liability as the policies are tested.

As a result, while I don't think it was easy to describe cybersquatting, I think there were clearer understandings about impermissible domain name registrations than there are clear understandings about impermissible advertising. Note, of course, that neither the UDRP or ACPA try to define and then eliminate all abusive domain name registrations; these solutions merely targeted the most egregious behaviors. So maybe we're not yet in consensus enough to give clear enough instructions to administrative neutrals to adjudicate claims.

Second, for the search engines to participate, they would need to have a safe harbor from liability (at least to the extent of their participation in the administrative procedure). I've become increasingly convinced that we need a statutory safe harbor to keyword liability lest we find ourselves in the French plaintiff feeding frenzy. However, perhaps a search engine safe harbor would be acceptable to TM owners if it was coupled with an expedited procedure to resolve their concerns.

3) Allison's slides contained the following bullet:

"Studies suggest that broader search terms that do not include a manufacturer name (such as “computer,” “computer memory”) account for a large majority of total search volume and conversions (turning searchers into actual buyers). Trademark-specific searches, meanwhile, account for a much lower percentage of all online searches."

I agree that TM keyword searches are a distinct minority of all searches (the number I recall seeing was 20%). However, in the talk, she clarified this point to mean that her understanding is that TMed keywords convert at a lower rate than generic terms. Is this true? This doesn't sound right to me, and I had thought I had seen empirical evidence to the contrary. I'd welcome any pointers regarding the relative conversion of TMs and generic terms.

Posted by Eric at 11:12 AM | Derivative Liability , Domain Names , E-Commerce , Search Engines , Trademark

June 18, 2005

More on .kids.us

In critiquing the .xxx TLD, I took a brief swipe at the .kids.us debacle. Meanwhile, during my trip, Reuters ran a good retrospective article on the complete failure of the domain. As the article says:

"while Congress and administrator NeuStar set plenty of restrictions to keep online predators and inappropriate content out of the .kids.us domain, they didn't provide many incentives to bring Web sites in."

That hits the nail on the head. Sites in .kids.us must comply with COPPA (which is expensive) and have difficulty making money from kids who don't have access to credit cards. Hmm...let's do the math...extra expense and low ability to make money. I'm shocked that it hasn't been a hit in the marketplace.

.kids.us is a great example of Congress run amok. In its zeal to address Internet porn, but stymied by repeatedly being slapped on the hands for passing unconstitutional laws, Congress thought it could solve the problem by creating a new market niche. Only problem: the niche doesn't exist (at least, in the form that Congress mandated). If it did, I am 100% confident that the market will find a way to solve the problem without Congress' help.

An older but good article discussing .kids.us.

Posted by Eric at 02:32 PM | Domain Names , Internet History

June 04, 2005

Why I'm Not Excited About a New .xxx TLD

I'm not really a fan of new TLDs. Mostly, I see them increasingly irrelevant, so they generate a fair amount of activity but little benefit. As a result, not surprisingly, I am not excited about a .xxx TLD. Indeed, not only am I unenthusiastic, I have some serious concerns about its implications. Given how Congress hates Internet porn, it seems almost inevitable that Congress will mandate that pornographers set up shop only under a .xxx SLD, leading us back to the age-old conundrum of what constitutes pornography and launching yet another multi-round Constitutional challenge.

Meanwhile, Internet News ran a good story recapping the development of .xxx. However, I'm surprised the article did not directly reference Congress' last attempt to zone the Internet, the .kids.us debacle--which I think can only be characterized as a complete and utter failure and a waste of Congress' time.

UPDATE: The AP Story is also good. Declan reaches the same conclusion I do, and provides some good background.

Indeed, Rep. Pence of Indiana is proposing to create a "dot-porn" TLD to create exactly the zoning problem we fear with .xxx. (Warning--the UPI article is shockingly slanted!) The idea of segregating porn into its own TLD is a bad meme that just won't die!

Posted by Eric at 11:20 PM | Domain Names

May 19, 2005

New Gripe Site Case--Faegre & Benson v. Purdy

Faegre & Benson v. Purdy, Civil File No. 03-6472 (D. Minn. Apr. 27, 2005).

Another ruling in the long-running story of William Purdy, an anti-abortionist who uses extreme forms of gripe sites against his targets. This particular ruling was a motion to hold Purdy in contempt for violating previous orders against him. Normally, contempt rulings aren’t that substantive, but this particular ruling had a number of noteworthy aspects.

Purdy used the law firm’s name in the keyword metatags of a gripe site. He also used the firm’s description metatag as the gripe site’s description metatag (called “pagejacking,” though the term wasn't used by the court). The court says:

“Purdy cannot be entirely barred from using Faegre’s trademarks in his metatags….he may legitimately use Faegre’s trademarks in his metatags in order to refer to Faegre and to describe the contents of his website.”

So far, so good. Now, the opinion gets weird. It says:

“Purdy can legally use Faegre’s marks in his metatags in the descriptive sense, particularly if he employs a disclaimer on his web pages; however, he is not permitted to use Faegre’s marks in his metatags in order to divert Internet users from Faegre’s web site.”

OK, what’s the difference? Purdy can advertise his site as having some topical relationship to Faegre & Benson, and he can even do so “surreptitiously” in the metatags. However, Purdy can’t divert Internet users from the Faegre site? When is a searcher diverted vs. just pursuing a topic of interest?

The court refers to Purdy's pagejacking as the diversion. This is fine, but is this appropriately treated as a trademark infringement issue? A number of commentators (including me) have argued that pagejacking, if actionable at all, should be considered under false advertising, not trademark infringement. The court here lazily deals with it under trademark law, which weakens our ability to understand the court’s reasoning.

Purdy also registered hindrocket.com as part of an attack on John Hinderaker, who blogs under the pseudonym “hindrocket.” The court does not like this (in light of the previous orders), even though Purdy used various disclaimers. The court says:

“Although Purdy’s disclaimers may alleviate confusion once an Internet user has reached the content of the web site, by employing “hindrocket.com” as his domain name, Purdy appropriated Hinderaker’s name for his own purposes and benefit—to mislead Internet users into visiting Purdy’s web site when they are actually seeking Hinderaker’s web site. Even if an Internet user eventually realizes that Purdy’s site is not sponsored by Hinderaker, Purdy will have already gained the benefit of luring the user to his web site by exploiting Hinderaker’s name.”

This is a confusing paragraph for a number of reasons. First, the court is protecting Hinderaker's pseudonym under an “appropriation” tort, defined as when someone “appropriates to his own use or benefit the name or likeness of another…for the purpose of taking advantage of that individual’s name, or reputation.” This is an odd doctrine—it’s not a classic right of publicity (which, normally, would require some commercial use of the name) nor a classic right of privacy. Thus, the court is able to find that Purdy engaged in “appropriation” despite the lack of any commercial activity.

Second, the court is treating the appropriation as having occurred through a form of “initial interest confusion” (though the court doesn’t use the words). We’ve seen this in other cases, such as PETA v. Doughney. However, I can’t recall seeing the doctrine applied in a right of publicity case (and certainly never in an “appropriation” case).

But why didn’t the court refer to the Ninth Circuit Bosley case, where the Ninth Circuit reached a different result in the case of a gripe site registering a domain name? The Bosley case was under the Lanham Act, not this funky appropriation doctrine, so that may have made a difference. Further, the court doesn’t care if the gripe site is non-commercial because the appropriation tort doesn’t require commerciality.

Nevertheless, the initial interest confusion doctrine (whether applied in the context of the Lanham Act or in some other tort doctrine) is a mess, and this case shows why. (1) How do we know what someone is looking for when they enter the term “hindrocket.com”? (2) The material at hindrocket.com was topical to John Hinderaker, so why can’t Purdy register that domain to present topical content? (3) Anyone who didn’t want to be there would have immediately recognized the errors of their ways and could leave instantly, so what harm was done?

(Note that there are some laws protecting the use of third party personal names as domain names, such as 15 USC 1129 and California Business & Professions Code 17525. None of these laws were invoked.)

Finally, the plaintiffs claimed that Purdy was responsible for anti-Hinderaker comments posted on a message board attached to his website. The court shuts down these claims under 47 USC 230, saying Purdy isn't liable for either defamation or “appropriation” based on third party message boards. Although I think this is the right result, the appropriation claim being shut down by 47 USC 230 is particularly interesting because 230 does not apply to “IP claims.” Compare the Perfect 10 v. CCBill case, where the court held that a “right of publicity” claim was not covered by 47 USC 230 because it was an IP claim.

It's hard to be sympathetic to Purdy's situation because he engages in such extreme tactics to make his point. On that front, I think the judge did an admirable job balancing competing policy norms and not just trashing Purdy. On the other hand, this ruling could have some important implications for both gripe sites and search behavior generally, and a little more rigor would have been nice.

Posted by Eric at 10:39 AM | Derivative Liability , Domain Names , Search Engines , Trademark

May 01, 2005

ICANN's Domain Name Tax on .Jobs and .Travel

I missed this before—perhaps I wasn’t the only one. ICANN has repeatedly attempted to impose a “tax” on domain names. This was first proposed back in 1999 and again at the end of 2004. Now, at the end of March, we learned that ICANN is charging a tax of $2 per year on each SLD in the .travel and .jobs TLDs. The expectation is that some fee will be levied against other TLDs under ICANN's administration as the applicable agreements come up for renewal/renegotiation.

This tax, of course, raises some serious questions:
· Where’s the money going to go? More money in ICANN’s pocket means two things: (1) more flexibility for ICANN to do more ill-advised things (a propensity they've amply illustrated while operating on a shoestring budget), and (2) a greater pot of money for those interested in ICANN governance to fight over.
· What procedural limits are there on ICANN’s ability to impose new taxes or raise existing ones? Who's watching the watchman? "The power to tax involves the power to destroy." John Marshall, McCulloch v. Maryland (1819).
· As ICANN sets a minimum floor on domain name pricing (at minimum, to cover the flat ICANN tax), what will this do to the market for domain names? In general, domain name pricing has been dropping dramatically; now there may be a countervailing need to raise prices. Price increases in domain names put significant scrutiny on the value of domain names, a value that has arguably been slipping throughout this decade as more action moves to the search engines.

Posted by Eric at 04:29 PM | Domain Names , Internet History

Widmaier on Internet Trademark Law

Uli Widmaier of Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP has written an important new article, Use, Liability, and the Structure of Trademark Law, 33 Hofstra L. Rev. 603 (2004). The article makes a persuasive argument why keyword triggering should not be trademark “use.” Recommended reading.

Posted by Eric at 04:06 PM | Adware/Spyware , Domain Names , Search Engines , Trademark

April 16, 2005

Google v. Froogles

Google has sued discount shopping site Froogles for trademark infringement. This is not the first time the parties have met; Google lost a UDRP against Froogles already. Most interesting line from the complaint: "As between the parties, Google is the senior user of marks that incorporate the formative -OOGLE for Internet search services." I wonder how far Google is planning to go with protecting that word stub...? The problem for Google is that they may not have priority on the basis of their use of "Froogle," so they have to leverage off their "Google" trademark to block "Froogles."

(Thanks to Gary Price).

Posted by Eric at 03:29 PM | Domain Names , Search Engines , Trademark

NPR on Whois and Privacy

Larry Abramson of NPR ran a story entitled “New Laws on Domain Names Aim to Stem Online Fraud” (specifically referring to the Fraudulent Online Identity Sanctions Act, passed as part of the Intellectual Property Protection in Courts Administration Act). My mom said I talked too fast.

Posted by Eric at 03:13 PM | Copyright , Domain Names , Privacy/Security , Trademark

April 13, 2005

ICANN Not a State Actor

McNeil v. VeriSign, Inc., 2005 WL 741939 (9th Cir. April 1, 2005). The Ninth Circuit ruled (in an unpublished opinion) that ICANN is not a state actor. According to my research, I’ve found the following cases holding that private Internet entities are not state actors:

CompuServe, Inc. v. Cyber Promotions, Inc., 962 F. Supp. 1015 (S.D. Ohio 1997)
America Online, Inc. v. Cyber Promotions, Inc., 948 F. Supp. 436 (E.D. Pa. 1996)
Name.Space, Inc. v. Network Solutions, Inc., 202 F.3d 573 (2d Cir. 2000)
Island Online, Inc. v. Network Solutions, Inc. 119 F. Supp. 2d 289 (E.D.N.Y. 2000)
Nat’l A-1 Adver. v. Network Solutions, Inc., 121 F. Supp. 2d 156 (D. N.H. 2000)
Thomas v. Network Solutions, Inc., 176 F.3d 500 (D.C. Cir. 1999)

The McNeil case now makes at least seven cases. I have not found any cases to the contrary. Am I missing any? What room is left for plaintiffs to argue that any Internet entity is a state actor?

(Hat tip to David Sorkin).

Posted by Eric at 12:29 PM | Domain Names

April 05, 2005

Bosley Medical Institute v. Kremer--Victory for Gripers

Bosley Medical Institute v. Kremer, No. 04-55962, 9th Cir. Apr. 4, 2005. Kremer launches gripe site at www.bosleymedical.com, using the trademark of his target (with no additional words/letters) in the domain name. The court’s response was a big victory for gripers everywhere: “the noncommercial use of a trademark as the domain name of a website — the subject of which is consumer commentary about the products and services represented by the mark — does not constitute infringement under the Lanham Act.”

On the critical question of whether the griper was using the domain name in commerce, the site generated no revenues and did not promote any goods or services. It did link to another website, which through a series of further links could lead to commercial advertisements. It would be ridiculous to collapse this chain of links into a conclusion that the domain name use was commercial, and the Ninth Circuit wisely rejected that illogic. (“This roundabout path to the advertising of others is too attenuated to render Kremer’s site commercial.”) The court distinguished Nissan Motor v. Nissan Computer because, in that case, the domain name owner put ads directly on his site.

Many courts have upheld gripers’ rights so long as do not use TM.com, so this case could be a turning point for letting gripers pick a domain name of choice. The court disagreed with the PETA v. Doughney case on the argument that registering TM.com blocks customers of the TM owner from obtaining the TM owner’s goods, because in this case the bosleymedical.com site was, indeed, about Bosley Medical. The court limits the doctrine to situations where the domain name registrant offers competing services. Thus, in a strongly-worded sentence, the court concludes “Bosley cannot use the Lanham Act either as a shield from Kremer’s criticism, or as a sword to shut Kremer up.”

(In a footnote, the court says that the initial interest confusion does not apply because the griper’s use was non-commercial).

The court reversed the griper’s summary judgment ruling on the ACPA claim, rejecting that the non-commercial determination under the Lanham Act insulates the griper from a bad faith determination under ACPA (citing the Coca-Cola v. Purdy case). Therefore, it’s still possible the trial court will find against the griper on ACPA.

(Disclaimer: I signed on to an amicus brief prepared by the Berkman Center supporting Kremer in this case).

UPDATE: Marty Schwimmer has a contrarian take on the case.

Posted by Eric at 10:50 AM | Domain Names , Trademark

March 24, 2005

Dot EU Approved

ICANN finally approved the .eu domain. When I joined Epinions in February 2000, a board member suggested that one of my top priorities as general counsel should be to secure the epinions.eu domain. Over five years later, does anyone even care about this TLD any more?

Posted by Eric at 12:19 PM | Domain Names , Internet History

February 14, 2005

Paul Boutin on Typo Traffic

Paul Boutin discusses the problem of searchers making typos when typing domain names into the address bar. He runs through the typical litany of gripes about product efforts to solve this problem—Microsoft’s “blatant ploy” to promote MSN search when IE users look for non-existent pages, Network Solutions’ attempt to capitalize on its “monopoly” with its SiteFinder product, and the new “mutating germ,” Paxfire, that allows IAPs to redirect typo traffic to an ad page.

But what, exactly, is the problem? In other words, what’s worse: getting a useless 404 page, or getting potentially helpful ads or content that match your interests? Perhaps these repeated and ongoing efforts to deliver ads to typo pages are not the result of a sinister plot but instead reflect efforts to improve the search experience.

Boutin offers a typical engineering-oriented solution: A software program that lets him customize the response he gets when he makes a typo. I suspect the demand for this is not great—most people will not invest the time to train the software when the fix (hit the back button) for making a typo is so minimal. Meanwhile, I’ve got a MUCH easier solution for him. Don’t use the browser address bar at all. Instead, start every search effort at a search engine. Looking for Slate? Search for Slate at Google. That way, you’re much less likely to run into unexpected ads (or worse) if, in fact, you make a typo.

(Thanks to Marty Schwimmer for calling attention to the article).

Posted by Eric at 11:10 AM | Domain Names , Search Engines , Trademark

February 09, 2005

Coca-Cola v. Purdy Permanent Injunction

The court issued a permanent injunction in the long-running Coca-Cola v. Purdy case. If you’re not familiar with Purdy, he is an anti-abortion activist. He targeted various publishers that he believed were pro-choice, plus a number of other companies that he thought should take an anti-abortion stance. Here’s one article recapping some of the story. He then registered various domain names including the trademarks of his targets, and then he redirected the domain names to anti-abortion websites (in some cases, causing web browsers to unexpectedly encounter some uncomfortable photos at the anti-abortion sites).

Not surprisingly, the court was sympathetic to the trademark owners. Even though Purdy has a political point to make, and many courts will consider his gripe rights, his techniques have been tough for the court to accept—-especially after he registered yet more domain names following an initial injunction.

Unfortunately, the new ruling illustrates why bad facts make bad law. Consider, for example, how the court resolves some factors of the likelihood of confusion test:

· Competitive proximity. An anti-abortion activist “competing” with major newspaper publishers and some big branded food companies like Pepsi and McDonalds? The court’s response? The parties compete “because the Defendant intended to redirect Plaintiffs’ audience and customers to view content of their choosing.” Treating a “diversion” as competition guts this factor.

· Intent to pass off goods. Of course the defendant isn’t selling any goods at all. He is trying to communicate his political message, and unquestionably there was little likelihood that any web browser would have assumed that the horrible photos were the “goods” of the trademark owner. The court’s response? Purdy registered the domain name with a bad faith intent to profit by diluting the marks and by “relying on Plaintiffs’ good names and goodwill to achieve the personal gain of promoting their messages, generating publicity and raising money for supported causes.” Bad faith intent to profit is important, of course, to an ACPA inquiry, and the court had already ruled against Purdy on that claim—-but inexplicably reuses the same language for the trademark infringement analysis. The references to using goodwill to promote a message might have relevance under trademark law, but they surely do not evidence that Purdy was trying to pass off goods as if they were the plaintiffs’.

· Purchaser care. This inquiry should properly focus on the care exercised by searchers for each of the plaintiffs’ respective products, which would require the court to treat each plaintiff differently. Instead, the court merely focused on the pre-purchase information marketplace, allowing the court to assess how careful Internet searchers are (rather than how careful buyers are when disgorging themselves of their hard-earned money). Framed this way, the court quotes a 2000 case for the proposition that:

“In the internet context, in particular, entering a website takes little effort - usually one click from a linked site or a search engine’s list; thus, Web surfers are more likely to be confused as to the ownership of a web site than traditional patrons of a brick-and-mortar store would be of a store’s ownership.”

I don’t know if this was ever true. Even if it was, I think we need a lot more empirical evidence to support this statement today in 2005.

Even though the court took too many liberties to reach a convenient conclusion, there remains no question that courts will continue to find ways to curtail aggressive marketing techniques by gripers. It seems like the gripers can still have their say, but not by automatically redirecting web browsers to pictures of aborted fetuses.

Posted by Eric at 12:37 PM | Domain Names , Trademark

February 08, 2005

Google and Keyword/Domain Name Convergence

Bob Tedeschi speculates about why Google became a registrar. He discusses a number of good reasons but missed perhaps the most obvious. To Google, there’s no difference between selling domain names and selling keywords: both are merely ways for companies to use keywords to generate traffic. I make this point about convergence between domain names and keywords in my article on Internet search.

Posted by Eric at 01:21 PM | Domain Names , Search Engines , Trademark